Legal Malpractice

Liens, Settlements and Legal Malpractice

By (Andrew Lavoott Bluestone)

Yesterday we discussed medical treatment liens and when an attorney might become liable to pay them, even though the attorney did not deduct from the settlement proceeds when making the distribution.

Today, Joel Stashenko in the NYLJ reports passage of a bill to eliminate "double dipping" by public employees in the disability area.  Specifically, "The bill, contained in a mandate relief measure put on the Legislature's special session agenda Tuesday by Governor David A. Paterson, eliminates a quirk in state law that has allowed public employees injured due to employer negligence who successfully sue for loss of future wages to get those payments plus whatever disability benefits workers qualify for."

While this is of interest to public employees who are injured, there is a much wide application and interest that this bill addresses.  The entire area of lien recovery, of attorney representation in post-verdict (or settlement) lien resolution, and equitable subrogation is in flux, and this bill simply adds to the mix.

"Another compromise was a provision that eliminates subrogation in medical malpractice suits that litigators have complained has made it more difficult to reach settlements.

The legislation prohibits insurers, except in a few narrow exceptions, from seeking from either plaintiffs or defendants to recoup insurers' coverage costs if a settlement has been reached in a malpractice case.

"The parties can freely settle a tort suit without being concerned that the disability provider is going to go after those monies," Mr. Schwartz said.

Mr. Cardozo said the provision would effectively undo the Court of Appeals' ruling in Fasso v. Doerr, 12 NY3d 80, in which the Court ruled that an insurer's equitable subrogation rights could not be extinguished without the insurer's consent in the settlement of a personal injury action (NYLJ, Feb. 25, 2009)."

Full post as published by New York Attorney Malpractice Blog on November 12, 2009 (boomark / email).