Florida Bar Staff Opinion 30310 – It is Unethical for Defense Counsel to Request indemnification/hold harmless regarding MSP Executed by Plaintiff CounselPosted date in Liens, Medicare, Medicare Secondary Payer Act, Medicare Set Asides, MSP Compliance
The Florida Bar issued Staff Opinion 30310 on 4/1/2011. In the opinion, the Florida Bar addressed “whether an attorney representing a plaintiff in a personal injury matter under a contingency fee agreement may personally sign a settlement release containing a hold harmless and indemnification agreement in favor of the opposing party which would obligate the plaintiffs attorney to indemnify and hold harmless the defendant for any future liability under the Medicare Secondary Payor Act.” The opinion was sought by a Florida Justice Association member and Tampa Bay plaintiff personal injury attorney. With my help, the plaintiff attorney compiled all of the ethics opinions from across the country addressing this particular issue. Relying upon the ethical opinions from across the country, the Florida Bar found it was a violation of the Rules Regulating the Florida Bar for defense counsel to request plaintiff counsel to indemnify and hold harmless the defendant for any future liability under the Medicare Secondary Payor Act (MSPA).
The opinion is unique in that it addresses not only Medicare Conditional Payments but also Medicare Set Aside requirements because of the way the request was fashioned by the requesting plaintiff attorney. As far as I am aware, this is the first ethics opinion in the United States to address the indemnification/hold harmless issue for Medicare Set Asides. The Florida Bar determined requesting indemnification/hold harmless executed by plaintiff counsel was a violation of the Rules Regulating the Florida Bar based upon Rule 4-1.8(e). Rule 4-1.8(e) provides:
(e) Financial Assistance to Client. A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and
(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.
Because an agreement by plaintiff counsel to indemnify/hold harmless the defendant for any violation of the MSPA would be providing financial assistance to a client, it is a violation to do so. The agreement to indemnify/hold harmless is not advancing court costs or expenses of litigation which are the only approved methods of providing financial assistance to a client under 4-1.8(e). In addition, the Florida Bar found that executing an indemnification/hold harmless agreement would result in a conflict of interest between plaintiff counsel and the client under Rule 4-1.7(a)(2). This is so “[b}ecause t creates a substantial risk that the representation of the client would be materially limited by the lawyer’s personal interest in not having to pay the client’s debts.”
The opinion went on to conclude that “a lawyer should generally avoid becoming a party to a client’s settlement agreement unless the agreement addresses the lawyer’s release of a claim for attorneys’ fees.” Finally, the Florida Bar opinion indicated that it is improper for defense counsel to request that a plaintiff lawyer enter into an indemnification/hold harmless agreement regarding MSP compliance. “Such a proposal could violate Rule 4-8.4(a) which states that a lawyer shall not ‘violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another’.”
The opinion concludes with the statement that “a lawyer should not agree to personally indemnify an opposing party. Such an agreement violates Rules 4-1.8(e) and 4-1.7(a)(2).” “Furthermore, a lawyer should not ask or require that another attorney enter into an agreement to personally indemnify an opposing party. Such conduct would violate Rule 4-8.4(a).”