CASE OF THE QUARTER: THE IMPORTANCE OF FOLLOWING THROUGH
Reprinted from Rx for Risk Vol. 14 Issue 3 (Summer 2006)

In 2003, Norman McBee, MD was employed as an independent contractor by the Sterling Medical Corporation ( Sterling ). Both McBee and Sterling were listed separately as insureds on the same malpractice insurance policy which was paid for by Sterling .

On June 25, 2003 , plaintiff Junell Benjamin filed a medical malpractice lawsuit naming both McBee and Sterling as defendants. One day after McBee was served with the lawsuit –via a document called the “complaint”- he hand-delivered it to Sterling ’s regional manager in compliance with Sterling ’s internal policies. The manager told McBee that Sterling would take care of everything and that the complaint would be forwarded to the corporate office which would forward it to the malpractice insurance company. On August 6, 2003 , McBee received an amended complaint which he forwarded to the same Sterling regional manager.

According to later testimony from Sterling , both the original complaint and the amended complaint were received at the corporate office. Once there, however, the original complaint was routed to the wrong person and the amended complaint was misfiled. As a result, neither document was ever forwarded to the malpractice carrier and, thus, no attorney was appointed to defend McBee. On September 22, 2003 , a default judgment was entered against him.

A default occurs when the defendant does not respond to a complaint –via a document called the “answer”- within the timeframe specified by law. If the answer is not filed in time, then the plaintiff can request that a default be entered into the record. Once a default is entered, the defendant is no longer allowed to defend himself and judgment is automatically given in favor of the plaintiff; in other words, the defendant is automatically found liable for the negligent acts alleged in the complaint.

Shortly after the trial court’s default judgment was served upon McBee, he dutifully notified the Sterling general manager. Once notice of default and judgment is given, the opportunity still exists to “open” or reverse the default, however, the defendant must act quickly. Unfortunately, Sterling waited several days before forwarding the notice to the insurance carrier and, as a result, the insurance company was unable to take any action until almost four weeks after the judgment was entered.

At no point did McBee contact the insurance carrier directly to determine whether they had received any of the documents, even though it was the insurance company –not Sterling itself- that had the duty to defend him. Furthermore, McBee never asked Sterling to provide him with any documentation showing that the lawsuit had been forwarded and was being handled appropriately.

The trial court ultimately refused to grant the defendant’s motion to open or reverse the default judgment.

Court’s Decision: The Court of Appeals denied the Defendant’s appeal of the trial court decision.

Comments on the Court’s Analysis:

The Appeals Court seemed mystified by McBee’s inaction. Although, McBee may have been justified in relying upon Sterling when he initially received the complaint, the court considered his “blind reliance” upon Sterling even after default to be “not excusable.”

In determining whether or not there were grounds to reverse the trial court decision, the Appeals Court compared this case to others involving “excusable neglect.” In denying McBee’s appeal, the court was swayed by two factors. First, unlike other cases, where the defendants contacted the insurance carriers directly upon learning of the default, McBee never attempted to contact the insurance carrier and chose to confine his communications to his employer.

Second, in those cases where the court determined there was excusable neglect, the defendants responded immediately upon learning that a judgment had been entered against them. In this instance, McBee took almost a month to respond. According to the court, “the trial court could take [McBee’s] unexplained delay into consideration as a factor in determining whether to exercise its discretion to open the default” and reconsider the court’s final decision.

Risk Management Implications

The judgment in McBee and the events that led up to it may seem almost absurd in retrospect. A lost and a misplaced file resulted in the defendant being found liable for negligence without a trial. A simple phone call at the right time from McBee would have cured nearly all of the mistakes that were made in this case. Because of this, McBee offers a basic but important lesson – it is imperative to respond quickly to a complaint, court order, or even a subpoena. The stakes can be high and your own actions or inaction can carry serious and lasting legal and financial consequences.

McBee illustrates why practitioners should remain engaged in the legal process to ensure that their interests are being adequately represented. In this particular case, it was the employer’s actions that prejudiced McBee and resulted in the default judgment, but even if Sterling had ably handled the complaint, McBee should have contacted and followed-up with the insurance company directly. Remember that if you are personally named in a complaint, you have a personal stake in the outcome of the legal action that goes beyond your relationship with any group, clinic, or managed care organization. There is no substitute for keeping in direct contact with the insurance carrier, because, in the end, it is the insurance carrier who is responsible for your legal defense.

McBee v. Benjamin , 272 Ga. App. 567 ( February 23, 2005 )

Back to Claims menu