What should a lawyer do when a client revokes a medical-bill assignment after the lawyer is already holding the settlement proceeds the doctor claims?

Plain-English summary

In a personal injury case, the client had executed a medical assignment form directing payment of unpaid medical bills out of any recovery. After settlement, the client specifically withdrew the lawyer's authority to retain a portion of the proceeds to pay the physician; following the client's instructions, the lawyer distributed the proceeds to the client after fees and costs. The physician then demanded payment from the lawyer. The lawyer asked whether he was personally obligated to pay the doctor and whether, in the face of the client's withdrawal of authority, he could withhold or pay funds.

The committee treated the first question, whether the lawyer was personally obligated to the physician, as one of law beyond the committee's jurisdiction. On the ethical question of the lawyer's course when the client withdraws authority while the lawyer holds the funds, the committee said the lawyer should first endeavor to help the client and the physician reach a compromise. Failing that, the lawyer should institute an interpleader action in a court of competent jurisdiction, naming the client and the physician as defendants, and the interpleader need not involve any portion of the funds beyond the physician's demand. The committee noted that many bar associations and medical societies have adopted voluntary codes to resolve such situations, and emphasized that the opinion did not address a situation where the physician's claim arose from a contract between the physician and the attorney.

Currency note

This opinion was issued in May 1968, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Canon 11 on handling client funds and property. Safekeeping of client and third-party property, including funds in which a third person claims an interest, is now governed by Rule 4-1.15 of the Rules Regulating The Florida Bar (Model Rule 1.15). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: A client tells me to release all the settlement funds, but a doctor with an assignment is demanding payment. What does this opinion say to do?

A: The committee said the lawyer should first try to help the client and the physician reach a compromise, and if that fails, file an interpleader action naming both as defendants so the court can decide who is entitled to the disputed amount.

Q: Does the opinion decide whether the lawyer personally owes the doctor?

A: No. The committee treated that as a question of law outside its jurisdiction and addressed only the lawyer's ethical course of conduct.

Q: Does the interpleader have to cover the whole recovery?

A: No. The committee said the interpleader need not involve any portion of the settlement funds beyond the amount the physician demanded.

Background and rules framework

The opinion applied the former Canon 11, which governed a lawyer's handling of client money and property. That subject is now addressed by Rule 4-1.15 of the Rules Regulating The Florida Bar, including the handling of property in which both a client and a third person claim an interest; the Model Rule analogue is Rule 1.15.

Citations and references

Rules of Professional Conduct:

• Canon 11 [Canons of Professional Ethics; handling client funds and property]

See also

• FL Bar Ethics Op. 70-17: Retaining Lien on Client Documents and Funds
• FL Bar Ethics Op. 68-37: Retaining Lien on Trust Funds

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-67-36/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-67-36.pdf

Original opinion text

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

FLORIDA BAR ETHICS OPINION
OPINION 67-36
May 28, 1968
Advisory ethics opinions are not binding.
An attorney holding settlement funds or judgment proceeds for a client who previously assigned a portion thereof to a physician and thereafter repudiated the assignment should institute an appropriate interpleader action.
Canon: 11
Chairman MacDonald stated the opinion of the committee:
A member of The Florida Bar advises as follows:
In a plaintiff's personal injury case, after obtaining settlement or collecting the proceeds of a judgment, the client, who has previously executed a medical assignment form for the payment of unpaid medical bills for medical services incurred in connection with injuries sustained in an accident, specifically withdraws authority from the attorney to retain a portion of the proceeds for the purpose of paying the medical bills.
In accordance with instructions of the client, after payment of the attorney's fees and legal costs, the proceeds are distributed to the client. The medical bills are not paid by the client. The doctor then makes demand upon the attorney for payment of his bill.
Is the attorney personally obligated to pay the doctor's bill? In the face of a withdrawal of the authority to pay the unpaid medical bills, is the attorney at liberty to withhold from the client's proceeds a sum sufficient to pay the doctor's bill and is he at liberty to, in fact, make said payment in the face of the client's instructions?
The first question as to whether the attorney is personally obligated to pay the physician is, of course, one of law and is beyond the jurisdiction of this Committee.
With reference to the second question, which in effect seeks instruction as to the ethical course of conduct to be followed when the client withdraws authority to pay the physician while the attorney is holding the funds of this settlement, an ethical question within our jurisdiction is presented. It is our belief that a lawyer confronted with this dilemma should initially endeavor to assist his client and the physician in effecting a compromise. Failing at this effort, it is our belief that the lawyer should institute an interpleader action in a court of competent jurisdiction naming his client and the physician as defendants. Naturally it would not be necessary for the interpleader to involve any portion of the settlement funds in excess of the demands of the physician.
Many bar associations and medical societies have resolved problems of this type by adopting voluntary codes setting forth guidelines to be followed by their members in resolving such situations.
We emphasize that this opinion does not consider a situation in which the debts of the physician arise from a contract effectuated between the physician and the attorney.