Legal Malpractice

Subrogation and Legal Malpractice - Part 1

By (Andrew Lavoott Bluestone)

The New York Court of Appeals determined that a medical insurance provider has the right to intervene in a personal injury case to protect its right to subrogation and to assert  "lien" on the proceeds of the case.  In a well researched article, J. Michael Hayes writes:

"Recent developments have changed the way that lien law is applied given Arkansas Department of Health and Human Services v. Ahlborn, 126 S.Ct. 1752 (2006) and Fasso v. Doerr, MD, et al., 12 NY3d 80, 875 NYS2d 846 (2009). Medicare, Medicaid and Workers' Compensation carriers claim they are entitled to full recovery of their expenses under the lien statutes. The reality is that recent decisions in Ahlborn and Fasso, combined with New York's shift to comparative negligence and itemized verdicts since the 1970s, confirm that at best, they have a right of apportionment for their "subrogation" claims.

Whether the right is a lien or subrogation affects the relationships between the co-claimants and the attorney as well as his fees. If these constitute subrogation rights then the attorney is clearly representing two claimants, negotiating an aggregate settlement and taking a fee from each. A conflict arises because the attorney must reduce/assign part of his client's recovery to the insurance carrier for medical expenses. Ethically, an attorney is barred from representing more than one party where there may be a lump sum award that has to be divided/allocated. "

Full post as published by New York Attorney Malpractice Blog on August 26, 2009 (boomark / email).