Suit alleges Morse profited from insurance bribery scheme

Robert Snell
The Detroit News
Attorney Mike Morse participates in handing out backpacks to Pulaski Elementary-Middle School students in this Tuesday, Sept. 6, 2016 file photo. Morse will not face criminal charges for a incident in which a woman accused him of improperly touching her at a Farmington Hills restaurant.

Detroit — Detroit Police officers funneled unofficial accident reports to personal injury lawyer Mike Morse during a scheme that cheated State Farm Automobile Insurance Co. out of at least $1 million, the insurer alleges.

Federal court records describe a scheme involving a stream of police reports flowing to Morse and his Southfield law firm from bribed police officers and a middleman using the alias "Lou."

The allegations, aired in a civil lawsuit filed by State Farm, provide new details about the scheme's inner workings. State Farm leveled the allegations Oct. 17, five days after a lawyer said the FBI and a federal grand jury are investigating a bribery conspiracy involving Morse's firm. 

Feds probe scheme that benefited Morse firm, records show

“Let’s do the police report thing," Morse is accused of writing in an email to rehabilitation center owner Jayson Rosett, 50, of Bloomfield Hills, who used the alias "Lou." "Just get them to me and I will get you more active treating patients. It will work."

An email between lawyer Mike Morse and rehabilitation center owner Jayson Rosett, who is expected to be charged with a crime in federal court next month.

Morse, 51, has done "nothing wrong," his lawyer I.W. Winsten wrote in an email to The News.

"Numerous courts have confirmed State Farm’s long and sad history of engaging in bad conduct to try to stop lawyers like Mike Morse from continuing to successfully represent accident victims against them," Winsten wrote. "This is what State Farm does, and this is what they are trying to do here. It will not work. State Farm has not sued Mike Morse or his law firm because it knows he has done nothing wrong.  There is no evidence that Morse knew his law office was given police reports that were improperly obtained by others. None."

State Farm's court filing describes a race among law firms to obtain unofficial accident reports so attorneys could sign clients and  rehab centers could enroll patients for lucrative treatments.

The link involving unnamed Detroit Police personnel emerged six months after a Detroit police sergeant was suspended amid an FBI investigation into allegations she sold information in traffic crash reports to a third party.

The unnamed third party used the stolen material to contact drivers and passengers, convince them to obtain unnecessary legal and medical services, and file lawsuits, according to two Detroit police memos obtained by The Detroit News.

Detroit Police Chief James Craig declined comment about State Farm's allegations.

Rosett, the rehab center owner, and his father, Robert Rosett, 76, of Bloomfield Hills, are targets of the criminal investigation, according to letters by federal prosecutors that were filed in a lawsuit brought by State Farm against Jayson Rosett and 17 others. 

Jayson Rosett expects to be charged in a criminal information next month, his lawyer wrote in a separate filing. A criminal information indicates a guilty plea is expected and suggests Jayson Rosett is cooperating with investigators.

The Justice Department notified Bloomfield Hills rehab center owner Jayson Rosett that he was a target of a federal criminal investigation in May.

The allegations emerged in the State Farm suit, filed two years ago against defendants including Rosett, doctors and health facilities, including Elite Health Centers Inc., for alleged fraud and inflated costs involving MRI testing at Metro Detroit locations.

State Farm is trying to force one of Morse's employees  to provide information about the alleged conspiracy.

"...defendants, Morse and those working for him ... knew they were not permitted to have or use the non-public reports they used to solicit individuals, but used them anyway so that they would have a competitive advantage over other firms and providers," State Farm lawyer Kathy Josephson wrote in the court filing last week.

The conspiracy started in 2010 and involved Jayson Rosett allegedly bribing Detroit police officers for accident reports before they were publicly available to law enforcement, insurers and lawyers, according to State Farm and court records.

"Initially, Rosett would personally call auto accident victims using the alias 'Lou' and then email the victims’ information" to the Morse employee, according to State Farm's lawyer.

The employee would  "then call the accident victims to solicit them for Morse," Josephson added.

In exchange for soliciting clients for Morse, the employee instructed chiropractors who treated Morse's clients to refer them to Jayson Rosett's physical therapy clinics, according to State Farm.

Morse is a well-known figure due to his firm’s ubiquitous television commercials and roadside billboards throughout Metro Detroit.

The competition among personal injury law firms is intense, said Peter Henning, a Wayne State University law professor and former federal prosecutor.

“They need a regular flow of clients so they’re going to beat the bushes to try and make connections with people,” Henning said. “Even though it sounds like ‘give our firm a call,’ that really isn’t how it works. They need to get their name out in front of people, whether that’s a policeman or EMT, who can tell people in an accident ‘here’s someone you can call.’”

Morse and Rosett agreed to a deal "in which Rosett would start hand-delivering unapproved police reports to Morse’s office," State Farm's lawyer wrote in the court filing. "Rosett then started to hand deliver unapproved police reports to Morse. At some point, (Morse's employee) began receiving these reports for Morse on a daily basis."

Two years later, in mid-2012, Rosett and others started planning to use a limited-liability company, the Accident Information Bureau, to solicit clients for Morse, and patients for rehabilitation centers, according to State Farm.

Without identifying the company, Jayson Rosett's lawyer Ben Gonek wrote in an earlier court filing that money used to bribe police officers was "laundered" through an entity created by the Bloomfield Hills entrepreneur and others.

The civil lawsuit filed by State Farm two years ago alleges Morse "played a critical role in facilitating the success of the (defendants’) fraud scheme and received substantial financial benefits from the fraudulent claims generated by the clinics...," the insurance company's lawyer wrote in an earlier court filing.

The financial benefits included $550,000 to buy property for an addition on Morse's house and $100,000 to an entity that owns Morse’s private jet, according to the civil lawsuit.

State Farm wants U.S. District Judge Avern Cohn to force Morse's employee to comply with a subpoena seeking documents relating to the police reports and payments. The employee is fighting the subpoena.

"Given Morse’s apparent role in the scheme and the significant evidence of a quid pro quo referral arrangement between his firm and defendants’ clinics — designed to enrich themselves rather than benefit any patient/client — the requested documents into these matters are clearly relevant," State Farm's lawyer wrote. 

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Twitter: @robertsnellnews

Staff Writer George Hunter contributed.