SPECIAL ISSUES THAT CAN MAKE OR BREAK YOUR CASE

J.G. "Gerry" Schulze

I. Debating the Stacking of Limits for Private and Commercial
Policyholders---What do the Courts Say?

The term stacking is used to describe a situation where all available policies
are added together to create a larger pool from which the injured party may draw in
order to compensate him for his loss where a single policy is not sufficient to make him
whole. Sweeden v. Farmers Ins. Group, 71 Ark. App. 381, 389, 30 S.W.3d 783, 788
(2000). Anti-stacking provisions in insurance policies are enforceable and are not
considered void as against public policy. [A]n insurer may prohibit the stacking of
multiple insurance policies if those policies unambiguously prohibit the stacking of
benefits . Couch v. Farmers Ins. Co., Inc., 375 Ark. 255, 264, 289 S.W.3d 909, 917
(2008). The question is whether the language of the anti-stacking provision or other
insurance provision applies to your particular situation.
Most insurers have modified their anti-stacking provisions to avoid any ambiguity.
Still, it is always a good idea to review the anti-stacking language in the policy and see if
there is any argument that it is ambiguous under the circumstances. Its kind of like the
lottery. Winning is rare, but when you can win it can make the difference between an
inadequate recovery and an adequate one.
Insurance is heavily regulated. Statutory regulations on insurance policy
provisions are a good starting point when considering any policy provisions. If a policy
provision is inconsistent with a statute, the statute controls. In fact, a statute applicable
to an insurance policy is considered part of the policy. Carner v. Farmers Ins. of
Arkansas, 3 Ark. App. 201, 203, 623 S.W.2d 859, 860 (1981).
If you can find a statute that prohibits the policy provision that you are trying to
interpret, your job is done. The statute controls.
For example, a provision in an automobile liability policy that an insurer shall not
be obligated to pay under uninsured motorist coverage for that part of the damages
which the insured may be entitled to recover from the owner or operator of an uninsured
automobile which represents expenses for medical services paid or payable under the
medical payments coverage of the policy is void and against public policy in that it
reduces the minimum coverage of uninsured motorist protection prescribed and
required by the law. Heiss v. Aetna Cas. & Sur. Co., 250 Ark. 474, 479, 465 S.W.2d
699, 701-02 (1971). An insurance policy cannot set off one payment under its policy
against another one under the same policy because that would be inconsistent with the
statutory requirement that both policy provisions appear in the policy. State Farm Mut.
Auto. Ins. Co. v. Sims, 288 Ark. 541, 545, 708 S.W.2d 72, 74 (1986).
Since the policy is supposed to be written in plain English, it is to be interpreted
the same way. Courts often say that they construe the meaning of contract provisions in
their plain and ordinary and popular sense, Conley Transportation, Inc. v. Great
American Insurance Co., 312 Ark. 317, 849 S.W.2d 494 (1993) "rather than their legal
or technical meaning." Union Insurance Co. v. The Knife Co., Ltd., 897 F. Supp. 1213,
1215 (W.D. Ark. 1995). "Courts often ascertain the ordinary and popular sense of
undefined words in an insurance policy by consulting a dictionary. Id., quoting from
David B. Goodwin, Review Essay: Disputing Insurance Company Disputes, 43 Stan. L.
Rev. 779, 784 (1991).
That does not mean that the courts ignore the fact that it is an insurance policy
that they are interpreting. A good example is Deal v. Farm Bureau Mutual Insurance
Co., 48 Ark. App. 48, 889 S.W.2d 774 (1994). In that case a policy application asked
whether the insured had suffered a previous "fire loss." The insured answered in the
negative. After a fire, the insurer learned that property the insured owned had been
destroyed in a fire in 1976. The insured countered that although the property had been
destroyed, he did not have an insurance claim arising out of the fire. The Arkansas
Court of Appeals agreed with the insured that the word "loss" has an established
meaning in the field of insurance, i.e. "Death, injury, destruction, or damage in such a
manner as to charge the insurer with a liability under the terms of the policy." "Loss" in
this context is at best ambiguous. The lesson is that if a term has one meaning in
English, and another in insurance language, it can be ambiguous.
Rules of construction are applicable to insurance policies. The most commonly
cited rule of construction is the one that ambiguities in insurance policies are construed
in the light most favorable to the insured. Provisions of a policy of insurance must be
construed most strongly against the insurance company that prepared it, and if a
reasonable construction could be placed on the contract that would justify recovery, it
would be the duty of the court to so construe. Southern Farm Bureau Cas. Ins. Co. v.
Pettie, 54 Ark. App. 79, 91, 924 S.W.2d 828, 834 (1996).
In order to be ambiguous, a term in an insurance policy must be susceptible to
more than one equally reasonable construction. Insurance Co. of North America. v.
Forrest City Country Club, 36 Ark. App. 124, 127, 819 S.W.2d 296, 298 (1991).
Under the doctrine of contra proferentum, an ambiguous provision is construed
against the drafter. This rule is followed with particular vigor in the insurance context
because insurance is a contract of adhesion in which the terms are not subject to
negotiation. The rule is a rule of construction, and is not applicable unless there is an
ambiguity. The party asserting that there is an ambiguity has the duty to point the
ambiguity out to the court. Reynolds v. Shelter Mutual Ins. Co., 313 Ark. 145, 852
S.W.2d 799 (1993). Only when the court finds an ambiguity can the doctrine of contra
proferentum apply.
Another rule of construction is that the policy should be read so as to give
meaning to all its parts:
In construing a contract, even one for insurance drawn by the
insurer, we must assume that the use of different language to define
different obligations was deliberate and accompanied by an intention to
convey different meanings rather than the same one. Different clauses of
a contract must be read together and the contract construed so that all of
its parts harmonize, if that is at all possible, and, giving effect to one
clause to the exclusion of another on the same subject where the two are
reconcilable, is error.

Kelsey and Fletcher v. Brown and Hackney, 165 Ark. 613, 264 S.W. 930; American
Indemnity Co. v. Hood, 183 Ark. 266, 35 S.W.2d 353.
A construction which neutralizes any provision of a contract should never be
adopted if the contract can be construed to give effect to all provisions. Fowler v.
Unionaid Life Ins. Co., 180 Ark. 140, 20 S.W.2d 611. Continental Casualty Co. v.
Davidson, 250 Ark. 35, 40-41, 463 S.W.2d 652, 655 (1971).
Since we place such importance on the language of an insurance policy, we
require that insureds read that language. They fail to do so at their peril. The insured
has a duty to educate himself or herself about the language of the policy. Scott-Huff
Insurance Agency v. Sandusky, 318 Ark. 613, 887 S.W.2d 516 (1994).
When presented with an issue regarding interpretation of a
contract, this court has stated: The first rule of interpretation of a contract
is to give to the language employed the meaning that the parties intended.
In construing any contract, we must consider the sense and meaning of
the words used by the parties as they are taken and understood in their
plain and ordinary meaning. The best construction is that which is made
by viewing the subject of the contract, as the mass of mankind would view
it, as it may be safely assumed that such was the aspect in which the
parties themselves viewed it. It is also a well-settled rule in construing a
contract that the intention of the parties is to be gathered not from
particular words and phrases, but from the whole context of the
agreement. Health Resources of Ark., Inc. v. Flener, 374 Ark. 208, 211,
286 S.W.3d 704, 706 (2008) (citations omitted).

Couch v. Farmers Ins. Co., Inc., 375 Ark. 255, 258-59, 289 S.W.3d 909, 913 (2008).
A provision in an insurance policy preventing the stacking of policies is
enforceable if it clearly and unambiguously prevents stacking. For example,

PART II UNINSURED MOTORISTS
Coverage CUninsured Motorist Coverage (Including Underinsured
Motorist Coverage)....

Other Insurance...

4. If any applicable insurance other than this policy is issued to you
by us or any other member company of the Farmers Insurance Group of
Companies, the total amount payable among all such policies shall not
exceed the limits provided by the single policy with the highest limits of
liability.

Couch v. Farmers Ins. Co., Inc., 375 Ark. 255, 259, 289 S.W.3d 909, 913-14
(2008).
Combining Limits Of Two Or More Autos Prohibited

If you have two or more autos insured in your name and one of these
autos is involved in an accident, only the coverage limits shown on the
declarations page for that auto will apply. When you have two or more
autos insured in your name and none of them is involved in the accident,
you may choose any single auto shown on the declarations page and the
coverage limits applicable to that auto will apply.

The limits available for any other auto covered by the policy will not be
added to the coverage for the involved or chosen auto.
* * * *
Part V Uninsured Motorists InsuranceCoverage SS

Underinsured Motorists InsuranceCoverage SU* * * *

If a limit of liability is shown on your declarations page for Coverage SU,
we will pay all damages that an insured person is legally entitled to
recover from the owner or operator of an underinsured auto because of
bodily injury sustained by an insured person.

* * * *

Limits of Liability

1. The coverage limit shown on the declarations page for:
a. each person is the maximum that we will pay for all damages
arising out of bodily injury to one person in any one motor vehicle
accident, including all damages sustained by anyone else as result of that
bodily injury.

* * * *

2. These limits are the maximum Allstate will pay for any one
motor vehicle accident regardless of the number of:

a. claims made;
b. vehicles or persons shown on the declarations page;
c. vehicles involved in the accident.

Kanning v. Allstate Ins. Companies, 67 Ark. App. 135, 138, 992 S.W.2d 831, 833
(1999).
The anti-stacking provision must unambiguously preclude stacking. If the clause
is limited to stacking policies, and not the stacking of cars within the policy, it is possible
for the uninsured or underinsured motorist policy to provide more than the policy limits
where there is more than one car covered by the policy. See, e.g. Ross v. United
Services Auto. Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995). An ambiguous other-
insurance clause will not suffice to prevent stacking. For example, in Barnhill, infra, the
provision read as follows:
[I]f the Insured has other similar insurance available to him and applicable
to the accident, the damages shall be deemed not to exceed the higher of
the applicable limits of liability of this insurance and such other insurance,
and the Company shall not be liable for a greater proportion of any loss to
which this coverage applies than the limit of liability hereunder bears to the
sum of the applicable limits of liability of this insurance and such other
insurance.

Farm Bureau Mut. Ins. Co. of Arkansas, Inc. v. Barnhill, 284 Ark. 219, 220-21, 681
S.W.2d 341, 342 (1984)
II. When is a Stacking Waiver No Longer Useful

In some states, an insurer must have the insured sign a stacking waiver, which
specifically informs the insured that the coverage he has on his automobiles wont
stack. See, e.g. Sackett v. Nationwide Mut. Ins. Co., 591 Pa. 416, 426, 919 A.2d 194,
200 modified on reargument, 596 Pa. 11, 940 A.2d 329 (2007). That is not required
under Arkansas law. Anti-stacking language in the policy itself will be enough.
So the best answer to the question is that a stacking waiver is not useful if it does
not unambiguously prohibit stacking in the particular situation involved.
III. Preparation and Preservation of Claims

Uninsured and underinsured motorist claims are a hybrid of statutory and
contract law. Arkansas statutes govern the availability and content of uninsured and
underinsured motorist coverage, but provisions that are not covered by specific
statutory provisions will be governed by the language of the policy.

Early notice to the insurer is often essential. In the case of uninsured motorists, it
will often be clear soon after the accident that the adverse driver had no insurance.
There is no reason not to put the uninsured motorist carrier on notice as soon as
possible. There is an argument that can be made that if the policy requires notice as
soon as practicable, that notice can be a condition precedent. This court has applied
the general rule, that where an insurance policy provides that the giving of notice of a
loss, claim, or lawsuit is a condition precedent to recovery, the insured must strictly
comply with the notice requirement, or risk forfeiting the right to *6 recover from the
insurance company. The insurance company need not show that it was prejudiced by
any delays in or lack of notification. However, if the notice provision is not a condition
precedent, the insured does not automatically forfeit the right to recover. Instead, the
insurance company must show that it was prejudiced by noncompliance with the terms
of the policy. The insurance company may be prejudiced if the delay in notice was
unreasonable.

Fireman's Fund Ins. Co. v. Care Mgmt., Inc., 2010 Ark. 110, 361 S.W.3d
800, 803 (2010) opinion after certified question answered, 1:08-CV-00056 JLH, 2010
WL 1417932 (E.D. Ark. Apr. 6, 2010).
In an underinsured motorist case, failure to give notice of the proposed
settlement to the underinsured motorist carrier will defeat coverage if there is a
provision in the policy making that notice a condition precedent. Vaughn v. Shelter Mut.
Ins. Co., 2011 Ark. App. 208, 382 S.W.3d 736 (2011).
Another thing to keep in mind about underinsured motorist is the process
required to settle with the underlying tortfeasor.

(c) If a tentative agreement to settle for the liability limits of the owner or
operator of the other vehicle has been reached between the insured and
the owner or operator, written notice may be given by the insured injured
party to his or her underinsured motorist coverage insurer by certified mail,
return receipt requested. The written notice shall include:
(1) Written documentation of pecuniary losses incurred,
including copies of all medical bills;
(2) Written authorization or a court order authorizing the
underinsured motorist insurer to obtain medical reports from
all employers and medical providers; and
(3) Written confirmation from the tortfeasor's liability insurer
as to the amount of the alleged tortfeasor's liability limits and
the terms of the tentative settlement, which shall in no event
include any component sum representing punitive or
exemplary damages. However, that in no event shall
evidence of the referenced liability limits, the fact that a
tentative settlement was reached, or the terms of the
tentative settlement be admissible in any civil action with the
sole exceptions of:
(A) Actions by underinsured motorist insurers
to enforce subrogation rights as contemplated
by this subchapter;
(B) Actions by first party liability insureds
against their insurer to enforce their contract or
a settlement hereunder, if any; and
(C) Actions by first party underinsured motorist
insureds against their insurer to enforce their
contract or a settlement hereunder.
(d)(1) Within thirty (30) days of receipt of the written notice, the
underinsured motorist insurer may make payment to its insured of an
amount equal to the tentative settlement amount agreed to by the owner
or operator of the other motor vehicle or his or her liability insurer.
(2) In such event, the underinsured motorist insurer shall be entitled to
subrogate to its insured's right of recovery against the owner or operator of
the other motor vehicle to the extent of such payments and to the extent of
any underinsured motorist insurance benefit it pays to its insured.
(3) If the underinsured motorist insurer fails to pay its insured the amount
of the tentative tort settlement within thirty (30) days, the underinsured
motorist insurer has no right to the proceeds of any settlement or
judgment between its insured and the other owner or operator and/or the
owner's or operator's liability insurer, no right to otherwise recoup the
amount of the underinsured motorist benefit it may pay from such other
owner or operator or his or her insurer, and no right to refuse payment of
its underinsured motorist coverage benefit by reason of the settlement
made by its insured.
(e) In the event that the tortfeasor's motor vehicle liability insurance carrier
and the underinsured motorist coverage are provided by the same
insurance company, the requirements of subsections (c) and (d) of this
section are waived, and the underinsured party may proceed against his
or her underinsured insurance carrier at any time after settlement of the
underlying tortfeasor's liability policy claim.

Ark. Code Ann. 23-89-209 (West).
Another significant factor in uninsured and underinsured motorist cases is the
potential for attorneys fees. Nationwide Mut. Ins. Co. v. Cumbie, 92 Ark. App. 448,
451, 215 S.W.3d 694, 697 (2005). At one time, the attorneys fee statute was
interpreted to require that the plaintiff recover 100% of the amount demanded.
Countryside Cas. Co. v. Grant, 269 Ark. 526, 601 S.W.2d 875 (1980). But in 1991 the
statute was amended to provide (d) Recovery of less than the amount demanded by the
person entitled to recover under the policy shall not defeat the right to the twelve
percent (12%) damages and attorneys fees provided for in this section if the amount
recovered for the loss is within twenty percent (20%) of the amount demanded or which
is sought in the suit. INSURANCE COMPANIESLOSS CLAIMSFAILURE TO PAY
TIMELYDAMAGES AND ATTORNEY'S FEES, 1991 Arkansas Laws Act 349 (S.B.
246). This provides an insured with an incentive to be reasonable in making a demand.
Underinsured motorist cases can be more difficult to anticipate at the earliest
stages. Still, at the earliest point that you suspect that the tortfeasors insurance might
be inadequate to cover all of your clients damages, it is a good idea to put the
underinsured carrier on notice. It is also a good idea to bring the underinsured motorist
carrier into your lawsuit against the tortfeasor as soon as possible. The Arkansas
Supreme Court has recognized the unfairness that arises out of an insured having to file
two separate lawsuits, first against the underinsured tortfeasor and then against the
insurer. Brinker v. Forrest City Sch. Dist. No. 7, 344 Ark. 171, 40 S.W.3d 265 (2001).
Requiring the appellant to try his case twice is blatantly unfair and clearly barred by res
judicata Id. at 176, 40 S.W.3d at 268 (2001).
If not for the analysis in Brinker, an underinsured motorist plaintiff would be
required to try his case twice, and take the smaller of the two judgments. The first
judgment would collaterally estop the plaintiff from asserting that he was damaged in a
greater amount than the jury found he was damaged, but if the underinsured motorist
carrier was not a party to the action, it could not be estopped by the jurys finding.
Under Brinker, the plaintiff can bring the underinsured motorist carrier into the lawsuit
against the tortfeasor. Ordinarily, this will result in the insurer agreeing to be bound by
the judgment.
Another advantage is that it speeds up the processing of the underinsured motorist
case. It is common that the tortfeasors insurer wont tender its limits until the trial is
approaching. Once the tortfeasor then tenders limits, the mechanism for putting the
underinsured motorist insurer can take place. If the underinsured motorist carrier
agrees to allow the insured to take the proposed settlement rather than paying it itself
which seems to be the most common scenariothe case against the underinsured
motorist carrier can be ready to go to trial.
Wrongful Death and Catastrophic Injury Issues

There are two reminders about wrongful death cases. The first is that the
wrongful death action can only be brought by the appropriate person. For all practical
purposes, that is the personal representative of the estate appointed by the appropriate
Circuit Court. There is also law to the effect that a wrongful death claim can be made
by all the wrongful death beneficiaries acting together. But as a practical matter this is
seldom advisable. First, the requirement that all beneficiaries join in the suit creates the
risk that by leaving out one beneficiary, perhaps one unknown, the suit would be
dismissed as a nullity. Second, in 2001 the General Assembly added survival damages
for loss of life as an independent element of damages. Ark. Code Ann. 16-62-101.
Loss of life damages come under the survival statute, not the wrongful death statute. If
all the heirs together bring an action, instead of the personal representative, there is a
strong argument that the loss of life element is not available.
The second point has to do with the loss of life element itself. That element can
be very valuable. See, e.g. McMullin v. United States, 515 F.Supp.2d 914
(E.D.Ark.2007); One National Bank v. Pope, 272 S.W.3d 98, 372 Ark. 208 (2008). But
there remains substantial confusion as to what it actually means. Before the 2001
amendment, damages in wrongful death cases were limited. As the Arkansas Supreme
Court stated in Durham v. Marberry, 356 Ark. 481, 156 S.W.3d 242 (2004):
Prior to the passage of Act 1516 of 2001, Arkansas had no statutory
provision for loss-of-life damages, nor was there any such provision in our
case law. Historically,damages recovered by a decedent's estate under
the survival statute, with the exception of funeral expenses, compensated
the decedent and were incurred pre-death. These include damages for
medical expenses due to the injury, lost wages between injury and death,
pain and suffering, etc. See, e.g., Advocat, Inc. v. Sauer, 353 Ark. 29, 111
S.W.3d 346 (2003); New Prospect Drilling Co. v. First Commercial Trust,
N.A., 332 Ark. 466, 966 S.W.2d 233 (1998). The appellees argued below
that the General Assembly's amendment did not add a new element of
damages, and that loss-of-life damages are merely a type of pain and
suffering.

Id. at , 156 S.W.3d 245.
In Durham, the Arkansas Supreme Court held that loss of life damages seek to
compensate a decedent for the loss of the value that the decedent would have placed
on his own life. In One National Bank, supra, the Supreme Court faced an issue of first
impression of what evidence an estate must present in order to seek an award of loss of
life damages. This is necessarily evidence that will have to be considered on a case-
by-case basis. The Supreme Court held that the following evidence was sufficient that
the trial court should have submitted the loss of life claim to the jury:
Here, the testimony clearly demonstrated that Ms. Kaz was a mother of
four, as well as a grandmother, that she was close to her oldest daughter,
that she had worked as a waitress, that she lived with a man for whom she
had come to Arkansas, and that, at the time of the accident, she was on
her way to a family get-together. While not direct evidence with respect to
the value Ms. Kaz would have placed on her life, we hold that this
circumstantial evidence was substantial evidence from which the jury
could have inferred the value she would have placed on her life and on
which the jury could have awarded the Estate loss-of-life damages.
Accordingly, because there was substantial evidence from which a jury
could have determined that the Estate was entitled to loss-of-life
damages, we hold that the circuit court erred in granting American
Manufacturers's motion for directed verdict. For that reason, we reverse
and remand on this issue.

Id. at 272 S.W, 3d 104
In wrongful death and catastrophic injury cases, there frequently is not enough
liability insurance to go around. The subrogation rights of the insurer under Ark. Code
Ann. 23-89-207 is contingent upon the insured being made whole.


IV. Handling Conflicts of Law with Other States

In conflict-of-law disputes for causes of action arising in contract, this court
applies the law of the state with the most significant relationship to the
issue at hand. Ducharme v. Ducharme, 316 Ark. 482, 872 S.W.2d 392
(1994). In cases not involving an effective choice of law by the parties, the
following factors are relevant to the determination of which state has the
most significant relationship to a particular case: 1) the place of
contracting; 2) the place of negotiation of the contract; 3) the place of
performance; 4) the location of the subject matter of the contract; 5) the
domicile, residence, nationality, place of incorporation and place of
business of the parties. Restatement (Second) Conflict of Laws 188
(1971).
Crisler v. Unum Ins. Co. of Am., 366 Ark. 130, 133, 233 S.W.3d 658, 660 (2006)

V. What if the Car has Caused an Accident Without Direct Contact?

To prevail in an uninsured motorist case, you have to prove that the adverse driver was
uninsured. The exception to this requirement is the hit and run provision contained in
most uninsured motorist policies. The problem with these provisions is that they require
physical contact. Hit-and-run automobile means an automobile which causes bodily
injury to an insured arising out of physical contact of such automobile with the insured or
with an automobile which the insured is occupying at the time of the accident, provided:
(1) there cannot be ascertained the identity of either the operator or owner of such hit-
and-run automobile. . . . Ward v. Consol. Underwriters, 259 Ark. 696, 697, 535 S.W.2d
830, 831 (1976).
The requirement of physical contact is valid and does not contravene public
policy. Ward, supra.
One creative attempt to get around the contact requirement failed in Kelley v.
USAA Cas. Ins. Co., 371 Ark. 344, 266 S.W.3d 734 (2007). The plaintiff was run off the
road by an unidentified vehicle. The plaintiff sought to prove that the driver was
uninsured by showing that no report of the accident was filed, and under the Motor
Vehicle Safety Responsibility Act, the failure to file a report leads to a presumption that
the driver was uninsured. The Supreme Court decided that the purpose of the act was
to punish uninsured drivers, and since the Department of Finance and Administration
has no way to identify the phantom driver, the failure to file the report cannot substitute
for proof that the phantom driver was uninsured.

VI. How Will the Latest Appellate Court Decisions Affect your Practice?











Ethical Issues in Representation
J.G. "Gerry" Schulze



The Client Who Lies
Coverage Defeating Admissions


You are an insurance defense lawyer for Consolidated Federated. Another
Consolidated Federated fender-bender comes across your desk. One Andrew Volstead was
rear-ended by Jos Cuervo. Your insured is Guillermo Cuervo, Joss brother, the owner of the
car.
Jos got a ticket for following too close and driving while intoxicated, his third.
Volsteads lawyer demanded the limits. The policy excludes punitive damages, and Volstead
wasnt seriously injured. He went to a doctor who treated him for two weeks and released him.
The total medical involvement was $625. Volsteads attorney has, of course, sued both Jos
and Guillermo, alleging negligent entrustment.

Jos and Guillermo come to see you. Guillermo tells you that the car isnt really even
his. Its just in his name because Jos couldnt get insurance because of his driving record.
Thats why the insurance agent recommended that Guillermo buy his car and take out the
insurance in his own name.

1. Do you have an ethical problem regarding the fraud that Guillermo and Jos have
just disclosed to you?
a. Can you tell the insurer about it?
b. Must you tell the insurer about it?
c. Must you remain silent about it?
2. Does the insurance agents alleged fraud change anything in your analysis?

A. Rules of Professional Conduct

Ethical questions always start with the Rules of Professional Conduct. What are the
Rules of Professional Conduct but another set of Rules? How are the Rules of Professional
Conduct different from the Rules of Evidence, the Rules of Civil Procedure, or the Rule against
Perpetuities?
We call our Rules of Professional Conduct rules of ethics. Im talking about these
rules today because we have a mandatory one-hour ethics requirement in our continuing legal
education obligation: Every member of the Bar of Arkansas, except as may be otherwise
provided by these rules and, excepting those attorneys granted voluntary inactive status by the
Arkansas Supreme Court Committee on Professional Conduct, shall complete 12 hours of
approved continuing legal education during each reporting period as defined by Rule 5(A)
below. Of those 12 hours, at least one hour shall be ethics, which may include professionalism as
defined by Regulation 3.02. Ark. R. Minimum Con't Legal Educ. Rule 3 (2009)
So what is this ethics hour supposed to be all about, anyway? Here it is:
Rule 3.02. Ethics
Ethics presentations shall be distinct segments no less than one hour in
length, shall be specifically designated separately on the program application and
shall be accompanied by appropriate documentation. Likewise, claims for ethics
credit shall be designated separately on certificates of attendance submitted to the
Secretary.
Ethics shall be defined as follows: "Legal ethics includes, but is not necessarily
limited to, instruction on the Model Rules of Professional Conduct and the Code
of Judicial Conduct."
Ethics may include professionalism courses addressing the principles of
competency, dedication to the service of clients, civility, improvement of justice,
advancement of the rule of law, and service to the community.

Professionalism courses may include a lawyer's responsibility as an officer of the
Court; responsibility to treat fellow lawyers, members of the bench, and clients
with respect and dignity; responsibility to protect the image of the profession;
responsibility generally to the public service; the duty to be informed about
methods of dispute resolution and to counsel clients accordingly; and misuse and
abuse of discovery and litigation.

Ark. Regulation Con't Legal Bd. Rule 3.02 (2009).
The ethics hour ought to also have something to do with the program.
The rule tells us that the Rules of Professional Conduct and a few related issues are
entitled to an hour out of our twelve hour annual continuing legal education requirement. As
substantive law, these rules are not all that complex. They are, to be sure, vague, but Im not
sure that they are conspicuously vaguer than some of the other broad rules of general
applicability. They are difficult to apply, and frequently there is precious little authority to go
on. We could look to the cases in which people get in trouble, but for the most part, with a few
exceptions here and there, those seem to be fairly obvious cases. The only thing that bothers me
about them sometimes is that I think the committee is too willing to take action on cases that in
my opinion, if I were on the committee, I think Id leave to the legal malpractice bar. If someone
lets a statute of limitations run, sure, its probably a legitimate violation of the rules about
competence, but theres always circuit court for those cases. Thats just me. Im not likely to be
on the committee any time soon.
Back to the question: What is it about this relatively short set of rules that requires that it
dominate one twelfth of our annual continuing legal education requirement?
To understand this requirement, I believe we have to look beyond the letter of the law
and seek out its spirit. Unfortunately, that is often an invitation to impose our own values and
prejudices on a set of rules, reading things into them rather than taking guidance from them. We
cannot read the Rules of Professional Responsibility as a moral code. It is a body of substantive
law. We are obliged to comply with the strictures of that substantive law, even if our personal
moral code might counsel us to act differently than the rules require. In many areas a cogent,
strong, and principled ethical argument can be made for behavior that would violate the code.
But if we are to practice law, we must set our personal moral beliefs to one side and live up to
our oath to follow the Code of Professional Conduct. Still, I think the aspiration of the ethics
hour is more than that we engage in a dispassionate analysis of the substantive requirements of
the Model Rules of Professional Conduct, and that we spend this hour discussing our ethical
obligations above and beyond the mere obligations imposed by the Model Rules. Which brings
us to the question, are there any moral or ethical obligations above, beyond, or different from
those imposed by the rules?
The drafters of the Preamble to the Model Rules seemed to think so. The Rules do not .
. . exhaust the moral and ethical considerations that should inform a lawyer, for no worthwhile
human activity can be completely defined by legal rules. The Rules simply provide a framework
for the ethical practice of law. Preamble, Arkansas Model Rules of Professional Conduct.
Scope. But what is the content of the additional moral and ethical considerations that should
inform a lawyer? Reasonable minds can differ, and the minds of lawyers are seldom limited to
the ideas that inhabit the hypothetical reasonable mind.
The Model Rules are a starting point. The Model Rules are the ethical rules that are
actually enforcedthe violation of which will subject us to sanctions.
Most real ethical quandaries arise out of conflicting ethical obligations. The most
common situation in which this occurs is when a conflict of interest arises. We may owe
conflicting duties of loyalty to our clients and the legal system. We may owe conflicting legal
duties to different people.

APPLICABLE RULES AND EXCERPTS FROM THE COMMENTS

Rule 1.6. Confidentiality of information

(a) A lawyer shall not reveal information relating to representation of a client unless the
client gives informed consent, the disclosure is impliedly authorized in order to carry out
the representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal such information to the extent the lawyer reasonably believes
necessary:
(1) to prevent the commission of a criminal act;
(2) to prevent the client from committing a fraud that is reasonably certain
to result in injury to the financial interests or property of another and in
furtherance of which the client has used or is using the lawyer's services;
(3) to prevent, mitigate or rectify injury to the financial interest or property
of another that is reasonably certain to result or has resulted from the
client's commission of a crime or fraud in furtherance of which the client
has used the lawyer's services;
(4) to secure legal advice about the lawyer's compliance with these Rules;
(5) to establish a claim or defense on behalf of the lawyer in a controversy
between the lawyer and the client, to establish a defense to a criminal
charge or civil claim against the lawyer based upon conduct in which the
client was involved, or to respond to allegations in any proceeding
concerning the lawyer's representation of the client or,
(6) to comply with other law or a court order.
(c) Neither this Rule nor Rule 1.8(b) nor Rule 1.16(d) prevents the lawyer from giving
notice of the fact of withdrawal, and the lawyer may also withdraw or disaffirm any
opinion, document, affirmation or the like.


NOTES: COMMENT

Disclosure Adverse to Client
[6] Although the public interest is usually best served by a strict rule requiring lawyers to preserve
the confidentiality of information relating to the representation of their clients, the confidentiality
rule is subject to limited exceptions. For instance, in becoming privy to information about a client,
a lawyer may foresee that the client or a third person intends to commit a crime and may reveal
that information to prevent the crime. The overriding value of life and physical integrity permits
disclosure reasonably necessary to prevent death or bodily harm. Other future harms as a result
of a criminal act, such as fraud, damage to economic interests, or loss of property which are
reasonably certain to occur, also permit disclosure if necessary to eliminate the threat. Several
situations must be distinguished.
[a] First, the lawyer may not counsel or assist a client in conduct that is criminal or fraudulent. See
Rule 1.2(d). Similarly, a lawyer has a duty under Rule 3.3(a)(3) not to use false evidence. This
duty is essentially a special instance of the duty prescribed in Rule 1.2(d) to avoid assisting a
client in criminal or fraudulent conduct.
[b] Second, the lawyer may have been innocently involved in past conduct by the client that was
criminal or fraudulent. In such a situation the lawyer has not violated Rule 1.2(d), because to
"counsel or assist" criminal or fraudulent conduct requires knowing that the conduct is of that
character.
[c] Third, the lawyer may learn that a client, or a third person, intends prospective conduct that is
criminal. As stated in paragraph (b)(1), the lawyer has professional discretion to reveal
information in order to prevent the crime which the lawyer reasonably believes is intended by the
client or a third person. It is, of course, sometimes difficult for a lawyer to "know" when such a
purpose will actually be carried out, for the client or the third person may have a change of mind.
[d] The lawyer's exercise of discretion requires consideration of such factors as the nature of the
lawyer's relationship with the client and with those who might be injured by the client, the lawyer's
own involvement in the transaction and factors that may extenuate the conduct in question.
Where practical, the lawyer should seek to persuade the client to take suitable action. In any
case, a disclosure adverse to the client's interest should be no greater than the lawyer reasonably
believes necessary to the purpose. A lawyer's decision not to take preventive action permitted by
paragraph (b)(1), (b)(2) or (b)(3) does not violate this Rule.
[7] Paragraph (b)(2) is a limited exception to the rule of confidentiality that permits the lawyer to
reveal information to the extent necessary to enable affected persons or appropriate authorities to
prevent the client from committing a fraud, as defined in Rule 1.0 (d), that is reasonably certain to
result in injury to the financial or property interests of another and in furtherance of which the
client has used or is using the lawyer's services. Such a serious abuse of the client-lawyer
relationship by the client forfeits the protection of this Rule. The client can, of course, prevent
such disclosure by refraining from the wrongful conduct. Although paragraph (b)(2) does not
require the lawyer to reveal the client's misconduct the lawyer may not counsel or assist the client
in conduct the lawyer know is fraudulent. See Rule 1.2 (d). See also Rule 1.16 with respect to
the lawyer's obligation or right to withdraw from the representation of the client in such
circumstances, and Rule 1.13 (c), which permits the lawyer, where the client is an organization, to
reveal information relating to the representation in limited circumstances.
[8] Paragraph (b)(3) addresses the situation in which the lawyer does not learn of the client's
crime or fraud until after it has been consummated. Although the client no longer has the option of
preventing disclosure by refraining from the wrongful conduct, there will be situations in which the
loss suffered by the affected person can be prevented, rectified or mitigated. In such situations,
the lawyer may disclose information relating to the representation to the extent necessary to
enable the affected person to prevent or mitigate reasonably certain losses or to attempt to
recoup their losses. Paragraph (b)(3) does not apply when a person who has committed a crime
or fraud thereafter employs a lawyer for representation concerning that offense.
[9] A lawyer's confidentiality obligations do not preclude a lawyer from securing confidential legal
advice about the lawyer's personal responsibility to comply with these Rules. In most situations,
disclosing information to secure such advice will be impliedly authorized for the lawyer to carry
out the representation. Even when the disclosure is not impliedly authorized, paragraph (b)(4)
permits such disclosure because of the importance of a lawyer's compliance with the Rules of
Professional Conduct.
[10] Where a legal claim or disciplinary charge alleges complicity of the lawyer in a client's
conduct or other misconduct of the lawyer involving representation of the client, the lawyer may
respond to the extent the lawyer reasonably believes necessary to establish a defense. The same
is true with respect to a claim involving the conduct or representation of a former client. Such a
charge can arise in a civil, criminal, disciplinary or other proceeding and can be based on a wrong
allegedly committed by the lawyer against the client or on a wrong alleged by a third person, for
example, a person claiming to have been defrauded by the lawyer and client acting together. The
lawyer's right to respond arises when an assertion of such complicity has been made. Paragraph
(b)(5) does not require the lawyer to await the commencement of an action or proceeding that
charges such complicity, so that the defense may be established by responding directly to a third
party who has made such an assertion. The right to defend also applies, of course, where a
proceeding has been commenced.
[11] A lawyer entitled to a fee is permitted by paragraph (b)(5) to prove the services rendered in
an action to collect it. This aspect of the rule expresses the principle that the beneficiary of a
fiduciary relationship may not exploit it to the detriment of the fiduciary.
[12] Other law may require that a lawyer disclose information about a client. Whether such a law
supersedes Rule 1.6 is a question of law beyond the scope of these Rules. When disclosure of
information relating to the representation appears to be required by other law, the lawyer must
discuss the matter with the client to the extent required by Rule 1.4. If, however, the other law
supersedes this Rule and requires disclosure, paragraph (b)(6) permits the lawyer to make such
disclosures as are necessary to comply with the law.
[13] A lawyer may be ordered to reveal information relating to the representation of a client by a
court or by another tribunal or governmental entity claiming authority pursuant to other law to
compel the disclosure. Absent informed consent of the client to do otherwise, the lawyer should
assert on behalf of the client all nonfrivolous claims that the order is not authorized by other law
or that the information sought is protected against disclosure by the attorney-client privilege or
other applicable law. In the event of an adverse ruling, the lawyer must consult with the client
about the possibility of appeal to the extent required by Rule 1.4. Unless review is sought,
however, paragraph (b)(6) permits the lawyer to comply with the court's order.
[14] Paragraph (b) permits disclosure only to the extent the lawyer reasonably believes the
disclosure is necessary to accomplish one of the purposes specified. Where practicable, the
lawyer should first seek to persuade the client to take suitable action to obviate the need for
disclosure. In any case, a disclosure adverse to the client's interest should be no greater than the
lawyer reasonably believes necessary to accomplish the purpose. If the disclosure will be made
in connection with a judicial proceeding, the disclosure should be made in a manner that limits
access to the information to the tribunal or other persons having a need to know it and
appropriate protective orders or other arrangements should be sought by the lawyer to the fullest
extent practicable.
[15] Paragraph (b) permits but does not require the disclosure of information relating to a client's
representation to accomplish the purposes specified in paragraphs (b)(1) through (b)(6). In
exercising the discretion conferred by this Rule, the lawyer may consider such factors as the
nature of the lawyer's relationship with the client and with those who might be injured by the
client, the lawyer's own involvement in the transaction and factors that may extenuate the
conduct in question. A lawyer's decision not to disclose as permitted by paragraph (b) does not
violate this Rule. Disclosure may be required, however, by other Rules. Some Rules require
disclosure only if such disclosure would be permitted by paragraph (b). See Rules 1.2(d), 4.1(b),
8.1 and 8.3. Rule 3.3, on the other hand, requires disclosure in some circumstances regardless of
whether such disclosure is permitted by this Rule. See Rule 3.3(c).

Rule 1.7. Conflict of interest: current clients

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the
representation involves a concurrent conflict of interest. A concurrent conflict of interest
exists if:
(1) the representation of one client will be directly adverse to another
clients; or
(2) there is a significant risk that the representation of one or more clients
will be materially limited by the lawyer's responsibilities to another client, a
former client or a third person or by a personal interest of the lawyer,
(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a),
a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide
competent and diligent representation to each affected client;
(2) the representation is not prohibited by law:
(3) the representation does not involve the assertion of a claim by one
client against another client represented by the lawyer in the same
litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing,

NOTES: COMMENT
Interest of Person Paying for a Lawyer's Service
[13] A lawyer may be paid from a source other than the client, including a co-client, if the client is
informed of that fact and consents and the arrangement does not compromise the lawyer's duty
of loyalty or independent judgment to the client. See Rule 1.8(f). For example, when an insurer
and its insured have conflicting interests in a matter arising from a liability insurance agreement,
and the insurer is required to provide special counsel for the insured, the arrangement should
assure the special counsel's professional independence. So also, when a corporation and its
directors or employees are involved in a controversy in which they have conflicting interests, the
corporation may provide funds for separate legal representation of the directors or employees, if
the clients consent after consultation and the arrangement ensures the lawyer's professional
independence. If acceptance of the payment from any other source presents a significant risk that
the lawyer's representation of the client will be materially limited by the lawyer's own interest in
accommodating the person paying the lawyer's fee or by the lawyer's responsibilities to a payer
who is also a co-client, then the lawyer must comply with the requirements of paragraph (b)
before accepting the representation, including determining whether the conflict is consentable
and, if so, that the client has adequate information about the material risks of the representation.



Rule 1.8. Conflict of interest: current clients: specific rule

(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire
an ownership, possessory, security or other pecuniary interest adverse to a client
unless:
(1) the transaction and terms on which the lawyer acquires the interest are
fair and reasonable to the client and are fully disclosed and transmitted in
writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is given
a reasonable opportunity to seek the advice of independent legal counsel
in the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to
the essential terms of the transaction and the lawyer's role in the
transaction, including whether the lawyer is representing the client in the
transaction.
(b) A lawyer shall not use information relating to representation of a client to the
disadvantage of the client unless the client gives informed consent, in a writing signed
by the client, except as permitted or required by these Rules.
(c) A lawyer shall not solicit any substantial gift from a client, including a testamentary
gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to
the lawyer any substantial gift unless the lawyer or other recipient of the gift is related to
the client. For purposes of this paragraph, related persons include a person within the
third degree of relationship to the lawyer or the client. The following persons are
relatives with the third degree of relationship: great-grandparent, grandparent, parent,
uncle, aunt, brother, sister, child, grand child, great-grand child, nephew or niece.
(d) Prior to the conclusion of representation of a client, a lawyer shall not make or
negotiate an agreement giving the lawyer literary or media rights to a portrayal or
account based in substantial part on information relating to the representation.
(e) A lawyer shall not provide financial assistance to a client in connection with pending
or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses of litigation, the
repayment of which may be contingent on the outcome of the matter; and
(2) a lawyer representing an indigent client may pay court costs and
expenses of litigation on behalf of the client.
(f) A lawyer shall not accept compensation for representing a client from one other than
the client unless:
(1) the client gives informed consent;
(2) there is no interference with the lawyer's independence of professional
judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required
by Rule 1.6.
(g) A lawyer who represents two or more clients shall not participate in making an
aggregate settlement of the claims of or against the clients, or in a criminal case an
aggregated agreement as to guilty or nolo contendere pleas, unless each client gives
informed consent, in a writing signed by the client. The lawyer's disclosure shall include
the existence and nature of all the claims or pleas involved and of the participation of
each person in the settlement.
(h) A lawyer shall not:
(1) make an agreement prospectively limiting the lawyer's liability to a
client for malpractice unless the client is represented by independent legal
counsel, or
(2) settle a claim or potential claim for such liability with an unrepresented
client or former client unless that person is advised in writing of the
desirability of seeking and is given a reasonable opportunity to seek the
advice of independent legal counsel in connection therewith.
(i) A lawyer shall not acquire a proprietary interest in the cause of action or subject
matter of litigation the lawyer is conducting for a client, except that the lawyer may:
(1) acquire a lien granted by law to secure the lawyer's fee or expenses;
and
(2) contract with a client for a reasonable contingent fee in a civil case.
(j) A lawyer shall not have sexual relations with a client unless a consensual sexual
relationship existed between them when the client-lawyer relationship commenced.
(k) While lawyers are associated in a firm, a prohibition in the foregoing paragraphs (a)
through (i) that applies to any one of them shall apply to all of them,
(l) A lawyer related to another lawyer as parent, child, sibling or spouse shall not
represent a client in a representation directly adverse to a person whom the lawyer
knows is represented by the other lawyer except upon informed consent by the client,
confirmed in writing.

NOTES: COMMENT

Use of Information Related to Representation
[5] Use of information relating to the representation to the disadvantage of the client violates the
lawyer's duty of loyalty. Paragraph (b) applies when the information is used to benefit either the
lawyer or a third person, such as another client or business associate of the lawyer. For example,
if a lawyer learns that a client intends to purchase and develop several parcels of land, the lawyer
may not use that information to purchase one of the parcels in competition with the client or to
recommend that another client make such a purchase. The Rule does not prohibit uses that do
not disadvantage the client. For example, a lawyer who learns a government agency's
interpretation of trade legislation during the representation of one client may properly use that
information to benefit other clients. Paragraph (b) prohibits disadvantageous use of client
information unless the client gives informed consent, except as permitted or required by these
Rules. See Rules 1.2(d), 1.6, 1.9(c), 3.3, 4.1(b), 8.1 and 8.3.


Person Paying for a Lawyer's Services
[11] Lawyers are frequently asked to represent a client under circumstances in which a third
person will compensate the lawyer, in whole or in part. The third person might be a relative or
friend, an indemnitor (such as a liability insurance company) or a co-client (such as a corporation
sued along with one or more of its employees). Because third-party payers frequently have
interests that differ from those of the client, including interests in minimizing the amount spent on
the representation and in learning how the representation is progressing, lawyers are prohibited
from accepting or continuing such representations unless the lawyer determines that there will be
no interference with the lawyer's independent professional judgment and there is informed
consent from the client. See also Rule 5.4(c) (prohibiting interference with a lawyer's professional
judgment by one who recommends, employs or pays the lawyer to render legal services for
another).
[12] Sometimes, it will be sufficient for the lawyer to obtain the client's informed consent regarding
the fact of the payment and the identity of the third-party payer. If, however, the fee arrangement
creates a conflict of interest for the lawyer, then the lawyer must comply with Rule. 1.7. The
lawyer must also conform to the requirements of Rule 1.6 concerning confidentiality. Under Rule
1.7(a), a conflict of interest exists if there is significant risk that the lawyer's representation of the
client will be materially limited by the lawyer's own interest in the fee arrangement or by the
lawyer's responsibilities to the third-party payer (for example, when the third-party payer is a co-
client). Under Rule 1.7(b), the lawyer may accept or continue the representation with the informed
consent of each affected client, unless the conflict is nonconsentable under that paragraph.
Under Rule 1.7(b), the informed consent must be confirmed in writing.

I didnt make all of this hypothetical up. There is a Nevada Ethics opinion about the fact
situation in which a brother permanently lends his brother his car because his record for
getting DWIs makes him uninsurable. State Bar of Nevada Standing Committee On Ethics And
Professional Responsibility Formal Opinion No. 9 (originally issued on 4/21/88, conclusion
amended 9/24/07). The brothers confess to their lawyer that the arrangement essentially is
fraudulent as to the insurer. The State Bar of Nevada Standing Committee on Ethics and
Professional Responsibility determined that the lawyer could not disclose the fraud to the
insurance company, was not obliged to withdraw on the ground that the fraud was complete, not
continuing, and that he was not required to, but probably should counsel Guillermo about the
adverse consequences of this fraudulent activity to the extent any further warning might be
necessary. I made up a few extra details. The names have been changedwell, you are free to
guess why I changed the names.
In First American Carriers, Inc. v. Kroger Co., 302 Ark. 86, 787 S.W.2d 669 (1990)
there was an eleven vehicle accident involving, among other vehicles, some tractor trailers. An
insurer for one tractor trailer, First American Carriers, called an attorney in a large law firm. He
did extensive work on the case. An insurer for another tractor trailer, owned by Kroger, called
another attorney in the same firm and asked him a question. He did a minimal amount of work
on the case, unaware that his partner was heavily involved in the case. The second lawyer both
worked the case for about a day until they found out they were both working the same case, at
which point the one who had done the minimal amount of work withdrew. He had never actually
talked to a client, but had dealt exclusively with the adjustor. No confidential information had
yet been conveyed. Nonetheless, new counsel for Kroger moved to disqualify the firm as First
Americans lawyer due to conflict of interest. The trial court granted the motion. The Supreme
Court affirmed.
An attorney hired by an insurance company to represent an insured is, of course, the
attorney for the insured, not the insurer, even if the attorney never so much as talks to the
insured. The case is a good illustration of just how seriously the Arkansas Supreme Court takes
this rule.

Unethical Doctors and Your Client


Dr. Dan Detroit is a chiropractor in Little Rock. In order to increase his business, Dr.
Detroit hires Roger Rabbit and his wife, Jessica Rabbit to find new patients for him. Roger and
Jessica go to the police station and gather police reports. They then contact the injured
partiesboth by telephone and in personand encourage them to see Dr. Detroit. Sometimes
Roger will make statements that arestrictly speakingnot true. Roger Rabbit frequently poses
as a former patient of Dr. Detroit, although he has never in fact had any chiropractic treatment
whatsoever. He has also made promises of success that may or may not have any basis at all in
fact. Jessica, on the other hand, has not engaged in any false or misleading statements.
Dr. Detroit treats the accident victims and bills their automobile insurance company.
Amazingly, the average course of treatment costs just under $5,000.00. Then the patient is
released as healed.
Insurers become suspicious of Dr. Detroit and stop paying his bills. At first, he begins
contacting insurers and negotiating settlements of his patients injury cases. His patients agree
to sign releases in order to get the matter resolved. Some of them even get money left over after
the chiropractic bills have been paid. He charges no fee for this service, but he does make sure
that his bill gets paid out of the proceeds. Some insurers, however, refuse to deal with him. He
contacts you about a claim against those insurers:
1. Can you represent Dr. Detroit in private suits against the insurance companies?
2. Can you represent his patients that he brings to you?
3. Can you, while youre at it, represent those patients in personal injury actions against
tortfeasors?
4. Is there any difference in how you may treat cases involving persons solicited by Roger
and those solicited by Jessica?

The first question raised by this title is what we mean by unethical doctors. The medical
profession has its own code of ethics. Clearly, the study of medical ethics is of ancient origin,
going back as far as the Hippocratic Oath. The American Medical Association has this statement
of principles of medical ethics on its webpage:

Principles of medical ethics
I. A physician shall be dedicated to providing competent medical care, with compassion and respect for
human dignity and rights.
II. A physician shall uphold the standards of professionalism, be honest in all professional interactions,
and strive to report physicians deficient in character or competence, or engaging in fraud or deception,
to appropriate entities.
III. A physician shall respect the law and also recognize a responsibility to seek changes in those
requirements which are contrary to the best interests of the patient.
IV. A physician shall respect the rights of patients, colleagues, and other health professionals, and shall
safeguard patient confidences and privacy within the constraints of the law.
V. A physician shall continue to study, apply, and advance scientific knowledge, maintain a
commitment to medical education, make relevant information available to patients, colleagues, and
the public, obtain consultation, and use the talents of other health professionals when indicated.
VI. A physician shall, in the provision of appropriate patient care, except in emergencies, be free to
choose whom to serve, with whom to associate, and the environment in which to provide medical care.
VII. A physician shall recognize a responsibility to participate in activities contributing to the
improvement of the community and the betterment of public health.
VIII. A physician shall, while caring for a patient, regard responsibility to the patient as paramount.
IX. A physician shall support access to medical care for all people.
Adopted June 1957; revised June 1980; revised June 2001.
http://www.ama-assn.org/ama/pub/physician-resources/medical-ethics/code-medical-
ethics/principles-medical-ethics.page?

There are, however, some ethical issues regarding health care providers that dont fall in
any of these categories.
As with the last hypothetical, I did not make all these allegations up. There have been
similar allegations against certain chiropractors. As of yet these are only allegations. However,
for our purposes we have to discuss the ethical implications of our practice. We can certainly
deal in hypotheticals that may or may not have a factual basis.
The ethical rules for chiropractors are different from those that apply to us as lawyers. In
Culpepper v. Arkansas Board of Chiropractic Examiners 343 Ark. 467, 36 S.W.3d 335 (2001)
the Arkansas Supreme Court held that a regulation of the chiropractic board prohibiting
telephone solicitation by telemarketers hired by the chiropractor was unconstitutional as the
board failed to produce any evidence that the regulation furthered any governmental interests and
was not sufficiently narrowly tailored. As lawyers, we are presumed to be so persuasive that a
call from one of us could be intimidating. The same doesnt apply to chiropractors.
A complaint filed in Pulaski County Circuit Court by two chiropractors in November of
2011 alleges that a chiropractic clinic was engaged in solicitations of patients by means of false
and misleading statements and even paying money to patients to make and keep appointments.
There is not a whole lot of detail about the nature of the false and misleading statements in the
complaint. Johnson v. Pulaski Injury & Rehab Center, Inc., Pul. Cir. No. 60 CV 2011-5690,
filed November 28, 2011. Some of the defendants, alleged marketers have answered, denying
the allegations.
The Florida Attorney Generals office has complained about solicitation by chiropractors and
doctors. http://myfloridalegal.com/pages.nsf/Main/9ab243305303a0e085256cca005b8e2e The
activity is described as follows:
Most traffic accidents in Florida result in an accident report being filed with the local
law enforcement agency. Individuals called "runners" contact the law enforcement
agency to pick up copies of all accident reports filed with that agency. The "pickups"
occur anywhere from a daily to a weekly basis, depending on how quickly the agency
makes the reports available to the public. Most of the time the runners have made
arrangements with the local agencies to have all reports copied and ready to be picked
up. A typical law enforcement agency may have hundreds of records copied and stacked
waiting for pickup from up to a dozen runners on any given day. Because accident
reports are public records under Chapter 119, Florida Statutes, law enforcement
agencies have no choice but to comply with the requests.

The runners subsequently use the reports to personally solicit accident victims or to turn
a list of victims' names over to a third party who will solicit. These solicitations generally
take the form of either harassing or invasive telephone calls or intimidating personal visits
to the insured's home. Whether by telephone or in person, the solicitor generally
misleads the victims into thinking they are speaking to their insurance company and that
the visit to a doctor or chiropractic clinic is mandatory. The runner will often also refer
victims to an auto body shop and a lawyer, all in return for kickbacks. The biggest payoff,
though, comes from medical professionals who typically pay between $250.00 and
$500.00 to the runner per referral. Other times victims are induced to believe they will
receive large settlements for their injuries, whether real or not, but only if they visit the
specific doctor or chiropractor immediately. Some runners dispense with formalities and
offer the victims money to visit the doctor or clinic.

Some runners pick up accident reports for so-called "accident journals." These
periodicals have nothing in common with any legitimate newspapers or periodicals. They
are nothing more than a list of the names, addresses and phone numbers of people
involved in accidents which have been summarized from the accident reports. These
"journals" are then sold to chiropractors and lawyers to be used for a mail solicitation, or
to solicitors who will call or visit victims directly.

Once they appear for medical care, the victims are given a battery of diagnostic tests
which rarely vary regardless of the reported injury. Some tests are of dubious value;
others, like video fluoroscopy, we have learned, can be dangerous if not administered
correctly. Whatever the test, they all have one thing in common; they're extremely
expensive and are primarily for the purpose of draining PIP benefits.

Some doctors or chiropractors will in turn refer the patient to a lawyer with whom they
have a business relationship. This typically does not involve a money exchange, rather
the doctor will expect referrals back from the lawyer.

Statewide Grand Jury Report, Report, Case No. 95,746, Second Interim Report of the Fifteenth
Statewide Grand Jury.
Some states regulate solicitation by chiropractors. An Ohio regulation provides:
(L) Chiropractic physicians who solicit via any telecommunication method or device shall
maintain a record of the names of the individuals called, their telephone number, and a
copy of the exact solicitation script(s) used for six months from the date of last use.
Failure to maintain the names of the individuals called, their telephone number, and a
copy of the exact solicitation script(s) used for six months from the date of last use
constitutes a violation of this rule.
(M) Chiropractic physicians who solicit via any written medium, including but not limited to
via the US mail, facsimile, or electronic mail, shall maintain a copy of the written
solicitation and a record of the name, address, electronic mail address, or other location
where the solicitation was sent, for six months from the last date of use. Failure to
maintain a copy of the written solicitation and a record of the name, address, electronic
mail address, or other location where the solicitation was sent for six months from the
date of last use constitutes a violation of this rule. When the name and information are
acquired from public documents, the written solicitation shall clearly state in at least ten
point font or its equivalent This is an advertisement. Your name and information were
acquired from public documents. You are under no obligation to respond to this
communication.
(N) Chiropractic physicians who solicit via in-person shall maintain a record of the names
of the individuals contacted, including their address and telephone number for a period of
six months. Failure to maintain a record of the names of the individuals contacted,
including their address and telephone number for a period of six months constitutes a
violation of this rule.
(O) Each of the following constitutes an act of abusive solicitation and is in violation of
this rule:
(1) Use of threats, intimidation, or profane or obscene language;
(2) Contacting an individual repeatedly or continuously, or after being advised that there
is no interest in receiving chiropractic and/or acupuncture services;
(3) Contacting an individual when that person has previously stated that he or she does
not wish to receive an outbound telephone call or in person solicitation made by or on
behalf of the seller whose goods or services are being offered. Every chiropractic
physician who solicits via telephone is to maintain a do not call list;
(4) Contacting an individual at any time other than between eight a.m. and nine p.m. local
time;
(5) Requiring an immediate response from an individual to any offer made during the
solicitation or making a one time only offer and/or not permitting the individual to consider
the offer and reply at a later time;
(6) Failure to disclose the solicitors identity and the identity of the chiropractic physician
and practice on whose behalf the solicitation is being made; the purpose of the
solicitation; and a statement of the goods or services being offered;
(7) Misrepresenting an affiliation with, or endorsement by, any government or third-party
organization;
(8) Communicating with an individual in a way that invades privacy of the individual, or
interferes with an existing doctor/patient relationship;
(9) Leaving a recorded message for the prospect that does not comply with this rule;
(10) Failing to advise the prospect how his or her name and information were acquired
and that the prospect is under no obligation to respond to the offer made during the
solicitation;
(11) Contacting a minor child under eighteen years of age;
Ohio Administrative Code, Chapter 4734-9. Section 4734-9-02.
The chiropractor himself does not have a cause of action against the insurer in his own
name. In Elsner v. Farmers Ins. Group, Inc., 220 S.W. 3d 633 (2005) the Supreme Court held
that a provider was not a third-party beneficiary of an insurance policy for purposes of a PIP
provision in the policy. The doctor was just an incidental beneficiary who did not have standing
to bring a direct action against the insurer.
Unethical Insurance Adjusters and Your Client's Claim

Ark. Code Ann 23-66-206. Unfair methods of competition and unfair or deceptive
acts or practices defined.
(13) Unfair claims settlement practices means committing or
performing with such frequency as to indicate a general business practice any of
the following:
(A) Misrepresenting pertinent facts or insurance policy provisions
relating to coverages at issue;
(B) Failing to acknowledge and act reasonably and promptly upon
communications with respect to claims arising under insurance policies;
(C) Failing to adopt and implement reasonable standards for the
prompt investigation of claims arising under insurance policies;
(D) Refusing to pay claims without conducting a reasonable
investigation based upon all available information;
(E) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss statements have been completed;
(F) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become reasonably clear;
(G) Attempting to settle claims on the basis of an application that
was altered without notice to, or knowledge or consent of, the insured;
(H) Making claim payments to policyholders or beneficiaries not
accompanied by a statement setting forth the coverage under which payments are
being made;
(I) Delaying the investigation or payment of claims by requiring
an insured or claimant, or the physician of either, to submit a preliminary claim
report and then requiring the subsequent submission of formal proof of loss
forms, both of which submissions contain substantially the same information;
(J) Failing to promptly provide a reasonable explanation of the
basis in the insurance policy in relation to the facts of applicable law for denial of
a claim or for the offer of a compromise settlement;
(K) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than the amounts
ultimately recovered in actions brought by those insureds;
(L) Attempting to settle a claim for less than the amount to which
a reasonable person would have believed he or she was entitled by reference to
written or printed advertising material accompanying or made part of an
application;
(M) Making known to insureds or claimants a policy of appealing
from arbitration awards in favor of insureds or claimants for the purpose of
compelling them to accept settlements or compromises less than the amount
awarded in arbitration;
(N) Failing to promptly settle claims, when liability has become
reasonably clear, under one (1) portion of the insurance policy coverage in order
to influence settlements under other portions of the insurance policy coverage;
and
(O) Requiring as a condition of payment of a claim that repairs
must be made by a particular contractor, supplier, or repair shop;

An important thing to remember about the statutory grounds is that a single violation will
not ordinarily serve to be an unfair practice. The statute requires committing or performing the
unfair practice with such frequency as to indicate a general business practice.
Arkansas law provides for penalty and attorneys fees when an insured has to bring a
lawsuit to collect insurance benefits and recovers within twenty percent (thirty percent in
homeowners cases) of the amount demanded in the suit. Ark. Code Ann. 23-79-208. Further,
in addition to the statutory penalty and attorneys fees, an insurance company may incur liability
for the first party tort of bad faith when it affirmatively engages in dishonest, malicious, or
oppressive conduct in order to avoid a just obligation to its insured. Aetna Casualty and Surety
Company v. Broadway Arms Corporation, 281 Ark. 128, 664 S.W.3d 463 (1984); Employers
Equitable Life Ins. Co. v. Williams, 282 Ark. 29, 30, 665 S.W.2d 873, 873-74 (1984). Mere
refusal to pay insurance cannot constitute wanton or malicious conduct when, as here, an actual
controversy exists with respect to liability on the policy. Findley v. Time Ins. Co., 264 Ark. 647,
651, 573 S.W.2d 908, 910 (1979). Tweedle v. State Farm Fire & Cas. Co., 4:04-CV-
608(RSW), 2005 WL 2149261 (E.D. Ark. Sept. 6, 2005).
Proof of first party bad faith in Arkansas has traditionally been difficult. [AMI 2304]. A
recent law review article defines the Arkansas approach as a Quasi-Criminal Standard. Sharon
Tennyson & William J. Warfel, The Law and Economics of First-Party Insurance Bad Faith
Liability, 16 Conn. Ins. L.J. 203, 212 (2009). This requires only slightly more rigorous proof
than an intentional tort, according to the classification by the authors.
The existence of two separate remedies, one being the statutory penalty and attorneys
fees and the other being the bad faith remedy for extreme violations makes our course rather
easy. When dealing with the unethical activity of adjustors, the solution is to sue. In egregious
cases, a report to the Insurance Department would not be out of order.