The following blog post Commercial Drivers: The Background Check was first seen on Slappey & Sadd Blog
The Background Investigation The regulations mandate that a detailed background check be conducted on any prospective driver. The requirements are quite rigorous, but also quite often not followed properly. A breakdown at this step is often an indicator that a motor carrier has a poorly-functioning safety department. In reviewing documentation of this step in the [...]
CMV Drivers: The Driver Application See more on: http://ift.tt/1GbQA7k
The Driver Application The first real step in the qualification process is the completion of an employment application that complies with the regulations. The application must be signed by the applicant and contain specific information. A motor carrier is free to require more information on its application than that called for under the regulations, but [...]
The blog post The Commercial Motor Vehicle Driver: Overview was first published to http://bit.ly/1Lv83gO
CMV Overview While a great deal of the FMCSRs concern the motor carrier itself, the rules governing driver qualification, monitoring, and testing are also extensive. These regulations come into play before the driver candidate ever takes the wheel. At the employment application stage, a driver candidate must assist his prospective motor carrier employer with the [...]
The following post Approaching Compliance in a Trucking Case is republished from Slappey & Sadd, LLC
Trucking Case: Regulatory Compliance Issues Knowing how to approach the pre-suit investigation and pre-trial discovery of regulatory compliance issues is an essential part of obtaining a successful result in a trucking case. Often the initial step is to understand the size and scope of the defendant motor carrier. While not always true, small “mom and [...]
Insurance Law: Limitation on Damages & Statute of Limitation was first published to Slappey & Sadd - Personal Injury Attorneys
Limitation on Damages An insurance agent’s bad faith may be imputed to the insurance company and thus become the company’s bad faith. However, under Georgia law, the potential liability of an insurance broker or agent (separate from the potential liability of the insurer itself) is limited to the terms of the insurance policy it negligently [...]
The article Insurance Law: Dual Agency & Liability of Agents is available on Slappey & Sadd - Personal Injury Attorneys
Dual Agency Independent agents or brokers are often considered the agent of the insured. However, Georgia law recognizes the concept of dual agency, where an agent acts on behalf of both the insured and the insurer. Dual agency is not considered void per se as against public policy in Georgia. Dual agency is proper where [...]
The following blog post Insurance Law: Negligent Procurement Read more on: http://bit.ly/1Lv83gO
Insurance Agents and Brokers An insurance agent is an individual appointed or employed by an insurer who sells, solicits, or negotiates insurance, or an individual insurance producer. Agents are licensed by and subject to regulation by the state. An agent may be an independent agent, representing at least two insurance companies and serving clients by [...]
A trend toward the use of in-house counsel to defend insureds has emerged. Insurers benefit because in-house attorneys become specialists not only in general insurance law, but also in the particular workings of their employer. Additionally, the insurer recognizes savings through not paying outside counsel bills.
When an in-house attorney represents an insured, unique ethical issues may arise, including whether the attorney is assisting the insurer in the unauthorized practice of law. The North Carolina Supreme Court held that “a licensed attorney who is a full-time employee of an insurance company [may not] ethically represent one of the company’s insureds as counsel of record” as doing so would constitute aiding the insurer in the unauthorized practice of law. There is little doubt that the use of in-house attorneys should intensify attention on the tripartite relationship. However, the majority of jurisdictions – including Georgia – hold that an in-house attorney may defend an insured without engaging the insurer in the unauthorized practice of law.
The ABA has also endorsed this view, holding that the ethics rules do not prevent insurance staff counsel from defending policyholders. Staff counsel for the insurer may provide legal representation to both the insured and insurer in an insurance defense claim, so long as he or she:
Unique ethical situations arise when an in-house attorney represents an insured. A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents. The in-house attorney must ensure that he or she does not develop an attorney-client relationship with an employee of the company who is not a “duly authorized constituent.”
An in-house attorney for an insurer must also beware of ethical duties in attorney-client relationships with the insurer’s agents as the actions of an agent may have an important (and possibly determinative) impact on an insurer’s liability. For example, an in-house attorney may interview an insurance agent in order to defend a case. If, during that interview, the agent reveals confidential information to the attorney, the attorney may be obligated to maintain the confidentiality of that information. Additionally, if the attorney provides legal advice to the agent, an attorney-client relationship may develop.
Insurers sometimes audit defense counsel’s fee bills as a cost control measure. A billing audit “encompasses a range of services, from an examination of the face of the legal bill for improper charges or errors to a detailed analysis of original time records, attorney work product, expenses and hourly rate benchmarks, and more.” Audits examine hourly rates, background information about the legal matter and lawyer work product to gauge quality, tactics, strategy and performance in context. Ethical problems arise when bills contain confidential or privileged information. Billing records and underlying documentation may reveal the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided to the insured – information that is generally protected by confidentiality rules, attorney-client privilege, or both. Disclosure of the information required to perform an audit may be particularly problematic when coverage issues exist, as work product by defense counsel could harm the insured’s interests with regard to the coverage issue.
Formal Opinion 01-421, addresses ethical obligations when an insurer instigates a third-party audit. The opinion states: “A lawyer may not…disclose the insured’s confidential information to a third-party auditor hired by the insurer without the informed consent of the insured.” In general, defense counsel may inform the insurer about the litigation through periodic status reports, detailed billing statements and the submission of other information, which usually advances the interests of both the insured and the insurer in the representation. These disclosures are impliedly authorized to carry out the representation. However, a lawyer may not disclose the insured’s confidential information to a third-party auditor designated by the insurer without the insured’s informed consent. The attorney should advise the insured in writing as to:
Many insurers issue to defense counsel “litigation guidelines,” which state under what circumstances defense counsel may decide to take certain actions in the defense and under what circumstances prior authorization from the insurer is necessary. Georgia Rule of Professional Conduct 1.7(a) provides as follows: “A lawyer shall not represent or continue to represent a client if there is a significant risk that the lawyer’s own interests or the lawyer’s duties to another client, a former client, or a third person will materially and adversely affect the representation of the client, except as permitted [by client consent].” Where an insurer uses litigation guidelines to control defense costs by limiting defense counsel’s actions in defending the case, Rule 1.7 comes into play. For example, guidelines may limit the discovery to be propounded on adverse parties. Such restrictions create potential conflicts of interest if they inhibit an attorney’s ability to adequately defend a case or interfere with the attorney’s independent professional judgment. For instance, the Montana Supreme Court has held that Montana attorneys may not follow an insurer’s billing and practice rules which limit or direct the scope and extent of the attorney’s representation of the insured.
The American Bar Association addressed the issue of litigation guidelines in Formal Opinion 01-421.3 The ABA stated:
Pursuant to the liability insurance contract, the insured delegates to the insurance company the right to defend the case and is required to cooperate in the insured’s defense. However, the rules of professional conduct – and not the liability insurance contract – govern the lawyer’s ethical obligations to his client, whether the client is the insured, the insurer, or both.
As soon as the matter is assigned, the defense attorney should inform the insured of any limitations on the representation. ABA Formal Opinion 01-421 states:
If the lawyer is hired to defend an insured pursuant to an insurance policy that authorizes the insurer to control the defense, and in its sole discretion, to settle within policy limits, the lawyer must communicate these limitations on his representation of the insured to the insured, preferably early in the representation. The lawyer should “make appropriate disclosures sufficient to apprise the insured of the limited nature of his representation as well as the insurer’s right to control the defense in accordance with the terms of the insurance contract … No formal acceptance or written consent is necessary. The insured manifests consent to the limited representation by accepting the defense offered by the insurer after being advised of the terms of the representation being offered.”
The attorney should provide written notice to the insured at the time of retention that:
The insured can agree at the outset that his appointed attorney should follow the insurer’s direction and does not have to specifically consent to each act or decision that his attorney makes. If the insured disagrees, however, the attorney must follow the wishes of his insured client, to whom he owes his primary duty.
Ethical issues may arise when an insurer refuses an offer to settle within policy limits, and the plaintiff’s counsel writes a letter to the insured defendant regarding the matter. In Formal Advisory Opinion No. 86-4, the Supreme Court of Georgia first stated the general rules that an insurer is normally only liable for:
If an insured engages in fraud (for example, arson) and the defense attorney becomes aware of the fraud, several ethical rules come in to play. Obviously, defense counsel cannot assist or advise an insured that is engaging in such conduct. If an attorney knows that the client is engaging in fraud, the attorney must withdraw from the representation. If an attorney withdraws due to an insured’s fraud, the attorney cannot disclose the fraud to the insurer. However, the attorney can give notice of the withdrawal and “may also withdraw or disaffirm any opinion, document, affirmation, or the like.
In some cases, defense counsel may become aware that the insured has a potential counterclaim against another party in the lawsuit or a third-party claim that may be barred if not asserted in the pending action. Insurance policies do not necessarily provide coverage for these additional claims, and the insurer will not pay the defense attorney to prosecute them. The proper course of action for the defense attorney is to advise the insured of:
Some insurance policies exclude punitive damages. If the complaint otherwise triggers the duty to defend, a conflict arises between the insurer and insured. The insurer may have little interest in defending the punitive damages claim, as the insurer might have no duty to indemnify the insured for that aspect of damages. If an insurer is not obligated to indemnify its insured for punitive damages, it may attempt to limit defense counsel’s activities with regard to defending that aspect of the claim. At the outset of the representation of a punitive damages case, defense counsel must determine whether the policy provides coverage for punitive damages and advise both the insured and the insurer of punitive damages claims so that they may protect their respective interests. In any event, the defense attorney must continue to defend the punitive damage claims.
Defense counsel has a duty to keep the insured client fully informed of all settlement negotiations. In Formal Advisory Opinion 86-4, the Georgia Supreme Court cited Rogers v. Robson, Masters, Ryan, Brumund & Belom, an Illinois case involving an insurer’s settlement over the express objection of the insured. Dr. James Rogers was sued for negligence by a patient. Dr. Rogers’ malpractice insurer provided a defense. During discovery, deposition testimony established that Dr. Rogers was not negligent. The malpractice policy provided that written consent of the insured was not required before the insurer settled any claim or suit. Despite Dr. Rogers’ express instructions not to settle, defense counsel negotiated a settlement. Dr. Rogers then brought suit against the attorneys. In opposition to the law firm’s motion for summary judgment, Dr. Rogers filed an affidavit in which he stated that he repeatedly informed one of the partners that he would not consent to a settlement, that he was assured the action would be defended, and that the attorneys never advised him that they intended to settle the suit.
In affirming denial of summary judgment for the law firm, the Supreme Court of Illinois noted that when the attorneys became aware that settlement was imminent and that Dr. Rogers did not want to settle the case, a conflict of interest arose that prevented the attorneys from continuing to represent both Dr. Rogers and the insurer without full disclosure. The attorneys breached their duty to Dr. Rogers and were liable for any damages stemming from the breach. The Supreme Court of Illinois then stated:
Although [the attorneys] were employed by the insurer, [Dr. Rogers], as well as the insurer, was their client and was entitled to a full disclosure of the intent to settle the litigation without his consent and contrary to his express instructions. [The attorneys’] duty to make such disclosure stemmed from their attorney-client relationship with [Dr. Rogers] and was not affected by the extent of the insurer’s authority to settle without [Dr. Rogers’] consent. We need not and therefore do not consider the question whether [Dr. Rogers’] insurance carrier was authorized to settle the malpractice action without his consent. Further, since no disclosure was made and [Dr. Rogers] was not given the opportunity to elect what course to pursue, we need not speculate on what recourse, if any, [Dr. Rogers] had under the terms of the insurance policy.
When faced with a situation where the insured and the insurer disagree on a settlement strategy, defense counsel can require the parties to work out disagreements on their own. Defense counsel can provide an objective assessment of the likely outcome at trial and estimate future defense costs. Defense counsel can also encourage the clients to obtain separate counsel or a mediator. However, defense counsel should refrain from making an “all things considered” settlement recommendation without obtaining informed waivers from the insured and the insurer.
