Vol. 6, No. 2, Pg. 39. PRO/CON: DUTY TO A CLIENT'S CREDITORS PAYMENTS TO MEDICAL CARE PROVIDERS: WHAT ARE THE LAWYERS OBLIGATIONS.

• Author: By John P. Freeman

South Carolina Lawyer

1994.

Vol. 6, No. 2, Pg. 39.

PRO/CON: DUTY TO A CLIENT'S CREDITORS PAYMENTS TO MEDICAL CARE PROVIDERS: WHAT ARE THE LAWYERS OBLIGATIONS

39PRO/CON: DUTY TO A CLIENT'S CREDITORS PAYMENTS TO MEDICAL CARE PROVIDERS: WHAT ARE THE LAWYERS OBLIGATIONSBy John P. FreemanThe essence of legal scholarship is staking out positions and then defending them. Nonetheless, a "point/counterpoint" analysis of an important ethics issue may raise some eyebrows. In my experience, when it comes to ethical "do's and don'ts," lawyers are less concerned with the reasoning than with the bottom line: "Tell me what to do to avoid a problem!"

Here is the bottom line. Lawyers who follow the view espoused by Leeds Barroll will be accepting reasoning that has been rejected by (1) the South Carolina Bar's Ethics Advisory Committee, (2) recent contract law decisions and (3), implicitly, South Carolina's appellate courts. That rejected view boils down to this: The personal injury lawyer holding settlement proceeds who is confronted with a dispute between a client and the client's medical care provider assignee is ethically bound to just let the client take the money and run. If the client's assignee (or subrogee) gets hurt, then that's just tough luck. I say this advice is shortsighted, dangerous and should not be followed.

THE PROBLEM

Physics teaches that two objects cannot occupy the same space at the same time; nor can the same money be put in two parties' pockets simultaneously. Doctors like to be paid money, and so do lawyers' clients.

The medical care provider/client conflict can arise in various ways. Assume the following different scenarios:

1. The personal injury lawyer and the client agree, in writing, to protect the client's hospital's interest in getting paid, in return for release by the hospital of its records.

2. The lawyer is put on notice that the client has given an "irrevocable lien and assignment" to medical care providers in order to protect the medical bills owed.

3. The client has put the lawyer on notice of a subrogation claim that the client's medical insurer may assert.

4. The client's medical insurer has informed the lawyer that it intends to assert its subrogation right.

EARLY SOUTH CAROLINA AUTHORITY

There once was a time when the legal positions expressed by Leeds Barroll had some credible support. South Carolina Bar Ethics Advisory Opinion 81-14 dealt with fact situation 1 above. It held that even if the client opposed payment to the hospital, the lawyer "should inform both the client and the hospital that the proceeds of the settlement are being held . . . for a short time, which you should specify, so that the hospital can take whatever action it deems necessary to protect its...