Lawyer Sanctioned for Filing Questionable RICO Extortion Claim

A lawyer and his law firm must pay sanctions for filing a racketeering claim against his opponent in negotiations over a hospital lien, which a lower court called “improper from the outset,” the Tenth Circuit said.

James Lyle represented Judy Parker, who was injured in a car accident in New Mexico and subsequently had a $15,171 hospital lien filed against her. Lyle maintained that the lien should be reduced to $2,124 under New Mexico’s common fund doctrine and principles of equitable subrogation.

After negotiations with the San Juan Regional Medical Center and its billing agent collapsed, Lyle turned to the responsible party’s insurer and settled Parker’s claim with it for $50,000. When he received the funds, he took his fees out and gave the rest to Parker.

SJRMC’s law firm, Jackson Loman Standford & Downey PC, sued Parker, the insurer, and Lyle on its behalf.

Rather than settle, Lyle removed the case to federal court, claiming that the hospital, its billing agent, and Jackson Loman violated the Racketeer Influenced and Corrupt Organizations Act by systematically extorting excessive fees from injured parties.

Lyle said that the “enterprise” routinely demanded lien payments that exceed the amount permitted by New Mexico law. He added that his firm suffered financial loss as a result of the hospital’s refusal to accept his proposed reduction of Parker’s debt.

The U.S. District Court for the District of New Mexico ruled that Lyle’s claim was frivolous. It said that even a brief review of controlling precedent would have revealed that the threat of even meritless litigation isn’t extortion and that Lyle didn’t suffer any injury because he was already paid.

The district court awarded the plaintiffs $20,836 in fees as a sanction against Lyle.

The U.S. Court of Appeals for the Tenth Circuit upheld the sanction. It said in an unpublished per curiam opinion that there isn’t any authority “to support the argument that the refusal to agree with an opposing party’s legal position is extortion under RICO.”

The appeals court also raised the specter of Lyle paying more sanctions. It said that after reviewing the appellate briefs, “we find that they have the indicia of a frivolous appeal.”

The plaintiffs were given 15 days to justify the award of further sanctions and Lyle will have 15 days to respond. “The parties’ submissions will guide our determination regarding whether sanctions should be imposed,” the appellate court said.

Judges Robert E. Bacharach, Gregory A. Phillips, and Joel M. Carson were on the panel.

Jackson Loman and Butt Thornton & Baehr represented the plaintiffs. Lyle represented his firm and Parker. O’Brien & Padilla represented the insurer.

The case is San Juan Reg’l Med Ctr. v. Law Offices of James P. Lyle PC, 2022 BL 137639, 10th Cir., No. 21-2035, unpublished 4/21/22.