Does my lawyer have to pay my medical and hospital bills or my health insurance company from my accident case?
You may also want to read Rule 1.15(d) of the Rules of Professional Responsibility, which requires an attorney to safeguard property in which the client or a third party has an interest. If the rule applies to your case, you may be hearing from the attorney grievance commission if you comply with the client’s request.
Check MLRPC 1.15 and the annotations thereto. AGC v. Mungin
, 439 Md. 290, 96 A.3d 122 (2014) is on point, stating that a lawyer violates that rule if, among other things, the lawyer fails to pay a client’s debt from settlement funds. The word “debt” is far broader than “lien” or “subrogation claim”. Tell client that if you obey her wishes, your license is in jeopardy. Interpleader is the proper procedure
You would indeed be “on the hook” if you remit the funds to your client without paying Rawlings or the plan. The FEHBA plan’s subrogation claim comes from the health insurance contract. See
5 C.F.R. § 890.106. Moreover, the subrogation claim is governed by federal law, and not state law. Id.
, subsection (m).
“[I]t is one of the familiar rules of equity that a contract to convey a specific object even before it is acquired will make the contractor a trustee as soon as he gets a title to the thing.” Barnes v. Alexander
, 232 U.S. 117, 121 (1914). Therefore, your client’s contractual promise to reimburse the health insurer from the tort recovery creates an equitable lien on the recovery to the extent of the insurer’s valid subrogation claim. See Sereboff v. Mid Atlantic Medical Services, Inc.
, 547 U.S. 356, 363-68 (2006).
If you dishonor the lien, then you will be personally liable to the plan. See Hoffman v. Liberty Mutual Insurance Co.
, 232 Md. 51, 56-57 (1963).You would also be in ethical trouble. See
Maryland Rule of Professional Conduct 1.15(d) & (e).Therefore, tell the client that absolutely cannot remit the funds to her in disregard of the Rawlings’s and the plan’s claims.
Besides, as others have stated, if the client breaches the subrogation contract, the health insurer may dispense with suing the client or you, and may instead simply electronically retract all of the payments that it made to the health care providers in the case, or put your client’s future health benefits in “retention” until it recoups the amount that it claims to be owed. But neither one of those things will happen, because you will not remit the funds to the client.
A client should always be advised, if possible, what he or she will “net” from an offered settlement.
There has been some language in recent Court of Appeals decisions which said that an attorney must pay a client’s “debts” out of a tort recovery, including amounts owed to health care providers. See, e.g., Attorney Grievance Commission v. Mungin
, 439 Md. 290, 308 (2014); Attorney Grievance Commission v. Roberts
, 394 Md. 137, 163-64 (2006). But the language in those cases must be read in context.In those cases, the attorney was supposed to pay the health care providers out of the recovery because the client had instructed or authorized the lawyer to do so. The attorney then did not do so or unduly delayed in doing so. Obviously, that behavior is a problem, particularly if the lawyer converts for his own use the money that the client had instructed him to pay to the health care providers.
But that is a different situation from one in which there is no lien or letter of protection for a particular health care provider, and the client
instructs the lawyer not to pay the health care provider. Medicare must always be paid back for any medical expenses it paid that are related to the accident