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Math helps appellate court decide case

Chicago Daily Law Bulletin February 27, 2013

By Colin H. Dunn

Some of us (me, for instance) went to law school because we couldn’t — or wouldn’t — do math. But there is really no way to avoid it.

Recently, in a case from the 5th District Appellate Court, the answer to a math question determined whether the personal-injury plaintiff received any portion of the verdict the jury had awarded her. Stanton v. Rea, 2012 IL App (5th) 110187, appeal pending (January 2013).

In Stanton, the plaintiff was injured in an automobile accident. The jury awarded her damages in the amount of $13,506.80. The plaintiff had incurred $4,501.44 in ligation expenses. And she had a number of liens from medical providers filed pursuant to the Health Care Services Lien Act (770 ILCS 23/1 to 999 (West 2008)) that needed to be paid.

The plaintiff filed a petition to adjudicate those liens and the trial court divided the funds among attorney fees, expenses and lien payments, applying the 40 percent cap of verdict to the payment of medical liens as required by the act, but because the trial court ordered that the litigation expenses be paid solely by the plaintiff, she received nothing.

On appeal, the plaintiff argued that the lienholders should have to share in the cost of acquiring the verdict. Therefore, she claimed that the 40 percent apportionment among the lienholders should begin with the amount available after payment of attorney fees and necessary expenses incurred in acquiring the verdict. In other words, “the only clear and fair interpretation [of the act] is to begin computation after expenses have been deducted from the amount of the original verdict.” The 5th District agreed.

The court recognized the Supreme Court’s recent decision in Wendling v. Southern Illinois Hospital Services, 242 Ill.2d 261 (2011), holding that the common fund doctrine is not applicable to health-care liens under the act.

The common fund doctrine, the court noted, is an exception to the general rule that absent a statutory provision or an agreement between the parties, each party to the litigation bears its own attorney fees and may not recover those fees from an adversary. Wendling, 242 Ill.2d at 265. That doctrine provides that a litigant or a lawyer who recovers a common fund for the benefit of a person other than himself or his client is entitled to receive reasonable attorney fees from the fund as a whole. Wendling, 242 Ill.2d at 265. But the 5th District court ruled that Wendling was not applicable.

First, Wendling dealt with attorney fees, not with the costs associated with acquiring a verdict. As Wendling pointed out, the act “is silent as to whether a health-care professional or provider holding a lien under the act is responsible for attorney fees pursuant to the common fund doctrine.” Wendling, 242 Ill.2d at 264. The Wendling court simply determined that lienholders are not responsible for a proportionate share of attorney fees under the common fund doctrine.

Second, the issue before the court was “based solely upon the proper interpretation of the act and its statutorily guided allocation of the plaintiff’s judgment or settlement.” Thus, the court’s analysis was based solely upon statutory interpretation, not the common fund doctrine, which pertains to attorney fees.

After reviewing the language of the act, the court found it “clear that lienholders are limited to 40 percent of the judgment or settlement and that if they in fact receive 40 percent of the judgment or settlement, then any attorney liens are limited to 30 percent. Accordingly, the act specifically limits the liens upon a judgment or settlement to 70 percent. Under these circumstances, we can deduce that our General Assembly intended that a plaintiff receive 30 percent of any judgment or settlement.”

In this case, the attorney lien was reduced to 30 percent, down from the one-third contingency fee agreed to by the plaintiff and the lienholders under the act were limited to 40 percent of the judgment. However, “the costs of the litigation simply wiped out plaintiff’s 30 percent.” The court concluded, “[a]fter a careful reading of the act, we agree this was not the intention of our General Assembly. The intent of the law is clear that plaintiff should receive 30 percent of the amount of the settlement for her injuries after all liens, expenses and medical bills have been paid.” Therefore, “[i]n order to ensure that [the] plaintiff receives 30 percent of the judgment as intended by the act, it is necessary that computation of the 40 percent does not begin until costs associated with bringing the case to trial and securing payment of the judgment have been deducted from the amount of the original verdict.”

So the trial court should have begun its calculations of 40 percent for the lienholders after payment of attorney fees and costs necessary in securing the judgment.

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