THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, December 1, 1995 TAG: 9512010212
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 176 lines
The doctor had a secret.
He was sitting alone, dazed, in a lawyer's office. His attorney, Carolyn P. Oast, walked in, saw her client and asked what was wrong. The 58-year-old physician, Dr. Norman R. Dahm of Virginia Beach, hesitated.
If I tell you, Dahm asked, will you keep it confidential? Oast said yes.
And so the doctor - a gynecologist defending himself against a $2 million malpractice lawsuit - gave up his secret: He had had a seizure. He had a history of seizures.
That, at least, is how the doctor recalls the conversation from November 1993. What happened next is the subject of a $15 million lawsuit.
Dahm, in a civil suit filed this month, accuses Oast and her Norfolk law firm of breaching their confidential relationship with him, of telling his insurance company - the company that hired Oast to represent him - about his history of seizures.
The insurance company, in turn, is trying to void Dahm's insurance policy, accusing him of lying on his 1991 application by omitting his medical history and obtaining a $3 million policy under false pretenses.
For all this, Dahm blames Oast; her law firm, Heilig, McKenry, Fraim & Lollar; and his insurance company, Doctors Insurance Reciprocal. He accuses them of a conspiracy to deny him insurance coverage for a potentially costly malpractice trial.
The case poses an intriguing ethical and legal question: To whom does a lawyer owe her first allegiance? The client she represents? The insurance company that pays the bills? Or is there a higher public obligation?
Dahm and Oast declined to discuss the case last week, so it is not known why Oast allegedly told Dahm's secret to the insurance company - whether she was alarmed at a doctor with a history of seizures conducting surgery, if she thought her client had committed fraud on the insurance company, or if she disclosed Dahm's secret by accident.
Two Virginia law professors say the case poses an interesting issue.
``It is common that insurance lawyers are put in what's called a tri-lemma,'' said Paul Zweir, a University of Richmond law professor. ``It's a dilemma that goes three ways. They have obligations to themselves, their insurance company and their client. That puts the lawyer into a three-way conflict at times.''
Dahm's case, pending in Virginia Beach Circuit Court, is not unique. The issues have been argued before and answered in professional regulations and previous court rulings.
In general, the rules are clear: Lawyers cannot divulge confidences without their clients' consent except in the most extraordinary of cases - for example, when there has been a fraud or to prevent a future crime.
``It doesn't matter who pays the lawyer,'' said Michael Krauss, a law professor at George Mason University. ``The lawyer's client is the lawyer's client.''
The Dahm case began as a routine medical malpractice matter.
A patient, Lucretia Grinston, went to Dahm's office on Independence Boulevard in 1991 complaining of abdominal pain. She was admitted to Humana Hospital Bayside, where Dahm did laparoscopic surgery, cutting out what he thought was an ovarian cyst.
Actually, the doctor had cut a hole the size of a quarter in Grinston's colon, according to her malpractice claim. That led to infection, peritonitis and several days of pain before Dahm corrected the problem, Grinston says.
Later, the patient sued Dahm, another doctor and the hospital for $2 million. Her lawyer, John R. Fletcher, said the lawsuit has nothing to do with Dahm's seizures.
Then came the seizure incident in the lawyer's office.
In his lawsuit, Dahm does not describe the seizure that occurred during a break in depositions, or why Oast thought something was wrong. He does say, however, that he and Oast were alone in a room when she asked about his medical problem, and he asked if everything he told her would be kept confidential.
``Ms. Oast assured Dr. Dahm she would not disclose the information he gave her to anyone,'' the lawsuit says.
Then he gave the lawyer his medical history, the lawsuit says.
Sometime later, according to the lawsuit, Oast told the insurance company about the doctor's history of seizures.
Dahm claims, in his lawsuit, that Oast gave up his secret because her firm does a lot of work for the insurance company and she wanted to ensure that the firm would get more attorney fees and referrals.
The insurance company reacted with its own lawsuit in September 1994. It accuses Dahm of lying on his 1991 insurance application to hide his medical condition. It also says Dahm lost his privileges to practice at Virginia Beach General Hospital because of this condition, and his privileges at Bayside Hospital were restricted for the same reason, but he did not report either one.
Dahm, 60, has had seizures for about 40 years, the lawsuit says.
``Dr. Dahm's condition was serious enough for his own neurologist to recommend that he not be permitted to continue his medical practice because of the danger to his patients,'' the insurance company wrote in court papers filed this month.
``Indeed, for several years in the 1980s, Dr. Dahm did not practice full OB/GYN medicine because of this physical condition. During this period of time, Dr. Dahm collected disability insurance,'' the insurance company wrote.
Dahm, in his legal reply, denies that his privileges at Beach General were revoked. He also says that any error or omission on his insurance application ``was done innocently upon the good faith belief that the information omitted was immaterial.''
The insurance company is skeptical.
``It is an amazing coincidence,'' the company's lawyer wrote, ``that Dr. Dahm `forgot' to list Virginia Beach General, which was the hospital that pulled the plug on his privileges.''
And then there is the lawyer-client confidentiality issue.
In his lawsuit, Dahm says the revelation of his seizures to his insurance company caused him ``extreme emotional distress.'' He says he has ``lost sleep, lost his appetite, and has suffered increased difficulty in communication with his loved ones.''
Dahm also claims he has lost business and his reputation has been damaged in the community and among fellow doctors.
The Virginia Code of Professional Responsibility addresses this issue. It warns, ``A lawyer shall not knowingly reveal a confidence or secret of his client.''
That means everything a client tells his lawyer is confidential, said Krauss, the George Mason professor. ``You don't have to preface each sentence by saying, `This is in confidence,' '' Krauss said.
There are exceptions.
For example, the professional code says a lawyer may reveal a confidence when required by law or a court order, or to establish the reasonableness of his fee, or to defend himself or his employees against accusations of wrongdoing.
A lawyer may also divulge a secret if his client ``has, in the course of the representation, perpetrated upon a third party a fraud related to the subject matter of the representation.'' That may apply in the Dahm-Oast case.
Finally, a lawyer can break a secret - indeed, he must, according to the code - if he knows his client is about to commit a crime.
In every other case, the rule of thumb applies: If a client tells you something, zip your lip.
``If it was told in confidence, then the obligation is supposed to be to the medical doctor,'' said Zweir, the University of Richmond professor. ``That supersedes the obligation to the insurance company.''
It is not known how or why Oast allegedly told the insurance company about the doctor's medical condition. In his lawsuit, Dahm says he discussed the issue with Oast and she said ``she felt she had to tell the insurance company about Dr. Dahm's medical history, but she did not say why.''
Dahm seeks $5 million in compensatory damages and $10 million in punitive damages.
In general, a medical malpractice lawyer should withdraw from a case rather than divulge confidential information to an insurance company, Zweir said.
But, Zweir added, ``Case law is a little bit mushy on this point. It continues to be a problem that comes up.'' ILLUSTRATION: Graphic
THE CODE
Here's what the Virginia Code of Professional Responsibility says
about lawyer-client confidences.
CANON 4
A Lawyer Should Preserve the Confidences and Secrets of a
Client.
Disciplinary Rule 4-101(B)
A lawyer shall not knowingly:
(1) Reveal a confidence or secret of his client. . .
Disciplinary Rule 4-101(C)
A lawyer may reveal:
(1) Confidences or secrets with the consent of the client or
clients affected, but only after a full disclosure to them.
(2) Confidences or secrets when required by law or court order.
(3) Information which clearly establishes that his client has, in
the course of the representation, perpetrated upon a third party a
fraud related to the subject matter of the representation.
(4) Confidences or secrets necessary to establish the
reasonableness of his fee or to defend himself or his employees or
associates against an accusation of wrongful conduct.
Disciplinary Rule 4-101(D)
A lawyer shall reveal:
(1) The intention of his client, as stated by the client, to
commit a crime and the information necessary to prevent the crime. .
.
(2) Information which clearly establishes that his client has, in
the course of the representation, perpetrated a fraud related to the
subject matter of the representation upon a tribunal. . .
KEYWORDS: MALPRACTICE CONFIDENTIALITY LAWSUIT by CNB