Dear Fellow Members:
Below you will find a link to an online copy of the Maryland Rules of Professional Conduct. We have provided this link in hopes of making your search for answers to your legal ethics questions easier. As always, if you need additional guidance, please do not hesitate to call the Legal Ethics Committee hotline at the number listed in the current issue of your bar newsletter.
MD Rules of Professional Conduct
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BILLING PRACTICES, REDUX
Question: Are legal billing practices exempt from the Consumer Protection Act under the exclusion for the “professional services of a…lawyer?”
The Maryland Consumer Protection Act, Title 13, Commercial Law Article, Maryland Code,
Annotated (“the CPA”), creates “…minimum standards for the protection of consumers…,” CL §§ 13-101, 105, and a private cause of action by a consumer who is “…subjected to a violation of this title…” CL § 13-401. The statute specifically adjures a liberal construction of its terms. CL § 13-105. For purposes of lodging a complaint with the appropriate Division of Consumer Protection, the consumer must prove the unfair or deceptive practice, but need not prove that s/he was “..misled, deceived, or damaged as a result of that practice.” CL § 13-302. In a private action, the consumer may not only recover damages to the extent of the actual injury suffered, but may also be awarded his or her reasonable legal fees. CL § 13-408. The same section of the CPA restates the special protection afforded health care providers.
And, yes, there is a specific, clear, and unequivocal exemption for enumerated “professional services,” including those of a medical practitioner or a lawyer, CL § 13-104, suggesting that the question posed is a bit of irrelevant nonsense. Enter the Maryland State Court of Appeals ruling in Scull v. Groover Christie & Merritt, P.C., 71 (Md. 9-30-2013).
David Scull, an attorney residing in Bethesda, was a member of United Healthcare Select HMO (“the HMO”). His HMO plan included coverage for the cost of x-rays. After visiting an orthopedist to address a knee problem, he was referred to Groover Christie & Merritt, P.C. (“Groover”), who x-rayed the knee in question. Two years later he was billed $121.00 by Groover, an amount that allegedly represented the balance remaining after the HMO paid its share. Following some back and forth communications among Scull, the HMOI, and Groover, Scull received another statement from Groover, billing him for the “balance” due of $121.00. He paid the bill, only to receive a full refund for that amount three months later. He did not negotiate the refund check. Four months later he brought suit against Groover in Montgomery County, Maryland for “balance billing” in violation of both Maryland State HMO laws and the CPA. Groover successfully moved to dismiss, and Scull amended the complaint to focus on the CPA’s application to the facts. The amended complaint was dismissed, and Scull appealed. The Court of Special Appeals affirmed the dismissal in a reported opinion. Scull v. Groover Christie & Merritt, P.C., 205 Md. App. 567. 45 A.3d 925 (2012). Scull’s petition for certiorari was granted.
The Court of Appeals affirmed the dismissal in part, stating that “…there is not an implied private right of action under the HMO law,” but reversed and remanded the CPA count, holding “…that medical billing is not a ‘professional service’ exempt from the Consumer Protection Act. Accordingly, on remand Mr. Scull may pursue his claim under the Consumer Protection Act.” Emphasis added.
The issue before the Court of Appeals came down to “…whether GCM’s billing practices constitute ‘professional services’…” under the CPA. In reaching its decision, the Court of Appeals relied in part upon the statutory creation of a Health Education and Advocacy Unit (“HEAU”) within the Consumer Protection Division, CL § 13-4A, stating that the HEAU authority to report improper medical billing to the Consumer Protection Division for appropriate action establishes a clear distinction between professional medical services and medical billing practices. The Court of Appeals relied upon the Consumer Protection Division’s amicus brief describing its history of actions brought against health care providers. Further, the Court of Appeals looked to other Maryland statutes concerning “professionals,” as well as to other jurisdictions. In reaching its conclusion, the Court of Appeals rejected Appellee’s argument, based at least in part on Hogan v. Maryland State Dental Association, 155 Md. App. 556, 843 A.2d 902 (2004) that the “professional services” exemption be read broadly. Instead, the Court of Appeals stated that
“[N]one of those decisions concerns medical practices – or the billing practices of any profession, for that matter. To the extent that they discuss the professional services exemption in the Maryland Consumer protection Act, they contain virtually no reasoning and are therefore of little assistance in resolving the question before us.
In sum, the exclusion in CL § 13-104 applies only to the actual professional services of a physician. The commercial aspects of a medical practice e, s compliance with laws concerning who may be billed and how, are not exempt from the Consumer Protection Act. When those billing practices involve unfair or deceptive practices, as defined in the Consumer Protection Act, the medical practice may be subject to a private action brought by a person injured by the violation.” Emphasis added.
The reference to “the billing practices of any profession” is deliberate, and sends a clear warning to all professionals who exaggerate their qualifications or experience in advertising (including on websites) or engage in any sort of false or deceptive business practices with regard to billings. Certainly the potential for an award of legal fees (under the CPA) should encourage legal professionals to take extra care with billing practices and statements.
Rule 1.5, “Fees,” The Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”), addresses the reasonableness of fees, but with a focus on excessive fees. The comments and case law references following the Rule offer some guidance on avoiding excessive fees, but precious little on the commercial aspects of billing practices.
The Scull ruling appears to create an opening for action, by disgruntled [presumably former] clients, against lawyers who over-promise, over-bill, or have sloppy billing practices. The ruling offers no real guidance on the distinction between “professional services” and the “commercial aspects” of providing those services for hire. As legal billing practices continue their shift away from the hourly fee, it behooves all legal professionals to take particular care.
So, are legal billing practices exempt from the Consumer Protection Act under the exclusion for the “professional services of a…lawyer?”
The answer now appears to be that they are not exempt.
Christiane E. Sorel, Committee Member
Jeffrey M. Axelson, Co-Chair, Legal Ethics
Samuel M. Shapiro, Co-Chair, Legal Ethics