Medical Malpractice News

Who Does My Malpractice Lawyer Represent?

Tags: | Comments: 0 | January 3rd, 2011

Does My Attorney Represent Me or My Malpractice Insurance Company?

Great question!  This issue has been debated in some form for as long as I have practiced in this area (over 20 years), and in each state where I have practiced.  It is a fair assumption that this debate began well before I became a member of the Bar, and will continue long after.  Since the issue is not settled, the best this brief article can do is to summarize the issues, and offer some guidance to physicians who have concerns about their relationship with their assigned defense counsel in a medical malpractice claim.  In short, the debate springs from the fact that, in most medical malpractice claims, the malpractice insurance company selects, retains, and pays defense counsel for the physician involved in a medical malpractice claim.  In fact, since most medical malpractice claims are resolved without any indemnity payment, the defense purchased with the premiums for medical malpractice coverage may be the most important component of medical malpractice coverage.

The nature of this “tripartite” relationship (insurance company, physician-insured and retained defense counsel) can vary state to state.  Some states have clear and unambiguous rules that tell lawyers, in no uncertain terms, their exclusive duty of loyalty is to the physician they represent even though they have been retained by an insurance company to do so.  Other jurisdictions take the position that the lawyer owes a primary duty to the physician, but also a secondary duty to the insurance company.

The good news is, for the vast majority of claims, this relationship never becomes an obstacle to an effective defense.

If my experience defending medical malpractice claims is typical, and I don’t know of any reason why it would not be, the fact that a physician does not have control over who defends the claim, or how much defense counsel will be paid for the defense, rarely interferes with the quality or effectiveness of the representation.  Medical malpractice insurance companies are committed to successful outcomes of medical malpractice claims, and are unlikely to risk outcomes by retaining inexperienced or second-rate defense counsel to represent their insured physicians.

In my particular practice, one of my chief goals was to build a consensus between the physician and insurance company on strategy, whether that was to work toward a settlement, or prepare for trial.  This requires a commitment to ongoing communication with both parties to the relationship, and sensitivity to their respective interests.  Either the insurance company or the physician may be motivated to settle early or to proceed to trial; it is often defense counsel’s job to reconcile those apparently diverse positions.  As such, there were very few occasions where the interests of the physician and insurance company were not ultimately aligned, provided this alignment is one of the goals of the retained defense counsel.

Although rare, there are instances where conflicts may arise, and need to be both recognized and managed.

There are several circumstances where potential conflicts arise in the relationship between retained defense counsel, the physician-insured, and the malpractice insurance company.  These scenarios do not suggest any malicious intent on the part of defense counsel or the insurance company, and most often are fluid and evolving circumstances.  The following is a list of the most common, albeit rare, circumstances of potential conflicts:

  1. Defense counsel learns information from the physician that may impair coverage.  Defense counsel here must carefully evaluate his primary duty to the physician-client.  At a minimum, this puts defense counsel in an awkward position since he has now acquired information that his physician client may not want his insurance company client to know.  From defense counsel’s perspective, I would want to create an open and candid relationship with my physician client to provide the best representation possible, even if it meant I did not share certain information with the insurance company that retained me.
  2. A fee dispute leads to the withdrawal of defense counsel.  Since the insurance company pays defense counsel’s fees and the litigation expenses, the failure of the insurance company to pay defense counsel may lead defense counsel to consider withdrawing from the case.  While there is nothing inherently wrong with defense counsel withdrawing from a case where he is not getting paid, defense counsel may withdraw only under circumstances where the interests of his physician client is protected.
  3. For reasons of economy and efficiency, an insurance company may retain one defense counsel to represent multiple defendants.  Defense counsel must be aware of potential conflicts between multiple defendants, and should not sacrifice a defense for one to build a defense for another without clear and unambiguous communication among all the parties, along with a specific waiver of conflicts.  If that is not a viable solution, the only alternative is for the insurance company to retain separate defense counsel for those defendants whose interests may not be completely aligned.
  4. Even where the malpractice policy does not include a consent to settle clause, defense counsel should still communicate the status of settlement negotiations and settlement strategy to the physician client, particularly if the opportunity to settle within the policy limits arises during the claim.  Where the physician does not have the ability to consent to settlement, or perhaps more significantly, withhold consent to settlement, it surely may be in the physician’s best interest to agree to settle a large exposure claim within the coverage limits of the policy rather than risk a jury verdict that exceeds his insurance coverage.

Conclusion

These are recurring examples of potential conflicts, and are by no means an exhaustive list.  Physicians should always remember that they have the right to retain personal counsel (at their own expense, of course) to protect their interests in a medical malpractice claim, and to intervene in the event a conflict arises between defense counsel, the physician, and the insurance company.   The liability exposure in any given claim will, in most cases, determine whether it is worth the expense to retain personal counsel.  The lesson here is that physicians should insist on regular and thorough communication with their assigned defense counsel, and to stay engaged with defense counsel on the development of an overall case strategy.