The Mass Tort Fraud Problem: Kate Hoffmann on Lead Quality and Case Validation with Ray Lakhani & Adam Warren

Is the mass tort space being overrun by bad leads, fake claims, and fraudulent marketers? In this hard-hitting episode of Open & Raw, Ray Lakhani (Raw Law Media) and Adam Warren sit down with Kate Hoffmann, Founder and CEO of Smart Reviews. For 12 years, Kate has been in the trenches of mass tort case workup, and she pulls no punches when discussing the current state of the industry.

Kate breaks down how the influx of digital marketing has led to a massive problem with claim validity, leaving law firms holding the bag on worthless cases. Ray Lakhani ties this back to the Raw Law approach: if you are spending top dollar on OTT and social media ads, your intake and vetting processes must be bulletproof, or you are just setting money on fire. 

They discuss the necessity of "secondary QC", how Smart Reviews helps firms validate leads before they waste resources, and why transparency between marketers and law firms is the only way the mass tort industry survives.

Transcript

SPEAKER_00 0:02

Welcome to Open and Raw, hosted by Rayla Carney and Adam Warren. Today we welcome Kate Hoffman from Smart Reviews. An innovative founder and CEO. Her services in case workup are changing the game and holding the case originators to the fire. Her company is qualifying claimants in short order and making sure everything is legit. Let's dig into this and hear what this boss has to say.

SPEAKER_02 0:32

So here we are, another episode of Open and Raw with our guest.

SPEAKER_03 0:38

Kate Hoffman with Smart Reviews.

SPEAKER_01 0:41

Smart Reviews.

SPEAKER_02 0:42

And what do you do with Smart Reviews, Kate?

SPEAKER_03 0:44

So we uh our company's been around for about 12 years. Uh we do all things mass tort case workup. And then we also uh provide a service we call secondary QC, where we are helping uh marketers and firms uh validate leads uh when they're coming in and push the fraud out of the space.

SPEAKER_02 1:04

And Kate, to be clear, this is your company.

SPEAKER_03 1:06

Yes.

SPEAKER_02 1:06

Yes, that's where I was going. Yep. You are the CEO?

SPEAKER_03 1:09

I am, founder and CEO.

SPEAKER_02 1:11

Founder and CEO. And how long, how old is this company?

SPEAKER_03 1:13

12 years. Been around for 12 years.

SPEAKER_02 1:16

Years. Wow. Um what have you seen between the first day you opened your doors to now? How is the business changing? And what do you think your company has done to impact many of those changes?

SPEAKER_03 1:29

So I think the biggest thing that uh a lot of people in the MassTort space has seen in the last decade is that, you know, when we had the TV radio ads, uh most claimants, if you could get them on the phone, were legitimate. Uh, and now that we've watched things move into, you know, all this internet marketing, it's you know, it's great for the reach, right? You have a broad reach of people. So we like it in the fact that we want to make sure that we can get to every valid claimant, but it also opens the door, obviously, to people that are fraudulent. Um, and so that's where you know, we created this product uh where we are trying to make sure that as soon as possible, once a uh claimant signs up for a case, that we make sure that they aren't fraudulent and validate that they are legitimate in their claims and give feedback to the marketers too.

SPEAKER_01 2:23

So I'm a super curious guy.

SPEAKER_03 2:26

Love it.

SPEAKER_01 2:26

Um, could you explain to us? Because I I'm not fully, I don't understand fully yet, how Smart Review vets everything. Can you explain that process of like what you created?

SPEAKER_03 2:36

Yeah, absolutely. So uh when a lead is signed uh at an intake center, our company calls, they've signed a retainer, they've signed a HIPAA, right? So we're in a different position than a marketer or an intake center is in because with those tools, there's so much more that you can do. So we uh do a background check on the claimant, um, look for any kind of uh legal history of concern, right? Um, look to see if they were legit, be you know, being honest about their demographics. And uh we also run them through our internal database we've now created with hundreds of thousands of these leads that have come through us to make sure that they don't have a rideshare claim and a lift claim and yeah, a VGA claim and a meningioma, and they're just the most unfortunate person and have 17, you know, lawsuits they've tried to get into. Um, so we can find fraud that way. Then we call the client within a day of them signing the intake, we do a welcome call from the law firm, which is really important for the valid claimants, um, the retention of those clients and making sure that they know they're important, the firm cares. So we do the welcome call from the firm. Um, and then we just ask some additional questions to vet out if they're being honest. Uh, and then we work together with the claimant to get proof of their claim. So if it's a medical case, we can use their patient portal to pull a record or call their treating provider. Uh, if it's like a facility case, uh we will uh work with them to get proof that they were, you know, within that facility when they said they were.

SPEAKER_02 4:10

So you interface with a lot of uh case originators.

SPEAKER_03 4:15

Yes.

SPEAKER_02 4:16

Tell me how you are received by the case originators.

SPEAKER_03 4:20

Well, that's a good question. I think the way that I'm received says a lot about what they're doing, honestly. Um I think though there's there was a lot of hesitancy when we moved into this space because we had always worked behind the law firms and we were giving the data to the law firm, but that only does so much, right? Really, all it was doing was providing, you know, the law firm the information if you know the leads weren't working up, right, that they could go back to the marketers, but the marketers weren't really getting that feedback. You know, you've got a firm maybe saying like 20 of these were bad, we need 20 more, right? Um, and so when we moved into the space, I knew it was important, you know, if if a marketer's running four ads for the same campaign and in real time within days, someone can say, hey, we've received five bad leads from you, and you can look and they're all five coming from one of those ads that's been compromised one way or another, right? You can shut that one down. Got it. And so when we first came in, people were uh the lead generators were very hesitant, understandably, right? It's like, I mean, no one likes to be policed, and who am I, right? Coming in here and telling them, you know. And so we did have some. Uh like your wonderful company. Uh, we've had some great uh marketers that were receptive from jump, that they understood the value of the feedback and utilizing it to do better. Um it it's the only way to improve, right? Is to know what's happening in real time. And we I will say this. So when we started this last August, there are 32 marketers that we have not seen a lead from in the last 90 days that were there a year, a year ago, last August. Wow. And the ones that we have not seen leads from are the ones that were doing, you know, 90% fallout rates. And so I think, you know, it's so important that if we get when it's transparent like that and everyone can see it, right? And if the firm has a budget they're giving out and they can see, okay, these are the ones doing the best, these are the ones doing the worst. If we get the budget into the right people's hands, you know, the fraud kind of takes itself out.

SPEAKER_01 6:32

Do you feel like um the industry has a lot of people that try to come in and take advantage of it?

SPEAKER_03 6:39

Oh yeah. I mean, it's like anything.

SPEAKER_01 6:41

I think that is in this industry specifically.

SPEAKER_03 6:44

Because there's too much money coming into the space too quickly. It's just money. I mean, that's money drives fraud, right? And so, and I've said it, we you know, we saw this influx. Medicaid and Medicare really cracked down on fraud. Um, and there's way more subjective towards now, right? Um, or things where the burden of proof is very low, right? Like in a ride share, Killian, the burden of proof is a receipt in a ride share. We've all had a ride share, right? And so um just mass money coming into the space and then just unrealistic expectations, right? So you have right. You have someone saying, hey, you've got a pond with a hundred fish in it, and then you've got some firm saying, I'll give you a million dollars to go get me 200 fish out of that pond, right? And you know, we we would see, you know, prior to being in the space, we would see marketers saying, like, hey, you know, these are coming in pretty fast. We want to make sure they're not boots and tires, they're actually fish, right? That we're getting out of this pond. And it just it was kind of like full speed ahead, because the from the firm and investor side, it's first one to the hundred fish, right? And so what they don't realize is there's a hundred fishermen fishing for the hundred fish. If you got 200 fish out of that pond, you got a problem. Yes, yeah, but they just say keep bringing them, keep bringing them.

SPEAKER_02 8:05

As a as a uh company starting 12 years ago, um, and I think we've now been working together two years, two years. Um, how did you develop this brand, but more importantly, the credibility and trust around that brand for what it is that you're doing that then had law firms believing in you?

SPEAKER_03 8:31

I love that question. Uh so we have worked behind firms primarily for the last decade since we started the company. And so we did have a lot of good partnerships and relationships with a lot of attorneys where we were just kind of working like, you know, white labeled under them or whatever, doing, you know, fact sheet, short forms, medical record collection, case workup, um, also doing some like post-settlement, like claim validation valuation. So we did have a lot of relationships there. The thing when we started doing this secondary QC was when I first started, we made it extremely inexpensive because I knew how important it was. And if people would just try it, they would realize the value, right, of getting that feedback. Because, you know, everybody, we all get caught up in like the numbers and the money and you know, all the things that are going on and the fraud. But I think it's fair to say that we all got into this space for the same reason that we it's purposeful, right? We're getting to help injured people. It's, you know, an individual human in mass tort, right, against a large corporation. And if we don't clean up the space, then tort reform is going to prevent, right? It's gonna either prevent claimants from, you know, getting to have a voice or it will prevent people from wanting to put money and time into the space, right? Um, just because of all the issues, lawyers can get, you know, sanctioned. Um, they can get a lot of trouble for it. So I, you know, don't have any kind of if I recommend a marketer, I don't get any kind of, you know, kickback for that. I've kept myself very neutral. There's people that I like that are unfortunately not doing well in certain campaigns. There's people that I don't like working with that are doing well, right? And I still recommend them. And, you know, I'm recommending who's doing well, regardless about how I've I've kept it completely neutral and just about the data.

SPEAKER_01 10:30

It's business is work, it's good work, yeah.

SPEAKER_03 10:32

Yeah.

SPEAKER_02 10:34

There's a lot of lawyers who watch this show. I would say the lion's share of viewers that we have are attorneys, law firms. Uh, we do have a lot of law firm providers of services that are not even I'm not even including uh case origination. Even if there are there are some case origination, but what what would you say uh to people who are getting into this large docket collection industry that we have right now, the mass tort space, what would you say to them about making sure that uh who they work with and how they work with them and having a service provider such as yourself, why that's so important?

SPEAKER_03 11:19

Yeah, I would say, first of all, uh we don't want to scare anyone out of this space. It is so important. Mass torts are so important to all individual humans, consumers, you know, patients, like everyone should have that right. So I don't want to scare people out of the space, but I do want to scare people into educating themselves, right? And so knowledge is powerful. Um, if a firm is getting into mass torts and you aren't working with my company, I am so more than happy to give you the information of what are we seeing, where are we seeing the most fraud. You know, there's usually areas right now, Detroit's a big hotbed for fraud. Um, what are fraud claimants looking like? What are additional things they can do to screen what marketers are doing well in torts? Like I'm happy to just give out that information, even if a company if a firm isn't working with us. But I think it's so important to know that no marketer, there is no marketer that is immune. You you cannot help it. If a Reddit group grabs your ad and drops it in the group, there's nothing a marketer can do to prevent that. They actually like the more legitimate ads because they tend to be attached to more legitimate firms who tend to get global settlements faster. And unfortunately, there have been situations where people have gotten through being dishonest, right? And so um, you know, I I think it's just really important if if a marketer is saying that they're completely immune to fraud, you can't trust that, right? If they're uh saying they can get you, it sounds like too many for too cheap, there's a reason, right? And so it's the other thing is I'm always happy to say, hey, you if you're getting these cases under whatever tort it is, but say it's if you're getting them for less than $5,000 and they're giving you more than 20 a week, you're it's a problem, right? And so there's certain ones where we know, like we we can look at all the data and we can say, okay, what are the good ones have in common? What is the cost, right? And so if you're if if you're wanting to lowball it, you have to appreciate that, okay, then you might be getting 60, 70, 80, 90% fallout to get them that fast at that at that cost.

SPEAKER_02 13:29

I hope all you master attorneys are hearing this come from her instead of me, the provider, because you know, you've worked with us, you know. I I don't believe perfection is possible. And I agree with you. If anyone is saying they're immune to fraud, they're lying because there's just some walls that get penetrated, no matter how ethical and you know what, no matter what the compliance standard is that we hold in place, things get through. I don't believe that is in any sort of statement towards the provider if they've done all they can and things still get through. And there are law firms out there who are still very quick to point the finger, and I'm gonna say, no, pointing the finger back at you. The other part of it is, though, is the rate, right? You know, there was a very wise man of say his name, Jonathan Weiss, who once said, stop telling me about these cheap rates per retainer. Uh the cost is the cost. So if there is a compensable case that we know can move forward, that's the cost. Is it if it's probably not $2,500? It could be $25,000 when you consider all the fall off, but a real case is a real case, and that's what it costs. And I think there's a confusion by a lot of attorneys you may be running out there into out there as well, where they think, well, this guy's offering me for $1,500 a case. That's the number one red flag you should be looking for. When you say, when you see ultra cheap, you're gonna get ultra cheap.

SPEAKER_03 14:55

Yes. It's like, you know, if someone says, you know, you're walking into a Louis Vuitton and there's some guy outside that's like, I can get you one for eight bucks. It's like, okay, that's not real. Like, we know it's not real. And what's baffling to me is when I talk to attorneys and I say, it would be like if someone came up to you right now and said, Hey, I get you a hundred miso cases this week, 5,000 apiece. They would 100% know that's crazy.

SPEAKER_02 15:19

All fraud.

SPEAKER_03 15:20

But why is it that they know that one when I give them that one example, they're like, oh my gosh, that's not possible. Right. So when I'm telling you that right now you can't get a double previous case for less than 10 grand, and you're only probably gonna get a couple a week, right? Why is that not believable? It it should, it's just data, right? Right. We all know, and probably it's because enough of them tried to get miso cases and couldn't get any, right? And so they know, but it's like the necrotizing pteracylitis cases. I think those truly to get real ones that prove up all the way are are pushing the cost of like a miso case, right? Yeah, it's extremely rare. A lot of parents don't even know their child had it. You know, it the a lot of those premies didn't get formula because they were premies. Like they're very hard cases to prove up. And so when that tort in particular came into the space and we started seeing hundreds a day, I was like, oh, hold on to your head. This is not gonna be good, guys. It's bad. It was so you know, it's like I I think that's the piece where I we have to shift that mindset. Yep. And this is obviously I I work for attorneys, I love attorneys. Uh it's it's a weird thing that we watch them like rinse and repeat on it, where it's like, why is it we it's like, guys, we just did this. Like, we'll do a round, they'll do a roundup campaign and they'll be so upset because of all the fallout. And I'll say, okay, here's the three best marketers doing this. And they're like, okay, well, they all wanted around $7,000. We're not paying that. We're gonna go with this guy for $2,500. And then they're all bad. Right. Then they're mad and they go, okay, well, that didn't work out. We're gonna now do depot. And I'm like, great, here are the people that are doing well in depot. And they go, Oh no, they all want like eight thousand dollars. We're gonna go with this guy for $2,500. I'm like, how can we keep doing it for the stuff?

SPEAKER_02 17:10

They would just start with a jar in the first place.

SPEAKER_03 17:12

All these things would it's like a British farce, it's like a Binny Hill episode. Yeah.

SPEAKER_01 17:19

So I'm hoping that I wonder if that ever changes, if human nature ever changes, and we just automatically always are like, it's more comfortable right there.

SPEAKER_02 17:26

Look, I I love I love all the lawyers out there. Um, but there is a lot of I would call fish hooking that I hear that many of the same firms, same lawyers fall for it, as she said, every single time. And there is a cost of real media versus a cost of bullshit media. And if you want the really good media, like you said in the beginning, in the days where it was primarily TV and radio, that stuff isn't cheap then or now. However, the case quality is exponentially higher. Now, there's now better digital moves we can make to help insulate the campaigns, right? We're constantly working on it and you're constantly checking us on it. But that's good. We want to be held in check because I don't want to deal with a pissed-off attorney a year from now where I've got to go find a million dollars to pay them back. I'd rather be doing it in real time. Sure. Yeah, you know, because the media partners will work with you in real time. They will not work with you later. Then it's all on you. But you're creating your kind of your company in the media side, you're forcing a partnership between the agencies and the media to improve the quality together for longer lasting partnerships with the clients.

SPEAKER_03 18:40

Yeah. And the nice thing is that we did a call yesterday with your company saying, hey, we saw this pattern, and immediate's like, okay, we're taking these cases with that pattern, we're going back and we're seeing what is it, that what's going on on our side so that we can, you know, fix this within days of those being signed, right? Okay, well, we're gonna make sure that we figure out what this problem is. And like you said about having good ads, right? You know, a parent who's had a child that's been victimized, like the Robux claims, um, or someone that's had, you know, one of the abuse claims, if you see some ad that's just like a sloppy ad, like you could get a million dollars if your child was abused, it's gross.

SPEAKER_02 19:24

Those are everywhere, by the way.

SPEAKER_03 19:26

And it's and they're everywhere. And who do you think is clicking on that? I'm a parent, you're a parent. Are you a parent?

SPEAKER_01 19:31

Yes.

SPEAKER_03 19:32

Yes, are you a parent? Okay. So your child is victimized. I can't ever appeal to you, right? And if something happened to your child on that, oh my god, it would be devastating. And there's no chance that an ad popping up saying, like, well, if you could make money off of that is going, that's not what's gonna, you're you're never gonna click that ad, right? Who's gonna click that ad? Someone that didn't go through that experience. That's the only person that's gonna click something like that. The the people, and we have looked at the ones where we've gotten the police reports, where we've gotten the documents, and we've looked at what ads they are, and they are the ones where it's just, you know, a mom sitting at the table saying, Hey, my child was a victim of this. And we have to, we have to show these companies that, you know, they're marketing to children and we're not gonna stand for this. And so I to any other parents who've been in a similar situation, like you're please join with me. Like, it's gonna take us doing this together. That's why this lawsuit is there, and making it about protecting other children, those are the ads where we're getting the legitimate parents because a parent doesn't, they don't want to put their child through this again. So they have to know that the value, there is no monetary value after your child has been abused, right? The only value would be protecting other children. So it's so important that we're looking at all of that. And those ones, those ones that is just it's appalling. We just gotta get those people out of the space. Yeah, right.

SPEAKER_02 21:00

Agreed, agreed, cleaning it up. By the way, are you gonna are you gonna open hers with I can get you an $8 Louis Vuitton?

SPEAKER_01 21:08

Yeah, I can get you an $8 Louis Vuitton. I'm gonna get some skywalking sells and bags. Get out of here.

SPEAKER_03 21:16

That's what it feels like. It feels like it's like, you know? And so I I'm hoping, and we we've seen, right? We've seen 30 marketers already our lead generation disappear. Look, I don't want to put anyone out of business ever, but you know, go go to debt, go somewhere else, just get out of this space. I love it. I love calling it out.

SPEAKER_02 21:36

It's like well, uh and a lot of companies we've noticed this being around. They were coming from other lead gen categories like debt, like tax. And they said, Oh, there's all this money in MassDort. Let's go bring our roadshow over there. Not understanding anything about the entire ecosystem from lead collection to signing to prove up, none of it. They knew none of it. And they were just throwing the craziest prices at law law firms who were just like, oh, I see a deal. They really were not considering that if the if it's too good to be true, it is.

SPEAKER_03 22:09

Yeah.

SPEAKER_02 22:10

Right.

SPEAKER_03 22:10

And they were grading an ad off of the clicks, right? And so that means nothing, right? If a thousand fraudulent people click this ad and 50 real ones click this ad, this ad did better, right? And so all they were looking at is, wow, look at how much traffic this ad is driving. And without feedback coming back, you know, coming back to them and saying, uh, you're driving the wrong, wrong type, right? This is not what you want. You do not want people. That's the problem.

SPEAKER_01 22:40

Anyone can drive traffic to anything, you know. It's about finding the right keys.

SPEAKER_02 22:45

Yes. So I don't know if we realize we're sitting here with kind of a rock star. Yeah, yeah. I mean, we realize we don't see you out like with uh uh I don't think you have a booth, right? And you know, you've just would you say your brand has just grown organically? Is it uh primary, primarily word of mouth? Yeah, you know, is it Tyler's tattoos? What is bringing the business uh that you're getting? Are are the law are you mainly in Texas or are you handling firms in other states?

SPEAKER_03 23:18

Yes. So we have firms all across the country. Uh we're getting in about a thousand leads a day to validate. And the big part of it is that the more traffic that runs through us, the more data we have, right? And so we run every piece of demographic, the name, the email, the phone number, the address, we run it through our database to see right if this is someone who's already got two overclaims and two lift claims and went to Astro World and was in the wildfire and right. And so the more data we can get into one space, the easier it's gonna be for us to check it, and the harder it's gonna be for people to keep trying to be serial, fraudulent claimants. Yeah, yeah. Uh, because they get good at it. Some of them are very savvy because they've done so many. And so we can just, you know, catch them on the front side, you know, doing background checks. Um, I think it it's it's really good. And this isn't me saying, like, listen, use any tool you can, truly. It doesn't have to be us. There's other things obviously you can do if firms have the ability to do stuff in house, do it in-house. But I do think there's a lot of value of us having so much SAT in one space because we can also look at it and say, what is the cost of a good lead, right? What is the rate of acquisition of real leads in this tort? Who is doing well in this tort? Who isn't? What types of ads do well? And, you know, we're rarely surprised. Like we were looking at hair relaxer, you know, we had um we had only a nine percent confirmed diagnosis for all the leads that came through us with hair relaxer, tens of thousands of them, right? And nine percent of them, we were able to get an invasion portal, pull a confirmed diagnosis. A lot of it was, you know, confusion about people of some misunderstanding about their own, you know, medical care. That was part of it. But there was also just a lot of true fraud um in there. And we again we found that sort of similar to like the abuse claims that you know, African-American women in these heroxy cases, it it was the same type of ads, right? Your daughter could be using these products, your sister, maybe your mother used them. If you know, you use them and you got this cancer. You need to help in the fight, right? It's important. And they were the ones that weren't about compensation. Also, that demographic, you know, older African-American women, a lot of them were religious. They didn't want to feel like they were profiting off of, you know, having gotten cancer. And so it was the same ads we were seeing.

SPEAKER_02 25:53

We saw some of uh in a different way. We saw some of that on Camp Lejeune where vets felt like they were betraying their government if they sued and were like, well, no, no, no, the money's been set aside for this. I mean, it that is a real thing where people take a principal stance, despite their injuries, that they don't want to be involved in the suit. It's interesting though that they inquire in the first place.

SPEAKER_03 26:16

Are we allowed to even say Camp Lejeune? I have like a visceral reaction to it.

SPEAKER_02 26:20

Oh, well, I mean, it was that was the best of times, it was the worst of times. Um don't know if I ever want to see something like that again. But uh is there any I feel like we've gotten some really great stuff. Is there any close remarks you might have? Um, I think your company serves a real purpose. Um I think it could be one of the most timely and important companies right now where case origination and what law law firms are uh taking on. Is there anything you wanna, as a final education point, you want to close with?

SPEAKER_03 26:57

Yeah, I think uh one thing I want to, you know, I I think most of the plaintiff firms are aware of, but obviously these marketers, these ads that are out are representing the law firms, right? So for the love, look at the ads, right? These firms are they're shocked, right? When I'm like, hey, do you know this ad is running for your firm? Look at the ads that are running for your firm, know who you're working with, make sure it's people that you trust. Uh either do your own vetting uh and know that it's your bar card, right? It's your license. It's going to come back on you. We're watching attorneys get sanctioned. We're seeing these fraudulent rides your receipts, the LA County fraud cases. And this is going to come back on your firm. And also from a post-settlement, we also work post-settlement, we're seeing a lot less sort of free-range global settlements where defense just says, well, here's a pot of money, you dole it out, right? And then the plaintiffs can go back and see, okay, whoever doesn't validate on their side, it's just more money to whoever's left over. We're seeing more defense doing like clawbacks. So basically they say, yes, we'll settle your docket for 50 million, but every case that isn't validated, right? You owe us back 200,000 or whatever it is, right? So you don't just get exactly. They basically say this is the value of a claim. And if you can't prove it, you got to give us that money back. And so it's not, you know, it's moved into a new place where, you know, defense is definitely aware of what's going on as well. So gotta clean it up together.

SPEAKER_00 28:35

Thank you for joining us for this episode of Open and Raw, featuring our guest, Kate Hoffman, CEO of Smart Reviews. Today's episode was brought to you by Raw Law Media and OpenJar Concepts. It's abundantly clear Kate knows her business backwards and forwards and has become a formidable service provider in a challenging and volatile space. Until next time, keep it open-minded and have plenty of raw discussion.