What to Do If a Lawyer Steals Insurance Settlement Money from His Client ?
In Rothman v. Fillette, 503 Pa. 259, 469 A.2d 543 (1983), plaintiff's counsel informed the defendant's insurance company that his client had agreed to settle the case, even though he did not have such authority, and in fact, had never discussed the matter with his client.
Relying on counsel's representation, the defendant's insurance company sent a check to plaintiff's attorney, made payable to plaintiff.
When plaintiff's counsel received the settlement documents, he forged his client's name and pocketed the settlement money.
The client then sought to recover those misappropriated funds from the insurance company that had relied on forged documents.
The issue in Rothman was "who must bear the burden of loss between innocent parties where the attorney for one of the parties has acted beyond the scope of his authority and has misappropriated funds." Id. at 262, 469 A.2d at 544.
The Supreme Court held that "where one of two innocent persons must suffer, the loss should be borne by him who put the wrongdoer in a position of trust and confidence and thus enabled him to perpetrate the wrong." Id. at 265, 469 A.2d at 545.
Accordingly, the defendant insurance company was excused from having to write another check.