The Washington D.C. Court of Appeals, for the first time since 1900, has decided not to impose disbarment as a sanction on a lawyer found guilty of intentionally misappropriating client funds because the was, in intent and effect, in the best interest of his ward.
Willie Hewett, a 15-year Washington practitioner who had no prior record of discipline, was appointed to serve as conservator for Ralph Jewell. Jewell, who had been a ward of the court since 1985, lived in a nursing home and was confined to both a wheelchair and a feeding tube.
Jewell died on April 21, 2003 and Hewett was the only person at his funeral.
As a conservator, Hewett completely fulfilled his duties...and took steps, based on basic human kindness, which went beyond his legal responsibility to his ward, according to the Hearing Committee as well as the Board on Professional Responsibility.
Hewett, however, faced a problem when he was informed in 2001 that Jewell would be undergoing a Medicaid eligibility review and if his cash assets exceeded $2500, he would be disqualified for Medicaid.
The lawyer knew that Jewell's only source of income was the $90 check he received per month from the Veterans Administration and his nursing home care was paid for by Medicaid.
He also knew that there was a total of $7820.79 in Jewell's bank account, or $5,329.79 over the maximum allowed for him to be eligible for Medicaid.
Hewett believed and the Hearing Committee found that a disqualification would have been devastating to the interests of the ward.
To address the problem, Hewett began to spend down Jewell's bank account. He withdrew the money from the account and used it for miscellaneous expenses, including buying a blue suit and gloves that Jewell had requested, paying a funeral home for pre-need funeral expenses, and for Grave opening and closing; Marker and Vault Placement at a cemetery.
In total, $4,646.54 was spent but approximately $750 still remained over the Medicaid limit. The Medicaid report was due on May 31, 2001.
The day the Medicaid report was due, Hewett filed with the probate court the annual accounting of Jewell's finances, together with a separate petition seeking a fee of $2006.25 for the legal services he has rendered to Jewell. Unknown to the court, Hewett had already withdrawn the requested funds from Jewell's account the same day he had filed the petition.
Hewett's petition was, however, turned down as the probate court determined that some of Hewett's actions taken on behalf of Jewell weren't legal in nature.
The probate court also determined that Hewett was only entitled to receive 5 percent of the amount disbursed from the estate i.e. about $23.67 for the 16 hours of ordinary services he devoted to Jewell. In other words, what Hewett was seeking was well above the limit set by the court's probate rules.
And though the petition stated that [t]he ward is currently in the process of spending down to maintain Medicaid eligibility, yet Hewett did not mention that the fees requested in the petition were being withdrawn as part of the spend-down.
After the withdrawal, Jewell's account carried a balance of $1,244.09, within the Medicaid limit.
Subsequently, the probate court had scheduled a show-cause hearing for Dec. 10, 2002 because Hewett had not filed the next annual accounting of Jewell's finances, which was due on April 12, 2002.
According to the Hearing Committee, Hewett did not know until December 8 that his fee petition was denied. On Dec. 9, he filed the overdue annual accounting and on Dec. 12, he deposited the $2,006.25 he had withdrawn from Jewell's account.
After the filing of the annual accounting, the probate court vacated its show-cause order but scheduled a status hearing, after which Judge A. Franklin Burgess Jr. referred Hewett to the bar counsel for disciplinary action because he had without court approval, paid himself a fee at a rate inconsistent with the applicable fee.
During the disciplinary process, the Hearing Committee determined that Hewett's act amounted to a misappropriation but thought that the stigma attached to a finding of misappropriation was not warranted in Hewett's case. Because there was no evidence of fraud, self-dealing, misrepresentation, conflict of interest, or any pattern of inappropriate conduct, and, to the contrary, Hewett's action was, in intent and effect, in the best interest of his ward, the Committee recommended thirty-days suspension, which should be stayed during a one-year probationary period, instead of disbarment.
In In re Addams, 579 A.2d 190, 191 (D.C. 1990), except where the misappropriation is the result of simple negligence, virtually in all cases of misappropriation, disbarment will be the appropriate action.
However, the Board felt that Hewett deserved six-month stayed suspension instead of thirty days because though generally over a long period of time, Hewett's representation had been competent and compassionate, his actions in dealing with the upcoming Medicaid eligibility fell short of fully competent.
In particular, the Board faulted Hewett for procrastinating in dealing with the need to spend down Jewell's assets and failing to inform the court and consult with other experienced practitioners. It also determined that his failure to disclose in his fee petition that he had withdrawn the requested fees from the ward's account and to examine the court's files more promptly, slowed his return of the funds, and therefore, constituted conduct seriously interfering with the administration of justice.
The Board felt that Hewett did not intentionally or reckless misappropriate his ward's funds but was rather negligent in carrying out his duties.
The case was argued on Feb. 6, 2009 and on Jan. 13, 2010, the court said in its 21-page opinion that though Hewett had misappropriated client funds, the facts of this case - in particular that the motivation for the misappropriation was protection of the client's interest - present the type of 'extraordinary circumstances' in which disbarment is not the appropriate sanction.
The court disagreed with the Board's finding that Hewett's act was one of negligence. It determined that Hewett's act was not one of negligence but it was, in fact, intentional because he knew that he was required to obtain prior court approval but withdrew the funds before obtaining the court's approval.
However, the court said that while defining what will constitute extraordinary circumstances, it is appropriate to consider the surrounding circumstances regarding the misconduct and to evaluate whether the mitigating factors are highly significant and [whether] they substantially outweigh any aggravating factors such that the presumption of disbarment is rebutted.
The court said that the circumstances in the present case allow it to determine that Hewett had engaged in intentional misappropriation for the purpose of benefiting the client, and in fact did benefit the client.
And, though it is true that Hewett had intentionally misappropriated the ward's funds, the court sought to determine whether any of the mitigating factors viz. (1) an admission of wrongdoing, (2) full cooperation with the disciplinary authorities, (3) prompt return of the disputed funds, and, most importantly, (4) an unblemished record of personal conduct applied in his case.
Hewett, the court said, satisfies all these mitigating factors, as he had fully cooperated with the disciplinary authorities, had admitted his wrongdoing, had returned all disputed funds prior to the initiation of the instant disciplinary action and within days of learning that the court had disapproved his petition and, most importantly, had an unblemished record of personal conduct.
The court also considered assistant bar counsel Ross Dicker's argument that there were aggravating circumstances that should prohibit the court from determining that Hewett's actions met the extraordinary circumstance exception set out by Addams - among those was the fact that Hewett paid himself the full $2006.25 he said he was owed as opposed to simply drawing the $750 that would have brought Jewell's account under the Medicaid limit,
It however felt that Hewett's act of withdrawal of $2,000 rather than the $750 that was strictly necessary to bring Jewell's account below the Medicaid minimum is an aggravating factor since the action for which Hewett is being charged was itself motivated solely by a desire to protect his ward's interest.
Hewett's case is not only compelling but also one of the rare cases that presents the most stringent of extenuating circumstances, that overcomes the presumption that disbarment is the appropriate sanction for intentional misappropriation, the court said.
In this case, we determine, for the first time, that the presumptive rule of disbarment established in In re Addams, 579 A.2d 190, 191 (D.C. 1990) (en banc), should not be imposed as a sanction for intentional misappropriation, the court opined.
The court decided to adopt the Board's recommended sanction and ordered that Hewett be suspended from the practice of law in the District of Columbia for six months, the usual sanction for negligent handling of entrusted funds.
The suspension, however, is to be stayed pending a six-month probationary period during which respondent must complete six hours of continuing legal education credits on probate procedures, the court said.
Hewett has also been ordered to reimburse the estate of his ward for the amount of interest accrued while he was in possession of the misappropriated funds, with interest to be calculated at the legal rate of six percent per annum.