October 14th, 2010

Is The Workers’ Compensation Lien Really Bulletproof?

I hate dealing with liens when handling a case. In fact, everyone seems to hate them, except of course, the company that wants to reach its hand into a settlement and grab a little something for itself.

And the big reason lawyers hate dealing with liens is an inherent conflict of interest. An injured person hired you, yet you are forced to do the work of someone else trying to capitalize on your work. Almost all of the health care liens, however, were knocked out late last year when New York passed an anti-subrogation law, prohibiting health insurers from trying to scrounge part of the lawsuit proceeds.

In New York’s Workers’ Compensation world , however, — and stay with me here even though you think this might be a boring post — the lien under Workers Compensation Law section 29 is thought to be bulletproof. Which is to say, they get paid back some of the money they spent to the extent it exceeds certain limits.

But I’m not so sure that lien is bulletproof. After a quick, general rundown of how Workers’ Comp works, I’ll explain why there is an avenue to explore for those trying to deal with an oppressive carrier that wants to take virtually all the proceeds of a lawsuit.

This is how it comes up: If Peter Plaintiff gets into an accident in an intersection while making a delivery for his boss, he can’t sue his boss because he’s entitled to Worker’s Comp benefits automatically. Fault for causing the accident is not an issue.

But Peter might sue Danny Defendant, the other car in the accident, because Danny was drunk as a skunk when he blew through that red light. Let’s assume there are big medical bills and lost earnings for Peter, because those are the only times someone might consider this strategy.

Now this is where Workers’ Comp comes in: The insurance carrier exerts a lien on all amounts it pays over $50,000. So if the WC carrier paid out $100,000, it has a claim on $50,000 from the lawsuit.

So let’s say Danny D has a $25,000 insurance policy on his car, which is the minimum here in New York, and that policy gets tendered by his auto insurer because Danny was convicted of DUI and there is now way in hell he’s going to win a civil trial. What does the badly injured Peter get from the 25K? Potentially nothing as the WC carrier swoops in.

Still with me here? Because this is where it gets interesting. The 25K from the insurance policy is first used to pay the lawyer (1/3, because without the lawyer no one is getting anything). That leaves about 16K (depending on expenses). But with a 50K lien, reduced by 1/3 to 34K, Peter Plaintiff might get bupkus.

Please don’t leave…this is where it gets good. And that is because Peter isn’t restricted to going after the 25K policy, and can go after personal assets. It doesn’t happen often, but it is a right he has, and it might happen when the accident is particularly egregious if Danny has some assets.

But the WC carrier is standing there with its hand out. So why should Peter’s lawyer go after the personal assets, if it is the WC carrier that will benefit?

Plaintiff’s counsel has a conflict of interest in trying to maximize recovery, serving two different masters: The client that retained him (Peter) and the WC carrier with its hand out. Why should the lawyer do the work if his client won’t get any money out of it? More importantly, if the lawyer is getting a percent of the whole,and thus the fee is already fixed in a settlement, where is the incentive to fight for Peter for as big a piece of the pie as he’s legally entitled to?

The Court of Appeals discussed a similar conflict last year Fasso v Doerr, regarding the conflict between the injured and health insurers that would like to intervene to take a piece of the recovery. The Court wrote:

[I]ntervention [by an insurer] can create an adversarial posture between a plaintiff/insured and its insurer because neither has an incentive to consider the interests of the other, especially where the potential damages exceed the available sources of recovery. The injured party’s goal is to maximize recovery without regard to whether its insurer recoups any monies it expended for the plaintiff’s medical bills; the insurer’s objective is to reclaim as much of the money it paid as possible regardless of whether its insured has a desire to settle the case rather than proceed to trial.

Now if an attorney’s fee is on the gross lump sum, as is almost always the case in personal injury litigation, that attorney no longer needs to be as concerned with any individual client’s recovery. The attorney will be less motivated to maximize the recovery for any single individual/client so long as s/he maximizes the gross recovery.

For an individual attorney to represent both the personal injury client and the health care provider, therefore, where resolution is contingent upon both parties accepting a single lump sum to be divided/negotiated by that attorney, would appear to be a patent conflict of interests and a violation of the Professional Rules of Conduct (Rule 1.8(g)):

“A lawyer who represents two or more clients shall not make or participate in the making of an aggregate settlement of or against the clients.”

The Plaintiff’s attorney is expected to “sell” the ultimate resolution to his retained client. He also is expected to maintain the illusion that he, the attorney, is solely interested in his retained client’s best interests. But the attorney knows that he will be fully paid his fee from the total settlement regardless how much or little his client recovers.

The Court of Appeals recognized that conflict in Fasso. It is equally obvious that the avoidance of conflicts of interest is one of the primary principles underlying the integrity of the legal system and personal injury law.

New York’s highest court long ago warned that where divided loyalties exist, a lawyer may act detrimentally to the client.

So what is the solution when faced with the lien? The practitioner may wish to consider making a motion to sever the Workers’ Compensation claim from the suit, citing the conflict, as the lawyer can’t work for both masters. The plaintiff can settle the car accident case, and the WC carrier can pursue the personal assets of the negligent driver, standing in the shoes of the plaintiff.

Will it work? I don’t know as there isn’t any law on it yet that I know of. I tried it recently, but the carrier chose to settle rather than litigate. The carrier may have realized that my client had zero downside in going forward, but if a decision came out against it, Worker’s Compensation carriers around the state would suffer enormous repercussions.

And a tip of my hat to J. Michael Hayes in Buffalo, for helping me wrestle with some of these issues last year. He discusses the issues in more depth at his site dealing with Workers Compensation liens.

October 8th, 2010

US Chamber of Commerce Loves Lawsuits! (Except, of course…)

According to this ABC News article, the US Chamber of Commerce, the largest corporate lobby group in the country, is about to pump $10M into advertising for the coming election to get tort “reformers” elected. It’s the single largest expenditure by any group other than the Democratic and Republican parties.

But this bit jumped out at me:

As the chamber increased its efforts in this year’s midterm elections, chamber CEO and President Thomas Donohue on Thursday issued a tough denunciation of government regulations, threatening to use the courts to block new rules that affect business and setting the chamber up as a major adversary of the Obama administration.

“Litigation is one of our most powerful tools for making sure that federal agencies follow the law and are held accountable,” he said in prepared remarks to the Des Moines Rotary Club. “Today, we are issuing a clarion call for Americans and lawmakers to stop the encroachment of a government by the regulators before it’s too late.”

Now let’s changed the line I italicized and see how it reads:

“Litigation is one of our most powerful tools for making sure that corporations are held accountable.

So, it seems, Big Biz actually loves litigation, and thinks it’s a wonderful “tool” for holding folks accountable. Except, of course, when it’s a consumer seeking to hold the corporation accountable. Then it’s not so hot.

The Chamber of Commerce is, it appears, utterly shameless in its hypocrisy.

A couple of Chamber of Commerce classics from the past:

US Chamber of Commerce Wins Golden Turkey Award (1/1/10)
Chamber of Commerce Credits Apple’s Success to Trial Lawyers (10/19/09)

October 1st, 2010

Should Lawyers Blog (Or Twitter) About Their Cases?

There’s been some discussion in the blogosphere lately about using blogs or Twitter to discuss one’s cases. It popped up recently when criminal defense lawyer Norm Pattis twittered about his day in court, dealing with child porn and sexual assault. It was designed to be a tweet (or twit) about a day in the trenches of the practicing attorney(which differentiates him as a practicing lawyer from those in academia, or those looking to sell social media services).

The tweet, which Pattis has taken down, (although a similar one remains) was problematic. For even if he believed the twit didn’t disclose anything about any of his clients — and he didn’t — I don’t think that is really the standard that needs to be addressed.

There are only two questions any attorney should ask when contemplating a public comment about a case:

What will clients, past, present and future, think about it if they should see it?
What will jurors think about it?

So even if a post is fine from an ethical standpoint, it may not be wise because of how others perceive it. And in worrying about how others perceive it, you have to assume that some will mis-perceive it. That’s just the way it is, and most importantly, there’s an excellent chance you will never know if it’s been mis-perceived.

Pattis thinks lawyers should post this kind of stuff, as he has an interest in the public seeing more of how the law works in actual practice. In a discussion of the post, and criticism he encountered, he explained:

I am adamant that there are not enough trial lawyers as judges. There are none on the Supreme Court. Every time a nomination to the court arises, I go into a funk about the injustice of it all, and write about why the court would be a better place with trial lawyers on it. Another writer has dubbed this the Trench Lawyer Movement. I like the sound of that. Trial lawyers of the world unite! We have nothing to lose but the courts!

So I report daily from the trenches about what I am doing. What kind of case am I appearing in?; am I in trial?, or engaged in trial prep? The “Tweeting” is inoffensive, or so I had hoped, as it reflects fewer than 140 characters. Others have begun to post trench menus of their own, reporting on their days in court. Slowly a sense of common purpose arises among lawyers with similar vocations. If trench menus help trial lawyers find one another and communicate, all the better. At least I think so. Or, to put it another way, beware the asshat masquerading as ethicist.

He’s dead-on regarding the lack of trial lawyers on the Supreme Court. I’ve discussed this here also. But does that address the issue of the content of the actual postings?

Scott Greenfield clearly isn’t a fan of these “trench menus” that seem to be going around the criminal defense blogosphere, writing:

In the meantime, you’re giving up information to anyone who bothers to read your twits. A prosecutor can announce that he’s ready for trial, knowing that you’ve got three other cases to cover in three other courthouses today, blowing a potential speedy trial dismissal so that you can broadcast your ego. Wonder how happy your defendant would be to know that you gave his motion away to be a big man on twitter?

He goes on in another post to explain why he doesn’t discuss his cases, writing:

But my lack of discussion has nothing to do with that, and everything to do with my decision to not discuss my cases to avoid any possibility that a confidence or strategy will be disclosed. I don’t own my cases, and they aren’t mine to write about. They belong to my clients, and my clients don’t want the worst experience of their lives strewn across the internet. I respect that, so I don’t kiss and tell.

As for me, I rarely write about a case or client. Did you see that qualifier? Rarely? When I started this blog, I did a couple of “day in the life” types of posts, in the form of photo essays, that reveal little about any case or client (and whose formatting got screwed up when I switched to WordPress, but I’ve been too busy to deal with it). I also didn’t think they were interesting enough to continue.

But I share Pattis’ desire to publicly explore more of what we do in the public eye, and I did do a day-in-the-life series of what it was like to try a case. I held all the posts until the trial was over, talking little about the details of the case, and did so with the permission of the client. The series remains one of my favorites, though that sentiment is not necessarily shared by my readers.

And I also did one post on an active case, with the permission of the client, after it landed on the front page of the newspaper,which started with this heads-up:

A week ago I quietly passed my three year blawgiversary. And now after three years I’m doing something I’ve never done here; writing about a pending matter in my office.

In each case, I read through the posts trying to see how they could be mis-read by anyone, before posting. I don’t want any client (past, present or future) or any juror, to think I’m even close to any kind of ethical line.

Sometimes, it isn’t about whether the lawyer is doing something improper, but about the much broader category of appearing to be improper. And that is the higher standard all blogging or twittering lawyers should, I think, aspire to. Any damage, will remain completely hidden. And it isn’t about the appearance of something improper as lawyers might see it, but how it might be viewed by the public.

Caveat blogeur.

Trial Tactics and Race Planning

I looked in my RSS feed and saw 4,000 unread posts. Yeah, I know that’s a lot. If the blogosphere thinks I fell off the face of the earth because my posts are a bit less frequent lately, I assure you that those in my community know otherwise.

For this Sunday is the Paine to Pain Trail Half Marathon, which I founded and for which I’m the Race Director. And as we come down the home stretch in planning, I find myself sorting through a thousand details and talking with a thousand people to get those details nailed down.

In other words, it resembles, to some extent, planning for a trial. Trial lawyers love to talk about tactics and fancy cross-exams, and who hasn’t fantasized about the perfect summation?

But in reality, a trial is the culmination of a thousand different details dealing with subpoenas, medical and employment records, documents, diagrams and demonstrative evidence, difficult evidentiary matters, lists, lists and more lists, and the godawful misery of trying to work around the schedules of the experts.

And lists and details are what I also deal with regarding the race. I have hundreds of people showing up from 12 states, and I need my finishers medals, shirts, sponsor stuff, food, water, timers, medical personnel, 100 volunteers, and 13 miles of little flags laid through the woods, all in the right place at the right time. Details, details, details.

They ought to give a class in law school called “event planning.” It would have a thousand different applications both in law and life.

When I wrote about this race two weeks ago, I noted that:

I’ve met a lot of people. Not the meet as in I’m-following-you-on-Twitter meet, but as in hundreds of real people in my own community knowing me as a person. I didn’t create the race as a form of networking, of course, but when people get involved in community events it is a natural by-product.

So on Sunday, I’ll have followers. This will be in the literal sense to the extent I can move my feet faster than they can move theirs, and in the figurative sense to the extent I’m showing them a new trail system.

I won’t get a single new Twitter follower as a result of this race. But I do hope to have hundreds of exhausted and happy faces at the finish line who have become new friends and acquaintances.

September 24th, 2010

Walking the High Wire At Trial (Defendant pulls offer with jury out, but verdict not what they thought…)

The jury came back quickly. And that is usually bad news for the plaintiff. Fast verdicts usually mean the plaintiff lost on liability, so there was no need to discuss damages. That is what most people, who have stood in the well of the courtroom, would conclude.

But this week in the Bronx it was wrong. When the jury sent back the note that they had reached a verdict, the defendant revealed it was pulling a $750,000 offer off the table. And the verdict was $3,500,000.

After hearing the story through the grapevine, I contacted plaintiff’s counsel Peter DeFilippis. And he gave me the inside story of this case that had appeared as the lede in an article in the New York Post in 2004, regarding patients being hurt by hospitals understaffing nurses: Plaintiff Loric Stothart nearly lost his left foot after it was burned in the hospital by a post surgical compression/heating boot. He pressed the help button for nearly 20 minutes before a nurse arrived and the device was finally cut-off of him. After several skin grafts and a vein transplant he now walks with a cane. His expert testified that the use of this device was contraindicated for this patient in the first place.

According to DeFilippis, his trial man on the scene, Conrad Jordan, relayed that the note came back from the jury. Jordan wanted to make sure he knew exactly what was, or was not, on the table, and asked for the note to be held while this was firmed up and a final decision could be made. It was at that point, with a note in the hands of the court saying a verdict had been reached, that the defendant announced the offer was being pulled.

There are some who think that trial lawyers, for the most part, file suits and get paid quickly, doing little work. It’s an “easy money” theme that runs through some members of the press and commentariat.

But that isn’t how life or the law works. I’ve yet to meet a defense lawyer or insurance adjuster who believed that they were potted plants that were supposed to sit still while a plaintiff makes claims. They fight, fight hard, and have the enormous financial backing of multi-billion dollar insurance companies to make big bets (like pulling offers when the jury is coming back) and take risks that mere mortals are unable to handle. Plaintiffs’s attorneys, by contrast, foot the bill for often tens of thousands of dollars out of their own pockets based on the belief that a rational jury will act rationally and compensate the injured, and that they will get paid back and earn a fee.

I have to imagine that, when the 750K offer was pulled in this case, that the plaintiff’s heart sunk to the floor. Unless the plaintiff was independently wealthy, this was likely a financial gamble unlike any he had seen in his life.

I’ve settled several cases while the jury was out. It’s a tough spot to be for individuals as they are asked to make what might be life-altering decisions right there on the spot. And they must do so through the prism of injury and heartbreak that brought them to that point.

Want to know half the game of being a trial lawyer? Stress. With the pad by the bedside at night, we lay awake thinking of the questions we should ask, or failed to ask. Not because we want to lay awake thinking about it, but because the brain won’t shut itself down. And we hope in the end we’ve made the right judgments so that our clients can have some degree of piece of mind. And we go through the trial, and sometimes the settlement negotiations, walking a high wire without a net to catch us if we’re wrong.

And when all is said and done, someone with no knowledge of how the law works will trash talk the lawyers, fantasizing that it’s some easy little game where insurance companies just throw money at you.