Mental Health MASQUERADE

Litigation over care fo rArizona's mentally ill ended four years ago. Sowhy have private attorneys racked up more than $1 million in fees since then?

State Senator Mark Spitzer strode to the podium at a Prescott hotel and got to the point. The subject of the State Bar seminar in late September was mental health care, a hot topic in Arizona.

The Phoenix Republican's expertise lies in the areas of business and taxes, not social issues. But he'd agreed to discuss Arnold v. Sarn, a still-pending lawsuit filed in 1981 on behalf of Arizona's seriously mentally ill.

It's not that he doesn't want the disabled to get the help they need, Spitzer said. But he doesn't appreciate how private lawyers in the class-action suit have lapped up taxpayer dollars along the way.

Spitzer's comments raised a few eyebrows among the 75 or so in attendance, among them Phoenix attorney Chick Arnold. Arnold is to the rights of Arizona's mentally ill what Martin Luther King Jr. was to civil rights for black Americans.

He is the "Arnold" of Arnold v. Sarn, the lawsuit Spitzer alluded to. In 1981, Arnold--then the Maricopa County public fiduciary--brought the suit against the county and the state on behalf of indigent seriously mentally ill. The named defendant, James Sarn, was director of the Arizona Department of Health Services.

Arnold listened with some amazement as Spitzer carried on about excessive legal fees.

Spitzer, you see, is an attorney himself, an associate of Fennemore Craig, a firm that has made big money from Arnold v. Sarn.

"My position on this is probably hostile to my firm," Spitzer conceded last week, "but the money in these types of cases does tend to go to lawyers instead of those who need help. But I can't say how much any one firm has made in this case."

We can.
Since July 1992, Fennemore Craig has billed the state more than $500,000 for its services in the lawsuit.

All told, private lawyers involved in Arnold v. Sarn have collected more than $1.3 million in taxpayer-

paid fees since July 1992.
What's most troubling about this is that litigation in the case--the scratching-and-clawing phase--was completed in 1991.

The litigants at that time signed a document known as "The Blueprint," which specified what government agencies must do to end the monumental case.

Just last week, the lawyers signed a new agreement--a kind of amended Blueprint. The agreement, announced at a press conference by Governor J. Fife Symington III, is supposed to resolve remaining issues within a few years.

"I know it's hard for anyone outside the system to understand why the lawyers are billing so much when the trial and litigation are long over," Chick Arnold says. "It's actually hard for some people inside the system to understand it."

Attorneys in these types of cases rarely quarrel over fees. But this case is different.

This time, a private attorney representing Maricopa County alleged in court papers that the private lawyers representing Arizona's seriously mentally ill have been ripping off the public. He asked a judge to cut bills submitted by the plaintiffs' private lawyers--which the state and county must pay--by 40 percent.

In the legal profession, such a request is tantamount to a declaration of war.

The brawl illuminates the ease with which government comes to depend on hired guns from private law firms. Those firms, by nature, stick to publicly funded cases such as Arnold v. Sarn like chewing gum to hot pavement.

By law, the Maricopa County attorney and the Arizona attorney general represent the agencies under their jurisdiction, in this case, the county Board of Supervisors, the state Department of Health Services and the Arizona State Hospital.

That private firms have been performing the tasks of the county attorney and the attorney general is another controversial aspect of the "shadow case," as one lawyer calls the fee dispute.

Even the plaintiffs' original Phoenix-based attorneys--the Center for Law in the Public Interest (also known as the Arizona Center for Disability Law) farmed out the case in August 1994.

A Boston firm that took over the bulk of the plaintiffs' work has been paid more than $200,000 since then.

Has the shadow case had any impact on the seriously mentally ill, the supposed beneficiaries of the protracted legal exercise? Only indirectly, says Gary Birnbaum, the attorney representing the county who started the fee fight.

Birnbaum, an associate of Mariscal, Weeks, McIntyre and Friedlander, wrote in a September court pleading: "It is not unfair to question whether substantial sums which could otherwise have been devoted to the care of the indigent seriously mentally ill are being depleted through funding of a well-intentioned administrative process run amok."

It's disingenuous for Birnbaum to complain too much. His firm has billed Maricopa County more than $170,000 in Arnold v. Sarn since October 1993.

A story focusing on the vicious dispute is one that the participants would prefer not be told.

Andrew Federhar of Fennemore Craig could not be reached for comment. His firm's client, the Arizona Department of Health Services and its director Jack Dillenberg, wouldn't utter a peep.

Birnbaum, who provided detailed background about the case, deferred on-the-record remarks to his firm's client, County Attorney Rick Romley. Romley's spokesman, Bill FitzGerald, said no one wished to comment.

Anne Ronan of the Arizona Center for Disability Law expressed displeasure that a story about the fees was in the works.

"One of the most frustrating things since I've been in this case is the interest people have in getting off the issue," said Ronan, a staff attorney for the center--which last year ceded major responsibilities to the Boston firm. "Why don't we talk about the development of a true community-based mental health system? Why don't we talk about the positive things that have happened?"

In hindsight, the Arnold v. Sarn lawsuit was inevitable.
When it was filed in 1981, Arizona ranked at or near the bottom in per capita spending on services for the seriously mentally ill. National experts often cited the state as an excellent example of how not to treat the mentally ill.

Also in 1981, the Arizona Legislature approved a social policy change, saying that poor citizens suffering from serious mental illnesses have the right to receive comprehensive services.

Lawyers for the AG's Office, Maricopa County Attorney's Office and the Arizona Center for Law in the Public Interest squared off at trial in 1985 before Superior Court Judge Bernard Dougherty.

That June, Dougherty ruled for the plaintiffs. In so doing, he awarded the Center for Law $226,000 for its five years of work on the case. (From 1986 through 1993, records show the Center for Law's billings for work on Arnold v. Sarn averaged less than $100,000 per year.)

A lengthy appeal followed, but in March 1989, the Arizona Supreme Court unanimously upheld Dougherty.

"We write today from the bottom rung of the ladder," the high court pronounced. "Arizona has imprisoned its mentally ill in the shadows of public apathy. ... The Legislature must fund whatever programs it has required. ..."

Arnold v. Sarn marked the first U.S. case in which a court had ordered all-encompassing relief for a disabled class of people.

Slowly and grudgingly, the Legislature began to fund programs for the seriously mentally ill. The state also tapped federal funding streams for the first time, and now ranks 12th nationally in per capita spending on mental health programs.

But the favorable court rulings hardly guaranteed a working system. Much haggling among the lawyers over how to implement bona fide programs remained.

In mid-1991, Dougherty approved The Blueprint--a heavily negotiated document that was by degrees both pragmatic and pie in the sky. One segment of The Blueprint created the Office of the Court Monitor, to oversee the case's progress.

Until 1992, lawyers for the state and county continued to represent their respective agencies in Arnold v. Sarn.

Assistant AG Theresa Dwyer was doing the day-to-day work for the state. Deputy County Attorney Louis Gorman was handling the county's part of the case.

But things changed dramatically that year.
Alethea Caldwell, then the director of the Arizona Department of Health Services, decided she'd didn't like how the AG's Office was handling the case.

According to several sources, Caldwell asked her boss, Fife Symington, if she could retain private counsel. Symington ran for office on a promise of reducing state government spending. But he also has clashed with AG Grant Woods over Woods' handling of civil cases.

Symington gave the go-ahead to hire Andrew Federhar, a Tucson-based attorney with Fennemore Craig who had represented Caldwell in a personal case.

Federhar promptly hired Theresa Dwyer away from the AG's Office, at $157 per hour instead of her government wages.

"My personal view is that Alethea thought the AG's Office wasn't being assertive or aggressive enough in its defense--not Theresa, who knows what she's doing," Chick Arnold says. "Andy [Federhar] charged in without knowing a thing about the issues, the system or about mental health care in general. He had to learn a lot in a hurry."

Federhar also billed in a hurry.
Records supplied by DHS indicate that in fiscal 1992-93, Fennemore Craig submitted bills totaling about $80,000. The next year, the invoices jumped to about $114,000. And in the fiscal year that ended last June 30, Fennemore Craig's billings totaled $325,000.

Maricopa County was the next to retain private counsel. In late 1993, Lou Gorman found himself as a potential witness in a new court fight between the county and the state--over mental health funding, of course.

Even if that potential conflict of interest were to be resolved favorably, the county had something more pressing to consider: Gorman is not a courtroom litigator. In October 1993, the county retained Mariscal Weeks to work Arnold v. Sarn at $125 an hour.

"My strong sense is that the county hired Mariscal Weeks in response to Andy Federhar getting revved up," Arnold says.

In mid-1994, the plaintiffs also faced major changes. Tannis Fox, a Center for Law attorney who had labored on Arnold v. Sarn for years, moved to New Mexico.

The case was at a critical juncture, says Tim Hogan, executive director of the nonprofit Center for Law.

"The leadership in the Legislature and the Governor's Office were pressing for modifications [in Arnold v. Sarn]," Hogan avowed in an August 18 affidavit. "We believed there was a very real threat that most of the unrealized promises of the [Blueprint] would never be fulfilled, and the limited progress which had been achieved for class members could be lost."

His staff was swamped with other pressing matters, Hogan wrote, and he couldn't identify any local attorney capable of picking up the slack.

So Hogan asked Boston attorney Steven Schwartz--one of the nation's most experienced hands in disability class-action cases--to take control.

Specialists like Schwartz--Arnold v. Sarn Monitor Linda Glenn among them--work in several states at once, often for big money. (Glenn was paid $125,000 in Arizona last year.)

Schwartz was familiar with Arnold v. Sarn, having worked on the Blueprint as a consultant. But he came with an expensive price tag--$225 an hour. His presence in the case led this year to the shadow case, the fees war with Maricopa County.

In August 1994, the State of Arizona and Steve Schwartz cut a deal. It worked like this:

Schwartz agreed that the state would have to pay his firm no more than $210,000 in fiscal 1994-95. He also agreed not to file contempt or other enforcement actions against the state for lagging in parts of The Blueprint.

In turn, the State of Arizona promised in effect not to question Schwartz's bills. And it hasn't.

Schwartz had asked Maricopa County's lawyers to sign on to the deal. But Mariscal Weeks didn't go along.

"It would clearly be inappropriate for the county to stipulate to pay fees whether they were reasonable or not," Gary Birnbaum told Judge Dougherty.

Schwartz and the Center for Law's Anne Ronan fought back like wounded animals. They countered that the county should be held liable for paying any plaintiffs' fees billed over the agreed-upon $210,000 "cap."

The debate heated up this spring, when Schwartz submitted his bill for the first three months of 1995. It totaled $106,000.

The amount sent the county's private lawyers--who had billed about $17,000 during that same period--through the roof, and led to a flood of new paperwork.

The battle reached its apogee in August when attorney Bruce Meyerson tossed in his two cents. Actually, county taxpayers paid Meyerson $2,200 to render his opinion on the plaintiffs' legal fees.

The former Arizona Court of Appeals judge was uniquely qualified to comment on the fee dispute.

Meyerson was a founding father of the Arizona Center for Law in the Public Interest. He served as its executive director from 197482; Arnold v. Sarn was filed on his watch.

But Meyerson blistered the Center for Law in a 15-page affidavit:
"The decision to have Massachusetts lawyers play the lead role in a negotiation in Arizona--given the availability of capable Arizona counsel--was not professionally appropriate," Meyerson wrote.

"No private business or law firm would associate as counsel out-of-state lawyers and give them a blank check to provide representation. ..."

The county's lawyers also griped about travel time billed by Schwartz and a colleague from his firm. Court records show that, in the first six months of 1995, the Massachusetts duo billed 124 hours of travel time to and from Arizona, at a cost of about $23,000. That didn't include airfare, lodging and other travel-related costs, which taxpayers have also reimbursed.

Mariscal Weeks dissected the billings for one day--March 2, 1995. On that day, the plaintiffs' three attorneys had billed 29 hours, or $5,510 in fees. Of that time, they had conferred for five hours, then spent the rest of the day--24 hours total--in negotiations with the state and county.

In protesting the billings, Gary Birnbaum laid it on thick: "Although it appears to be true, as plaintiffs' counsel boasts, that Arizona is but one whistle stop in their nationwide tour, this court should not foster the continuation of this cottage industry."

Court Monitor Linda Glenn disagreed with Birnbaum's analysis.
"Steven would leave here with his computer and he'd work on the plane all the way home," says Glenn of her longtime colleague Schwartz. "For the county to accuse him of practically committing theft to me was way off base. I don't think anyone has been trying to rip off the taxpayer, I really don't."

Responding to Birnbaum, Schwartz and Ronan cited numerous sessions at which county and state lawyers had brought their own squadrons. They contended:

"For the county to now complain of the burgeoning expense of this litigation, which includes the cost of voluntarily retained private counsel as a supplement to its own municipal lawyers, is just slightly insincere."

Judge Dougherty has overseen Arnold v. Sarn, now 47 volumes thick, for more than a decade. The fee war didn't charm the veteran jurist, who vented his frustration in a September 18 ruling.

"The [county's] expression of alarm at the high cost of litigation comes at a late date," Dougherty wrote. "Vital and necessary services for the class [mentally ill] should have been implemented early on. Outside counsel for all parties would not have been necessary.

"The Court notes no outside counsel tried this case for any defendant. The trial was litigated by the staff of the County Attorney and the Attorney General. For any defendant in this case to attempt to carry the flag of fiscal responsibility at this stage is hollow, indeed. ... The state and the county have themselves created the high cost of this litigation.

"... The decision of plaintiffs to associate Massachusetts counsel was prudent. Mr. Schwartz's presence and expertise has taken a floundering situation as it existed ... and has achieved enormous success in pointing everyone toward closure."

By closure, Dougherty meant the end of Arnold v. Sarn.
"Bernie is a very conscientious guy," says another Superior Court judge of Dougherty. "But, as far as looking at every penny that goes through his office, I don't think so. He just wants the case to end as nicely and as quickly as possibly. Whatever it takes."

Local media last week trumpeted the supposed impending conclusion ofArnold v. Sarn--"14-Year Mental Health Suit Nears End," one paper announced.

But lawyers for the plaintiffs estimate that it may take another five years. (State officials say three years at the outside.)

Is Arizona's seriously mentally ill population better off now than it was when Chick Arnold filed his lawsuit in 1981?

Certainly, but with an asterisk.
ComCare, the agency responsible for administering mental health programs in Maricopa County, remains mightily flawed at best. By most accounts, the 11,000-plus seriously mental ill people on ComCare's rolls continue to receive inconsistent levels of treatment.

And, Chick Arnold says sadly, the war over the fees has only detracted from the plight of the seriously mentally ill in this state.

"Yes, the attorneys' fees thing does look awful," says Arnold, who collected $44,000 last year as the lawyer for the court monitor. "Law firms fighting other law firms over money in a class-action suit can't possibly look good.

"... Look at the big picture. Lots of clients still aren't being properly served. But there have been sea changes in Arizona, many of them positive. I guess change doesn't come cheap, you know.

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