When a joint defense is no defense

Are you and your co-defendant really on the same side? Potential conflicts of interest can undermine your legal strategy.

By Mark Crane
Article Editor

If you're ever sued for malpractice, there's a good chance you'll be sharing the defense table with a co-defendant or two, usually another physician, a hospital, or a group practice. Plaintiffs' attorneys frequently file shotgun lawsuits against everyone who ever had anything to do with the patient.

A unified defense—one attorney or law firm for all defendants—has some strong advantages. The insurance carrier saves thousands of dollars in legal and expert witness fees. With a joint defense, it's also easier to persuade defendants to avoid casting aspersions on each other. Once finger-pointing starts, the plaintiff is usually the only winner.

But a joint-defense can also be a double-edged sword, and isn't appropriate for every case. A defense that best serves the team could tie you to the weakest link in the chain. There could be pressure on you to settle for the good of the co-defendants when your level of liability is lower than theirs.

"Taking one for the team" is gallant in football, but it's perilous for physicians in a malpractice case. Each physician has a personal stake in the outcome of a malpractice case that can reverberate for an entire career. For instance, any award or settlement will be reported to the National Practitioner Data Bank or may be posted on Web sites run by state governments. And there's more:

After a settlement, the carrier may well impose a surcharge on your premiums or refuse to renew your policy, says Lee J. Johnson, a malpractice attorney in Mt. Kisco, NY. State licensing boards also pay more attention to settlements these days and could open an investigation. A managed care plan could decide to drop you from its network.

Need more reasons to think twice about a joint defense? Here's an unusual example of the problems that can arise when co-defendants might be in conflict: A physician had been sued along with his employer, a group practice, in an obstetrical malpractice case. An attorney assigned by the insurance carrier represented both. The physician wrote numerous letters to the attorney, outlining his opinions and recollections. Because of the joint defense, he showed them to his employer, who edited some of the correspondence.

When a co-defendant turns on you

Later, the doctor and the group had a dispute about compensation—a fairly common falling-out over money, unrelated to the lawsuit—and the doctor was fired. He threatened to sue the practice. In order to gain leverage against him, the practice took his confidential letters to the malpractice attorney and turned them over to the state licensing board, which began investigating the physician over the obstetrical incident.

The civil malpractice case was settled, but the licensing hearing against the doctor gained steam. "My firm represented him in arguing that the practice had violated attorney/client confidentiality by forwarding the letters to the state," says Steven I. Kern, a healthcare attorney in Bridgewater, NJ. "The deputy attorney general shouldn't have been able to use that material in the licensing hearing. A court ultimately ruled that the information couldn't be used, and the deputy had to be disqualified from the hearing."

But the case illustrates how physicians can be harmed by being tied to co-defendants. Once it became apparent to this doctor that his interests were in conflict with his employers', he should have severed the joint defense by hiring his own attorney or asking the insurer to assign him independent counsel, says Kern.

What to look for when you hire an attorney

If you feel your own case may be jeopardized by a joint defense, discuss your concerns with the insurer. If your objections are clear and legitimate, the carrier will probably assign another attorney rather than risk the appearance of conflict of interest. Insurers know that they could be charged with failing to properly defend a case, and could even face punitive damages.

If there's a chance that a jury verdict could exceed your coverage, you'll need a personal attorney right away, even if you're happy with your insurer's lawyer and the prospect of a joint defense. Indeed, the carrier is obligated to formally notify you of this possibility and to recommend that you retain private counsel.

The overwhelming majority of the time, the attorney assigned by the carrier will adequately serve your interests. The insurer's money is at stake, so it has no interest in hiring incompetents.

But even if you're happy with a joint defense and with the lawyer your carrier has hired, retaining your own counsel may still be a good idea. He can intervene to smooth things over and monitor what the assigned attorney is doing. He can provide a fresh look at your defense. "The purpose of hiring your own attorney isn't to take over the defense," says Kern. "The insurer owes you that much. After all, that's why you pay premiums. But your own lawyer can ride shotgun and make sure the carrier is protecting your interests."

In a recent case with several defendants, one physician was clearly blameless. Kern persuaded the carrier's lawyer to file a motion for summary judgment to have him dismissed from the lawsuit. He got out of it before he even had to answer any interrogatories. "I'm not sure that would have occurred as fast if he didn't have his own attorney involved."

The carrier's attorney might have elected to wait until some depositions were taken, or a case-management conference was held, before filing the motion. But with a private attorney looking over his shoulder, he moved a lot faster.

For your own attorney, select someone with expertise and experience in the appropriate area of the law, says Lee Johnson. If the charge is malpractice, a malpractice defense attorney is best. If you're facing administrative review, you need a health attorney with a track record in that area.

A private attorney usually charges by the hour. The cost could be nominal if he agrees with the insurer's strategy and defense. However, if there's a conflict, or if he feels the case isn't being handled properly, he may take a larger role, and costs would rise significantly. Ask his hourly rate and how much time he estimates he'll spend.

Today there's greater need for such oversight than ever. Carriers are making increased demands on their appointed counsel to reduce costs. "Being a defense lawyer for a malpractice insurer isn't much different than being a physician in a managed care environment," says Steven Kern. "A lot of attorneys are being pressured to take short cuts." Make sure they aren't at your expense.

 

Steven Kern. When a joint defense is no defense. Medical Economics 2002;8:67.