Opinion 88-10
(April 1988)

Your recent inquiry regarding your discovery of a client's possible insurance fraud was presented to the Professional Guidance Committee at its meeting on March 21, 1988. The following constitutes the opinion of the Committee on your inquiry.

During a support hearing, you discovered that your client had lied in applying for disability insurance benefits from a private carrier. Although he recanted his position upon cross-examination by opposing counsel, and any fraud regarding the support hearing itself was therefore disclosed and remedied in front of the judge, you ask if you are obligated to attempt to notify the private carrier (whose identity you are not sure of) of your client's action.

DR7-102(b)(l) provides that:

A lawyer who receives information clearly establishing that:

(1) His client has, in the course of the representation, (emphasis added), perpetrated a fraud upon a person or tribunal shall promptly call upon his client to rectify the same, and if his client refuses or is unable to do so, he shall reveal the fraud to the affected person or tribunal except when the information is protected as a privilege communication.

In the current situation, you were not representing your client regarding his disability insurance claim. You are not even sure who the carrier is with whom he filed the application for benefits. More to the point, the fraudulent act was committed prior to the time of the support hearing. Finally, the court was not misled by your client's fraudulent conduct because it was exposed during the hearing.

DR4-l0l(C)(3) provides an exception to the attorney-client privilege:

(c) A lawyer may reveal:

(3) The intention of his client to commit a crime and the information necessary to prevent the crime.

While some Committee members present felt that the insurance fraud was past conduct and thus not anything potentially criminal, others felt that your client, if he does not notify the insurance company of his present employment, is involved in the ongoing and future crime of insurance fraud. Under the Disciplinary Rules, you, as an attorney, may disclose the conduct if you feel it qualifies as the intent to commit a crime, but clearly, there is no affirmative obligation to do so.

The result is the same under an analysis of the Model Rules of Professional Conduct. Model Rule 1.6, which addresses attorney-client confidentiality, provides that:

(a) A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation, and except as stated in paragraphs (b) and (c).

Section (c) provides that:

A lawyer may reveal such information to the extent that the lawyer reasonably believes necessary:

(1) to prevent the client from committing a criminal act that the lawyer believes is likely to result in death or substantial bodily harm or substantial injury to the financial interest or property of another....

The Comment to this Rule regarding disclosure states that:

"The Rule must be based on the lawyer's discretion. . . .A lawyer's considered decision not to make disclosures permitted by Rule 1.6(c) does not violate this Rule."

Again, if you feel that a future crime is going to be committed, you may reveal the information to the insurance company, but there is no affirmative obligation to do so.
   

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.