FKB's Andrew Kowlowitz obtains dismissal of a conflict of interest claim against an established defense law firm arising from the defense of multiple parties in an underlying medical malpractice action.2/11/2011

FKB's client, a prominent defense firm specializing in the field of medical malpractice ("Law Firm"), represented several defendants in a medical malpractice action arising from the failure to diagnose and treat a malignant lung tumor. The Law Firm represented a radiologist ("Radiologist"), the radiological practice group, a hospital and another physician. Discovery was conducted in the underlying medical malpractice action. Following discovery, it became apparent that the liability prospects were poor. After extensive discussions, the defendants provided their unconditional consent to settle, as required by their medical malpractice insurer. Shortly thereafter, a settlement was negotiated and reached between the plaintiff and the medical malpractice defendants. The settlement was funded entirely by the defendants' medical malpractice insurer.

Subsequently, the Radiologist revoked his unconditional consent to settle, and commenced the instant action against the Law Firm alleging that the Law Firm engaged in a conflict of interest for failing to disclose in writing that the Firm represented several defendants in the underlying medical malpractice action. The Radiologist alleged that he would not have agreed to settle the medical malpractice claim had he known the Law Firm was representing several parties, and that the underlying settlement has resulted in compensable damages – namely, an increase in medical malpractice insurance premium, loss of work and revenue. The Complaint contained causes of action for legal malpractice, breach of fiduciary duty/conflict of interest, fraud and Judiciary Law 487 violations.

Following the exchange of documentation, FKB filed a motion for summary judgment pursuant to CPLR 3212 seeking dismissal of the claims against the Law Firm. FKB argued inter alia that the Radiologist cannot prove the essential element of "but for" proximate causation, or that the purported conflict of interest caused the Radiologist to suffer damages. FKB argued that the Radiologist's decision to settle the underlying medical malpractice claim was made in reliance upon a fully developed record in the medical malpractice action, including the opinions of several independent medical professionals who all concurred that medical malpractice had occurred. FKB argued that "but for" the Law Firm's alleged conduct, the Radiologist would not have received a better result in the underlying medical malpractice; the record reflected that the Radiologist had, in fact, breached the applicable standard of care in failing to diagnose and treat the cancerous tumor. FKB also argued that the Radiologist's damages were speculative and beyond legal proof, and that the fraud and Judiciary Law claims were duplicative of the legal malpractice/conflict of interest claims as they arose from the same set of operative facts.

Following oral argument, on February 2, 2011, Hon. Paul Wooten (J.S.C., New York County) issued a Decision and Order granting the Law Firm's motion for summary judgment. The Court found that the Radiologist's inability to prove "but for" proximate causation precluded him from proving a claim for conflict of interest or legal malpractice. The Court found that the Radiologist's claim for damages were speculative, and that the fraud and Judiciary Law violation claims were duplicative of the legal malpractice claim. This is an important decision as it reinforces the well established principle that the mere allegation of a "conflict of interest" is legally insufficient to sustain a claim for conflict of interest; "but for" proximate causation (a heightened causation standard) remains a requisite element of any such claim.

Should you have any questions concerning this decision, or the defense of legal professionals in general, please contact Andrew S. Kowlowitz.

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