ILNews

Settlement may be largest of its kind: State agency resolves federal lawsuit that began with legal malpractice claim

Back to TopCommentsE-mailPrintBookmark and Share
An Indianapolis law firm has been holding its breath for two years. Ever since getting hit with a potentially devastating $17.9 million jury verdict on a legal malpractice claim in state court, the 45-year-old law firm Fillenwarth Dennerline Groth & Towe hasn't been able to put the focus on its daily client business without acknowledging that dark storm cloud hovering overhead.

Now, the storm cloud has dissolved.

In what may be the state's largest-ever liquidation return of its kind, the Indiana Department of Insurance has reached a $16.5 million settlement with Alabama-based ProNational Insurance to end a fourmonth-old federal lawsuit alleging bad faith and breach of contract for how it handled the legal malpractice claim against Frederick Dennerline and the firm.

"This is a big relief," partner William Groth said about the settlement. "The last couple years have been pretty difficult from an emotional standpoint; there's been a lot of bitter tears and uncertainty. The judgment has been a big distraction, but that's now all concluded and that distraction is removed."

ProNational was the malpractice insurer for the law firm when a situation materialized. At the time, Fillenwarth Dennerline represented the failed Indiana Construction Industry Trust that had provided health-care coverage to 8,200 non-union construction workers before going bust in 2002. Those Hoosiers were left with unpaid medical bills, and the insurance commissioner went after all the defendants - including Dennerline, who'd served as outside counsel for the health plan and had knowledge of the failing trust.

About 80 other defendants settled with the state agency, but Dennerline proceeded to trial. ProNational declined to settle for the $1 million limit that Dennerline wanted. A jury in August 2006 found Dennerline and the firm liable and assessed a $17.9 million verdict that the Indiana Court of Appeals affirmed this past spring.

Earlier this year, the law firm assigned its rights to the insurance commissioner and paid $50,000, releasing it from any obligation to pay the multi-million dollar verdict. The U.S. District Court, Southern District of Indiana, suit immediately followed in June.

The agreement came about 4:30 p.m. Oct. 10 in Jim Atterholt v. ProNational Insurance Co., No. 1:08-cv-0834-DFH-WTL, which accused ProNational of declining multiple opportunities to settle the state court claim. The suit claimed the company breached its obligation to pay the claims and engaged in a "malicious, willful, oppressive, and unfounded" manner in failing and refusing to settle.

Indianapolis attorney Joe Chapelle with Barnes & Thornburg, who represented ProNational, said he and the company are pleased with the $16.5 million settlement.

"This is not to be construed to mean that there was any finding by the department of bad faith," he said. "We are pleased with the outcome, and the company is pleased to be able to put this behind them."

He maintained that ProNational does not have a "no-settle" policy - a position made following the federal suit filing in the summer.

At that time, Chapelle said that his client insures about 1,000 attorneys or firms in Indiana and offers coverage up to $5 million. In the past five years, about 67 percent of the cases against attorneys have been resolved without any payments from dismissals, summary judgments, or defense verdicts, he said. About 27 percent have been settled, and about 7 percent have evaded judgment, he said. 

"We do not have a no-settle policy," he said. "That's something someone would throw out there on these types of complaints."

Of about 20 suits filed nationally in the past decade where ProNational was a defendant, federal dockets show that about six involved the insurer getting sued for medical malpractice claims. None of the others appear to involve legal malpractice, except for this current case and the previous one that was filed but dismissed in 2005 by Fillenwarth Dennerline. Records show most were dismissed, with some involving joint stipulation of dismissal from both parties following settlement. Some records were sealed or not available online.

Cohen & Malad attorney Irwin Levin, who represented the state insurance agency and was on the original legal malpractice action against the firm, said this federal settlement negotiation came down to balancing the trust fund needs with a potentially ongoing appeal and federal suit.

"We negotiated and took a tough stance, and it came down to how long we wanted to litigate," Levin said, noting this settlement ended the federal suit and a transfer request pending on the state legal malpractice claim before the Indiana Supreme Court.

Levin added that to his knowledge, this is the highest amount ever returned from a liquidation action without a guaranty fund in the state. An additional $7.7 million in settlements already paid by other defendants makes a combined total of more than $24 million to be paid into the trust.

The Department of Insurance described this recovery as remarkable, noting that it hadn't expected to recover this amount. The money will be used to reimburse about 80 percent of out-of-pocket expenses paid by member companies, their employees, and healthcare providers that should have been paid years ago by the trust. A payout date is set for Dec. 15; members, employees, and healthcare providers are able to submit reimbursement claims to a special deputy liquidator, Indiana Insolvency Inc.

In the meantime, Groth and others at the firm are just happy to be able to look past this suit that has been all engulfing. The firm's malpractice rates have dropped, the client base continues expanding from those loyal clients who endured the past two years, and Groth said the firm has more work than ever. The firm has changed insurance carriers and no longer goes with ProNational. 


Previous ProNational coverage:

"Justices asked to hear law firm case" - Sept. 3, 2008
 
"Suit filed against insurer" - July 9, 2008

"$18 million verdict clouds law firm's future" - Sept. 20, 2006"This was our only experience with ProNational, and it wasn't a pleasant one.We don't know if it's consistent to how they operate with everyone, but they didn't settle when we wanted them to," Groth said, adding that he hopes this $16.5 million amount will teach ProNational and other insurers a lesson.

"We hope this will cause them to put the insureds' interests ahead of their own financial interests," he said. "Maybe it'll make them pay more attention to the emotional and financial consequences of refusing to settle, particularly when that insured is a law firm and there's no cap on liability, as there is on medical professionals." •
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. @BryanJBrown, You are totally correct. I have no words, you nailed it.....

  2. You have not overstated the reality of the present situation. The government inquisitor in my case, who demanded that I, on the record, to choose between obedience to God's law or man's law, remains on the BLE, even an officer of the BLE, and was recently renewed in her contract for another four years. She has a long history in advancing LGBQT rights. http://www.realjock.com/article/1071 THINK WITH ME: What if a currently serving BLE officer or analogous court official (ie discplinary officer) asked an atheist to affirm the Existence, or demanded a transsexual to undergo a mental evaluation to probe his/her alleged mindcrime? That would end a career. The double standard is glaring, see the troubling question used to ban me for life from the Ind bar right here: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners (see page 8 of 21) Again, what if I had been a homosexual rights activist before law school rather than a prolife activist? A gay rights activist after law school admitted to the SCOTUS and Kansas since 1996, without discipline? A homosexual rights activist who had argued before half the federal appellate courts in the country? I am pretty certain that had I been that LGBQT activist, and not a pro-life activist, my passing of the Indiana bar exam would have rendered me an Indiana attorney .... rather than forever banished. So yes, there is a glaring double standard. And some are even beyond the reach of constitutional and statutory protections. I was.

  3. Historically speaking pagans devalue children and worship animals. How close are we? Consider the ruling above plus today's tidbit from the politically correct high Court: http://indianacourts.us/times/2016/12/are-you-asking-the-right-questions-intimate-partner-violence-and-pet-abuse/

  4. The father is a convicted of spousal abuse. 2 restaining orders been put on him, never made any difference the whole time she was there. The time he choked the mother she dropped the baby the police were called. That was the only time he was taken away. The mother was suppose to have been notified when he was released no call was ever made. He made his way back, kicked the door open and terrified the mother. She ran down the hallway and locked herself and the baby in the bathroom called 911. The police came and said there was nothing they could do (the policeman was a old friend from highschool, good ole boy thing).They told her he could burn the place down as long as she wasn't in it.The mother got another resataining order, the judge told her if you were my daughter I would tell you to leave. So she did. He told her "If you ever leave me I will make your life hell, you don't know who your f!@#$%^ with". The fathers other 2 grown children from his 1st exwife havent spoke 1 word to him in almost 15yrs not 1 word.This is what will be a forsure nightmare for this little girl who is in the hands of pillar of the community. Totally corrupt system. Where I come from I would be in jail not only for that but non payment of child support. Unbelievably pitiful...

  5. dsm 5 indicates that a lot of kids with gender dysphoria grow out of it. so is it really a good idea to encourage gender reassignment? Perhaps that should wait for the age of majority. I don't question the compassionate motives of many of the trans-advocates, but I do question their wisdom. Likewise, they should not question the compassion of those whose potty policies differ. too often, any opposition to the official GLBT agenda is instantly denounced as "homophobia" etc.

ADVERTISEMENT