Practicing Law Without A License?


A recent post on another website regarding Medicare benchmark pricing (in lieu of a PPO), raises questions as to the legality of certain third party intermediaries representing patients vis-à-vis the provider under Cost Plus, Reference Based Pricing and other similar schemes  which are gaining traction (and the attention of hospitals) in the market.

The author (we believe) is a Dallas attorney who works with and “represents / advises medical providers, in the area of maximizing commercial reimbursement from a multitude of payors or resources including managed and non-managed care payors, ERISA plans, Workers’ Compensation carriers and plans, estate and probate, bankruptcy as well as others imposing difficulty and/or issues.”

We have redacted the name of the company he complains about:

No one is mentioning the fact that XYZ purports to represent the patients vis-a-vis the providers. Because they are negotiating the patient’s legal rights, THEY ARE PRACTICING LAW — even though they are not attorneys.

Texas courts have expressly held that ONLY A LICENSED ATTORNEY may lawfully represent third parties in negotiation of their legal rights. Crain v. The Unauthorized Practice of Law Committee of the Supreme Court of Texas, 11 S.W.3d 328 (Tex.App.–Houston [1st Dist.] 2000, reh. den.) Anyone else acting on behalf of a third party is ENGAGING IN THE UNAUTHORIZED PRACTICE OF LAW.

A BUSINESS COMPANY may not circumvent this requirement by having an in-house attorney handle the matter because that is the COMPANY practicing law–which only a PROFESSIONAL CORPORATION is permitted to do. Bar Ass’n of Dallas et al. v. Hexter Title & Abstract Co., 175 S.W.2d 108 (Tex.Civ.App.–Fort Worth, 1943, reh. den.) Nor may the business company hire an outside lawyer and have the lawyer handle the matter, because the law firm’s CLIENT is the COMPANY, *not* the third party. And the company cannot get around this with some sort of “power of attorney” or other “written authorization to represent” ruse either.

Only ATTORNEYS may form a professional corporation and a professional corporation may ONLY practice law.

Similarly, if XYZ  hires outside counsel and inserts itself between the patient and the attorneys, THERE IS NO ATTORNEY-CLIENT PRIVILEGE because information has been disclosed to a third party: XYZ.

Also, if the LAW FIRM deals with XYZ instead of the patient, the LAWYER(S) are violating State Bar ethics by letting a third party (XYZ) control the lawyer-client relationship.

The article also doesn’t mention that XYZ regularly misrepresents to ISD’s (school districts) and various other government units that their plans and activities are protected by ERISA. The fact is that ERISA has a “governmental plan” exception–NO governmental entity comes under ERISA.