Mitchell Warner, P.A. - Medical Law Alert

Health Law Matters

WHEN SHOULD A PHYSICIAN HIRE A PERSONAL ATTORNEY?

By Edward E. Hollowell and Kenneth A. De Ville, Mitchell Warner, P.A.

Overview: The Need For A Personal Attorney

Medical liability insurance policy contracts typically give the insurance carrier the duty and the right to defend suits against the physician policyholder. These contractual provisions mean that the insurer has the right to choose the defense attorney who will defend the physician. This attorney will make key decisions regarding the general legal strategy in the case as well as more specific decisions regarding tactics and which experts will be consulted. In many ways this is an ideal arrangement for both the insured physician and the insurance carrier. The physician receives legal assistance without paying what could be substantial legal and litigation fees. The insurance company wants its financial assets protected and can play the central role in identifying and employing competent and appropriate legal counsel.

Despite these observations, there are times when physician-defendants should consider retaining a personal attorney to help monitor and guide the defense and to further protect the physician's interests. While the insurer manages and controls the defense, the physician's personal attorney can review all documents, monitor the tactics and strategy of the litigation as the case progresses, and provide additional expertise and support. The personal attorney would also be able to provide supplementary explanations for the physician, to act as liaison conveying the physician's concerns to the insurance company's attorney, and negotiating with the carrier if necessary. This Medical Law Alert outlines the situations in which a physician should consider employing his or her own attorney to work in concert with the attorney provided by the insurance carrier.

General Comments:

Attorneys retained for physicians by insurance companies have an ethical duty to act in the best interests of their physician-clients. Insurance carriers invariably seek out highly qualified and experienced defense attorneys. It is important to note, however, that the insurer pays these lawyers and has an interest in pleasing its employer-the insurance carrier. Many have worked for the insurance company before and hope to continue the mutually beneficial relationship. In some instances, the insurance carrier relies on its own in-house counsel; however, in both instances it is in the interest of the assigned attorney to please his or her employer in order to secure future legal work.

Long-term and continued relationships between defense attorneys and insurance carriers are beneficial because they promote the development of consistent strategies to deal with medical liability issues. But the nature of the insurer-attorney relationship raises the possibility of dual loyalties and conflicts of interest. A physician might understandably worry about the allegiance of his or her assigned attorney. For example, in one case, an insurance carrier denied coverage for a liability claim based on confidential information provided it by the attorney assigned to the case by the company.¹ Many or most of the physician's and the insurance company's interests are the same. Both wish to avoid or limit financial liability. But there are situations in which the interests of the insurer and the defendant physician are potentially diverse, and where the employment of a personal attorney should be seriously considered.

When Physicians Should Consider Hiring Their Own Attorneys:

A physician might consider retaining a personal attorney if there are multiple defendants in the case, and two or more of the defendants are represented by the insurance carrier's attorney. On one hand, a single attorney or team representing multiple defendants has the advantage of being able to develop a coherent defense strategy. On the other hand, co-defendants' potential liability and interests are not always the same. For example, if Physician-Defendant A has lower potential liability than Physician-Defendant B does, then Physician-Defendant A may wish to pursue a different strategy. Or, if there is any danger that other defendants represented by the same assigned attorneys may attempt to shift the blame for the incident, the targeted physician should consider retaining a personal attorney to protect the physician's interests.

Different legal theories or defense strategies do not always serve the interests of all defendants equally. A personal attorney will advise a physician on which legal theory or strategy best serves that physician's interests.

The physician should retain a personal attorney if the insurance company provides legal defense under a "reservation of rights" arrangement. In these instances, an insurance carrier may dispute whether the policy even covers the subject of the litigation. Despite these questions, the carrier may assign defense counsel to the physician with the understanding that it is "reserving its rights" to deny coverage, or even discontinue its support of the defense, if it learns or determines that it is not responsible for the coverage. In these situations, the physician's personal attorney can monitor the defense of the underlying case, evaluate the physician's rights under the policy, and prepare, if need be, to defend the physician's rights under the policy.

A physician should consider employing his own attorney when the potential damages of the lawsuit exceed the policy limits of the physician's insurance policy. In these circumstances, a personal attorney would aid in the defense and might encourage the insurer to settle the case within the policy limits to protect the physician. Or, the attorney might ensure that if the insurer chose to litigate the case at trial against the wishes of the defendant physician, the insurer would be responsible for any jury award that may exceed policy limits.

In some instances, however, an insurance carrier and its attorney may wish to settle a weak or meritless suit to avoid the costs of defending the case or the slight possibility that a jury might award damages. Such settlements are not always in the best interest of the insured physician, who must report the settlement of even these so-called "nuisance" cases to relevant hospitals, the state medical board, and the National Practitioner's Data Bank. A personal attorney experienced in medical malpractice defense can help the defendant-physician evaluate the relative benefits and risks of settlement versus those of pursuing litigation to vindication. Finally, in some cases the physician might be potentially liable for damages that the carrier must defend, but may not have the responsibility to pay. Punitive damages, for example, are frequently not covered by insurance contracts. It may be useful for the physician facing such risks to employ a private attorney to monitor and aid in the defense of the case, or to press for settlement when it would spare the physician the risk of paying damages out-of-pocket. Similarly, additional, supplemental counsel might also be useful if the physician faces potential criminal as well as civil charges.

Physicians might also consider retaining a personal attorney in the rare case in which they question the competence of the lawyer assigned to the case by the insurance carrier. It is legitimate to ask questions regarding the lawyer's experience, success rate and plans for the case. If the physician is uneasy with the responses, he should share these concerns with the insurance carrier. If the physician remains uneasy, he might consider retaining a personal attorney to consult with the lawyer employed by the insurer.

Final Words On Retaining Personal Attorneys:

Physicians should have a clear understanding of billing practices and a written fee agreement before retaining a personal attorney. The attorney should be able to answer all questions regarding billing. If a physician decides to retain his or her own attorney, it is essential that the attorney specialize in health law and medical issues. All lawyers are not created or trained equally, and it will do little good to expend additional money on an attorney who does not fully understand the subtleties of the litigation, or who cannot interact with insurance company counsel on equal terms. Finally, physicians need not secure supplemental legal representation for all the legal questions they face. Insurance companies invariably seek out qualified counsel to defend their physician subscribers, and usually they have the interests of the physician at heart. It is prudent, however, to remain on guard for those occasions in which a physician may require additional guidance and support.

¹ Medical Mutual Liability Insurance Society of Maryland v. Gerald A. Miller, 52 Md. App. 602; 451 A.2d 930 (1982 Md. App.).

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The Medical Law Alert is a publication of the Mitchell Warner Health Law Group. Its purpose is to provide general information about significant legal developments, and should not be construed as legal advice on specific factual scenarios. For more information on the issues discussed in this publication, please contact Edward E. Hollowell, JD, FCLM or Kenneth A. De Ville, JD, PhD, Co-Editors at (800) 662-7403.