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No-Fault lawyer practice tip: How to avoid surprise medical bills

April 15, 2015 by Steven M. Gursten

Did lawyer commit malpractice after ruling a ‘global’ No Fault settlement cannot be reopened to include big medical bill that surfaced after? How to avoid surprise medical bills

What can a lawyer do if a $28,000 surgery bill comes to light after a “global” $78,000 No Fault settlement?

Apparently nothing, after the Michigan Court of Appeals ruling in Clark v. Progressive Insurance Company, et al., which rejected a Michigan No Fault attorney’s efforts to void  a “universal, binding settlement” (that “she freely entered into with the advice of counsel”) when an unpaid and very large surgery bill was discovered three days after the settlement was finalized.

I was contacted by Michigan Lawyers Weekly on what lessons this case will hold for attorneys who practice auto accident and No Fault insurance law. The lesson is that it’s not too late for other lawyers to learn from the hard and important lessons taught by Clark.

What does Clark v. Progressive Insurance Company teach Michigan lawyers?

My own practice tips for attorneys appear below, but in Clark, the Court of Appeals held that there are three important things lawyers must do to protect their clients and themselves before agreeing to a “global” or “universal” No Fault settlement:

  1. A lawyer must do everything in his or her power to discover and verify all of the outstanding balances his or her client owes to his or her healthcare providers, including surgeons and medical facilities.
  2. Before advising a client to agree to a “global” No Fault which “provided that all PIP benefits incurred as of that date would be settled in exchange for a $78,000 payment” from her auto insurer, “[i]t is the obligation of [the] plaintiff’s attorney to ensure his [or her] client knows that [the] settlement … encompasses all claims.” In other words, the lawyer must make sure his or her client knows she’s agreeing to a “universal settlement” that “wipe[s] the slate clean of any claims incurred prior to the date of the settlement.”
  3. “If a plaintiff or her lawyer [have] any doubt about [a “global” or “universal” No Fault] settlement, it [is] the responsibility of plaintiff’s lawyer to demand a different kind of settlement.”

As for the “different kind[s] of settlement[s]” that might be possible, the Court of Appeals in Clark suggested the following:

  • A settlement that “only include[s] a specific list of PIP benefits incurred to date, rather than all PIP benefits incurred to date.”
  • When a claim “involve[s] continuing medical treatment and numerous related charges over long periods of time, [a] plaintiff and her lawyer could … condition[] any settlement by specifying that if any charges incurred before the date of settlement came to light after the settlement, the settlement could be reopened to address such a charge.”
  • “If the plaintiff or his lawyer have any concern that there might be future (and unknown) expenses not included in settlement agreement, then the lawyer should include express language in the agreement that the settlement may be amended to provide for potential charges not included on a specific list. This obligation is the fundamental professional duty of any lawyer in such a case …”

In the Lawyers Weekly story, I agreed with the first point. However, I’ve been practicing exclusively in this area of law for 20 years, and I can’t imagine any insurance company agreeing to language in any release that would allow a case to be reopened.

As to the third point, I said that while I agree in general that it’s the plaintiff attorney’s responsibility, the opinion does not take a realistic view of the current world of health insurance billing. It is becoming incredibly complicated, as anyone who has had a big medical issue knows. In many cases, there are unexpected people sending out bills on medical procedures that a lawyer or patient might never imagine exist. I recently found one for the dye used in a shoulder injury procedure that was not billed by the doctor or the hospital. Too often, finding all the bills becomes more akin to “Where’s Waldo?” than how the appellate court characterized it in Clark.

Did the attorney commit malpractice?

So what happens to a lawyer who failed to discover all of his client’s outstanding medical bills before finalizing a “global” or “universal” No Fault settlement and then after the deal is finalized, an unpaid $28,000 medical bill comes to light?

In other words, can the lawyer be sued by his client, and/or sanctioned for having committed malpractice?

Based on the Clark court’s discussion of the lawyer’s obligation, duty and responsibility and the Court of Appeals’ reference to several of the Michigan Rules of Professional Conduct, it appears the answer is “Yes.”

For the story about the Clark ruling, the Michigan Lawyers Weekly reporter asked me whether the trial attorney committed legal malpractice because he did not submit the $28,000 bill when he settled the case for $78,000.

In the story, I deferred on answering the specific question because the answer of whether legal malpractice was committed will be factually dependent on what exactly the trial attorney did to ascertain the existence of this bill. I did not know enough about the facts and what efforts were made to ascertain the bill to say whether the attorney committed malpractice.

Respected insurance defense attorney Ronald Sangster, however, was not so circumspect.  He made the following observation for the MLW story:

“Sangster said he believes the plaintiff in Clark might have a malpractice claim. ‘Assuming that trial counsel was operating on a one-third contingency fee on a $78,000 settlement, that is almost the amount of the medical bill,’ he said. ‘The plaintiff’s lawyer should probably forego the attorney’s fee in the case.’”

The attorney who appeared on the Clark case was identified in the Michigan Lawyers Weekly story as David E Christensen.  Christensen was quoted in the story, and he blamed the insurance company, saying the Clark ruling “blesses insurance companies that hide the truth.”

My own take is different.  It should come as no surprise to anyone that insurance companies lie all the time in this state, including to their own insured customers.

In fact, No Fault attorneys have known this for years.

I was quoted by Lawyers Weekly as saying “… it is really easy to miss something. You can’t just dabble in this area of law anymore.” That’s important, because the landmines and potential legal malpractice traps have never been greater than they are today.

And while the Clark opinion does not state what steps the trial attorney took to ascertain this bill, I have my own ideas on what attorneys must know do after Clark to protect their clients – and themselves (see below).

My practice tips after Clark v. Progressive Insurance Company

The Clark case presents a dangerous opinion for all attorneys who litigate first party No Fault litigation.

Rounding up all the medical bills is a very time-consuming and expensive process, and one made more difficult because Michigan attorneys cannot hire a medical billing expert to do this and then charge it as a cost to the case (as they can in most other states). So our own ethics rules have created a real problem for legal practitioners in this area.

What lawyers can and should do, in my opinion, is this:

At any facilitation, an attorney must include release language that says that the No Fault settlement includes only those medical bills only presented at facilitation and in Plaintiff’s facilitation summary

In all legal releases, specify the medical bills and the amounts itemized individually, and incorporate language that the settlement is only for these itemized amounts and specified medical bills.

Never agree to a global release of all medical bills and outstanding amounts, whether known or unknown, presented or not presented.  This is nearly standard in all the releases I receive from insurance companies these days.

Include in any release that the Defendant and any other insurer is not aware of any other medical bills that have not been itemized individually and presented by the plaintiff attorney. This should eliminate the situation in Clark, where the insurance company knew about the bill, apparently, but the plaintiff attorney did not when he agreed to the settlement.


Lastly, after the Clark case I will be amending my standard Requests to Admit, interrogatories and Requests to Produce Documents with language that requires proper supplementation of additional medical bills, and demand supplementation of defendants PIP file in advance of all settlement discussions.

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