the morning honors may that leave the court my name is john mumford counsel for lancet and in the reprehension group this appeal presents the issue of what a liability insurance company is supposed to do when its insurer refuses to communicate what's that who made the decision not to go to court mr kelley this is a record show mr kelly has testified well there's a did he make a decision not to go to court he told the insurer he could so with an ethics expert he told the insurance company  saying come back from pakistan where you fled because the federal government's after you and come back and defend this thing and the answer is a lawyer could not enter an internship problem with your lawyer could not argument is of course this which case went to trial and you had a pretty  about this and they said they couldn't possibly go to trial well i'm not so sure that's the right record in this case belies that you're right and it doesn't matter what matters is what the law says and that's why this is a legal issue not  attorney enter an appearance in court for an a client they've never ever spoken to and the maryland rules professional conduct speak to that rule nineteen dash one three zero one point eight says that an attorney can't represent a client when there's an insurance company footing the bill unless the client has informed consent and then informed consent is to find specifically as formed after the lawyer has communicated with the client he has to gave coverage and that has nothing to do with the plaintive corina pass coverage based upon having gone to his doctor you have coverage represent you provide insurance paid and show up you don't show experts in this area and as i understand they represented this is not the way they would have done it they would have don't code and gotten at least the court to say something i'm what i'm saying so who are the other lawyers that sa i was explained to mr kelly said mr kelly said ethically i talked to attorneys in town and i did not believe i could do this what i'm saying to use it doesn't matter what mr kelley thought mr prout saw mr artaud what matters is the law and the law can an attorney who never talks in a client walk into court and say here i am i'm in your parents for this client and i enter that with a note to go there you would have to accept it facts that well this attorney only has this client here this attorney did not come only his own volition this attorney came from the insurer it is the insurers warrior who then goes to to contact the insurer so this is a different scenario then you're sitting in your office and someone comes in any implication though side want to say we are we asked to be dismissed the cards are a judgment of something that nature in the end of the matter or but if you sit home and do absolutely nothing you end up here well that's that's the promise and is that the clinton insurance company did not sit on its hands and not sent home the language the insurance policy is we have that says we have the right and duty to defend and that obligation is limited to the payment of defense costs that is the allegation they hired  would they should negotiate and all kinds of things they control the defeated insurance companies certainly when they have a client who is is is they're able to defend do you have an input into the it touched on this issue and chapman vs kamar a guy killed was involved in geico their insured renee call her son was involved in an accident geico hires an attorney there's a lawsuit filed against right corner son geico hires an attorney for them to on there's a proceeding in which she challenges saying no i never authorized that appearance if parents waive the issue of service of process on her in the court of appeals in maryland were called upon to determine whether his whether the attorney was authorized to appear in the case and the court said it wasn't the court said that the court rejected the notion that a standard clause obligating guy could offend her in a case of litigation created implied authorization the court notion that you cannot as an attorney enter an appearance in a case in a client with a client you never spoken with so what was the you know it's easy to sit back and say the insurance companies sat on their hands but there's a lot more that went into th they actually tried to find this film they try to find a doctor they call him they e mailed him and if he doesn't respond to them they cannot tell mr kelly or any other tourney go down there that courthouse in an appearance and  now that says it mean internets in terms of the the attorneys duty if if if if there were if you had a party represent and there's a conflict there are rooms between us and the insurer in the end insured you would have to withdraw all that's all i mean that's that's that's that's what it is a result you have a right to be able to to defend this case in the manner in which you choose to do so we have the right and duty to thin but the insurer the the if you see that in practice in the in there is a conflict between the insurer and the insurance company over dollars i mean somebody showed up for trial and i won this case whether they have a lawyer may going to want this case i mean there's a lot of sympathy for doctors in malpractise cases i mean that's the kind of cases  mechanism it's the hot how in the why you know how can the insurance company do this it's easy to sit back and say you know they sat on their hands they didn't do anything but they couldn't do anything legally under the rules of ethics in maryland on this commercial case they did not have the ability to have an attorney go down there of the defense lawyers who do this kind of work whatsoever just decided not to do it well no that's not true but we asked mr kelly the defense counsel maryland and he told us that he was i am unable to do that but honestly doesn't matter if we have two thousand people or conduct whether you should or should not you've got hundreds of folks around that you could ask that question to but the simple thing is what's the big deal go in the court and explain to the judge can't buy mcconnell is gone the contract  had their own selves that their client there's no question about that and in terms of lay and filing a separate d j certainly i can't argue that they could've filed earlier but there's no there's no difference in terms of cover terminations what they did or didn't the insurance this policy with its insurance puts million dollars of its own funds at risk and very wisely in exchange for putting use funds at risk very wisely they reserved the right to defend any claim three so the cooperation paragraph twenty five of the policy which is an issue in the case and was argued before judges in this the the language the language there says that  if the insurance any failure of the insured to cooperate that prejudice is our ability to defend the claim any claim our ability and the word our is defined in the policy to mean lancet so lancet itself very prudently has reserved the right to protect its financial stake and if there is something that threatens that threatens our ability lancets ability to do so then we have the right to act and they did act in this case they applied to judge rubin the trial judge in the circuit court case for the right to become a party now today lancet says oh let was for a limited purpose and point of fact they were made a party a party to the case has all the rights of any other party now they'd they chose to do that notwithstanding yours truly had been in contact with  literally from day one from trying to filing suit i've been in contact with them and the day i filed suit i mailed him a copy so they had this last you're the one who gave notice yes you're sort of everything everything medical record the complaint all the papers associate with the complaint from day one and they have acknowledged receiving the lawsuit and from from from plaintiff's counsel prior to the end of the policy period when did they disclaim coverage or they disclaim coverage october sixteenth of two thousand and fifteen so the lawsuit is filed july twenty four they just claim coverage october sixteen your honor by a letter to to their judgment is entered august of two thousand and sixteen and so so live you know they were going to show up at the default judgment hearing or in the in the court case in the court  was i i was in contact i had probably two conversations with mr kelly who was the attorney that had called me and said you know i'm representing the defense and i'm representing i don't know he said the insurers are la but anyhow he was the defense hired attorney for the case and i was of course very anxious to find out whether they were going to be filing an answer or not and we did have an upcoming hearing  early november which is a basic status conference so i contacted mr kelly and i said hey you know the judge is going to want to know because there's been no answer filed and i do i tell him and that point that was late october of two thousand and fifteen mr kelly and for me will you know we're not going to be entering an appearance in the case we're not going to be defending the case so he told you what will come in and correct it in fact he didn't come in and he did not commit and you got to default judgment correct your honor but i sent everything to lansing when i filed for the default judgment i mailed a copy of that to lance because once mr kelley and for me he was no longer in the case very soon thereafter coverage counsel for lance it contacted me because i had served a subpoena on lancet to get records so cited like a gift i was basically you know doing everything i could to get them involved but the point is the judge rubin also the trial judge for the malpractise case at the once they had moved to become a party and that had been transcript is in the record he said they sat on their hands and they're just waiting to see what happens here and they you know they basically where are they so here's here's my point is that lancet is saying we didn't get in the case because we couldn't get in the case who was going to oppose that not me i wasn't going to oppose them getting involved case judge ruben was waiting for them to get involved in the case so this goes to the default judgment thing which frankly i had not focused on till this moment  right yes you are because i think i gathered your colleagues on the other side argument was when i originally looking at their obligations under the policy they didn't think that they were a they had a client and therefore could not defend the policy but he didn't talk about this default judgment i didn't say but he will have a chance to address it and your honor just for the record judge ruben the transcript of that default judgment hearing and join sixty three to seven sixty nine of the pages that i'm referencing i want to i want to switch gears slightly and address something that was raised in the breeze and hasn't been yet discussed this morning and that is the sherwood brands versus great american insurance case twenty eleven unanimous decision by the court of appeals in maryland reason that case is extraordinarily important to this appeal is the maryland court of appeals was presented with a claims made and reported policy wherein the claim was made during the policy period but the allegation was that the reporting was beyond the ninety day window to do so so the claim from the insurance company was you didn't comply with our claims made and reported policy because you didn't report within the time frame so the court of appeals of maryland was faced with a decision they were being urged by by the insurance council to apply a strict condition proceeding approach to those policies and quite honestly your honor most jurisdictions in the nation that have faced claims made and reported policies have applied a strict condition preceding approach meaning that if you don't one hundred percent comply with with the making of a claim and one hundred percent comply with the manner of reporting that claim you're out ok so the court of appeals had its opportunity to make that the law of maryland and they decided against it so all of the decisions that lancet is a relying on in this case the dell dell decision out of pennsylvania and the decision cited by dow dell they apply the strict condition proceed approach  which is was rejected specifically by the court of appeals in the surewood brandes case which should brain is decided was yes you strictly can screw construe the coverage triggering act the coverage triggering act w the making of a claim and it is undisputed in this case undisputed that according to the policy making a claim against lance it was accomplished by filing the lawsuit didn't have to be served didn't have to be even provided to anybody all policy says a claim is made by filing a civil lawsuit within the policy period that was done meaning that this claim was made and the only question then is was it reported now of course lance and says it had to be reported by our ensure it can't be reported by plaintiff's counsel it can't be reported by anybody has to be reported by our insured and that's where the should brands the case is key because what it said was you separate those two components the making of the making of a claim yes we strictly construe that if you don't make the claim in a policy period there is no coverage because the policy ends right however the reporting requirement is not viewed through a strict condition proceeding approach it is viewed through the notice the lens of notice prejudice and the insurer has to demonstrate how it has suffered prejudice by the manner or timing of the notice so unlike any other jurisdiction and certainly any jurisdiction that is cited by the lancet maryland law says you break those two components apart meaning that in this case when they complain that oh the policy says as a condition proceeded to coverage the insured must notify us and plans councils notice was ineffective that is that is not the law in maryland under the short branch case you look at what lance said has the burden of demonstrating in what manner the notice to it prevents it from being able to mount a defense or begin the process of time i just want to mention this yes in the judges in this addressed this issue of limited liability retention act preemption and the court hasn't asked any questions on that but i do think that it did come up in the briefs and i just want to address it very briefly judges in this initially on the notice when she decided her notice decision in march of two thousand and seventeen memorandum she said that the l r a pre amps the maryland notice prejudiced statute which is one thousand one ten i had argued it is not preempted based on three nine one b of that statute which says that notwithstanding anything else we apply states are to apply their law regarding the interpretation of consent of the contracts however six months later after the bench trial after the judge had additional briefing when she wrote her decision on the case she changed her mind and she said that three nine zero one b of the l r a in fact does allow the court to apply the maryland notice prejudice statute which is one thousand one ten and undoubtedly as they said in the brief defense counsel counsel may say well i didn't cross appeal the law this circuit is and i'm citing referencing the country witan or of north carolina versus gallo that's seven eighteen fed third to forty nine rose and royce to the virgin enterprises that's at five eleven f thirty four thirty seven and reynolds via merican national red cross seven o one fed third one forty three so long as i am not so long as the absolutely is not seeking to change to to enlarge the record may be urged to support the appeal and so my my contention is that judges in is ultimately got it right that marilyn notice prejudice statute does apply and that her decision on notice i agree with but as an alternate ground i urge the court to find that notice needs to be evaluated under that statute and the burden was on the lancet to demonstrate in what way getting notice from me prevented it from being able to begin the process of defending this case the in terms of the policy that the policy states that lancet gets has the final say on who is the attorney representing the insured they will listen to the insurance input as far as who they would like to have  the litigation tactics the the the the lancet has the right to control the defense that is undisputed now if the interest of the mean well that means is that they just went there if they're paying the bills they get to decide it sounds like they could do litigation tactics that i know the distinction you're making well i guess what i'm saying is that what happens if if there is if there becomes a direct conflict what if the insured there are there are many instances where let's just say the there was a case in the circuit when this came up let's just say it outside of this negligence type of a situation if there was also a claim that the physician had battered the patient so that's not covered that's a claim that's not covered so counsel for the insured in that scenario has a control but i'm sure well you know i mean the ultimate the lawyer has the professional responsibility for the case and i don't know i think that you know an attorney's profession responsibility is to handle the case in the way that he or she deems is the most appropriate to get there in ri company in the record is that the instance in maryland absolutely not insured nonetheless it is that considered to be a party or is it assumed to be a part of us that you that when you follow an action against insured part of it or yes well in this case yes their finance they have a million dollars at stake the they're the party of interest i just want to end it just when i only have a minute left i just want to make one not one for the observation the allstate versus state farm case which was mentioned by everybody including judges in this in this case has a very interesting scenario that kirby who is the state farm insurance that case was contacted eighty four times by state farm and kirby never cooperated no dispute and so and in fact her cooperation was so egregious that the trial judge prevented any evidence favorable to kirby being admitted but here's my point mick burrows is the attorney assigned by state farm to represent kirby he never had contact with with his client however state farm defended that case kirby was allowed to participate at trial to ask questions to give a closing argument to cross examine witnesses that jury was not told that this lawyer standing here in front of you is is an insurance lawyer he just he hadn't had any contact with his client and yet he a couple things in response lancet insurance companies are contractual and didn't or here so yes they have a financial interest in what happens but they're not a party and interest when when when the cases aside  decide the sides could they have wanted to get into they want to get in and they act like they want to get in the question of how they can get and my response to that is it's not as easy as you can just go down to the courthouse and some willing exactly often you bring a suit in which you think you're going to win usually you do but the suit that is not going to decide the issue of cooperation the d j is not going to make these doctors do something different the d j is not going to prevent a default judgment the fact is he had so many days to answer and default judgments enter in the question is how could the insurance company have got in to prevent that how could mr kelly have done it if you all decide legally an attorney can enter appearance for a client and never spoken with and that will be one mechanism if you decide that legally an insurance company can now inject itself in a lawsuit and should even the law says a maryland they shouldn't then that would be the other mechanism beyond that there is no mechanism so it's it's it's well into ruben and montgomery county and said we intervene in a purpose of asking you to stay the damages to all this case until after the declaratory judgment that's that limited purpose for which they intervene that was it after after the liability had been  and that's what the wind fin versus the versus what finn case says it says that insurance company is not a proper party to a lawsuit until after the the liability phase has been a term insurance company could've got in our own name then we were if we have to defend our own name then maryland law already holds that's presidential so either way they're not cooperation here bars coverage and moving quickly to the the issue of who can give proper notice of a lawsuit or a claim under a claims made reported policy there's a healthy body of case law as counsel knowledged holding that and it claims man reported policy not that the claimant can't give notice company is domiciled in one state they can do business and they can be registered to do business and all other states but the law of the domicile or state is what applies to them so they did not in order to deny coverage on the ground they were not obligated to show prejudice at all and so basically this claim is made reporting concept asked the president's one point of contact who can report claim it's not confusion about who reported or when it's reported because the whole policy