Understanding Professional Liability Defense

When Do Physicians Need Their Own Legal Counsel?

As a medical professional, it is important to understand the ins and outs of professional liability defense. When medical professionals face a possible malpractice suit, oftentimes a professional liability carrier will appoint a defense attorney as representation. However, seeking the advice of private counsel should never be off the table. Knezek Law understands there are several scenarios where professional liability defense can come into play for physicians.

Punitive Damages

One of the most common reasons your carrier will advise you to seek private counsel is that the plaintiff made a claim for punitive damages. Because an insurance carrier is prohibited by law from paying punitive damages, the carrier must disclaim and advise you to seek private counsel. The bar for awarding punitive damages in medical malpractice is typically very high. In most cases, there must be malice, a fraudulent motive, or such a conscious and deliberate disregard of the interests of others that the conduct may be called willful or wanton.

Bad Faith Doctrine

The classic scenario is one in which a demand is made to settle within the policy limits and the physician wants to settle, but the carrier refuses. For the Bad Faith Doctrine to apply, liability must be clear and the potential recovery must far exceed the insurance coverage. If bad faith is established, the carrier’s policy limits no longer apply.

If liability is not clear (i.e., the care is defensible) or the award is not likely to exceed policy limits, there is no bad faith on the part of the carrier refusing to settle. Often, this is the case when the physician wants to settle and the carrier does not. In such circumstances, a bad faith letter is unnecessary and will not be effective.

Uncovered Claims

Plaintiffs will sometimes plead claims that are not covered by insurance. This presents a conflict of interest to the carrier-appointed defense attorney whose duty to the insured requires that he defeat liability on any grounds and his duty to the insurer requires that he defeat liability only upon grounds that would render the insurer liable. Under such circumstances, the physician has the right to an attorney of his/her choice to replace appointed counsel at the carrier’s expense.

This can happen when a physician is sued as both the attending physician and the medical director of the facility. The former claims would be covered by the physician’s professional liability insurance while the latter are not. 

Informal Mediation

The last significant role for private counsel in regards to professional liability is to informally mediate a settlement. Private counsel can engage in shuttle diplomacy to effect a settlement between the parties. Like a mediator, private counsel is often privy to opposing counsel’s positions and can sometimes find the common ground necessary to affect a settlement.

If you have questions about professional liability defense cases for physicians in Louisiana, contact Knezek Law Firm today. Our legal team will guide you through all of the options.

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