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Liens and a Fiduciary Duty in Personal Injury Matters

The Nevada Supreme Court recently ruled in an advisory opinion that Liens, a form of contract law, are an assignment of rights where “trust” is owed to the fiduciary lien holder. In Lopez vs. Corral, a chiropractor sued an attorney for failure to honor his lien. The allegations were for fraud, breach of contract and breach of fiduciary duty. Liens are typically used when accident attorneys represent clients with no health insurance. The liens are a form of contract to guarantee payment to the medical or other type of provider. Injury lawyers use them quite frequently to get clients medical help when they do not have health insurance or other forms of medical help. To many, the medical lien is just a form of an assignment against the personal injury settlement, and hence, the Nevada Supreme Court’s desire to call the relationship a fiduciary one. It is for this reason alone, that a duty of trust has been inferred into the relationship.

Under common contract law, a special relationship must exist before an ordinary contract becomes one of a fiduciary. For example, a car purchase is simply a contract of terms where both sides should abide by the terms. If a party breaches, then the damages are simply a breach of contract. In a lien situation, the duty of trust is implied and if a party breaches then a potential bad faith lawsuit could evolve. This is important because under older contract law, punitive damages are not allowed in breach of contract situations. Under breach of lien rights, bad faith would be a cause of action allowing the punitive damages historically not allowed.

This opinion by the Nevada Court changes Nevada Law for Nevada Personal Injury Lawyers. How? As a fiduciary of the medical lien holder, the Attorney is playing a dual role with obligations to both the client and the medical provider. The role to the client is paramount, but the shift in allegiance that now must be practice to the medical provider is one that will shift the dynamic of personal injury representation to one that is much more broad in its duty to recover for both the victim and the provider. If you need help with a medical lien, please call our Nevada personal injury law firm.

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