Judge seeks changes to eliminate high small claims fees
"The People's Court" in Marion County was supposed to be a low-cost system with no need for high-priced attorneys.
But 13 Investigates has found a system overrun by high attorney fees.
And now for the first time, the advisory judge for Marion County township courts admits there is a serious problem with fees and reveals steps to address it.
"I don't see how anybody could see your series without thinking, 'Maybe we need to take a second look at attorney's fees. And a lot of other things as well,'" said Marion County Circuit Judge Louis Rosenberg.
It was straight talk after watching an admittedly, embarrassing display of injustice uncovered by 13 Investigates.
"You're charging them more than they actually owe," said 13 Investigates, questioning Derek Johnson as he walked away from our cameras. Johnson refused repeated requests to talk about his billing practices in Decatur Township.
Rosenberg presides over the Marion County Circuit Court and is an advisor to the Township Small Claims Courts, where we found former patients with old, forgotten doctor bills willing to pay what they rightfully owe. But instead of a reasonable deal, they're forced to pay double, triple or even more in Decatur Township, where the extras amount to a money grab by medical collection attorneys.
We found $200 bills there, morphing into nearly $800 or more.
"I have never felt more victimized than I did in the courtroom that day," said Ashley Wilson, who couldn't believe a $200 co-pay for spine surgery would spiral so high.
"He told me he was not going to reduce the attorney fees, he thought they were fair. I don't," said Gina Hoggs, minutes after appearing in Decatur Township Court.
"I'm familiar with some of the sad stories that you heard, so I was disappointed in some instances, but I can't say I was surprised," admitted Rosenberg, who is also on the task force to help reform Marion County Small Claims Courts.
Records obtained by 13 Investigates show one attorney on the receiving end of potentially millions of dollars in attorney fees.
Derek Johnson gets a $450 fee each time he wins a judgment.
Judge Myron Hockman told 13 Investigates it doesn't matter if the patient owes just $50, Johnson charges the same fee and he approves it.
"The contrast between the fee and the award is very dramatic and it's a common problem. And probably the Bar Association should take a closer look at it," Rosenberg said in response.
We took a closer look and found between 2011 and 2012, Johnson filed nearly 7,000 medical collection cases in Decatur Township alone. Winning just three out of every four cases would net more than $2 million in attorney fees.
"That's disgusting. That doesn't look right," said a stunned Gina Hoggs, who challenged the attorney fees in court, but was made to pay them anyway, even though she owed just $272.
Angry, disgusted viewers are also sounding off:
One writes, "Dirty..they need to dissolve the small claims court..."
Another added, "I felt bullied by this attorney..."
One man said "I had a bill for $199 and he still charged for those ridiculously high fees."
"I told Mr. Johnson...he was ripping people off," said another viewer.
Yet another said, "They are stealing from us."
One woman sat down with 13 Investigates. She asked we not show her face because she is a legal professional who also had to face off as a patient in Decatur Township.
"I thought that the system failed me, and this is a system that I work in," she told 13 Investigates.
In one case, the legal professional said a $99 medical coding mistake ended up costing her $600. She no longer has the receipts in that case.
In another case, she paid a $190 doctor bill before Johnson filed a claim against her. Still, Johnson sought a judgment against her for the same amount and his $450 fee. She was able to show a judge proof and had case dropped.
"I was just flabbergasted that he was attempting to continue through with this even though it was already paid and I had proof," said the legal professional.
Rosenberg says the problem is no one is monitoring the courts on a full-time basis. He wants lawmakers to create such a position.
As for collection attorneys, he says no one expects them to work for free, but the fees are a serious problem and traditional hourly rates are inadequate in small claims court.
"If you were to strictly apply that formula, they'd come up with 20 cents!," Rosenberg said, talking about the limited amount of time collection attorneys generally work on a case.
Rosenberg says paralegals usually do much of the court preparation.
The desperate need for balance is now prompting Rosenberg to consider unprecedented action.
"Is this going to change?" asked 13 Investigates.
"Well, I'm thinking about whether it would be within my authority to issue a rule giving guidelines," said Rosenberg, about possible new restraints on a money grab that's left the people's court in a world of hurt.
Rosenberg is reviewing some viewer complaints as requested. The Supreme Court is also taking comments until June 5 on a new rule that will limit collection attorneys from filing claims out of jurisdiction.
Indiana Supreme Court Small Claims Venue Rule 12
The Committee invites public comment on the proposed rule amendments. Those wishing to comment should do so, in writing, not later than June 5, 2013.
Comments may be sent by email to: RulesComments@courts.in.gov
OR addressed to:
Lilia G. Judson
Indiana Supreme Court
Division of State Court Administration
30 South Meridian Street
Indianapolis, IN 46204