When a health-care provider appoints a lawyer to represent an injured person in a PIP arbitration, must that lawyer notify the client's personal-injury counsel, and what conflicts arise?

Plain-English summary

A personal-injury lawyer asked the Committee two questions about Personal Injury Protection (PIP) arbitrations, the proceedings filed when an auto insurer denies payment for an injured person's medical care. An injured person who receives care may sign an assignment of benefits letting the health-care provider pursue payment directly from the insurer. The inquiry described an assignment of benefits authorizing the provider to appoint a lawyer and file a PIP arbitration in the injured person's own name if the assignment turns out to be invalid or is not accepted by the insurer, and noted that some provider lawyers were routinely filing petitions naming both the provider and the individual.

On the first question, whether both the injured person and the provider may be named as petitioners, the Committee declined to opine: because the assignee's claim ordinarily divests the assignor of a separate claim, one party would normally be dismissed once the assignment's validity is decided, and the propriety of naming both "is less a matter of ethics than of procedure." The Committee "will not address questions of procedural (or substantive) law."

On the second question, whether the PIP lawyer must notify the injured person's personal-injury lawyer, the Committee concluded there is no such duty and no RPC 4.2 violation. RPC 4.2 bars communicating with a represented person about the subject of the representation without the other lawyer's consent, but a client is free to retain more than one lawyer, and a second lawyer the client retains has no obligation to notify the first and does not violate RPC 4.2 by talking to the client. The Committee added, however, that the PIP lawyer "should advise the client to inform his or her personal injury lawyer of the arbitration," because of the issues discussed next.

The Committee explained why the consultation matters. When an injured person pursues a PIP claim in an individual capacity rather than through an assignee, the arbitrator's findings on causation and medical necessity can, by collateral estoppel, bar relitigation of those issues in a later personal-injury suit; if the same claim is pursued by the provider as assignee, collateral estoppel generally will not apply. RPC 1.4(c) requires the lawyer to explain a matter enough for the client to make informed decisions, so the PIP lawyer must inform the client of the nature of the representation and its potential adverse effect on a later personal-injury lawsuit, and should ask whether the client has a personal-injury lawyer and advise the client to discuss the arbitration with that lawyer. The Committee also flagged that the entire-controversy doctrine may require all of the injured person's individual claims to be presented in one PIP petition, so representing the person for only one claim is limited in scope and "may not be reasonable under the circumstances" under RPC 1.2(c). Finally, a lawyer representing both the injured person and the provider may have a conflict under RPC 1.7(a)(2): although both share an interest in payment, the injured person's interests may exceed the provider's where the medical claim is small or causation is difficult, and the provider may lack the incentive to fully litigate.

In practice

The opinion holds that a lawyer appointed by a health-care provider to represent an injured person in a PIP arbitration has no obligation to notify a lawyer representing that person in an underlying personal-injury lawsuit, and that communicating with the client does not violate RPC 4.2. Per the opinion, the lawyer must nonetheless communicate directly with the injured person about the arbitration and explain the potential adverse effect the arbitration findings (on causation and medical necessity) may have on a subsequent personal-injury suit, under RPC 1.4(c), and should ask whether the person has a personal-injury lawyer and advise the client to discuss the arbitration with that lawyer. The opinion identifies two further constraints: representing the person for only one of several individual claims may be an unreasonable limited-scope representation under RPC 1.2(c), and representing both the injured person and the provider may create a conflict under RPC 1.7.

Common questions

Q: Must a lawyer appointed for a client's PIP arbitration notify the client's personal-injury lawyer?

A: No. The Committee concluded a client may retain more than one lawyer, and a lawyer retained for the PIP arbitration has no ethical duty to notify the personal-injury lawyer and does not violate RPC 4.2 by communicating with the client. The opinion adds that the lawyer should advise the client to inform the personal-injury lawyer of the arbitration.

Q: Why does it matter whether the PIP claim is brought by the injured person or by the provider?

A: Per the opinion, when the injured person pursues the PIP claim individually, the arbitrator's findings on causation may, by collateral estoppel, bar relitigation in a later personal-injury suit. If the provider pursues the claim as assignee, collateral estoppel generally will not apply.

Q: What must the PIP lawyer explain to the client?

A: Under RPC 1.4(c), the lawyer must explain the nature of the representation and the potential adverse effect the arbitration findings may have on a subsequent personal-injury lawsuit, and should ask whether the client has a personal-injury lawyer and advise the client to discuss the arbitration with that lawyer.

Q: Can the lawyer represent both the injured person and the health-care provider?

A: The opinion concludes that doing so may create a conflict under RPC 1.7(a)(2). Although both share an interest in obtaining payment, the injured person's interests may exceed the provider's where the claim is small or causation is difficult, and the provider may lack the incentive to fully litigate.

Q: Did the Committee decide whether both parties can be named as petitioners?

A: No. The Committee declined to opine, treating the question of naming both the provider and the individual on the petition as a matter of procedure rather than ethics, and stating it would not address questions of procedural or substantive law.

Background and rules framework

The opinion applies RPC 4.2 (communication with a person represented by counsel; cf. Model Rule 4.2), RPC 1.4(c) (explaining a matter so the client can make informed decisions; cf. Model Rule 1.4), RPC 1.2(c) (limited-scope representation that must be reasonable and consented to; cf. Model Rule 1.2), and RPC 1.7(a)(2) (concurrent conflicts arising from the lawyer's responsibilities to another client; cf. Model Rule 1.7). It situates these duties against New Jersey decisional law on PIP assignments, collateral estoppel, and the entire-controversy doctrine.

Citations and references

Rules of Professional Conduct:

• RPC 4.2 (communication with a represented person); cf. Model Rule 4.2
• RPC 1.4(c) (explaining a matter for informed decisions); cf. Model Rule 1.4
• RPC 1.2(c) (limited-scope representation); cf. Model Rule 1.2
• RPC 1.7(a)(2) (concurrent conflict of interest); cf. Model Rule 1.7

Cases:

• Lech v. State Farm Ins. Co., 335 N.J. Super. 254 (App. Div. 2000), assignment of PIP claims makes the provider the real party in interest
• Lopez v. Patel, 407 N.J. Super. 79 (App. Div. 2009), collateral estoppel from PIP findings in a later personal-injury suit
• Habick v. Liberty Mutual Fire Ins. Co., 320 N.J. Super. 244 (App. Div.), certif. denied 161 N.J. 149 (1999), preclusive effect of PIP arbitration findings
• Pace v. Kuchinsky, 347 N.J. Super. 202 (App. Div. 2002), assignee provider lacks the incentive to "make a case," so collateral estoppel generally will not apply

See also

• NJ ACPE Op. 713: Unbundled Services and Ghostwriting for Pro Se Litigants
• NJ ACPE Op. 743: Imputing Personal-Interest Conflicts
• NJ ACPE Op. 739: Reply-All on Group Emails and RPC 4.2

Source

• Landing page: https://dspace.njstatelib.org/bitstreams/540bcaec-b176-4cfd-8434-bca960b4bdc3/download
• Original PDF: https://dspace.njstatelib.org/bitstreams/540bcaec-b176-4cfd-8434-bca960b4bdc3/download

Original opinion text

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

Issued by ACPE May 17, 2012

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the Supreme Court of New Jersey

OPINION 724

Lawyer Appointed by a Health Care Provider to Represent an Injured Person in a Personal Injury Protection (PIP) Arbitration

The Advisory Committee on Professional Ethics received an inquiry from a personal injury lawyer who represents plaintiffs. Inquirer asked whether a lawyer may, consistent with the Rules of Professional Conduct, name both the injured person and the health care provider as petitioners in Personal Injury Protection (PIP) arbitration proceedings against insurance companies. Inquirer further asked whether a lawyer who represents the injured person in the arbitration has an obligation to give notice to the lawyer representing the person in an underlying personal injury lawsuit.

A PIP arbitration petition is filed when the automobile insurance company has denied payment for health care services provided to an injured person. When receiving medical care, an injured person may sign an assignment of benefits to the health care provider, authorizing the health care provider to pursue payment directly from the insurer. "[I]n the context of assignment of PIP claims, it has been held that the health care provider is the real party in interest and that the assignment of a patient's PIP claims against its insurer divests the patient of a right to bring a separate action." Lech v. State Farm Ins. Co., 335 N.J. Super. 254, 258 (App. Div. 2000).

Inquirer presented to the Committee an assignment of benefits providing that the injured person authorizes the provider to appoint a lawyer and file a PIP arbitration petition in the injured person's own name if the assignment is found invalid or is not accepted by the insurer. Inquirer stated that a small number of lawyers for health care providers are relying on this language to routinely file PIP arbitration petitions in the name of both the provider and the individual injured person.

Ordinarily, since the claim of the assignee divests the assignor of a separate claim, one of these two parties would be dismissed from the proceeding when the validity of the assignment is stipulated or decided. It is not clear from the inquiry whether the PIP arbitrator permits the filing of an action naming both parties with an eye to dismissing one of the parties after making the appropriate finding on the validity of the assignment, or merely ignores the procedural inconsistency and proceeds with the two petitioners in the action. The propriety of naming both parties on a petition for arbitration is less a matter of ethics than of procedure. The Committee will not address questions of procedural (or substantive) law.

Inquirer further asked whether the PIP arbitration lawyer has an obligation to give notice to a lawyer representing the injured person in an underlying personal injury lawsuit. Rule of Professional Conduct 4.2 prohibits a lawyer from communicating with a person represented by counsel about the subject matter of the representation unless the other counsel consents. In this situation, the client has agreed to appointment of a lawyer for the PIP arbitration in the event the assignment of benefits is not accepted by the insurer or is held invalid.

Clients are free to retain more than one lawyer for the same, or similar, claims. A second lawyer retained by the client has no ethical obligation to notify the first lawyer and there is no violation of Rule of Professional Conduct 4.2 when the second lawyer, here the PIP lawyer, talks to the client about the case. For reasons discussed below, however, the PIP lawyer should advise the client to inform his or her personal injury lawyer of the arbitration.

When an injured person pursues a PIP claim in his or her individual capacity, instead of through an assignee, the disposition of the PIP claim may have an adverse effect on a subsequent personal injury lawsuit. Issues decided by a PIP arbitrator include causation, whether the injuries for which treatment was rendered were caused by the automobile accident or were the result of a pre-existing injury, and whether the treatment is medically necessary. If the arbitrator finds that the injury was not proximately caused by the automobile accident, and the injured person filed the petition for arbitration in an individual capacity, principles of collateral estoppel may bar relitigation of the finding on causation in a subsequent personal injury suit. Lopez v. Patel, 407 N.J. Super. 79, 88-89 (App. Div. 2009); Habick v. Liberty Mutual Fire Ins. Co., 320 N.J. Super. 244, 257 (App. Div.) certif. den. 161 N.J. 149 (1999). If the PIP arbitration was brought not by the individual but, rather, by a health care provider as assignee, collateral estoppel generally will not apply. Pace v. Kuchinsky, 347 N.J. Super. 202, 217 (App. Div. 2002) (noting that the assignee provider did not have the requisite "incentive to make a case").

Rule of Professional Conduct 1.4(c) requires a lawyer to "explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." A lawyer appointed by a health care provider to represent an injured person in a PIP arbitration has an obligation to inform the client of the nature of the representation and the potential adverse effect on a subsequent personal injury lawsuit. In the course of that initial consultation, the lawyer should inquire whether the injured person has consulted with a personal injury lawyer and, if so, advise the client to discuss the arbitration with that lawyer.

Further, if the injured person received medical care from other health care providers and payment was denied, the entire controversy doctrine may require all claims brought in the injured person's individual capacity to be presented in one PIP petition. Rule of Professional Conduct 1.2(c) permits limited representation provided "the limitation is reasonable under the circumstances and the client gives informed consent." Representation of the injured person in an individual capacity for just one of the claims is limited in scope and may not be reasonable under the circumstances.

The appointed PIP arbitration lawyer also may have a conflict of interest under Rule of Professional Conduct 1.7(a)(2) when he or she represents both the injured person and the health care provider. While the injured person and the health care provider have a common interest in obtaining payment for medical expenses, the interests of the injured person may exceed those of the health care provider when the medical expense claim is small or there are difficult questions of causation. The health care provider may lack the requisite incentive to fully litigate the matter.

Accordingly, a lawyer who represents an injured person in a PIP arbitration does not have an obligation to notify a lawyer representing the injured person in an underlying personal injury lawsuit. The lawyer, however, must communicate directly with the injured person about the arbitration and explain the potential adverse effect the arbitration findings may have on any subsequent personal injury lawsuit. RPC 1.4(c). In the course of this consultation, the lawyer should inquire whether the injured person has consulted with a personal injury lawyer and advise the client to discuss the arbitration with that lawyer. If the injured person has received medical care from other health care providers, the representation may not be reasonable under the circumstances, violating Rule of Professional Conduct 1.2(c). Lastly, a lawyer who represents both the injured person and the health care provider may have a conflict of interest under Rule of Professional Conduct 1.7.