The Hearing Board found the following facts to be relevant:
During the time Respondent worked at law firms and General Growth Properties, she received health insurance as an employee through her employers’ policies. When she started her own firm in 2009, she obtained health insurance pursuant to the Consolidated Omnibus Reconciliation Act (Cobra). At that time Respondent and her husband, who was a partner with a large company, were living with Respondent’s parents in Highland Park. (Tr. 19-20, 27-28).
Between 2009 and October 2010, Respondent decided she wanted to have a second child. Her Cobra coverage had a waiting period of twelve months for maternity benefits, and other private insurance options had a similar requirement. Her husband did not have insurance coverage through his business. Respondent testified when she mentioned the situation to her father, he told her she could be added to Horizon’s policy. She understood from his statement that she was allowed to be on the policy. (Ans. at pars. 4, 6; Tr. 29-31, 76).
Daniel Michael recalled telling Respondent he would add her to the company insurance policy. He acknowledged Respondent never worked at Horizon, but he believed she qualified for coverage because she was part owner of the company. He was not aware that only employees were covered by the policy. When he told the office accountant, Robert Berman, to make sure Respondent was added to the policy, Berman did not ask any questions or express any concerns. Daniel testified that whenever his kids needed something, they got it. (Tr. 133-35, 138-39, 145).
In or about January 15, 2011, Respondent completed parts of a Blue Cross Blue Shield “Employee Application.” She acknowledged writing “Horizon Realty Group” in the space provided for the employer’s name, and writing her own name in the space for employee. She also provided her email address, social security number, and her husband’s and daughter’s names where requested. In a section designated “Employment Status,” the following options were provided:
__ Active Employee __COBRA Continuation __IL Continuation __ If Retiree, retirement date ____
Respondent did not know who placed an “x” next to “Active Employee,” or who placed other marks on the page indicating “PPO” coverage and “family” health plan. She denied filling in the date of employment and the effective date of the policy, and did not know who completed that portion of the application. (Tr. 35-43, 50-51, 75; Adm. Ex. 1).
Respondent testified she did not want life insurance coverage and therefore did not provide information pertaining to that option, such as job title, salary amount and number of hours worked in a normal week. On a separate “Waiver of Coverage” form, Respondent wrote “Horizon Realty Group” as her employer and her own name as the employee, filled in her address and social security number, and indicated she was declining life insurance coverage. She denied writing in the date of hire on that form, and does not know who filled in that information. On a page entitled “Medical Questionnaire,” Respondent wrote her name and date of birth, and supplied information for her husband and daughter. (Tr. 38, 43-47, 50-52, 74-75; Adm. Ex. 2).
Respondent acknowledged signing the application, waiver, and medical questionnaire in the spaces provided for “Signature of Employee,” and dating them January 15, 2011. By signing the application, she acknowledged the following:
I apply for coverage as indicated above, for which I am or may be eligible under the agreement with Blue Cross and Blue Shield of Illinois, a Division of Health Care Service Corporation . . . and/or Fort Dearborn Life Insurance Company . . . which are herein exclusively called the Company. I have read the above statements and represent that they are true and complete to the best of my knowledge.
(Tr. 42, 49-51, 233; Adm. Ex. 1).
Respondent did not believe she was breaking any rule by signing the forms as an employee. She testified she never thought twice about the situation after her father told her she could be on the company policy. She acknowledged she never worked for Horizon, nor was she employed by her father or any of his businesses for any purpose. She testified her brother was an employee of Horizon, and she assumed he was on the Horizon policy. (Tr. 57-59, 233-34).
Jeffrey Michael testified he did not instruct anyone to give the Employee Application to Respondent, did not give it to her himself, did not fill in any information on Respondent’s initial application or on a subsequent form to enroll an additional child, and did not provide that information to anyone. He first became aware that Respondent was on the Horizon group insurance policy when he received a request for information from the ARDC or from a bankruptcy trustee. He was not aware the company was paying both the employer and employee contribution for Respondent. (Tr. 218-26).
Jeffrey and his family were on the Horizon policy during the 2011 to 2015 time period. He testified he works for the company full time, but denied he is an employee or receives payroll wages; rather, he is paid as the sole owner of an LLC. He confirmed that Respondent was not employed by the company, and no other non-employees were on the policy. (Tr. 219-21, 225).
Robert Berman, a certified public accountant, testified he worked for Horizon Realty in or about 2010 and 2011 as an in-house accountant. His only responsibility with respect to health insurance benefits was to supply blank forms and, at Daniel or Jeffrey Michael’s request, he faxed a blank application to Respondent. He knew at the time that no payroll was being processed for Respondent. He also knew that Jeffrey, who was an owner and worked at the company, was covered by the policy. Berman denied having any discussions with Respondent regarding the completion of the application and did not recall whether the form was completed and signed when she returned it. After receiving the application, he filled in the policy number, effective date of the policy and the date of employment, which information he might have received from Jeffrey, and sent the application in for processing. He denied having any further involvement with Respondent’s health insurance, any claims she filed, or the addition of dependents to the policy. (Tr. 193-99; Adm. Ex. 1).
In the case before us, Respondent acknowledged she completed portions of insurance applications that identified her as an employee of Horizon when, in fact, she never worked for Horizon. Further, while covered by the Horizon policy, she submitted claims for medical services and received payments from Blue Cross. Those facts, while seemingly incriminating, must be viewed in light of other evidence and Respondent’s explanations for her conduct.
Respondent denied that her actions stemmed from any calculated plan to deceive anyone; rather, she explained that in light of her father’s statement that she could be added to the Horizon policy, she failed to give any real thought to her eligibility. We found Respondent to be a very credible witness and her explanation to be reasonable. In our opinion, her deference to her father’s judgment was realistic in light of his position of authority in the company and the fact he would be expected to have knowledge of company benefits. Respondent’s legal expertise, while extensive in the area of commercial real estate, did not encompass the interpretation of insurance benefit plans.
Even if Respondent had given greater thought to the language of the application form, the wording of the acknowledgement paragraph was vague in that it stated she was applying for coverage for which she was eligible or “may become” eligible. The Blue Cross representative was not asked to interpret that language, nor was it referenced in the terminology definitions we reviewed. With respect to an “x” next to “Active Employee,” Respondent did not recall if she made that mark. Since at least one other person entered information on the application form, we draw no conclusions with respect to that mark. We also note there were no other options provided, such as “owner” or “other.”
Aside from the issue of Respondent’s motivations, which we conclude were innocent, we find there was a complete failure of proof as to whether she was, in fact, eligible for coverage. It was incumbent upon the Administrator to provide proof of the policy terms, requirements, benefits and definitions in place at the time of the alleged wrongdoing, but that proof was lacking. The two-page undated excerpt of definitions, which was represented to be part of a “group document,” was of little assistance without the entire document, which may have contained additional definitions or addressed the issue of coverage for company owners. The fact Respondent’s brother identified himself as an owner of the company who was covered by the policy, only adds to the confusion and the possibility that further definitions may exist. The Blue Cross representative did not know if the two-page excerpt was the document referenced in the policy booklet and notably, had no opinion as to whether Respondent qualified for coverage. Additionally, the benefit applications for Horizon that were presented to us were not in effect at the time Respondent first applied for coverage and we saw no evidence that Respondent was given a copy of the actual benefits policy or any other document that defined who was entitled to coverage. As such, she had no basis to make an independent judgment that would contradict her father’s assessment.
We also find it significant that no one involved with the application process raised any objections or concerns regarding Respondent’s coverage under the Horizon policy. We saw no evidence that anything was said to Respondent – by her father, her brother, the company accountant or the insurance broker who transmitted the policy to Blue Cross – that would cause Respondent to pause and consider her actions. Likewise, we saw no indication that Jeffrey Michael’s eligibility for coverage was ever questioned when he, like Respondent, was an owner of the company and not an employee.
We have reviewed cases in which attorneys engaged in dishonest conduct by seeking insurance coverage or other benefits for themselves of family members. In See e.g. those cases the attorneys were clearly aware that eligibility requirements could not be met. In re Lewis, 2016PR00007 (Review Bd. 2018) (exceptions pending before the Supreme Court) (attorney admitted that his eligibility for benefits was dependent on his status as a domestic partner, but continued claiming benefits for eight years after the domestic partnership ended); In re Bless, 2013PR00122, M.R. 28275 (Nov. 21, 2016) (attorney who was collecting disability benefits failed to obtain approval for secondary employment, although he knew such approval was required by workplace rules, in order to continue receiving full benefits); In re Worrell, 07 CH 60, M.R. 24407 (Mar. 21, 2011) (attorney acknowledged concealing information that would prevent her step-father from receiving public aid benefits); In re Volpe, 97 CH 33, M.R. 15040 (Nov. 24, 1998) (in order to obtain health benefits, attorney listed himself and family members as employees of a family business which had ceased to exist years earlier).
The present case is more in line with In re Cooney, 2010PR00123 (Nov. 30, 2011) where an attorney relied on his employer’s assurances that he could be included in a union health benefits plan, and that the arrangement had been approved by a union officer. The attorney signed a union membership application, which had been completed for him, which inaccurately identified him as a “carpenter.” He was not familiar with the law involved and did not research what was necessary to include nontrade employees in a union benefit plan. The attorney was reprimanded for undermining the justice system and bringing the legal profession into disrepute in violation of Supreme Court Rule 770 (which rule is no longer a basis for imposing discipline), but no finding of dishonest conduct was made.
We found Respondent to be a credible witness and accept her explanation that she gave no real thought to the insurance process and instead, simply acceded to her father’s decision. While her failure to give proper consideration to her actions and investigate her eligibility for coverage was not prudent behavior, especially for an attorney, we find no evidence of dishonest intent or purpose on her part.
During closing argument, counsel for the Administrator asserted that Respondent’s conduct constituted “constructive fraud,” which requires neither actual dishonesty nor intent to deceive. Cases have held that constructive fraud occurs where a special relationship gives rise to a legal or equitable duty that, when breached, results in a detrimental effect on public or private interests. See In re Gerard, 132 Ill. 2d 507, 528-29, 548 N.E.2d 1051 (1989); Cessna v. City of Danville, 296 Ill. App. 3d 156, 168-69, 693 N.E.2d 1264 (4th Dist. 1997). We find no such relationship here. We further note that neither a constructive fraud theory, nor the facts necessary to support it, were referenced or charged in the Complaint.1For the foregoing reasons, we conclude the Administrator failed to prove a violation of Rule 8.4(c) by clear and convincing evidence.
2. Rule 8.4(b) – engaging in a criminal act that reflects adversely on Respondent’s honesty, trustworthiness or fitness as a lawyer
The Administrator charged Respondent with violating Rule 8.4(b) by “committing insurance fraud by submitting false claims when she was not entitled to insurance coverage as an employee of HRG (Horizon Realty Group).” The criminal statute cited in the Complaint states that a person commits insurance fraud by:
Knowingly obtain[ing], attempt[ing] to obtain, or caus[ing] to be obtained, by deception, control over the property of an insurance company or self-insured entity by the making of a false claim or by causing a false claim to be made on any policy of insurance issued by an insurance company or by the making of a false claim or by causing a false claim to be made to a self-insured entity, intending to deprive an insurance company or self-insured entity permanently of the use and benefit of that property.
720 ILCS 5/17-10.5(a)(1). A “false claim” is defined as any statement made to an insurer, insurance broker or insurance agent in support of a claim for payment or as part of, or in support of, an application for insurance when the statement 1) contains false or misleading information concerning any fact material to the claim; or 2) conceals the occurrence of any event material to a person’s entitlement to insurance benefits or payment, or the amount of any benefit to which the person is entitled. 720 ILCS 5/17-0.5.
We understand this charge to be based on Respondent’s application for insurance In January 2011 and her submission of claims between February 2011 and January 2016. As a preliminary matter, we note that the statute cited in the Complaint, although admitted by Respondent to be the controlling law at the time, actually took effect in July 2011 and therefore would not govern the application submitted by Respondent in January 2011. While the predecessor statute (720 ILCS 46-1(a) and 46-1(d)(5) (2010)) is nearly identical to the statute cited in the Complaint, a charge as serious as criminal conduct requires exactitude and we will not find a violation of a statute that was not in effect at the time the conduct in question occurred. The statute cited by the Administrator does apply to Respondent’s completion of the 2014 form adding a dependent to the policy, which she signed as an employee of Horizon, as well as to the insurance claims she submitted between July 1, 2011 and January 2016.
We find that a violation of Rule 8.4(b) was not proved by clear and convincing evidence. The criminal statute requires that a person “knowingly” engage in a “deceptive act” to gain control of the property of an insurance company. In our discussion of Rule 8.4(c), we concluded that Respondent’s conduct stemmed from her lack of attention and her assumptions based on statements made by her father, rather than from any knowing behavior or conscious deceptive act meant to deprive the insurance company of its property. Moreover, there was no evidence she had the proper materials in front of her that would establish the criteria for her insurance coverage, or that she knew those criteria. For those same reasons, we find Respondent did not knowingly engage in any deceptive act in violation of the insurance fraud statute.