October 28, 2020

Should Medical Providers Contribute to Attorneys Fees in a Personal Injury Case?

The Illinois Supreme Court recently decided a case in which the plaintiffs had received medical services at two Illinois hospitals after a car accident. The hospitals filed a lien against the plaintiffs’ possible recovery. Medical providers commonly file liens in this manner when a doctor, hospital, or other medical services provider is not paid for the medical treatment that s/he/it has provided. In accident cases, the medical services provider will file a medical lien on any insurance settlement or award that the injured person may receive as a result of a personal injury case.

In this case, the plaintiffs settled with the defendants but then disputed the hospitals’ liens, arguing that under the “common fund doctrine,” the plaintiffs’ attorneys were entitled to one-third of the amount that the hospitals were attempting to recover. The common fund doctrine is a longstanding rule of common law which allows a court to order an allowance of attorney’s fees to one who, at his own expense wins, a suit which increases or creates a fund in which others share. The rule is based on the idea that the person who has taken the risks and costs of litigation should not pay the expenses alone, while others share in the benefits.

In the case above, the lower court upheld this principle and ordered that the plaintiff’s attorneys were entitled to one-third of the plaintiff’s recovery, including that to which the hospitals were entitled. The appellate court affirmed. Surprisingly, the Supreme Court reversed, reasoning that the hospitals’ claim against the plaintiffs existed, regardless of the plaintiffs’ personal injury litigation, or its outcome. It further explained that, the hospitals were not unjustly enriched by the plaintiffs’ efforts to recover because, “the hospital … had no opportunity to choose their own counsel or to negotiate a settlement on their own terms.”

The result of this litigation is that the common fund doctrine is not applicable to health-care liens, as once thought. In light of this ruling, the existence of any liens should be carefully considered when calculating and evaluating a potential personal injury settlement. In the event of a settlement or judgment on behalf of an injured plaintiff, a medical provider’s lien must be paid in full, without any deduction for attorney’s fees or the costs of the litigation. It is likely that there will be attempts to enact a law which would circumvent the holding of this case by seeking to amend the Health Care Services Lien Act.

 

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