Interpleader: Trap or Opportunity? Perspectives on Personal Injury

The California bar launched a new device which can help dishonest lawyers. The legal device is confusing and often thwarts a chiropractor’s right to collect on a personal injury lien. Welcome to the interpleader.

Many states permit chiropractors to enforce their liens if an attorney signs a lien or letter of protection. Hundreds of attorneys are disciplined and many lose their licenses as a result of failing to honor a lien. Attorneys are disbarred when stashing the doctor’s money and pocketing it themselves from their trust account. Most bar associations hold an attorney to a higher duty when handling a client trust account. Attorneys are considered a fiduciary. A fiduciary cannot use the trust account for his or her own personal purposes. When lawyers receive a personal injury check, he or she has an obligation to treat all monies as an executor would do in a probate action. Attorneys can get into a lot of trouble when they take other people’s money, including doctor’s fees.

In many states, not paying chiropractors in PI cases is profitable or just plain good sport. Some jurisdictions, like New Jersey, Michigan and Massachusetts, provide few rights for the chiropractor. Other jurisdictions such as Virginia and Georgia offer a limited lien protection but often not exceeding more than $1,000 for the chiropractor. In California, the whole fee is protected under a lien.

Because the California bar handles hundreds of complaints each year against attorneys who don’t honor chiropractic liens, the bar recently threw a curve ball. The bar now recommends to attorneys that if they cannot get doctors to accept a cut on doctors’ liens, the attorney can file an interpleader.

An interpleader is a common device permitting the court to choose who gets paid from a trust account. This may happen when a PI attorney controls money owed to other people. If a PI client “objects” to the doctor’s fee, then the attorney can claim that they are “conflicted” between their duty to honor the lien against their duty to obey instructions from their client. The bar suggests that the attorney take the doctor’s fee from his/her trust account and deposit the disputed funds into the local court. The PI attorney then names both their client and the doctor as defendants. The attorney always gets their fee, but the client and doctor have to fight it out. This is an enormous disadvantage for the chiropractor. First, the doctor will have to either retain counsel or practice law. Second, it is quite time consuming. Moreover, the delay of not getting paid, which
the doctor has justifiably earned, is an additional burden. What’s to Be Done?

Attorneys who intend to defraud the chiropractor now have a nice legal device which they can use to simply take the money owed to the doctor, threaten the doctor and often beat the doctor down to reduce his fee considerably. Instead, Howard Ross has a suggestion. When your attorney calls to beat down your bill, the doctor should respond by saying, “If you intend to interplea my fee, you must interplea the entire sum of the personal injury settlement including your fee and the client’s portion.”

The attorney will not like that. The doctor then should immediately fax a letter to the attorney and to his patient insisting that the entire PI settlement is “in dispute.” The doctor should not be the only one who has to litigate and wait to get paid. By sending this letter, the doctor will document the record that may impress the local judge who would be offended if the attorney interpled only the doctor’s fee.

This would put the attorney in a difficult position. Your letter clearly emphasizes the attorney’s transparent behavior by attempting to make the doctor suffer while the lawyer’s own fee is immunized. A sample letter is attached (Editor’s note — see sample at the end of this article). Assuming the attorney refuses to turn all the PI proceeds to the local court, the doctor would have a reasonable basis of asking the judge to demand from the attorney that the lawyer’s fees must also be turned over to the judge’s control for a complete and fair disposition. The suggested letter should be sent by certified mail to the attorney, with a copy to the patient plus a copy to the leader of the local bar association.

Many local bar associations encourage fee disputes to be resolved through the local bar association. Some bar associations are more honest and straightforward than others. Nevertheless, a crooked attorney generally does not want to face his peers knowing that other attorneys will clearly recognize what the PI attorney is doing against the doctor.

Finally, it never hurts to file a complaint to the state bar against an attorney if he is not handling a personal attorney settlement in a fair and equitable manner. Any time an attorney is not acting responsibly with other people’s money, the attorney should be turned over to the bar. Some bar associations may not take decisive action, but the legal culture is changing. When a bad attorney starts accumulating a number of complaints, even the most inactive bar association will have to take action.

[This is a sample letter that chiropractors can use in response to an interpleader. The letter should be sent by certified mail to the attorney, with a copy to the patient and a copy to the leader of the local bar association.]

Facsimile and Certified Mail
Dewey, Cheatem & Howe
123 ABC Street
Anywhere, USA 12345-6789
Personal Injury Patient:
Date of Accident:
RE: Demand for Interpleader
Dear Mr. Dewey:

You explained to me that there is a conflict of interest between your patient and my office regarding the payment of my fee. You claim you are required to file an interpleader in this action.

Not only does my office dispute the sum involving my fee, but we dispute the whole sum of the personal injury settlement. Therefore, I request that you tender the entire settlement/judgment to the Superior Court, including your fees and costs, the client’s portion and all medical fees.

I would expect you to file the interpleader no later than 14 days from the date of the letter, unless your client agrees to pay my fee in full.

Sincerely,
_________________________________
Doctor of Chiropractic
Shawn Steel, JD, MA, BA
Assistant Professor of Ethics and Jurisprudence
Cleveland Chiropractic College, Los Angeles