PAYMENT OF CLAIMS
Rule 521. Investigation and Payment of Claims.
(a) Cooperation with Disciplinary Board. At the request of the Board, the Disciplinary Board of the Supreme Court of Pennsylvania shall make available to the Board all reports of investigations and records of formal proceedings conducted under these rules with respect to any attorney whose conduct is alleged to amount to Dishonest Conduct causing Reimbursable Loss to a Claimant, and shall otherwise cooperate fully with the Board. The Board shall cooperate fully with the Disciplinary Board of the Supreme Court of Pennsylvania and shall preserve the confidential nature of any information which is required to be kept confidential under these rules.
(b) Hearing Committees. The Board may utilize a hearing committee to conduct any hearings under this subchapter for the purpose of resolving factual issues. Imposition of discipline under Rule 204 (relating to types of discipline) or otherwise shall not be a prerequisite for favorable action by the Board with respect to a claim filed with the Fund, but the Covered Attorney involved shall be given notice of and an opportunity to contest any claim made with respect to his or her alleged Dishonest Conduct. Notice mailed to the Covered Attorney at the address of record with Attorney Registration per Rule of Disciplinary Enforcement 219 (relating to annual registration and assessment) shall satisfy this notice requirement.
(c) Subpoenas.
(1) At any stage of an inquiry being conducted in accordance with Rule 221 (relating to mandatory overdraft notification), the Board or a designated representative on behalf of the Board shall have the right to require production of records by issuance of a subpoena(s). The attorney whose account is the subject of the inquiry under Rule 221 shall have the right, upon written request and payment of appropriate duplicating costs, to receive copies of the records produced.
(2) At any stage of an investigation and/or proceeding under this subchapter, the Board shall have the right to summon witnesses and/or require production of records by issuance of subpoenas. Should the Board determine to conduct a hearing, the Claimant and/or the Covered Attorney may request the issuance of a subpoena to summon a witness to testify at such hearing. The costs associated with the issuance and service of the subpoena and the witness’ appearance shall be borne by the requesting party.
(3) Subpoenas authorized by this subparagraph (c) shall be obtained by filing with any Prothonotary of the Supreme Court of Pennsylvania (‘‘Court Prothonotary’’) a statement calling for the issuance of the subpoena. On the same day that the statement is filed with the Court Prothonotary, the party seeking the subpoena shall send by certified mail a copy of the statement to either the Executive Director and the Claimant or the Covered Attorney as the case may be. Upon the filing of the statement, the Court Prothonotary shall forthwith issue the subpoena and it shall be served by certified mail, return receipt or by personal service. A subpoena issued under this subparagraph (c) shall not be returnable until at least 10 days after the date of its issuance.
(4) A subpoena issued under this rule shall clearly indicate on its face that the subpoena is issued in connection with a confidential investigation under these rules and, that it is regarded as contempt of the Supreme Court or grounds for discipline under the Rules of Disciplinary Enforcement for a person subpoenaed to in any way breach the confidentiality of the investigation. It shall not be regarded as a breach of confidentiality for a person subpoenaed to consult with an attorney. The subpoena procedures of this rule shall be subject to the protective requirements of confidentiality provided in Rule 504.
(5) Any challenge to the validity of a subpoena issued under this rule shall be heard by a hearing committee or the full Board. A determination by such committee or the Board may be appealed to the Supreme Court under subparagraph (8)(iii) within ten days after service of the determination on the party bringing the appeal.
(6) Witnesses before a hearing committee or the Board shall be examined under oath or affirmation.
(7) With the approval of a hearing committee or the Board, testimony may be taken by deposition or by commission if the witness is not subject to service of subpoena or is unable to attend or testify at the proceeding because of age, illness or other compelling reason. A complete record of the testimony so taken shall be made and preserved.
(8) Enforcement of subpoenas; appeal of challenges to subpoenas:
(i) The Board, a Claimant, or a Covered Attorney may petition the Supreme Court to enforce a subpoena.
(ii) Upon receipt of a petition for enforcement of a subpoena, the Court shall issue a rule to show cause upon the person to whom the subpoena was directed, returnable within ten days, why the person should not be held in contempt. If the period of response has passed without a response having been filed, or after consideration of any response, the Court shall issue an appropriate order.
(iii) A petition for review of a determination made under subparagraph (5) must set forth in detail the grounds for challenging the determination. Upon timely receipt of a petition for review, the Court shall issue a rule to show cause upon the party to the proceeding who is not challenging the determination, returnable within ten days, why the determination should not be reversed. If the period for response has passed without a response having been filed, or after consideration of any response, the Court shall issue an appropriate order. No challenge to the validity of a subpoena will be considered by the Court unless previously raised as provided in subparagraph (5).
(9) Any rule of the Supreme Court or any statute providing for discovery shall not be applicable in a proceeding under these rules, which proceeding shall be governed by these rules alone.
(d) Factors to be considered. In exercising its discretion under Rule 511 (relating to reimbursement of certain losses authorized) the Board may consider, among other things:
(1) The amount available and likely to become available to the Fund for payment to Claimants.
(2) The size and number of claims which are likely to be presented in the foreseeable future.
(3) The total amount of losses caused by Dishonest Conduct by any one Covered Attorney or associated group of Covered Attorneys.
(4) The degree of hardship the Claimant has suffered by the loss.
(e) The Claimant or Covered Attorney may request a reconsideration of the denial or approval of an award. Such request for a reconsideration shall be made in writing and shall be received by the Fund within 30 days of the date of the notification of the Board’s denial or approval of an award. If the Claimant or Covered Attorney fails to make such a request, or the request is denied, the decision of the Board is final and there is no further right of appeal.
(f) Conditions. In addition to such other conditions and requirements as it may impose, the Board shall:
(1) require each Claimant, as a condition of payment, to execute such instruments, to take such action, and to enter into any agreements, including assignments of claims and subrogation agreements, as may be feasible in order to maximize the possibility that the Fund will be appropriately reimbursed for payments made from it. Amounts recovered pursuant to any such arrangements shall be paid to the Fund;
(2) require each Claimant, as a condition of payment, to file a formal complaint with the Disciplinary Board of the Supreme Court of Pennsylvania against the Covered Attorney and to cooperate in the fullest with the Disciplinary Board or other authorities in connection with other investigations of the alleged Dishonest Conduct; and
(3) require a Claimant who has commenced an action to recover unreimbursed losses against the Covered Attorney, or another entity or third party who may be liable for the Claimant’s loss, to notify the Board of such action.
Source The provisions of this Rule 521 amended January 13, 1993, effective January 30, 1993, 23 Pa.B. 538; amended June 29, 2007, effective September 4, 2007, 37 Pa.B. 3218; amended July 29, 2010, effective in thirty days, 40 Pa.B. 4633; amended December 9, 2019, effective in 30 days, 49 Pa.B. 7571; amended July 19, 2023, effective September 1, 2023, 53 Pa.B. 4385. Immediately preceding text appears at serial pages (400028) and (406143) to (406144).
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