The insurance company wants to bail out on the dentist’s defense and on coverage for the malpractice claim against her.
The case of former Chesapeake dentist Glennetta White exemplifies the conflicting duties and divided loyalties faced by an attorney hired by an insurance company to defend a policyholder when the policyholder refuses to cooperate.
The fine ethical line for the lawyer could be even harder to walk when, as in White’s case, the lawyer is directly employed by the insurance company.
Eight extractions and ill-fitting dentures
The insurance company’s lawsuit in Norfolk federal court sets out the claim history.
White treated a patient named Kwanza Al-Amin and allegedly extracted eight teeth. Afterwards, White provided ill-fitting dentures, according to a lawsuit the patient filed in 2012.
Al-Amin’s lawsuit, filed without a lawyer in Chesapeake Circuit Court, demanded $250,000. White was insured by Continental Casualty Company for $2 million per claim. The insurance company assigned Kenneth C. Hirtz to represent White.
Hirtz is a senior litigation attorney at a Richmond law office that serves as Virginia staff counsel for CNA, the parent company of Continental, according to a CNA publication posted online.
Malpractice case survives initial defense
Hirtz urged that the case be dismissed in 2013 for Al-Amin’s failure to deliver the suit papers to White within the required one-year for service of process. A judge allowed the case to go forward, however.
Hirtz filed an answer on White’s behalf on April 18, 2013, according to online court records.
At that point, however, White stopped communicating with Hirtz and the insurance company, according to Continental’s pleadings.
Hirtz was not the only one having trouble communicating with White.
The state Board of Dentistry reported White closed her dental office around May of 2012 and had been “completely unreachable” since about December 2012. Complaints about her treatment of four patients were pending.
White and her husband filed for bankruptcy in January 2013, records showed. In May, Hirtz contacted the Whites’ bankruptcy lawyer hoping to gain access to his client, to no avail, according to Continental’s court filings.
In July of last year, the insurance company took over efforts to contact White. The company’s July 18 letter to White – by certified mail – stated that both Continental and Hirtz had been unsuccessful in efforts to reach her.
In September, the dentistry board notified White of rule violation charges that appeared to include allegations from the Al-Amin case.
White failed to attend a December hearing before the dentistry board, although Hirtz attended on her behalf, according to records from the Virginia Department of Health Professions.
White’s former dental hygienist testified that White still lived at the same address she had for years, but was “simply refusing to deal with her issues with the Board,” according to the record of the hearing.
The dentistry board revoked White’s license as of Dec. 12, 2013.
In January, 2014, Continental sent a form to White to allow her to consent or withhold consent to allowing the insurance company to settle the case on her behalf. White did not respond, the company said in its pleadings.
The patient gets an attorney
The stakes grew larger in the summer of 2014. An attorney entered an appearance on behalf of Al-Amin and filed an amended complaint. By letter dated Aug. 1, Continental advised White that Al-Amin’s lawyer was demanding $2 million to resolve the case.
The letter said Continental was reserving its rights to limit coverage based on White’s failure to cooperate.
The letter asked White to contact either Continental or Hirtz “immediately.”
Other letters from the insurance company followed on Sept. 9 and Sept. 18.
“We understand litigation is a stressful process and we will work with you to manage the case. Without your cooperation, however, we will have no other choice but to withdraw coverage …,” the company said.
The company received no response, it said in its complaint. Continental asked Judge Robert G. Doumar to declare that the company has no duty to defend or indemnify White and her professional company and may withdraw its defense in the Al-Amin action.
Hirtz and Continental lawyer Brian N. Casey of Norfolk declined to comment. They referred questions to CNA, Continental’s parent company. “We don’t comment on matters of pending litigation,” a spokesperson said.
Al-Amin’s attorney, Daniel M. Schieble in Virginia Beach, did not respond to requests for comment.
The client comes first, ethics rules say
The case raises issues involving the duties of attorneys hired by insurance companies to represent policy holders who are sued.
Some of those attorneys are outside contractors who accept work from several different insurance companies. Others are “staff counsel” employed directly by insurance companies.
Either way, once hired, the defense lawyer owes the client “independent professional judgment,” untainted by concerns about the lawyer’s relationship with the insurer, according to ethical guidelines in Virginia and elsewhere.
Insurance companies’ use of staff lawyers to represent insureds was approved 5-2 by the Supreme Court of Virginia in a pair of 1985 Virginia State Bar opinions.
Staff defense lawyers were permissible when the amount sought did not exceed coverage limits, when the carrier did not assert any coverage defenses and when any judgment against the insured would be fully satisfied by the insurer, according to Virginia Unauthorized Practice of Law Opinion 60.
A companion legal ethics opinion established that the “client of an insurance carrier’s employee attorney is the insured, not the insurance carrier.”
“Accordingly, except with the consent of the client, the insurance carrier’s employee attorney is barred from disclosing or using confidences and secrets … including, for example, any defense to policy coverage gained through the attorney/client relationship,” according to LEO 598.
The lawyer’s dilemma
That rule could put an insurance company lawyer in a tough spot when a client quits cooperating, defense lawyers said.
“You’re in an untenable position,” said M. Pierce Rucker of Richmond, a former president of the Virginia Association of Defense Attorneys.
The lawyer has to tell the insurance company, “I am not in a position to represent your insured any more, and I can’t tell you why,” Rucker said, acknowledging that the situation would be apparent to the company, regardless of the evasive language.
It’s not a common occurrence that defendants persist in their ostrich approach to litigation.
Rucker said he has never had it occur. Richard E. Ladd Jr. of Bristol said the situation has come up about five times in more than 30 years of his practice.
Nearly every liability insurance policy requires the insured to cooperate when claims are filed, said Ladd, who works at a private practice firm and is not an insurance company employee.
“The insured must not torpedo their insurance company’s obligation to adequately defend the claims,” Ladd said.
Ladd said he has had to tread carefully, urging his reluctant clients to cooperate while trying not to tip off the insurance company that there’s a problem. Lots of activity by the lawyer goes unreported to the insurance company.
Once, Ladd said, his firm picked up the expense of hiring someone to find the elusive client. Billing the expense would have revealed the client’s lack of cooperation, he explained.
In every instance of uncooperative clients, Ladd was able to avoid a coverage issue, he said.
“I have been fortunate. I was able to persuade those five medical malpractice clients they had no choice if they did not want to lose coverage,” he said.
For staff counsel, the situation can be even tougher, Ladd said. When a client just refuses to make contact, as White apparently did, the attorney may simply have to withdraw, Ladd said.
By the time the insurance company sends a reservation of rights letter, the company lawyer may no longer be in a position to handle the case, he said.
“You cannot do anything that impairs your independent professional judgment on behalf of your client,” Ladd said.