10 May No Comments MikeT Expert Matters, Theft of Checks Payable

Facts:  The plaintiff was a physician with a large medical practice in Maryland who maintained a business checking account at a local community bank.  The physician gave the bank a letter authorizing his office manager to cash checks payable to the physician from time to time to provide “walking around money” for the physician.  Over a period of several years, the office manager stole a large number of checks issued by insurance companies payable to the physician.  She cashed the checks at the bank.  The physician ultimately discovered the stolen checks.  He then filed a lawsuit against the bank alleging that the endorsements on the checks were forged and that the cashing of the checks by the bank constituted a conversion of the physician’s funds.

Client:  The plaintiff physician.

Subject of Expert Report:  Whether or not the bank was negligent for failing to inquire of the physician before cashing a large number of checks drawn on other banks for a non-customer of the bank (the office manager) and whether the failure to inquire of the customer was a violation of the reasonable commercial standards of the banking business.

Outcome:  The case settled at the conclusion of discovery.