Insurance Firm Sues Lawyer to Recover $85,000 : Liability: Suit seeks repayment of disability benefits by attorney who said he became unable to work after being charged with murder in an unrelated case.

An attorney who claims he becomes physically ill when he nears a courthouse is being sued by an insurance company trying to recover $85,000 it paid him in disability benefits after he was charged with murder in an unrelated case of alleged insurance fraud.

Gary P. Miller was arrested in October, 1992, at his Encino home for allegedly masterminding a staged wreck four months earlier that killed Jose Luis Lopez Perez, 29, a participant in the crash.

After his arrest, Miller filed a claim for disability benefits with the Equitable Life Assurance Society stating that he suffered from job-related stress, a lack of concentration, mood swings and depression.

“I sleep a lot, procrastinate,” Miller told the insurance company. “I get physically sick when I get near a courthouse.”

Equitable is now seeking to get its $85,000 back. In a suit filed in U.S. District Court, the insurance company argues that paying benefits to Miller would be compensating him for his illegal acts. The suit also alleges that Miller refused to submit to an independent medical examination in September--a condition for receiving benefits.

Perez was killed on the Golden State Freeway in Sun Valley when a car-carrier truck that was allegedly set up to rear-end the car in which Perez was riding overturned and crushed the car’s back seat.

The crash was the starkest example of a chain of similar allegedly staged wrecks involving big rigs, which law enforcement authorities said was a desperate and frightening escalation of the crashes staged on city streets.

Miller, who is free on $500,000 bail, told Equitable in May that his condition began “as a result of psychiatric complications related to my arrest for murder and conspiracy,” according to the insurance company’s suit filed in October.

Miller’s physician, Dr. Jerome Karasic, also submitted a statement to the insurance company saying he had diagnosed Miller as suffering from a “panic disorder” and “major depression” that have left him unable to work, the suit said.

Karasic also said Miller’s condition was being treated in weekly psychotherapy sessions and with daily medication.

The State Bar of California placed Miller on inactive status in May, temporarily barring him from practicing law. Moreover, Miller promised a judge at a pretrial hearing that he would not practice law.

A hearing to set a trial date for Miller’s criminal case has been scheduled for Jan. 14.

Attorney Harland Braun, who represents Miller in the criminal case, said his client has been left mentally disabled because of “all that has happened to his law practice.”

“If a lawyer gets charged with a crime, it’s an enormous pressure on him,” Braun said. “He becomes mentally incapable of functioning as a lawyer. Now does that not qualify as a disability?”

Braun cited a Los Angeles Superior Court case in which Dr. Gershon Hepner sued his insurance company for failing to pay him disability benefits after he pleaded guilty to 25 felony fraud and theft charges. Hepner, who prosecutors said used his medical practice as “a license to steal,” allegedly bilked insurance carriers of up to $8 million.

A Superior Court jury ruled in favor of the Hepner this month, awarding him more than $290,000, said his attorney, Ernst Lipschutz.