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Recently Closed Claims’ Lessons March 2020
Post on April 17th, 2020
OBLIC paid approximately $1,208,290 to resolve 11 claims that were closed last month, in addition to 2 that were closed without any payment.
Payments included gross loss payments, such as judgments awarded or settlement payments, and the attorneys’ fees and costs OBLIC paid to defend its insureds.
This is part of a continuing monthly series providing information on recently closed claims.
We will provide claim statistics on the areas of practice in which the act, error or omission occurred and generalized information on the cause of recently closed claims. Our intention with this series is to demonstrate the value that we provide to you, our insureds, through the experiences we have had with our other insureds and make you aware of the common areas of risk and ways to avoid similar claims in the future.
Hopefully, by seeing where your colleagues may have taken a step in error, you will know where to be cautious!
Recently Closed Claims by Area of Practice and Alleged Cause of the Claim:
  • Administrative Law/Social Security – Allegation by client that he was not advised that a subsequent social security disability award would be offset by the settlement received in the workers’ compensation action.
  • Bankruptcy – Allegation by the client/debtor that the Insured failed to protect a creditor’s mortgage on the client/debtor’s property after the mortgage was stripped from the property and liquidated in a chapter 7 bankruptcy.
  • Bankruptcy – Allegation that the Insured failed to timely file a motion to strip a second mortgage from a primary residence of debtors in their chapter 13 bankruptcy.
  • Commercial Matter – Insured allegedly acted as escrow agent in a financing deal for religious organization that was required to first “fund” the financing of a several million-dollar loan it sought. Allegation that insured was aware of the issues of the financier and should not have disbursed funds with purported knowledge that the financing would not be completed.
  • Criminal / Juvenile – Allegation that the Insured failed to accurately calculate the length of time served by their client prior to the client’s re-incarceration.
  • Defendant Personal Injury – Allegation that Insured missed the deadline to identify experts to defend action by estate against a nursing home.
  • Domestic Relations – Allegation that Insured failed to properly advise of risk of adverse outcome if the client decided to proceed with trial rather than accept settlement proposal. Outcome following trial left the client in a significantly worse position than if the client had accepted the settlement proposal.
  • Employment – Allegation that the client was not advised to settle a poor employment discrimination claim against a university after the client was denied tenure.
  • Employment – Allegation that Insured extorted magazine publisher on behalf of her client in alleged attempt to renegotiate a severance package.
  • Labor – Allegation that the Insured severely hampered and prejudiced efforts of achieving a fair and just result in a labor dispute involving a class of employees and violations of overtime pay despite cost and settlement restrictions imposed by the client.
  • Plaintiff Personal Injury – Allegation that Insured missed Kentucky’s one-year statute of limitations to file a personal injury case. Client allegedly fell in home he was working on as a contractor.
  • Probate, Estates & Trust – Insured appeared at a related eviction hearing on behalf of the company after being disqualified as corporate counsel in a probate matter. Corporate trustee filed a motion for contempt for appearing and taking notes at the eviction matter.
  • Probate, Estates & Trust – Allegation that Insured failed to sell property while administering an estate that led to squatters entering the property requiring eviction and expenses by the city in maintaining the property.
We see claims involving failure to advise to settle intermittently but they can arise in nearly all areas of practice. What these claims usually boil down to is that the client was allegedly not made aware of the risks of rolling the dice in proceeding with trial or with the outcome of a pending motion, especially where a settlement proposal was pending that was better than the final outcome.
Two common facts in these types of claims are the client asking for direction on what to do and no clear written advice warning of the risk of not settling the claim. While not everything can be documented in a formal letter, it is vitally important to advise the client, at least by email, of the risks involved in taking a specific course of action, especially for a hearing or trial, laying the foundation for the client to make an “informed decision.” There is always risk with proceeding to trial. At worst, everyone will forget that the letter existed when you win at trial or on motion, at best, you have evidence that the client made an informed decision to gamble with the outcome of their case.
Cause of Claim does not mean that the claim was meritorious or that there were any damages arising from the alleged breach of the standard of care. The alleged cause is the brief summary of the allegation made by the claimant against our insured.
In addition to the Recently Closed Claims noted above, we also closed four disciplinary matters last month.
Disciplinary coverage is separate and apart from the coverage available for “Claims” and is not included in the totals noted above. All OBLIC Legal Professional Liability Policies provide an additional limited legal fee and expense coverage for disciplinary actions. The coverage is designed to reimburse you for the expenses for legal services charged by a lawyer to defend you.
See XIV. LIMITED LEGAL FEE AND EXPENSE COVERAGE FOR DISCIPLINARY ACTIONS in your policy for the terms and conditions of the disciplinary coverage.
“Historically low count AOPs” include the following Areas of Practice. Each of these AOPs include only one or two claims as of 03/31/2020 and did not exceed two closed claims in 2019.
  • Administrative Law / Social Security
  • Appellate
  • Civil Rights
  • Criminal / Juvenile
  • Defendant Personal Injury
  • Ethics
  • Labor
  • Workers’ Compensation
Please contact me at cmarsh@oblic.com if you have any questions!
Carl Marsh, Esq.
Claims Counsel
Ohio Bar Liability Insurance Company
614-488-7924