Justia Professional Malpractice & Ethics Opinion Summaries

GEICO, a group of insurance companies, presented evidence that the defendants, collectively known as the Mayzenberg Defendants, paid third parties for referring patients eligible for no-fault insurance benefits to Mingmen Acupuncture, P.C. GEICO argued that this constituted an illegal kickback scheme, violating New York's rules of professional misconduct, and thus, under the Eligibility Regulation (11 N.Y.C.R.R. § 65-3.16(a)(12)), Mingmen was ineligible to receive no-fault payments. The Mayzenberg Defendants contended that paying for patient referrals might be professional misconduct but did not violate a "licensing requirement" under the Eligibility Regulation.The United States District Court for the Eastern District of New York granted summary judgment in favor of GEICO, agreeing that the Mayzenberg Defendants paid for patient referrals and that this conduct rendered Mingmen ineligible for no-fault benefits. The court also granted GEICO summary judgment on its common law fraud and RICO claims, based on the same conclusions about Mingmen’s ineligibility.The United States Court of Appeals for the Second Circuit reviewed the case and found that while the facts established that the Mayzenberg Defendants paid for patient referrals, the legal question of whether this conduct violated a "licensing requirement" under the Eligibility Regulation was unsettled. Given the lack of clear precedent from the New York Court of Appeals and the significant policy implications, the Second Circuit certified the question to the New York Court of Appeals to determine if paying for patient referrals in violation of New York Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3) disqualifies a provider from receiving no-fault payments under the Eligibility Regulation. View "GEICO v. Mayzenberg" on Justia Law

Joan Stormo and her siblings hired attorney Peter Clark for a real estate transaction, but Clark's actions caused the deal to fall through. Stormo sued Clark for malpractice and won. Clark's insurer, State National Insurance Company, denied coverage based on a prior-knowledge exclusion and Clark's delay in reporting the lawsuit. Stormo, as Clark's assignee, then sued State National for breach of contract and unfair claim-settlement practices.The U.S. District Court for the District of Massachusetts found that factual questions necessitated a trial on the breach-of-contract claim but granted summary judgment to State National on the unfair claim-settlement practices claim. The jury found for Stormo on the breach-of-contract claim, awarding over $1 million in damages. However, the district court granted State National's motion for judgment as a matter of law, ruling that Clark's late notice of the claim voided coverage under the policy.The United States Court of Appeals for the First Circuit affirmed the district court's judgment. The court held that under Massachusetts law, a claims-made policy like Clark's does not require the insurer to show prejudice from late notice to deny coverage. Since Clark failed to provide timely notice, State National had no duty to indemnify or defend him. Consequently, Stormo's claims for breach of contract and unfair claim-settlement practices failed. View "Stormo v. State National Insurance Co." on Justia Law

In this case, the plaintiff, Shandor S. Badaruddin, was sanctioned by the Nineteenth Judicial District Court, Lincoln County, for his conduct as defense counsel in a criminal trial involving his client, Kip Hartman, who faced multiple felony charges related to securities and insurance fraud. The trial was conducted under strict time constraints due to the COVID-19 pandemic, and the court allocated equal time for both the prosecution and defense. Badaruddin was accused of mismanaging his allotted time, leading to a mistrial declaration by the District Court.The District Court found that Badaruddin had deliberately delayed the trial, which led to the mistrial. Consequently, the court imposed monetary sanctions amounting to $51,923.61 against Badaruddin for the costs associated with the trial. Badaruddin appealed the sanctions, arguing that he was not given adequate notice of the court's concerns and that his actions were not deliberate but rather a result of the challenging circumstances.The Supreme Court of the State of Montana reviewed the case and noted that the U.S. District Court had previously ruled that the mistrial declaration was erroneous. The U.S. District Court found that Badaruddin's actions did not constitute deliberate delay and that his efforts to manage the trial time were competent. The U.S. District Court's ruling was affirmed by the U.S. Court of Appeals for the Ninth Circuit, which held that Hartman could not be retried due to double jeopardy protections.Given the federal court's findings, the Supreme Court of Montana concluded that there was no basis for the sanctions under § 37-61-421, MCA, as there was no multiplication of proceedings. The court reversed the District Court's sanction order, determining that the costs incurred were not "excess costs" as defined by the statute. View "Badaruddin v. 19th Judicial District" on Justia Law

A former patients of Pediatric Partners for Attention and Learning, Inc. and its founder, Dr. Joni Johnson, sued them in state court after discovering that the clinic’s in-house psychologist, Sharonda Avery, was not a licensed psychologist. The clinic and Dr. Johnson asked their professional liability insurance carrier, Medical Mutual Insurance Company of North Carolina, to defend and indemnify them in those lawsuits. Medical Mutual responded by filing a declaratory judgment action in federal court, arguing that it could rescind the policy covering Pediatric Partners and Dr. Johnson due to Dr. Johnson’s material misstatements in her insurance applications. The United States Court of Appeals for the Fourth Circuit ruled that Medical Mutual has no duty to indemnify or defend Dr. Johnson or Pediatric Partners under Virginia law due to material misstatements made by Dr. Johnson in her policy applications. The court affirmed the district court's decision that Dr. Johnson's misrepresentation that none of her employees had been subject to disciplinary investigative proceedings was a material misstatement, and therefore, Medical Mutual could rescind its professional liability policy covering Pediatric Partners and Dr. Johnson. View "Medical Mutual Insurance Co. of North Carolina v. Gnik" on Justia Law

This case involves Jeremy Schulman, a former shareholder at the Maryland law firm Shulman, Rogers, Gandal, Pordy & Ecker. Schulman sued insurance companies AXIS Surplus Insurance Company, Endurance American Specialty Insurance Company, and Prosight Syndicate 1110 at Lloyd’s, for breach of contract, detrimental reliance, and lack of good faith, claiming that they wrongfully denied his claim for coverage under his law firm's professional liability insurance policy. The dispute hinges on whether Schulman's indictment in a criminal case qualifies as a "claim" under his professional liability insurance policy, and whether a letter from the insurance companies promising to cover certain costs relating to a subpoena also covered costs related to the later indictment. Schulman also alleges that the insurers acted in bad faith.The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision, granting summary judgment to the defendants. The court held that Schulman's indictment in the criminal case did not constitute a "claim" under his professional liability insurance policy, and that the insurers' letter did not promise to cover costs related to the indictment. The court also held that Schulman's claim of bad faith could not succeed because he was not entitled to coverage under the policy and the insurers did not breach any tort duty by denying coverage. View "Schulman v. Axis Surplus Ins. Co., Inc." on Justia Law

The Supreme Court vacated the opinion of the intermediate court of appeals (ICA) reversing the order of the circuit court granting summary judgment in favor of Defendant in this insurance broker malpractice case, holding that the circuit court and the ICA majority incorrectly analyzed Defendant's burden regarding the causation element.Plaintiff brought negligence and negligent malpractice claims against Defendant. In the original proceedings, judgment was granted for Plaintiff. The ICA remanded the case to the circuit court to include previously excluded testimony. On remand, the circuit court granted summary judgment for Defendant. The ICA reversed. The Supreme Court vacated the ICA"s order and remanded the case to the circuit court for further proceedings, holding (1) to negate the causation element of the negligence and negligent malpractice claims against it Defendant would need to demonstrate that Plaintiff's insurer (Insurer) would not have been legally obligated to advance Plaintiff's defense costs even if Plaintiff's grand jury subpoena matter were timely tendered to Insurer; and (2) the lower courts incorrectly analyzed Defendant's burden regarding the causation element, requiring remand. View "Pflueger, Inc. v. AIU Holdings, Inc." on Justia Law

The Supreme Court affirmed the order of the district court finding that this action brought by Plaintiff against Janice German and Dawes County Abstract & Title, Inc. (collectively, German) arising from title abstracting and issuing commitments and title insurance services German performed for a series of transactions, holding that the district court did not err.The district court concluded (1) the amended complaint stated a single cause of action for professional negligence against German as an abstracter with several theories of recovery; and (2) Neb. Rev. Stat. 25-2222, the two-year statute of limitations for professional negligence, applied, thus time-barring the complaint. The Supreme Court affirmed, holding (1) the district court correctly concluded that Plaintiff was performing abstracter services during the time period in issue; and (2) abstracters of title provide "professional services" within the meaning of section 25-222. View "Mai v. German" on Justia Law

Lawyers brought claims against schools under the Individuals with Disabilities Education Act (IDEA), 20 U.S.C. 1400. After the claims failed, the schools sought their attorney’s fees from the lawyers under the IDEA’s fee-shifting provision. The School Districts alleged that, during the administrative process, the attorneys presented sloppy pleadings, asserted factually inaccurate or legally irrelevant allegations, and needlessly prolonged the proceedings. The lawyers asked their insurer, Wesco, to pay the fees. Wesco refused on the ground that the requested attorney’s fees fell within the insurance policy’s exclusion for “sanctions.”The Sixth Circuit affirmed summary judgment in favor of Wesco. The IDEA makes attorney misconduct a prerequisite to a fee award against a party’s lawyer, so the policy exclusion applied. The court noted that the legal community routinely describes an attorney’s fees award as a “sanction” when a court grants it because of abusive litigation tactics. View "Wesco Insurance Co. v. Roderick Linton Belfance, LLP" on Justia Law

In 2015, Elite sued Legacy for breach of contract. Attorney Bredahl received a $5,000 check from Legacy. On December 30, 2015, and February 26, 2016, he appeared on behalf of Legacy in the Elite suit. Bredahl did not respond to discovery, resulting in an order banning Legacy from putting on evidence at trial. Legacy later retained Hankey Law but neither Legacy nor any defense counsel attended the March 2017 trial. Elite won a $1 million judgment. Elite and Legacy settled the suit for $575,000 in 2018.In October 2017, ALPS issued an insurance policy to Bredahl with loss inclusion starting October 1, 2016. In January 2018, Legacy notified ALPS of a potential claim. Legacy sued Bredahl in April 2019. Bredahl notified ALPS, which indicated that it would defend that suit subject to a complete reservation of rights, then sought a declaratory judgment that the Policy did not apply to the Legacy suit.The district court held that ALPS had no duty to indemnify or defend Bredahl. The Eighth Circuit affirmed. The Policy does not apply to the Legacy suit if the “Insured” knew or reasonably should have known, as of the October 1, 2017 effective date, that his conduct during the Elite suit might be the basis for a “demand for money” against him. Before that date, Bredahl knew of acts or omissions in the Elite suit and reasonably should have known Legacy might bring a claim against him, View "ALPS Property & Casualty Insurance Co. v. Legacy Steel Building, Inc." on Justia Law

Letgolts and Plattner (plaintiffs) remodeled their home in 2008. The contractor, Pinchevskiy, did some demolition and then walked away, causing extensive damage to the home. The plaintiffs retained attorney Marks, who sued Pinchevskiy, the plaintiffs’ home insurer, and their insurance agent who allegedly inaccurately advised the plaintiffs that their existing homeowners' policy would cover possible property damage by Pinchevskiy. The complaint detailed property damage but did not mention personal injury. Marks withdrew from the case in 2012. The plaintiffs retained Pierce, who secured a default judgment against Pinchevskiy in 2015; his insurer, National, filed for liquidation before Pierce could collect on the judgment. Pinchevskiy was bankrupt.The plaintiffs sued Pierce for negligent delay in seeking recovery from National. Pierce’s lawyers argued the plaintiffs could never have prevailed against National because Pinchevskiy’s policy did not cover construction defects. The court entered judgment for Pierce. The court of appeal affirmed, rejecting the plaintiffs’ attempt to assert a personal injury claim based on Plattner’s alleged 2008 fall from temporary stairs installed by Pinchevskiy. National’s policy did cover personal injuries but the tardy, uncorroborated claim was at odds with the detailed lists of problems given to the insurer years before. Pursuing insurance money from National was a lost cause from the start, so whether Pierce committed malpractice did not matter, View "Letgolts v. David H. Pierce & Associates PC" on Justia Law