Opinion ID: 2081336
Heading Depth: 2
Heading Rank: 3

Heading: Travelers' Action Against Attorney Haden

Text: Travelers seeks in this action to impose a duty upon the employee's attorney to transmit settlement proceeds directly to the insurance carrier. The claim asserted by Travelers is for breach of an implied contract to protect its compensation lien. Travelers points to correspondence with Attorney Haden notifying her of the compensation payments as evidence of an implied contract. In general, an attorney may be liable for failure to protect a lien imposed on his client's settlement proceeds, where he expressly agrees with the client and the creditor to do so. See Heffelfinger v. Gibson, D.C.App., 290 A.2d 390 (1972) (written agreement by attorney to withhold sums from any recovery to reimburse client's doctor for services rendered). To protect its interest, the insurance carrier in a workmen's compensation case may obtain from the employee's attorney an agreement to retain from any judgment an amount equal to the employee's compensation payments. See International Terminal Operating Co., Inc. v. Waterman Steamship Co., supra at 18 n.6. Under the circumstances of this case, however, we do not find a wrongful dispersal of the funds. An analogous case is United States v. Limbs, 356 F.Supp. 1004 (D.Ariz.1973). In Limbs, the United States sued two injured federal employees and their attorney to obtain reimbursement from the proceeds of a third party settlement for amounts paid under the Federal Employees Compensation Act. Although the attorney received notice of the government's claim to reimbursement, he did not incur liability by distributing the settlement proceeds to his client. As the court stated, the government argument flies in the face of one elementary lesson that every lawyer quickly learns: that he impliedly agrees to turn a recovery over to his client. Id. at 1015. Correspondence between the parties indicated that the attorney's refusal to reimburse the United States stemmed from a good faith, if mistaken, belief that the government was not entitled to the funds, and that he had never been required by the government to assign any of his client's rights nor to disburse any funds. To establish an implied contract, Travelers relies solely upon letters sent to Attorney Haden, and upon asserted conversations with her. It is Travelers' position that the correspondence put Attorney Haden on notice of the insurance lien. However, Travelers does not proffer any written response by Attorney Haden to Travelers' request for acknowledgement of the lien. A notarized memorandum by a Travelers' Claim Supervisor reports a telephone call placed by Attorney Haden on October 15, 1974 in which she assertedly asked how the proceeds should be divided. According to the memorandum, the supervisor told her that the matter had been referred to Travelers' attorney who would contact her. However, Travelers' attorney did not write Attorney Haden regarding the workmen's compensation lien until May 19, 1975. Attorney Haden telephoned on May 20, 1975 in response to the letter stating the case had been settled. On September 30, 1975, Travelers' attorneys sent another letter informing Attorney Haden that she and her client would be held liable for the lien. In her deposition, Attorney Haden denied any communication with Travelers regarding its lien. At most, Travelers established Attorney Haden's knowledge of the prior workmen's compensation payments. Mere notice does not constitute an implied contract. Yet Travelers fails to prove conduct of all three parties (insurer, attorney, and client) showing a tacit understanding that Attorney Haden would withhold Travelers' share. See, e. g., Richardson v. J. C. Flood Co., D.C.App., 190 A.2d 259 (1963). Even accepting Travelers' version of the facts, the carrier must bear the consequences of a distribution to the injured employee, since it failed to contact promptly the attorney regarding its lien. Travelers cannot now protest the disbursement of settlement proceeds. The summary judgments for the District of Columbia and Attorney Haden are affirmed, and the judgment for Jesse Jones is reversed. Affirmed in part, and reversed in part.