CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Archive for the ‘Professional Liability and MPL’ Category

In California Lawyer-Client Sex Will Soon Be A No-No

Posted on: May 14th, 2018

By: Greg Fayard

In California, lawyers can have consensual sex with their clients as long as it is not based on coercion or in exchange for legal services. That will change this Fall.  On May 10, 2018, the California Supreme Court approved comprehensive changes to the lawyer Rules of Professional Conduct—the first major change in 29 years.  Under the new rules, California lawyers cannot have consensual sex with their clients—except in one of two situations: 1) the client is the lawyer’s spouse or domestic partner; or 2) a sexual relationship existed prior to the lawyer-client relationship.  This means California lawyers can be disciplined by the State Bar for having consensual sex with clients.

The sex ban has been divisive even though at least 17 other states have adopted a similar ban. Supporters of the lawyer-client sex ban argue the relationship between a lawyer and client is inherently unequal, so any sexual relationship is potentially coercive. Others claim the blanket ban is an unjustified invasion of privacy.

The new Rule is 1.8.10 and goes into effect November 1, 2018.

If you have any questions or would like more information, please contact Greg Fayard at [email protected].

“Lien On Me, When You’re Insured …”*

Posted on: May 11th, 2018

*Apologies to Bill Withers.

By: Zach Moura

On May 8, 2018, the Court of Appeal, Second District, upheld a trial court’s decision that an insured plaintiff who chooses to receive treatment from providers who are outside of his private health insurance plan is not prohibited by Howell v. Hamilton Meats & Provisions Inc. (2011) 52 Cal.4th 541, from introducing the full charged amount of his medical bills into evidence for the purpose of determining his economic damages in Pebley v. Santa Clara Organics, LLC (May 8, 2018, No. B277893) ___Cal.App.5th___ [2018 Cal. App. LEXIS 409.)

Pebley was injured in a motor vehicle accident caused by an employee of defendant Santa Clara Organics, LLC (Santa Clara).  Pebley initially sought treatment through his medical insurance carrier, Kaiser Permanente (Kaiser). Then, after filing a personal injury action against defendants, Pebley obtained care from a specialist outside the Kaiser network. While Pebley testified he was referred to the doctor by “members of his men’s group”, defendants drew the court’s attention to an internet article co-written by one of Pebley’s attorneys, noting that while “[t]ypically, medical liens in personal injury cases have been used where the plaintiff is uninsured” (or the carrier will not authorize recommended medical care), the attorney authors proposed that insured plaintiffs use the lien form of medical treatment to allow them “to sidestep the insurance company and the impact of Howell, Corenbaum and Obamacare” because treating on a lien basis increases the “settlement value” of personal injury cases. And indeed, Pebley’s post-Kaiser medical treatment was provided on that basis.

The trial court granted plaintiff’s motions in limine to exclude: evidence that Pebley was insured through Kaiser; arguments concerning Pebley’s decision not to seek medical treatment through his insurance; evidence of the amounts an insurance company may pay, or what a medical provider may accept, for medical services; and evidence that Pebley obtained most of his medical treatment on a lien basis. The trial court denied defendants’ motion in limine to exclude evidence of unpaid bills from health care providers under Howell.

The Court of Appeal held that Pebley was to be considered uninsured (or non-insured) for purposes of proving the amount of his damages for past and future medical expenses.  The consequence of that, under Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1336, was that Pebley could instead rely on an expert to “competently testify that the amount incurred and billed is the reasonable value of the service rendered”, and “the defendant may then test the expert’s opinion through cross-examination and present his or her own expert opinion testimony that the reasonable value of the service is lower”, leaving the jury to “best decide the reasonable value” of the medical services.

Defendants presented expert testimony that the reasonable and customary value of the services provided by the various medical facilities was substantially less than the amounts actually billed, and defendants’ medical expert opined that 95% of private pay patients would pay approximately 50% of the treating professionals’ bills. The jury rejected this expert evidence and awarded Pebley the billed amounts.

The Pebley decision will likely lead to an increase in the prevalence of insured plaintiffs seeking treatment outside their insurance networks on a lien basis.

If you have questions or would like more information, please contact Zach Moura at [email protected].

Schiff Hardin Requests 5th Circuit To Dismiss Insurer’s Malpractice Suit

Posted on: April 25th, 2018

By: Barry S. Brownstein

Schiff Hardin, LLP, asserting that it has immunity under Texas law, has appealed to the Fifth Circuit seeking to end a suit filed by Ironshore Europe DAC, alleging that the law firm’s bad advice in connection with a product liability trial cost it $34 million.

Schiff Hardin defended Dorel Juvenile Group Inc. in a products liability suit over an allegedly faulty car seat. Ironshore, Dorel’s excess insurer, was not paying for the defense, but was regularly monitoring the litigation with Schiff Hardin to make sure the suit would not trigger its policy, which kicked in after $6 million in primary coverage had been exhausted.

Ironshore claimed it was blindsided when Dorel was hit with a $34 million verdict and sued Schiff Hardin for negligent misrepresentation, claiming that Schiff Hardin misrepresented the amount in which the plaintiffs were willing to settle.  In addition, Ironshore claimed that the firm repeatedly told Ironshore that the suit was going “pretty well” even into trial.  Schiff Hardin asked the panel to overturn a district court ruling allowing Ironshore to continue with some of its negligent misrepresentation claims, saying they are immune from suit for any statements made in the course of representing its client.

The district court partially granted Schiff Hardin’s motion, dismissing the claims based on predictions about the future and subjective claims about the trial by Schiff Hardin and allowing the portions of the claims based on allegations that Schiff Hardin failed to inform Ironshore of important developments in the case, such as settlement offers.

In its appeal, Schiff Hardin argued that the court had incorrectly ruled that the Texas state law that protects law firms from liability to nonclients for actions taken while representing a client has an exception for negligent misrepresentation.  That exception, according to Schiff Hardin, only applies if the damages result from an attorney acting entirely outside the scope of representing their client.

In sum, Schiff Hardin asserted that it is was immune from suit by Ironshore, since it was acting within the scope of representing Dorel when it made any alleged negligent misrepresentations or omissions, and its conduct was of the kind in which defense attorneys engage when communicating with their clients’ insurers.

If you have any questions or would like more information, please contact Barry Brownstein at [email protected].

New Clarity for California CCP 998 Offers

Posted on: April 18th, 2018

By: Gretchen S. Carner

California Code of Civil Procedure section 998 settlement offers (“998 offer”) are valuable settlement tools, often under-utilized in prevailing party attorneys’ fees cases.  The California Court of Appeal has bolstered defendants’ ability to confidently make valid 998 offers, exclusive of attorneys’ fees, so that a motion for attorneys’ fees can be brought after acceptance of the offer.

The California Court of Appeal recently held that a defendant’s 998 offer to pay the plaintiff $12,500 “exclusive of reasonable costs and attorney[ ] fees, if any” was clear and unambiguous.  (Timed out LLC v. 13359 Corp. (Feb. 27, 2018, No. B280301) ___Cal.App.5th___ [2018 Cal. App. LEXIS 262].)  In Timed Out LLC v. 13359 Corp., plaintiff sued defendant for misappropriation of a model’s right of publicity under Civil Code section 3344 (section 3344).  Section 3344(a) provides for “prevailing party” attorneys’ fees and costs.  After trial, the court awarded plaintiff $4,483.30 “exclusive of any costs [or] attorneys’ fees that may be set by noticed [m]otion.”

Defendant submitted a cost bill that included post-offer attorneys’ fees and costs.  Plaintiff moved to strike the cost bill on the grounds, among others, that the 998 offer was invalid because the terms “exclusive of attorneys’ fees, if any” was ambiguous.  The Court of Appeal concluded that the usual and ordinary meaning of the term “exclusive of” in this context is that the settlement amount did not include fees and costs, and that one could not fairly interpret the phrase “if any” to require a concession that plaintiff may not be entitled to any attorney fees if it accepted the 998 offer.  The 998 offer did not deny Plaintiff’s right to recover attorneys’ fees and costs, nor could it have reasonably been interpreted to do so.  The offer provided that Defendant would pay $12,500, which was ‘exclusive of,’ meaning not including, reasonable costs and attorneys’ fees.  Where a 998 offer does not expressly preclude the recovery of fees and costs, a prevailing party may seek them.  Defendant was awarded its post-offer attorneys’ fees and costs.

The take away here is that defendants in any case where statutory attorneys’ fees and costs are at stake, should think about serving early 998 offers to cut off and limit their potential liability for significant attorneys’ fees that quickly add up during protracted litigation.  In addition, if the plaintiff does not obtain an award greater than defendant’s 998 offer (plus plaintiff’s actual award of attorneys’ fees and costs), the defendant is entitled to recover its post-offer attorneys’ fees and costs.  This should give great pause to plaintiff’s counsel who have weak or meritless cases.

If you have any questions or would like more information, please contact Gretchen Carner at [email protected].

Tax Day Troubles?

Posted on: April 12th, 2018

By: Jessica C. Samford

As the well-known saying goes, “Nothing can be said to be certain, except death and taxes,” and with the federal individual income tax deadline quickly approaching on Tuesday, April 17, 2018, now is a good time for tax professionals to take a quick break from their busy season and take account of the possible liabilities that could arise when filing tax returns.

Similar to legal malpractice claims against a lawyer, an accountant may be held liable for professional malpractice, which often involves allegations of a negligent act or omission in performing accounting services below the standard of care for certified public accountants, for example. A simple illustration of this would be if a tax professional misses the deadline by failing to file either the tax return or the extension, postmarked on or before Tax Day (perhaps with a payment to accompany the extension to decrease the potential for interest and penalties).

While the advent of e-filing alleviates some of the pressure of the Tax Day deadline, there could still be mistakes within the returns themselves. Whether it be inadvertent typos, reliance on figures miscalculated by prior tax professionals, or reliance on misrepresentations by clients, the decision to amend the return or not after a mistake is discovered also affects potential liability of the tax professional. Unhappy clients can get creative in asserting numerous claims under a variety of theories in addition to professional malpractice, such as breach of fiduciary duty, fraud, constructive fraud, negligent misrepresentation, breach of contract, breach of good faith and fair dealing, violation of applicable state laws, etc.

Although having to file taxes may be as certain as death, accounting service liability has many uncertainties to account for, such that professional liability insurance and assistance of legal counsel should be considered in any risk management strategy.

If you have any questions or would like more information, please contact Jessica Samford at [email protected].