Can a personal injury lawyer give medical lienholders an accounting of how settlement proceeds were disbursed?

Plain-English summary

A lawyer represents a personal injury client whose medical providers hold valid liens against any recovery. N.C.G.S. 44-50.1 lets medical lienholders request an accounting of how settlement proceeds are disbursed when certain conditions are met. The question is whether providing that accounting violates the lawyer's confidentiality duty.

The opinion concludes it does not. The statute imposes a duty, in limited situations, to account for the manner in which settlement proceeds are disbursed, and complying with that statutory mandate does not violate the Revised Rules of Professional Conduct. The opinion grounds the answer in Rule 1.6(b)(1), which permits disclosure of confidential information to the extent required to comply with law.

In practice

Under this opinion, as the North Carolina rule stood at the time, furnishing the disbursement accounting that N.C.G.S. 44-50.1 calls for is permitted when the statute's conditions are met, because Rule 1.6(b)(1) allows disclosure required by law. The opinion's holding is tied to the statutory accounting duty; it does not address disclosures the statute does not require.

Common questions

Q: Does giving medical lienholders a disbursement accounting breach client confidentiality?

A: No. The opinion concludes the lawyer does not violate the Rules of Professional Conduct by complying with N.C.G.S. 44-50.1, because Rule 1.6(b)(1) permits disclosure to comply with the law.

Q: When does the accounting duty arise?

A: The opinion notes N.C.G.S. 44-50.1 imposes the accounting duty only in limited situations, when the statute's conditions are met and a medical lienholder requests it.

Background and rules framework

The opinion interprets Rule 1.6 of the North Carolina Rules of Professional Conduct (confidentiality of information, the state counterpart to Model Rule 1.6), specifically the Rule 1.6(b)(1) exception permitting disclosure to comply with law. It applies that exception to the accounting duty created by N.C.G.S. 44-50.1 for medical lienholders in personal injury settlements.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.6 (confidentiality of information)
• N.C. Rule 1.6(b)(1) (disclosure to comply with law)

Statutes:

• N.C.G.S. 44-50.1 (accounting of disbursements to medical lienholders)

See also

• ABA Formal Op. 96-403: Insured Objecting to Settlement
• NC State Bar 2009 FEO 4: Credit Card Trust Acct

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2003-formal-ethics-opinion-15/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

Attorney A represents Client in a personal injury matter. Several medical providers treated Client and now have valid medical liens against any funds awarded. N.C.G.S. § 44-50.1 provides that medical lienholders may request an accounting of disbursements made on behalf of a lawyer's client when certain conditions are met. May Attorney A provide an accounting of the disbursements from Client's settlement proceeds to the medical providers?

Opinion:

N.C.G.S. § 44-50.1 imposes a duty, in limited situations, to account for the manner in which settlement proceeds are disbursed. Attorney A does not violate the Revised Rules of Professional Conduct by complying with the mandates of the statute. Rule 1.6(b)(1).