Common Fund Doctrine
Illinois Supreme Court Holds Attorneys’ Fees Not to Be Taken From Health Care Liens: March 2011 Supreme Court Ruling
For a full understanding of this topic, this article should be read in conjunction with our Lien FAQ: https://ilchiro.org/news/news.asp?id=128136
In a written opinion just released, the Illinois Supreme Court has ruled that attorneys who recover money for injured parties (sometimes referred to as the common fund) may not deduct legal fees from health care providers. The case is Wendling v. Southern Illinois Hospital Services, d/b/a St. Joseph Memorial Hospital and Memorial Hospital of Carbondale, consol. With Howell v. Southern Illinois Hospital Services, d/b/a Herrin Hospital.
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In these cases, the parties were injured in automobile accidents and received treatment at area hospitals. When the parties filed lawsuits to recover for their injuries, the hospitals filed health care liens to protect the amount of their bills. After the cases were settled, the court permitted the parties’ attorneys to collect their fee from the total settlement, PLUS a percentage of the hospitals’ health care liens.
The Illinois Supreme Court has now held that attorneys may not collect additional fees from health care liens because the attorney has not “created the fund” from which the provider is paid – the obligation to the provider exists irrespective of the litigation.
ICS Recommendations
The ICS has previously reported this case to its members, together with options for how to handle pending matters while awaiting the Supreme Court opinion. Now that the opinion has been issued, the ICS makes the following updated recommendations to its members regarding the common fund:
- During the period of time, the Illinois Supreme Court case was on appeal, if you, as the lienholder physician, refused to agree to a reduction in your lien for attorney fees, you may now assert the Illinois Supreme Court case to finalize your refusal to pay these fees. Your lien should be handled without the requirement for these additional legal fees.
- If you have previously reached an impasse with a patient’s attorney, and you have demanded adjudication of your lien before the circuit court where the patient’s case was filed, you may now assert the Wendling case to the court to support your argument that you are not required to pay attorney fees to the patient’s attorney.
- If you previously accepted an amount in full and final settlement that was less than your total lien, this probably operated as a general release and you may not now seek reimbursement from the attorney or the patient. However, if you accepted a settlement less than the full amount of your lien, but you included language stating it was not intended to be a General Release and that you did not release the balance of the debt owed by the patient or any other responsible party, you may be able to recover the attorney fees from the attorney and the unpaid balance from the patient.
You may download the written Illinois Supreme Court opinion at: http://www.state.il.us/court/Opinions/SupremeCourt/2011/March/110199.pdf.
