A secondary health insurer paid my client's medical bills in a tort case but never filed a lien. Do I have to pay the insurer out of the settlement?

Plain-English summary

The inquiring attorney explained that in many tort cases, secondary health insurance companies pay the client's medical bills and then fail to file a lien. The attorney asked whether he or she should pay the secondary health insurance carrier any money out of a settlement when there is no lien.

The panel answered no, applying Rule 1.15(b) ("Safekeeping Property"), which requires a lawyer who receives funds in which a client or third person has an interest to notify that person and promptly deliver funds the client or third person is entitled to receive.

The panel reasoned that in the usual situation the medical insurer pays the bills without any verbal or written assurance from the attorney in the lawsuit. Assuming the inquiring attorney gave no assurance that the bills would be paid, the attorney is not obligated to pay the insurance company from the settlement. The panel added that, under Rule 1.15(b), the attorney should counsel the client that the client may be obligated, under the client's contract with the medical providers, to reimburse the insurance company.

Currency note

This opinion was issued in 1995, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 1.15 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which renumbered and amended several provisions. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: Must a lawyer pay a health insurer from settlement funds when there is no lien?

A: Under this opinion, no. The panel concluded that, absent a lien and absent any assurance by the attorney, Rule 1.15(b) does not obligate the attorney to pay the secondary health insurer.

Q: What would change the answer?

A: The panel's conclusion assumed the attorney gave no verbal or written assurance that the bills would be paid; the opinion is framed around the absence of both a lien and any such assurance.

Q: What should the lawyer tell the client?

A: The panel stated that, under Rule 1.15(b), the attorney should counsel the client that the client may be obligated, per the client's contract with the medical providers, to reimburse the insurance company.

Background and rules framework

The opinion applies Rule 1.15 (Safekeeping Property), corresponding to Model Rule 1.15, quoting subsection (b) on a lawyer's duty to notify and deliver funds to a client or third person with an interest in them. The panel's analysis turned on whether the secondary insurer had a cognizable "interest" in the settlement funds: with no lien and no assurance from the attorney, the panel found no duty to pay the insurer, leaving any reimbursement obligation to the client's own contract with the providers.

Citations and references

Rules of Professional Conduct:

• MR 1.15 (safekeeping property)
• RI RPC 1.15

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• RI EAP Op. 95-12: Disputed Medical Lien Funds
• RI EAP Op. 95-27: Medical Lien From Prior Counsel
• RI EAP Op. 95-29: Fee Reduction vs Medicare Lien

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2095-57.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

FINAL

ETHICS ADVISORY PANEL
OPINION # 95-57, - REQUEST # 634
ISSUED - DECEMBER 14, 1995

FACTS:

The inquiring attorney states that in many situations, the secondary health insurance companies pay medical bills regarding tortious cases and subsequently fail to file a lien.

ISSUES PRESENTED:

The inquiring attorney asks whether he/she should pay the secondary health insurance carrier any monies from a settlement absent a lien.

OPINION:

No.

REASONING:

The Panel believes that Rule 1.15(b) "Safekeeping Property" is applicable to this inquiry and states in part:

(b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third persons, shall promptly render a full accounting regarding such property.

In the usual situation, medical insurance companies pay the bills without verbal or written assurances by the attorney involved in the lawsuit. Assuming the inquiring attorney did not provide any assurances that the bills would be paid, he/she is not obligated to pay the insurance company. Pursuant to Rule 1.15(b) the inquiring attorney should counsel the client that the client may be obligated, per his/her contract with the medical providers, to reimburse the insurance company.