From Texas Civil Justice League
In a case exposing the unsavory practices of some plaintiff’s firms and medical bill factoring companies, the Dallas Court of Appeals has affirmed a Dallas County district court’s confirmation of an arbitration award of nearly $550,000 to a factoring company.
English Law Group, PLLC v. Medinet Investments, LLC and Michael Bingham (No. 05-21-01041-CV; filed January 4, 2024) stemmed from a premises liability lawsuit filed against an apartment complex. The plaintiff, a complex resident, entered into a subrogation and distribution agreement with his law firm, English, and a factoring company, A/RNet (later acquired by Medinet, a Dallas-based factoring company). The agreement included a standard arbitration clause. Subsequently, Medinet sued English and Walker for breach of contract and fraud, seeking reimbursements allegedly due under the contract and attorney’s fees. English answered, and Medinet moved to compel arbitration. English then filed a number of counterclaims, attempting to invalidate the contract, and moved for summary judgment. The trial court granted the motion as to Medinet’s tort claims and denied Medinet’s motion to compel. Medinet appealed. The case continued to play out in the trial court, which entered a final summary judgment for English. The court, however, subsequently modified its judgment to specify that it was interlocutory and did not dispose of all claims and parties.
After that, the Dallas Court of Appeals reversed the trial court’s order denying Medinet’s motion to compel arbitration (this is back in 2018). SCOTX denied English’s petition for review. Meanwhile, the dispute between Walker, the plaintiff in the premises case, and Medinet has proceeded to arbitration, and the trial court subsequently confirmed the arbitrator’s award in that case. A satellite dispute erupted between Medinet and Bingham, its manager and member, and another entity called Medinet Investments LLC, which sought to block arbitration between English, Medinet, and Bingham and to non-suit Medinet’s claims. Medinet and Bingham then filed a motion to adminstratively reopen the case for the purpose of confirming the arbitration award in their case against English. The award subsequently awarded Medinet and Bingham $380,000 in uncompensated services, $125,000 in attorney’s fees, arbitration fees of $17, 318, and sanctions of $25,000. The arbitration award, however, left some issues open, however. The trial court entered judgment on the award in August 2021.
The court of appeals affirmed to the extent that the award confirmed the arbitrator’s award for Medinet, but reversed the trial court’s judgment as to certain claims that were not adjudicated in the arbitration proceeding. Medinet argued that English refused to pay its share of the arbitration fees and expenses, for which the arbitrator barred English from offering any evidence for its affirmative claims or defenses. The trial court thus did not deny English adjudication of those claims and defenses related to the subrogation agreement. The court agreed. The court then determined that English waived its issues challenging the trial court’s confirmation of the award because it did not make an application to vacate the award within the 90-day deadline after the date of delivery of the award to the applicant (English waited for another three months). In any event, the court continued, English failed to sustain its burden to prove the statutory grounds for vacating an arbitration award, which essentially require a showing of corruption, fraud, or bias.
English then argued that Medinet lacked standing, but, as the court pointed out, it really argued that Medinet lacked the capacity to sue and that another entity, Medine Financial Services, was the “right” plaintiff. Noting that this is for the arbitrator to decide, the court rejected the argument, as well as English’s argument that the award violated the election of remedies doctrine (an error in law is not sufficient grounds to vacate an arbitration award). The court did, however, decline to hold Jay English, as opposed to his firm (which I have referred to as “English”) vicariously liable for its claims because they were not decided by the trial court. The court remanded this issue to the trial court for further proceedings.
We realize that the long and convoluted recitation of the procedural history of the case probably means that most of you will never read this conclusion. But we think it is important to expose this matter in some detail because it involves the expanding involvement of medical bill factoring companies in personal injury lawsuits, with all its attendant risks for vastly inflating medical expenses in these cases. It is supremely ironic that in this case the law firm argued that Medinet inflated the bills—which the law firm was on the hook for. Odd that when an insurer is on the hook, law firms make the contrary argument every time. The case, which has been dragging through the court system for nearly a decade with no end in yet in sight, shows the extent to which many law firms who get sued for allegedly keeping somebody else’s money will go to get out of paying it, even to the extent of tying up the dispute in the courts in hopes that it will eventually go away. This is bad for both the court system and the legal profession. If the public knew about these cases, it would not be a good look for anybody. We hope that by writing about them.