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In the defense of medical malpractice claims, doctors may question who represents their best interests. When an attorney is hired by a malpractice insurance carrier, who is the client, the carrier or the doctor?
The American Bar Association's Model Rules of Professional Conduct are in place in several states. All of these states have made amendments to the Model Rules, some substantial. While the Model Rules specifically address conflict of interest issues, the lack of uniformity from state to state leaves the door open to interpretation by the courts.
As a rule, courts have found that the insurance defense attorney represents the insured, and not the insurance carrier. In claims of medical malpractice, this means that the doctors are the clients.
It is clear that an attorney-client relationship exists between the defendant doctor and the defense attorney. The relationship between the insurance carrier and the defense attorney is not as clear. In a recent Michigan case, Atlanta International Co. v. Bell, the Michigan Supreme Court found that the relationship between the insurer and the defense counsel is unique in that it constitutes more than a commercial relationship and somewhat less than an attorney-client relationship.
Conflict of interest issues can and do arise in tripartite relationships. Ethically, the attorney must represent the interests of the insured. However, attorneys also have a responsibility to the insurer. The insurer can and most likely will require written evaluations about the progress of the case, and its likelihood of success. Insurance companies are entitled to this information, and attorneys are generally required to provide it.
Insurance companies are not allowed to control the defense of the insured. In Massachusetts, the Disciplinary Rules state that "A lawyer shall not permit a person who recommends, employs, or pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services."
When the insurance company and the insured disagree, questions arise. Whose interests take precedent? With regard to settlement issues, the insurance company has a duty to act in good faith on behalf of the insured. The insured must be notified of any settlement negotiations between the plaintiff and the insurance company. In a decision by the Supreme Court of Illinois, Rogers v. Robson, Masters, Ryan, Brumund & Belom, the insured physician did not want to settle. The court found that the defense attorney was obligated to inform the doctor of the insurance company's intent to settle, despite the fact that the policy did not require the insured's consent for settlement.
In medical malpractice claims, healthcare professionals should feel confident that the attorney retained by the insurance company is acting on behalf of the insured healthcare provider.
Most often, the insurer, insured and the attorney share a common interest toward the resolution of a case. In some instances however, their objectives may differ. When a case involves disputes over policy limits or coverage, representation may be at issue. In some cases it may be necessary for the insured to retain independent counsel. For example, when the same insurer insures both the plaintiff and the defendant, courts have found that the defendant is entitled to independent counsel. Multiple co-defendants who are insured by the same insurance company do not always require independent counsel. When multiple co-defendants' interests conflict, separate defense counsel should be brought in. So, the answer to the question `who is the client?' is,usually, the insured. Except in special circumstances, the defense attorney will treat the insured as the client, as if the insurance company did not exist.
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