Swafford v. Harris
| Decision Date | 16 March 1998 |
| Citation | 967 S.W.2d 319 |
| Parties | Greg SWAFFORD, M.D., Plaintiff/Appellee, v. Robert G. "Greg" HARRIS, and Darrell R. Ryland, Individually and "P.C.", Defendants/Appellants. |
| Court | Tennessee Supreme Court |
William J. Simmons, Memphis, for Plaintiff-Appellee.
Marc E. Overlock, Nashville, for Amicus Curiae, Tennessee Medical Association.
William L. Bomar, Glankler Brown, PLLC, Memphis, for Defendant-Appellant, Harris.
George T. Lewis, III, Bradley E. Trammell, Baker, Donelson, Bearman & Caldwell, Memphis, for Defendant-Appellant, Ryland.
Dale H. Tuttle, Memphis, for Amicus Curiae, Tennessee Defense Lawyers Association.
The United States District Court for the Western District of Tennessee has certified the following questions to this Court pursuant to Rule 23 of the Tennessee Supreme Court: 1
1. Whether a contract between a personal injury plaintiff and his physician to pay the physician a fee contingent on the outcome of litigation for the coordination of and consultation with respect to the medico/legal aspects of the lawsuit, including potentially the giving of expert medical testimony at trial, is enforceable under the laws of Tennessee;
2. Whether a contract between a personal injury plaintiff and his physician to pay the physician a fee contingent on the outcome of litigation for medical services and treatment (i.e., actual care and treatment for the injuries) to the plaintiff/patient is enforceable under the laws of Tennessee; and
3. If either or both of the above contracts are unenforceable, whether the physician may recover on a quantum meruit theory for the expert and/or medical services.
We accepted these important legal questions of first impression under Rule 23 and, in response, conclude that a contract requiring a party to pay a physician a fee for medico-legal expert services and/or medical treatment that is contingent on the outcome of litigation is contrary to public policy in this state and therefore void. We also conclude that under the facts of this case, payment for the physician's expert services and/or medical treatment pursuant to a theory of quantum meruit is not appropriate.
On June 21, 1990, the defendant, Robert G. Harris, a resident of Mississippi, was injured in an automobile accident occurring in Louisiana. Harris filed a lawsuit against several defendants in Tennessee in connection with the accident, and the case was removed to the United States District Court for the Western District of Tennessee. Harris went to the plaintiff, Dr. Greg Swafford of Memphis, Tennessee, for treatment of a cold and his injuries.
The injured Harris and the physician Swafford entered into two contractual agreements. The first was an oral agreement between Harris and Dr. Swafford whereby Dr. Swafford would act as medico/legal consultant and assist with the preparation of Harris's personal injury suit in return for 15 1/3 percent of any monetary recovery received by Harris. The agreement was reduced to writing on April 16, 1995.
The second agreement, entitled "Medical Reports and Doctor's Lien," was entered into in August of 1994. This agreement, which was signed by Harris and his attorney, Darrell Ryland, required Ryland to pay Dr. Swafford any money owed to him for medical services provided to Harris. This agreement, according to the District Court's order of certification, was not contingent on the outcome of the personal injury litigation.
In preparation for the trial, Dr. Swafford testified at one deposition relating to Harris's personal injury claim and also, according to the complaint, provided medical consultation, treatment, and services. When Harris's personal injury claim settled for $625,000, Dr. Swafford demanded 15 1/3 percent as provided in the first contract. When he was not paid, Dr. Swafford filed suit for breach of contract against Harris and his attorney Ryland, as well as a suit for inducement to breach a contract against Ryland.
The parties dispute the nature of the contractual agreements. Harris and Attorney Ryland contend that the agreement for medico-legal services was a contingency fee contract, while the agreement for medical treatment was not a contingency fee contract. Dr. Swafford, on the other hand, argues that the contingency fee contract included medico-legal services as well as medical treatment services. He also contends that if the contingency fee contract is unenforceable, he is entitled to recovery under a quantum meruit theory.
The District Court, finding that a response to the questions of law set forth above would "substantially dispose" of the case, certified the questions to this Court pursuant to Rule 23 of the Tennessee Supreme Court. We agreed to review these important questions of first impression.
The defendants, Harris and his attorney Ryland, relying on extensive authority in Tennessee and elsewhere, contend that a contingency fee contract for the expert services of a physician is contrary to sound public policy and void. Dr. Swafford, although not challenging this authority, contends that "at the time of contracting, there was no existing law in Tennessee, and no guidelines applicable to him, which [gave] notice [of] any public policy against contingency fee contracts."
We begin our analysis by determining whether the contingent fee contract violated existing Tennessee public policy and if so, how such policy was established.
We first examine the American Medical Association Code of Ethics, § 6.01, which condemns contingency fees for the provision of medical services:
Contingent Physician Fees: If a physician's fee for medical services is contingent on the successful outcome of a claim, such as a malpractice or worker's compensation claim, there is the ever present danger that the physician may become less of a healer and more of an advocate or partisan in the proceedings. Accordingly, a physician's fee for medical service should be based on the value of the service provided by the physician to the patient and not on the uncertain outcome of a contingency that does not in any way relate to the value of the medical service.
Similarly, although the Code of Ethics recognizes that "as a citizen and as a professional with special training and experience, the physician has an ethical obligation to assist in the administration of justice," it again prohibits the use of a contingency fee by a medical witness:
[t]he medical witness must not become an advocate or a partisan in the legal proceeding. The medical witness should be adequately prepared and should testify honestly and truthfully. The attorney for the party who calls the physician as a witness should be informed of all favorable and unfavorable information developed by the physician's evaluation of the case. It is unethical for a physician to accept compensation that is contingent upon the outcome of litigation.
American Medical Association Code of Ethics, § 9.07 (emphasis added).
The AMA Code has been adopted as a regulatory policy by the Tennessee Board of Medical Examiners, the Tennessee statutory agency charged with the licensing and supervision of physicians in this jurisdiction. The Board of Medical Examiners has the statutory responsibility and authority to deny, suspend, or revoke a license for, among other things, "unprofessional, dishonorable or unethical conduct." Tenn.Code Ann. § 63-6-214(b)(1)(1997). 2 Accordingly, a violation of the AMA Code constitutes unprofessional conduct and violates public policy established by the Tennessee Board of Medical Examiners.
The Supreme Court, under its inherent and statutory authority, governs the admission and discipline of attorneys in this State. See, e.g., Dockery v. Bd. of Professional Responsibility, 937 S.W.2d 863 (Tenn.1996). The Code of Professional Responsibility and Disciplinary Rules governing the conduct of attorneys are a part of the Rules of the Supreme Court. Tenn. Sup.Ct. R. 8. Disciplinary Rule 7-109(C) of the Code of Professional Responsibility provides that a lawyer "shall not pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of the witness's testimony or the outcome of a case." (Emphasis added). Similarly, ethical consideration 7-28 provides:
Witnesses should always testify truthfully and should be free from any financial inducements hat might tempt them to do otherwise. A lawyer should not pay or agree to pay a non-expert witness an amount in excess of reimbursement for expenses and financial loss incident to being a witness; however, a lawyer may pay or agree to pay an expert witness a reasonable fee for services as an expert. But in no event should a lawyer pay or agree to pay a contingent fee to any witness. ...
(Emphasis added). In our view, these provisions of the Code of Professional Responsibility, promulgated by the Supreme Court and authorized by the Tennessee Constitution and statutes, reflect public policy, just as it is reflected in the American Medical Association Code of Ethics. See, e.g., Spiegel v. Thomas, Mann & Smith, P.C., 811 S.W.2d 528, 531 (Tenn.1991)( that a contract which violated sections of the Code of Professional Responsibility was "void as against the public policy of Tennessee.").
Accordingly, the medical and legal communities share the ethical prohibition against the use of contingency fees for expert witnesses which is contained in the respective professional codes for each profession and adopted by the State as the public policy of Tennessee. This public policy is re-enforced by the actions of the Tennessee Bar Association and the Tennessee Medical Association in adopting the Interprofessional Code of Cooperation, which provides in part that "[u]nder no circumstances may a physician charge or accept compensation for any service which is contingent upon the outcome of a lawsuit." Article VI, § 2.
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