Lawsuit: Attorney Mike Morse had secret ties to MRI center

Metro Detroit attorney Mike Morse accepted payments from medical clinics for his private jet and an addition to his house and had secret ties to an MRI center where his law firm referred clients, according to claims made in federal court by State Farm insurance company.

State Farm leveled the allegations last week against Morse, one of Michigan's most visible personal injury lawyers, as part of the insurer's broader lawsuit against more than a dozen area clinics, doctors and businessmen it alleges were involved in no-fault auto insurance patient mills.

Morse's now-former brother-in-law Mark Radom is a central figure in the lawsuit, which was filed nearly two years ago in U.S. District Court in Detroit and is still pending.

In the latest filings, State Farm says that Morse likely had secret financial ties to an MRI center in a Detroit suburb that ran through the brother-in-law. The MRI center also treated some Mike Morse Law Firm clients.

Such claims — if true — could be a potential violation of attorney conduct rules.

Attorneys in Michigan are prohibited by professional conduct rules from allowing any separate business interests to influence how they represent clients, unless those interests are fully disclosed.

"If you are receiving additional compensation from a third party, then that has to be made known to a client," said Peter Henning, a Wayne State University law professor and former prosecutor who spoke with the Free Press in general terms about attorney ethics, not specifically about Morse.

If an attorney does have ties to an MRI center that treats his or her clients, that fact could be seized on by insurance companies and the center's MRIs could be denounced as tainted medical evidence.

"Any kind of taint could work to the client's disadvantage," Henning said. "That's why you want to make sure the client knows."

State Farm's lawyers concede in the court filings that they do not know "the full nature" of the arrangement between Radom, Morse and the MRI center.

Still, citing emails and other documents, State Farm contends that Morse and his then-brother-in-law were either partners in the MRI center, or the brother-in-law acted as a "straw owner" for Morse, or the center had an "illegal kickback" arrangement that funneled money to Morse in exchange for him referring auto accident clients.

An attorney for Morse, I. W. Winsten of Honigman, Miller, Schwartz & Cohn, said Tuesday that the insurance company's allegations are untrue.

“State Farm has an enormous economic interest in trying to stop Mike Morse from representing injured people in getting them the fair compensation they deserve from State Farm," Morse's attorney said. "What State Farm is doing and saying is wrong, and they know it, and our response to the motion will prove that."

State Farm's claims — prompted by Morse's objectionsto a State Farm subpoena — are not the first allegations of misconduct concerning Morse and MRI images for his auto accident clients.

Last summer, an imprisoned Clarkston doctor who once ran a Madison Heights-based MRI center swore in an affidavit that Morse, starting in 2009, pressured him to alter or over-read MRI test results to make them look more abnormal and boost the value of his law firm's cases.

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Dr. Ram Gunabalan, who plead guilty to conspiracy to commit wire fraud, also claimed that Morse demanded he hire Radom for an $80,000-a-year do-nothing job at the Madison Heights MRI center.

"I knew that hiring and paying Radom was effectively paying a kickback to Morse," Gunabalan said.

Morse strongly denied the doctor's allegations. The doctor provided his affidavit implicating Morse and other southeast Michigan attorneys after State Farm agreed to dismiss claims against him in a separate lawsuit.

Morse has also battled groping and sexual harassment allegations in five separate civil lawsuits filed last year before the #MeToo movement by women represented by rival attorney Geoffrey Fieger.

Morse denied the claims. His attorney in that matter, Deborah Gordon, said Tuesday that three of the five lawsuits have been dismissed by courts. In one of the cases still pending, Gordon said she is seeking sanctions for false testimony that was given under oath.

"These are not cases any serious employment or sex discrimination lawyer would have taken," Gordon said. "This appears to have been brought for some other reason.”

Horizon Imaging

The MRI business at the center of State Farm's Morse allegations, Horizon Imaging, was situated in a medical office building at 1695 W. Twelve Mile Road in Berkley and treated patients from late 2010 until about 2015.

Horizon was one of the highest-charging MRI centers in metro Detroit, billing more than $5,000 per image to patients paying with no-fault auto insurance. Hospitals often accept payment of less than $1,000 per image for similar MRIs for patients paying with private health insurance.

In its lawsuit, State Farm says that Horizon provided "fraudulent MRIs" to 84 of the State Farm insureds at issue in its broader claims against the alleged no-fault mills. At least 65 of those individuals were also clients of Morse's firm, the insurance company said.

State Farm claims it has proof that Radom transferred more than $1.6 million from Horizon proceeds to Morse or to benefit Morse.

That included a $555,925 sum Radom paid to buy the property next door to Morse's house in Huntington Woods. That transaction was done in summer 2014 on behalf of the Michael J. Morse Revocable Living Trust. Morse then used the property to build an addition for his home, State Farm says.

Contractor payments

The contractor who built the addition to Morse's house was later paid $88,000 in 2015 by physical therapy clinics belonging to area businessman Jay Rosett.

The clinics also paid $100,000 that year to a limited liability company, JEL Aircraft Leasing, which owns Morse's private jet, according to State Farm, which calls the payments "suspicious."

Rosett's clinics treated more than three dozen patients in the lawsuit who were represented by Morse's firm, according to State Farm.

Rosett's attorney, Ben Gonek, said Tuesday that the $100,000 was in fact payment for renting time on Morse's plane. Gonek said he did not know the reason for the alleged $88,000 contractor payment.

“I have no comment on it. I just think that it is completely irrelevant to the lawsuit," Gonek said.

MRI ownership?

State Farm claims that Morse initially considered a direct ownership interest in the Horizon MRI business. But those plans changed as negotiations between Horizon's business partners unfolded in late 2010.

Radom, who is the brother of Morse's then-wife Harriet Morse, stepped in for Morse and became one of Horizon's owners on paper, the insurance company says.

State Farm redacted the names of the individuals who were listed in Horizon's final ownership agreement, which it says gave Radom a 38% interest in the business.

But its court filings do cite emails that name interested partners in the MRI center as local businessmen Cory Mann and Vincent Celentano and chiropractor Scott Zack.

An early version of the agreement had a reference to “Morse or entity owned by Morse” for financial distributions if Horizon were sold or liquidated. That wording was dropped in later drafts.

During those early negotiations, one of Horizon's partners wrote a September 2010 email to an attorney helping to set up the business. The email had the subject line "MORSE" and said the partner had “talked to Mike” and was “going to partner with him in the Horizon imaging."

Another Horizon partner emailed that same attorney on Oct. 1 with the subject line "Morse Deal." He wrote that he had “no problem with the 70/30 split on profit because as Michael likes to say he’s going be the rain maker.”

State Farm quotes an Oct. 28, 2010, email allegedly written by Morse in which he inquired about the deal's confidentiality because he didn't “want them to be able to mention my name to anyone, anytime about anything short of a court

order or with written permission.”

Horizon's ownership deal was nearly finished by mid-December. A Dec. 12 email to the attorney described how several Horizon partners met that day with Morse and agreed on principles of the deal.

“Remember the contract you wrote assumed Michael is apart (sic) of the corporation somewhere. Now you need to re-write the contract knowing we are partnering with his brother-in law and he has no direct ownership so (Scott Zack) and I need to be fully protected on ALL ANGLES," the email said, according to State Farm.

Loan and free house

State Farm says that in addition to buying Morse's next-door property, Radom issued a $1.1-million check in 2014 from Horizon proceeds that a law firm then used to make a loan to Morse for purported real estate investments.

Separately, Radom that year handed over a house in Huntington Woods to Harriet Morse that he paid $675,000 cash for two years earlier. The transfer occurred shortly after Harriet Morse and Mike Morse divorced, according to the court filings.

"In other words, Radom transferred a property for which he had paid $675,000 to Harriet

Morse for free," State Farm's lawyers said.

After a dispute arose in 2014 between Horizon's partners, Morse stopped referring clients to get MRIs at Horizon. He began steering them to a new MRI center, Superior Diagnostic, that Radom had formed with a business partner, according to State Farm.

Staff for attorneys with the Farmington Hills-based law firm Joelson Rosenberg representing Radom hung up on a reporter seeking comment for this article.

State Farm obtained an undated and unsigned document, titled "Acknowledgment by Company and its Members," that states Morse discussed becoming a member of Horizon but ultimately declined.

"This document appears to have been created solely to conceal that Morse had a majority interest in Horizon ... and his referrals to Horizon were key to its financial success," the insurance company's lawyers wrote.

Note: An earlier version of this story gave an incorrect location for Morse's house in Huntington Woods. This version is correct.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl.