Reporting obligations, payments of money, and settlement of cases.  These are all regular and usual areas for attorney attention.  In the past, settlement of medical malpractice cases definitely had rules and obligations.  Infants had to get their compromises, the infirm had to get their guardians, many a settlement had to pass judicial scrutiny.

The medical malpractice field, and by extension, the personal injury field where there will be future medical treatments or where medicare has already made payments for medical treatment has come under unusual and significant statutory treatment.  Medicare and health insurers seek reimbursement, and Medicare has statutory rights to money. 

An excellent article in today’s NYLJ, "Traps for the Unwary: Defendant’s Obligations Under Medicare" by John L.A. Lyddane and Barbara D. Goldberg graphically illustrates the many obligations under federal law for hospitals, physicians and their insurers and attorneys. 
 

"Medical malpractice liability insurers and self-insured entities that ignore the new Medicare reporting requirements do so at their peril. Not only do they face substantial penalties for non-compliance, but if the plaintiff does not reimburse Medicare from the proceeds of a settlement or judgment, the defendant and/or its insurer may be compelled to do so even if payment has already been made to the plaintiff! In such a case, double damages with interest may potentially be imposed.

Accordingly, it is no longer sufficient for defense counsel in a medical malpractice action to be knowledgeable regarding the medical issues in the case, the intricacies of HIPAA and the particular judge’s part rules in order to provide adequate representation to his or her client. Defense counsel must now assume the added burden of ensuring that timely and accurate reports are made to Medicare when a case is settled or a judgment is entered, and that adequate provision is made for reimbursement to Medicare"
 

"The reporting obligation was imposed by the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), and is applicable to liability insurers and self-insured entities as of January 2011. MMSEA does not change the recovery procedures under the Medicare Secondary Payer statute,1 but strengthens the statute and reinforces Medicare’s status as a payer of last resort by requiring that defendants and their insurers take the lead in determining and reporting a plaintiff’s potential status as a Medicare recipient to the Center for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services.2

Medicare’s status as a "secondary payer" means that its obligation is secondary to that of a defendant or a defendant’s liability insurer. The reporting requirements, set forth in §111 of the act, are designed to ensure that Medicare will be able to recover any "conditional payments" it previously made from the date of injury that should have been made by a "primary payer," including a self-insured defendant or a defendant’s liability insurer.3 MMSEA imposes a draconian penalty of $1,000 a day per claimant for non-compliance.4

The legislation also created the positions of Coordination of Benefits Contractor and Medicare Secondary Payment Recovery Contractor (MSPRC). These entities, essentially, are independent contractors responsible for coordinating the reporting of claims to, and facilitating the recovery of benefits paid by Medicare. The coordination of benefits process identifies primary payers to Medicare for health benefits available to a Medicare beneficiary and coordinates the payment process to prevent mistakes or the unnecessary conditional payment of Medicare benefits. The MSPRC is responsible for determining and recovering the amounts due to Medicare from personal injury claim settlements and judgments."
 

This legal malpractice traces its birth to a 2000 tolling agreement between a long lost law firm, Tenzer Greenblatt and Kramer Levin, which took place in Delaware.  In 1996 investors started what would be a bankruptcy bound law suit over an investment firm. The case is Blank Rome, LLP v Parrish ; 2011 NY Slip Op 30712(U); March 24, 2011; Sup Ct, NY County; Docket Number: 601809/05;Judge: Jeffrey K. Oing

Of relevance to the legal malpractice case was a tolling agreement reached in 2000 which held that any claims that were already too late as of that date would not be tolled, but any new claims after that date would be tolled for at least 120 days.

Of course, in 2002 a case was started against Kramer Levin with Parish using BR., which was dismissed in Supreme Court, New York County.  That dismissal was appealed, and the AD affirmed.  Tenzer Greenblatt’s successor, Blank Rome then sued for its legal fees.  The counterclaim against Blank Rome alleges that BR allowed the statute of limitations to expire on claims against KL.

Again a motion to dismiss was successful, but this time the AD reversed,  Now in a third party action agasint other attorneys we see the following:

"the principle is well settled that a law firm sued for malpractice may bring a third-party complaint
seeking indemnification or contribution from a subsequently or  concurrently retained law firm whose negligence has contributed to or aggravated the plaintiff’s damages (Soussis v. Lazer, Apthaker, Rosella & Yedid PC, 66 AD3d 993 (2d Dept, 2009); Patterson, Belknap Webb & Tyler LLP v. Bond Street Associates, Ltd.  266 AD2d 125 (1st Dept, 1991)."

Procedure is king in legal malpractice and elsewhere.  How does a good case end up in Civil Court.  Sometimes an inexperienced practitioner, or a pro-se litigant who is trying to save $ 175 might start the case in Civil Court rather than Supreme, and sometimes a judge will transfer the case pursuant to CPLR 325d rather than handle it (or sometimes to punish plaintiff’s attorney.)

Here, in Global Bus. Inst. v Rivkin Radler, LLP ; 2011 NY Slip Op 01941 ; Decided on March 17, 2011 ; Appellate Division, First Department  we see plaintiff’s attorney successfully get the case back to Supreme Court. 
 

"The motion court improvidently exercised its discretion in denying plaintiff’s motion. Leave to amend the pleadings is freely granted, absent prejudice (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386, 388 [2007]; see also Loomis v Civetta Corinno Constr. Corp., 54 NY2d 18 [1981]), and plaintiff has stated, at this juncture, a cognizable claim against defendant law firm for failure to sufficiently advise it of the consequences of the tax escalation clause in the lease it eventually executed with its landlord several months after retaining defendant (see Escape Airports (USA), Inc. v Kent, Beatty & Gordon, LLP, 79 AD3d 437 [2010]). Furthermore, in view of the foregoing and the additional damages sought, the matter should be transferred to Supreme Court (see Firequench, Inc. v Kaplan, 256 AD2d 213 [1998]). "

Jail over Christmas…is there anything worse?  Well, yes of course there is, yet being jailed for the holidays is pretty bad. That’s what happened to plaintiff here.  Was it her fault or her attorneys?

in Minkow v Sanders ;2011 NY Slip Op 02120 ; Decided on March 24, 2011 ; Appellate Division, First Department  we see the fault placed on plaintiff’s shoulders and the attorney obtaining dismisal of the legal malpractice case. 
 

"The documentary evidence conclusively disposed of plaintiff’s legal malpractice claims (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). The hearing court found that plaintiff’s disobedience of the so-ordered stipulation directing her to transfer certain custodial accounts to her husband’s attorney to be placed in escrow or immediately liquidate the accounts and transfer the proceeds was willful. In light of such willful conduct, the motion court properly found that plaintiff — not her attorneys — was the proximate cause of her contempt adjudication and the resulting incarceration (see Delfyette v Fisher, 40 AD2d 674 [1972]). We note that letters from the husband’s attorneys, which were provided to plaintiff by defendants, unambiguously indicated that plaintiff’s compliance with the so-ordered stipulation was a condition precedent to further settlement discussions. Defendants’ alleged failure to correct the purge amount set forth in the contempt order to conform to the stipulation was also not a proximate cause of plaintiff’s incarceration from December 23 through December 26, since the stipulation identified the amounts in the subject accounts as "approximate current balance[s]," thus recognizing that their values were subject to market fluctuation."

Doctors and lawyers, legal and medical malpractice.  The two fields of law have many similarities, and in this case they are all mixed up.  Doctor hires attorney to handle a purchase of a Co-op for use as a medical office.  It turns out that there is no certificate of occupancy for use as a medical office.  Doctor closes anyway and then pays significant sums to amend the c/o.  Doctor sues attorney.  Doctor loses at trial.

Sarah Stackpole, M.D. v Cohen, Ehrlich & Frankel, LLP ; 2011 NY Slip Op 02137 ; Decided on March 24, 2011 ; Appellate Division, First Department  illustrates the "but for" element of legal malpractice.  Sure, you might prove that the attorney did not advise you about the lack of c/o.  Sure you might prove that it costs a bundle to fix the problem.  Sure, you might prove that it would be a departure not to advise you.  But, can you prove that you would not have bought the co-op anyway?  Here, the doctor could not.  She lost.
 

"The record supports the trial court’s finding, based on credibility determinations, that plaintiff failed to prove that defendant did not advise her that her intended use of the apartment was impermissible under the certificate of occupancy (see Garza v 508 W. 112th St., Inc., 71 AD3d 567 [2010]). To the extent that defendant was negligent in failing to further advise plaintiff of the consequences of occupying a cooperative apartment in contravention of the certificate of occupancy, plaintiff failed to prove that, but for defendant’s negligence, she would not have purchased the apartment. To the contrary, plaintiff testified that she had been made aware of the "horrors" (including the cost) of amending a certificate of occupancy several years before in connection with an apartment in another building; despite this awareness, she purchased the subject apartment (see e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435-436 [2007]; Orchard Motorcycle Distribs., Inc. v Morrison Cohen Singer & Weinstein, LLP, 49 AD3d 292 [2008])."

We discussed Hinshaw & Culbertson, LLP v e-Smart Tech., Inc.; 2011 NY Slip Op 30651(U);
March 18, 2011; Sup Ct, New York County; Docket Number: 113108/09; Judge: Judith J. Gische on the question of dropping a client just before a deadline. That shortcoming was held not to be legal malpractice.  What about unauthorized divulgance of privileged documents or cooperating with an opponent after the romance wears off?  Those allegations lead to a different result.

"Although Smart states that Fitz and Hinshaw breached their fiduciary duty by providing confidential and/or privileged documents to the SEC and other persons, they have not specified, even in the most general way, what kinds of documents they are referring to, with two exceptions, one being a single document attached as an exhibit to Fitz’s motion to be relieved as counsel in one of the California cases.  It is unrefuted that she attached this documents, it was obtained by defense counsel in the other California action and that, eventually, the file was sealed by the court because the document was privileged. At the pleading stage, Smart‘s facts support the claim of breach of fiduciary duty asserted as to that document. Other documents readily identified are those Fritz provided to the SEC without Smart’s consent. Though the documents were produced pursuant to a subpoena, that defense can be raised in Fritz and Hinshaw answer."
 

CLE lecturers almost always warn the listener not to sue for fees. They tell attorneys at the lectures that there will be an inevitable legal malpractice counterclaim.  In the case of sole practitioners or small firms, a comparison of their insurance deductible with the fee claim should be made, because they may have to pay the deductible even before they have any possibility of collection.

One legal malpractice claim which comes up regularly is a law firm that takes a case for "investigation" or simply takes a case, and then drops it just before the statute of limitations expires.  This seems to happen more often in medical malpractice.  An expert (at least theoretically) must be on board before bringing the case (certificate of merit) and sometimes attorneys take on a case in the hope of a pre-complaint settlement, or in the hope of getting an expert.  When neither happens, they give the case back to the client.  Is this legal malpractice?  Is a similar situation where the attorneys wait until the very last minute to work on a motion legal malpractice?

In Hinshaw & Culbertson, LLP v e-Smart Tech., Inc.  ;2011 NY Slip Op 30651(U); March 18, 2011
Sup Ct, New York County;  Docket Number: 113108/09;  Judge: Judith J. Gische we see that the latter situation is not a good legal malpractice claim.

"Fritz and Hinshaw have successfully established – and Smart does not disagree -that Fritz and
Hinshaw were discharged as their lawyers August 1, 2008. It is also unrefuted that there was a pending motion in one of the California cases in which Smart’s opposition was due August 4, 2008. Smart’$ argument, that it was negligent for Fritz and Hinshaw to wait until the last moment to work on the motion, which is why they were discharged, does not support a claim for legal malpractice. No deadline was missed. The supplemental claim, that Smart had to scramble to find new lawyers, is also unavailable. To establish a prima facie case of legal malpractice or negligence, the client must plead and prove facts tending to show that the law firm: 1) failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by an ordinary member of the legal community, 2) that such negligence was the proximate cause of the actual damages sustained by the plaintiff and, 3) that “but for” the defendant’s negligence, the plaintiff would have been successful in the underlying matter (Laventure v, Galeno, 307 AD2d
255 [Ist Dept. 2003] ;Wexler v. Shea & Gould, 21 I AD2d 450, 621 NYS2d 858 [Ist Dept. 1995]. The facts do not support any of these elements and the claim for legal expenses spent to hire another attorney is not a malpractice claim. Therefore, Fritz and Hinshaw’s motion to dismiss the legal malpractice claim based upon the failure to timely prepare a response to the motion in the California action granted and that aspect of the malpractice claim is severed and dismissed."

The Elite Models litigation, in which a class action set of models challenged the industry practices on expenses and allocation of fees to the models ended with a group of US District Court cases, a multi-million dollar settlement and a raft of legal malpractice cases which followed.  This case, Pillard v Goodman ;2011 NY Slip Op 01929 ;Decided on March 17, 2011 ;Appellate Division, First Department  is one of them.

Of import is the finding that a conflict of interest, or a violation of attorney disciplinary rules which alone cannot support a law suit, may support liability when malpractice follows.

"This action alleging legal malpractice arose out of defendants’ representation of plaintiff in a lawsuit brought by Victoria Gallegos alleging employment discrimination against nonparty Elite Model Management Corp.; plaintiff, a 10% shareholder; and Elite’s majority shareholder, director of finance and co-president. A bifurcated trial resulted in a verdict of liability against the Elite defendants and an award to
Gallegos of approximately $2.6 million in compensatory damages and $2.6 million in punitive damages against the corporate defendant. On appeal, this Court affirmed the liability verdict but vacated the damages award and remanded the matter for a new trial on the issue of damages (see Gallegos v Elite Model Mgt. Corp., 28 AD3d 50 [2005]).

The instant complaint states a cause of action for legal malpractice by alleging that defendants were negligent in failing to proffer evidence at trial that plaintiff was no longer president of Elite when Gallegos’s employment commenced, had limited authority to respond to Gallegos’s complaints, and did not approve of or participate in the termination of Gallegos’s employment, and that but for this negligence plaintiff would have been exonerated of liability and would not have incurred damages (see InKine Pharm. Co. v Coleman, 305 AD2d 151 [2003]). Plaintiff also alleges sufficiently that Curtin mishandled the Gallegos in-house complaint and failed to apprise her of Gallegos’s early settlement demand in the amount of $50,000 (see Boglia v Greenberg, 63 AD3d 973, 975 [2009]).

The complaint further alleges that defendants’ joint representation of all the Elite defendants in the Gallegos
action, in violation of Code of Professional Responsibility DR 5-105 (22 NYCRR 1200.24) (effective through March 31, 2009), divided their loyalties and prevented them from asserting the [*2]defense that plaintiff’s co-defendants were the primary, if not the sole, actors in the decision to terminate Gallegos’s employment; because of their joint representation, defendants could not request that the jury apportion liability among plaintiff and her co-defendants, resulting in the automatic imposition of joint and several liability on her (see CPLR 1601). While these allegations of a conflict of interest or a violation of attorney disciplinary rules alone could not support a cause of action, liability can follow where the divided loyalty results in malpractice (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 8 [2008]; Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267 [2004]). "