So you have been diligently prosecuting your client's personal injury case for many years. After doing your due diligence as a practicing personal injury attorney, you have worked out a six figure settlement with the defendant's counsel after many depositions, pre-trials, status conferences, a trial management conference or maybe the start of trial. In fact, you probably have reported the case as settled to the court clerk with the clerk waiting for you to file your withdrawal of action by a date certain as requested by the presiding civil judge. You're now waiting for defense counsel to email the proposed release so that you can present the release and all proposed disbursement documents to your client for execution.
So what's the problem? There is a big problem brewing. The liability carrier emailed defense counsel a release with attorney hold harmless and indemnification language. The liability carrier wants you to personally sign the release. This language addresses indemnification for third party liens associated with the settlement of your client's personal injury claim. These liens may include Medicaid liens, Medicare liens, hospital liens or self funded ERISA plan liens to name a few.
The next question is what do you do? You instinctively know that what has been presented to you is far over reaching. You are not a party to your client's case. You know you have to make inquiries and do some research. You call defense counsel and ask that the language be removed. You get this response: "I'm sorry but the carrier wants this indemnification language left in the settlement documents. Management has been attending instructional seminars and this is what they want signed."
You call up brother plaintiff counsel. You ask them, "have you ever had a release presented to you with such overreaching language?" The response they give you is "no, but I would love to see a copy of such a release so I don't get bagged with one of those. By the way, you did a great job on that case. I never get cases that settle in that dollar range." You realize you are now on your own to figure this one out.
This is a fact pattern that happened in our office last spring. In fact, it happened multiple times on multiple six figure settlement cases. We refused to allow any attorney indemnification and hold harmless language to remain in the settlement documents. We negotiated this over bearing language out of the releases. We were not, at that time, however, armed with the Connecticut Bar Informal Ethics Opinion 2012-06. That ethics informal opinion was released after the issue had arisen in our cases.
In a nut shell, that opinion holds that requesting the plaintiff's lawyer to provide hold harmless and indemnification language for third party liens in a personal injury case is not ethical and patently improper. The reasons provided were essentially three fold: the language injects the lawyers financial interests into the client's decision to settle a case, it conflicts with a lawyer's ability to exercise independent professional judgment rendering candid advice and it provides indirect improper financial assistance to a client in connection with litigation.
The opinion invoked lawyer ethics rules 1.7 and 1.8. The opinion also cited a battery of states that also hold the same similar opinion. Those states included Arizona, New York, Florida, Illinois, Kansas, Missouri, North Carolina, South Carolina, Tennessee, Vermont and Wisconsin. The case had an interesting footnote. The footnote suggested that the defendant could require that the plaintiff provide an affidavit attesting to no Medicare or other liens holding the defendant harmless from any third party liens. The plaintiff's attorney, however, should not be signing any such type of affidavit.
If you are a plaintiff's attorney and are presented with indemnification and hold harmless language in a release or affidavit that a liability carrier in either a car accident case, premises liability case or medical malpractice case wants you to sign, don't do it! You can now invoke Connecticut Bar Association Informal Ethics Opinion 2012-06 and have unethical third party lien holder settlement language requesting attorney indemnification and hold harmless language removed from all settlement documents. If you are Connecticut defense counsel and the liability carrier wants to prepare the release for execution, be sure to review the release to make sure that it contains no such attorney indemnification and hold harmless language before you email it to plaintiff's counsel.
Regards, Peter Rotatori, III