When a physician is sued for malpractice, one of the first action steps to take, after securing the patient’s chart, is to notify your professional liability insurance carrier. Assuming the claim is covered under the policy, the carrier will, in due course, select and retain an insurance defense attorney to represent you and will pay the defense costs. Insurance defense attorneys are ethically responsible to represent you as the client. Yet, they may have conflicting interests or goals, considering that they are selected by the professional liability insurance carrier, which also pays their fees.
From the physician’s perspective, concerns include not only the risk of payment and financial jeopardy to the extent the damages might exceed insurance coverage, but also demonstrating that the level of care was appropriate, justifying the care or treatment provided, proving professional competence, clearing your name, and vindicating your reputation. The insurer is more focused on the dollar amount of damages and amount that might be paid in settlement.
Insurance defense attorneys typically have an ongoing relationship with their insurers, and they work to maintain their confidence and develop future business. The relationship with you happens only once, hopefully. The economic linkage between the attorney and the insurer frequently causes concern and occasionally causes friction.
So, who is the client?
The rules of professional conduct for lawyers make it clear that the physician, as the represented insured, is the lawyer’s client, although some jurisdictions have held that the insurance company is also a client. The practical consideration is that the insurance company gives direction in the legal proceedings and is the payer. Fortunately, in most cases the tripartite relationship doesn’t create an impediment to an effective defense of the physician. The defense attorney assumes a role of facilitating the development of acceptable legal strategies, creating a consensus, reconciling differences of opinion, and preserving relationships in an effort to achieve a successful legal outcome. However, in some cases, conflicts and divergent positions inevitably arise, and the defense attorney’s dual relationship may raise the physician’s apprehension regarding the adequacy of legal representation.
The areas of concern for a physician vary. Here are a few examples:
- Forced Settlement. Some policies provide that the insurer may “make such investigation and settlement of any claim or suit as it deems expedient.” Courts have held in those situations that the insurer may settle the case, even if you believe the claims have no merit and you don’t want to settle. Trying a malpractice case is expensive, and some insurers may pressure you to settle if they expect the costs of litigation to exceed the cost of settlement, even if you believe the claims have no merit. An important consequence is that a settlement payment will require a report to the National Practitioner Data Bank, which will further report the case to state licensure boards and, upon inquiry, to hospitals and others.
- Desired Settlement. In many cases, the physician wants to settle in order to ensure payment within policy limits, minimize personal liability, and eliminate continued personal involvement in the case. The insurer may not be interested in settlement at the particular stage of the case.
- Attorney’s Involvement. The assigned defense attorney may involve other attorneys to assist with representation. For example, less experienced associate attorneys or others may be involved in the representation, and you might not be comfortable with their involvement. Your insurer, on the other hand, may prefer the involvement of junior attorneys as a cost-saving measure. The lack of continuous, high-level professional attention will invariably affect the physician’s level of confidence in legal representation.
- Poor Communication. Poor communication from your malpractice defense attorney can result in uncertainty, lack of understanding of procedural activities, loss of trust, and inadequate information for decision-making.
- Concerns about Legal Strategy. If your attorney doesn’t involve you in strategic matters, but instead relies on direction from your insurer, it can result in a loss of confidence and raise concerns about the legal strategy. For example, your attorney should consult with you about the selection of expert witnesses, prepare you for depositions, return your phone calls, respond to your emails, and obtain your input in responding to inquiries from the plaintiff’s attorney.
- Confidential Information. You disclose confidential information to your defense attorney, but you don’t want the attorney to further disclose it to the insurer because it might affect coverage.
- Multiple Insureds. The insurer, in an effort to control costs, appoints one attorney to represent multiple physician-defendants in the same case. This situation will affect confidentiality of communications with your attorney. Also, although an attorney may represent multiple clients if there is no substantial risk that representation of one will adversely affect the other, you may have differences of opinion regarding that, especially if you believe that the other party may have liability.
- Damages in Excess of Policy Limits. An insurer must undertake to settle the case within policy limits. The settlement efforts of the malpractice defense attorney, and therefore the insurer, may not be satisfactory to you.
- Selection of Counsel. Insurance companies maintain limited panels of attorneys that they use. The attorney is selected and paid by the insurer. You may have a preference for a different attorney, particularly if the relationship becomes impaired.
These are merely examples. Other situations involving the inherent conflicts of interest for the malpractice defense attorney may arise.
One solution is to retain an independent personal attorney to oversee the process or assist on particular aspects of the case. The independent attorney can provide an unbiased second opinion, suggest more aggressive representation, monitor case strategy, weigh in on settlement options, facilitate communication, and keep your malpractice defense attorney fully engaged. The independent attorney can also assist you in your understanding of legal procedures. The role of the independent attorney can be as limited or expansive as the situation warrants.
Physicians will have concerns about retaining another attorney. First, the arrangement might adversely affect the relationship with your assigned malpractice defense attorney. If, however, you have concerns about representation by your malpractice defense attorney, your failure to take action may have a more disastrous result. Besides, your personal independent attorney will be sensitive to your concerns and will act accordingly.
Also, hiring an independent attorney will result in additional expense, and the cost will not be covered by the insurer. In most cases, an independent attorney isn’t needed or warranted. But when a physician has concerns about effective representation by the assigned malpractice defense attorney, retaining an independent attorney is a viable solution, and the cost should be justified by the circumstances.
The key is to make sure that you are comfortable with your legal representation. And in any event, you should insist on full engagement by your attorney, regular communication, personal involvement in legal strategy, adequate explanations to assure that you understand the process, and active participation in any settlement discussions and decisions.