The May 30, 2018 opinion of the Fifth Circuit Court of Appeal State of Louisiana (“Louisiana Appelate Court”) discussed the convoluted history of a legal malpractice case arising out of a Louisiana medical malpractice case that should serve as a warning to all medical malpractice lawyers everywhere that it is important that the distribution of the settlement proceeds should be established and agreed upon by all parties at the time of the settlement in order to avoid later costly disputes as to who should receive what amounts.
In 1999, the parents of a minor child filed their Louisiana medical malpractice case on their own behalf and on behalf of their daughter for the severe injuries the child sustained as an infant during her February 20, 1998 heart surgery. The Louisiana medical malpractice petition alleged medical malpractice claims against the healthcare providers involved, a products liability claim against the manufacturers of the medical device used during the surgery, and loss of consortium claims for the parents.
In early 2006, the plaintiffs filed a petition in the underlying medical malpractice proceeding for court approval of the settlement of the medical claim against one of the defendants, which was granted by the court in April 2006.
On June 26, 2006, the child’s mother (the child’s parents were divorced by then) discharged her Louisiana medical malpractrice attorney, for herself and the child.
On October 29, 2008, the plaintiffs reached an aggregate settlement with the medical device manufacturers in which the plaintiffs agreed to release their products liability claim against those defendants for a lump sum payment of $8.25 million. At the time of this settlement, which was signed by both plaintiffs in their individual capacities and on behalf of their minor child, no determination had been made as to how the lump sum would be allocated among the plaintiffs for the satisfaction of their individual claims. The 2008 settlement agreement was not perfected until November 2009, at which point the $8.25 million in settlement funds were finally deposited into court registries and began earning interest.
Disputes arose between the plaintiffs over the establishment of a supplemental care trust for their child and the proper allocation of the settlement funds for the satisfaction of the mother’s and child’s claims. The mother subsequently hired, then fired, various attorneys, and various claims were made in court both by the mother’s former lawyers and by the mother herself, claiming, among various other claims, that her Louisiana medical malpractice lawyers committed legal malpractice during the course of negotiating the 2008 settlement with the device manufacturers. A prior appeal to the Louisiana Appellate Court resulted in a remand to the lower court, where an attorney was appointed to represent solely the child’s interests in the settlement proceeds.
The mother’s legal malpractice lawsuit against her attorneys claimed that the lawyers failed to obtain the child’s informed consent to enter into the aggregate $8.25 million dollar settlement; failed to disclose to the child, prior to settlement, the share or portion of the settlement funds each plaintiff would receive, as required under Rule 1.8(g) of the Rules of Professional Conduct, which in turn resulted in a dispute between the child’s parents over allocation and management of the fund, causing additional attorneys’ fees and costs; and, failed to take action to enforce the settlement and payment of settlement funds, resulting in lost interest on the funds.
The Louisiana Appellate Court stated at the time of the settlement, there was no attorney-client relationship between the former attorney and the mother. In this scenario, not only would it have been impractical for the lawyer to attempt to advise and provide information to someone who no longer trusted him, it would have been unethical and a violation of the Rules of Professional Conduct for him to communicate information relating to the representation of his clients (the attorney still represented the child’s father indvidually and as parent of the child) with an adverse party who was represented by other counsel. Not only did the lawyer have no duty to communicate with the mother regarding the settlement of the child’s claim, he was prohibited from doing so.
The Louisiana Appellate Court stated that to impose such a duty on the lawyer would require him to unethically communicate with the mother, who he knew had given her consent to the settlement on behalf of the child, in order to determine whether the mother’s own attorneys had given her sufficient information regarding the settlement such that her consent was “informed.”
The Louisiana Appellate Court stated that there is no per se prohibition against entering into an aggregate settlement for joint clients without an allocation among the clients prior to settlement. The Louisiana Appellate Court stated that the lack of an allocation of the aggregate settlement fund, a fact of which both parents were clearly aware at the time of the settlement, provides absolutely no justification for a failure to confect the settlement so that the funds could be deposited and draw interest for the benefit of all three claimants. The Louisiana Appellate Court held that the mother presented no evidence to contradict the record evidence showing that the only reason that consummation of the settlement was delayed was due to her refusal to confect the settlement.
Source Jones v. ABC Insurance Company and Cobe Cardiovascular, Inc., No. 17-CA-368.
If you or a loved one were harmed as a result of medical negligence in Louisiana or in another U.S. state, you should promptly find a medical malpractice lawyer in Louisiana or in your state who may investigate your medical malpractice claim for you and represent you or your loved one in a medical malpractice case, if appropriate.
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