Legal Malpractice

Right to Independent Counsel in Malpractice Cases

By (Andrew Lavoott Bluestone)

This case, Elacqua v. Physicians Reciprocal Insurers is a medical malpractice matter, in which the doctors had both covered and non-covered claims against them  Naturally, the insurance company had coverage for certain of the claims.  Although this case is in the medical malpractice area, it is fully applicable to legal malpractice.

The insurer was under an obligation to inform the doctors that they could have independent counsel, at the insurer's cost, to represent them.  The failure to inform the doctors could amount to deceptive business practices under Business Law 349. 

The NYLJ reports: "Drs. Mary S. Elacqua and William Hennessey alleged deceptive business practices because they were not told they were entitled to choose independent counsels, at the insurance company's expense, to represent them when a conflict of interest arose between covered and uncovered claims in the malpractice case against them. They were each represented by lawyers assigned by their insurance company.

The state Court of Appeals recognized the obligation by an insurer to provide independent representation to insureds in Public Serv. Mut. Ins. Co. v. Goldfarb, 53 NY2d 392 (1981), the Third Department panel said.

Yet, according to last week's ruling, a lawyer for Physicians' Reciprocal Insurers and the company's general counsel both acknowledged that its "practice is not to inform its insureds with whom it has conflicts that they have the right to select independent counsel at defendant's expense." In fact, the Third Department noted that in a 2005 ruling in the same case, Elacqua v. Physicians' Reciprocal Insurers, 21 AD3d 707, it confirmed that insurers have an "affirmative obligation" to inform insureds of their rights.

"Here, the partial disclaimer letters sent by defendant to its insureds - including plaintiffs - failed to inform them that they had the right to select independent counsel at defendant's expense, instead misadvising that plaintiffs could retain counsel to protest their uninsured interests 'at [their] own expense,'" Justice Karen K. Peters wrote for the panel. "Equally disturbing is the fact that defendant continued to send similar letters to its insureds, failing to inform them of their rights, even after this Court's pronouncement in Elacqua I."

Full post as published by New York Attorney Malpractice Blog on June 10, 2008 (boomark / email).