Malpractice Assurance
Why is Oregon’s mandatory attorney malpractice insurer paying off bad claims?
In Oregon, lawyers in private practice are required to maintain malpractice insurance, supposedly to protect consumers. That sounds great until you realize that the mandatory insurance agent is the Oregon State Bar — the badly-politicized agency that also regulates the attorneys it insures, i.e. a huge conflict of interest.
Recently, it has become a public record that the Bar’s insurance company — the PLF — is paying off claims that are not actually covered by its policies.
To put it simply, only a lawyer’s ineptitude and negligence are covered by the PLF, yet the agency is paying off claims that involved lawyers’ criminal activity, and other claims that had nothing to do with the practice of law. Both are absolutely, explicitly, 100% not covered.
To put it in perspective, imagine suing a doctor’s malpractice insurance because they stole your car, or because you opened a donut shop together, and things went bad. You wouldn’t do it, and if you did, the insurer would laugh at you, not hand you money.
That makes it all the more strange that the PLF is risking its entire statutory existence to pay out these uncovered claims.
Jennifer Yruegas v. Rittenberg, et al.
Let’s start with the $75,000 the PLF paid out to the former business partners of Jennifer Yruegas — a failed pot farmer who also happens to be a lawyer.
In 2016, three Chinese nationals collectively invested $580,000 in an upstart that Yruegas was pushing, that smelled pretty ponzi-ish. Predictably, the get-rich-quick business failed. Records and complaints currently flying around the Bar suggest that it didn’t exactly exist to begin with.
Regardless, when the dust settled, the investors were left with nothing — even after the farmland they paid for was sold and the proceeds deposited into Yruegas and her husband’s personal account.
After trying for two years to get all or some of their money back (but not reporting her to the police!) Yruegas’ three patsies finally sued her. Not for fraud, but for legal negligence.
Whatever Yruegas was doing in this matter, it most certainly was not practicing law, and the business contract made no mention of performing legal services.¹
Remarkably, Yruegas was given some PLF-paid defense attorneys, who repeatedly and unironically pointed out that Yruegas’ conduct was not covered by the PLF. In one communication, the PLF attorney suggested that Yruegas’ actions smelled more than a bit crimey, or at least “wrongful, dishonest, fraudulent, or malicious.”
Despite this, the PLF settled the claim in 2020, agreeing to pay $75,000 to the victims, while Yruegas would pay an additional $75,000, mostly in installments. Astonishingly, the agreement that everyone signed stated that Yruegas denied “any attorney/client relationship” between her and the plaintiffs.
The lawyer who apparently brokered the deal? Criminal defense attorney Wayne Mackeson, who slid into the case at the 11th hour and is not an approved PLF roster attorney. Hmm.
Lori Deveny v. M.S.G.
Speaking of Mackeson, he also represented disgraced former attorney Lori Deveny during the Bar’s custodianship proceedings and in the state’s criminal case against her. He did not, however, represent Deveny in a pair of malpractice cases.
One of those was filed by Kali Miller, a child psychologist who was a victim of both Deveny’s negligence and her criminal conduct.
During Deveny’s state sentencing, Miller testified, as an aside, that she was guilted into accepting a seriously lowball malpractice settlement offer by Deveny’s PLF attorney, Brett Mersereau.
Mersereau apparently preyed upon Miller’s known history of helping children. He scolded her that any penny Miller fought for would directly take money away from a minor sex-abuse victim who was also suing Deveny for malpractice. The PLF pockets are only $300,000 deep per attorney — not per claim.
Miller was horrified at the idea of “taking money” away from a victimized child, so she settled for pennies on the dollar. She never financially recovered from that decision.
When she offered that testimony in January, Miller was unaware that the child was the alleged victim in the notorious Terry Bean criminal case — a case in which Deveny was somehow positioned to represent the child and got his mother appointed guardian ad litem,² then improperly settled the criminal case with a civil compromise for $220,000 and secreted the boy so that he could not testify against Bean. For good measure, Deveny stole almost all of the boy’s money, and appears to have forged his signature.
His malpractice attorney filed a complaint that is a recitation of the many crimes and improprieties that Deveny committed in the case, and stated effectively nothing about negligence or ineptitude.
In short, it was not at all a case of malpractice.³
The PLF wrote a letter clearly stating that it was not legal malpractice, and that the boy’s claims against Deveny were not covered “under the terms and conditions” of the PLF plan.
Regardless, the case was abated for a year, in July 2019, while the criminal cases against Deveny proceeded. Even though she now sits in federal prison in Arizona, it remains in abatement, while presumably still being negotiated.
Even more strange, the victim’s attorney declined a quick $50,000 for his client, available through a program that the Bar runs for victims of dishonest attorneys. It’s all very, very odd.
U.S. v. Pamela Hediger
The final improper PLF payout was made in the case of Pamela Hediger — a Corvallis attorney who embezzled money from her business associates, clients and investors, and falsified her law firm’s accounting records. In 2019, she was sentenced to nearly four years in federal prison.
I would have missed this one had I not been combing through paperwork related to non-PLF claims against Hediger filed at the Bar, which were mysteriously removed from the Bar’s records.
In the federal criminal judgment against her, Hediger was ordered to pay restitution to the PLF in the amount of $413,806, reimbursing the insurer for payouts it apparently made related to Hediger’s criminal activities.
There are no other public records to review to determine why the PLF paid this amount, or to whom it was paid. But there is also nothing in the public record of Hediger’s state or federal criminal cases to suggest that she was providing negligent or incompetent legal services while she embezzled money.
Adding to the impropriety is that the PLF wants to be reimbursed for its apparently poor decision to pay out $400k related to Hediger. That’s not really how insurance works, and it seems to be an admission that the PLF settled an uncovered claim.
Years ago, the PLF barely survived a lawsuit to shut down the Bar’s insurance scheme for violating the Sherman Antitrust Act and the commerce clause of the U.S. Constitution.
The dissenting opinion in that case remains a virtual roadmap for eliminating the PLF, which provides coverage that is far more expensive than malpractice insurance available on the open market, and of lower quality.
But we’re all stuck with the broken system until some brave licensee decides to take on the Oregon State Bar’s racket, which enriches and shelters a select few — often the very worst — at the expense of public protection and justice… or at least compensation.
¹ The three businessmen should sue their own attorney for malpractice for filing the suit against Yruegas as a malpractice claim, which provided Yruegas with a free attorney. Maybe the plaintiff’s attorney thought it would be easy money?
² I got the above-linked records of Lori Deveny’s involvement in the Terry Bean case unsealed in 2021.
³ MSG should consider the above advice re suing his own attorney for malpractice.
