Calculating Lien Reductions under the Illinois Health Care Services Lien Act (after McVey)

The Illinois Supreme Court issued an opinion on McVey v. MLK Enterprises this week. Plaintiffs lawyers who accept small and/or difficult cases are frustrated.

The Health Care Services Lien Act, 770 ILCS 23/10(c), provides a framework to reduce the liens of health care providers (in some circumstances) after a case has been settled. The quick and dirty of this law (which is actually quite intricate) is that the total of all medical liens were reduced to 40% of the verdict or settlement, and the attorney’s lien was reduced to 30%, with the idea that there would still be money available to go to the injured party.

In practice, this doesn’t always work out the way it should. First, the Act didn’t address subrogation claims (like those for health insurance, Medicaid or Medicare). This has been mitigated somewhat by the new 770 ILCS 23/50, which allows for a reduction in subrogation if there is comparative fault or “uncollectability of the full value of the claim.” Second, the Act specifies that, even though a lien can be reduced, the injured party still owes the full amount of the bill. So if there is a $10,000 bill that is reduced to $6,000 under the Act, the injured person still owes $4,000 unless the attorney can negotiate that away (which we always try to do – typically by adding a little extra to the reduced lien amount). Third, to apply the Act to a provider who wasn’t willing to reduce its lien voluntarily, there has to be a suit or at least some sort of action filed by which the Court can adjudicate the liens. That’s fine if a case has already been filed, but for some that are resolved pre-suit, it could add filing fees and costs.

The McVey case created (or at least highlighted) a fourth problem with the Act. The 30% that goes to the attorney also includes the attorney’s costs incurred in prosecuting the case. Most attorney fee contracts provide that the attorney is paid 33.33% plus reimbursement of costs at the end of the case. So if an attorney settles a typical case for $10,000 after spending $500, the attorney would be paid $3,333.33 plus the $500 back. If the attorney needs to use the Health Care Services Lien Act to reduce the liens, then the attorney would only take home $3,000 total – 30% of the settlement.

Doesn’t seem that bad, right? Not in that case. The difficulty comes in where there is a compromise settlement of a difficult case, or a verdict without much awarded for pain and suffering.

Imagine the “bad verdict.” $10,000 in medical bills. Jury awards $12,000. Attorney has taken depositions and needed two treating doctors to testify at trial, spending $3,000. Attorney’s fees are now only $1,000, per statute. What if there were $5,000 in costs? Then the attorney loses $4,000.

Imagine the “50/50” case. Both parties say they had the green light. Case worth, say, $20,000 but with a 50% chance of winning. $3,000 in costs, but a $10,000 offer. If the attorney takes the offer, he gets his costs back and nothing else. If he rolls the dice and goes to trial, his costs go up and he may get nothing – or even less. If there are medical liens out there, then there are unpaid medical bills. Settlement is probably in the client’s best interest, but then the lawyer would have worked and “loaned” $3,000 of his own money, for free.

This isn’t a pity party for us poor plaintiffs lawyers, although it certainly may sound like that. The real problem here is that many people will have difficulty finding attorneys who are willing to fight tough cases. Not all cases are clear cut. Some have difficult liability. Sometimes it’s tough to prove that the crash or whatever actually caused the injury. People with tough cases need lawyers who are willing to fight for them – even more than most people do because the cases are harder. People like me take those cases and enjoy the challenge – but if we can win and still not even recover what we spent out of pocket? It may make us think twice about taking the case, and it may leave injured people without the legal help they need.

(Howard Zimmerle is a personal injury lawyer handling car accident and other injury cases in the Quad Cities area. He can be reached at hzimmerle [at] mjwlaw.com or 309-794-1660). 

New Illinois Medical Malpractice Law

Governor Quinn recently signed Public Act 97-1145 into law, changing one big thing and clarifying another big issue in Illinois medical malpractice cases.

First, attorneys fees on medical malpractice cases are now capped at 33 1/3% of the total recovery. There had previously been lower caps as case values increased. This is important for all attorneys to pay attention to for new or future cases. I think it’s a good thing, as med mal cases tend to be the toughest, longest, and most expensive cases personal injury lawyers handle.

The act finally codifies the current version of the 2-622 expert certification requirement:

(735 ILCS 5/2-622)  (from Ch. 110, par. 2-622)

Sec. 2-622. Healing art malpractice.

(a) In any action, whether in tort, contract or otherwise,

in which the plaintiff seeks damages for injuries or death by

reason of medical, hospital, or other healing art malpractice,

the plaintiff's attorney or the plaintiff, if the plaintiff is

proceeding pro se, shall file an affidavit, attached to the

original and all copies of the complaint, declaring one of the

following:

1. That the affiant has consulted and reviewed the

facts of the case with a health professional who the

affiant reasonably believes: (i) is knowledgeable in the

relevant issues involved in the particular action; (ii)

practices or has practiced within the last 6 years or

teaches or has taught within the last 6 years in the same

area of health care or medicine that is at issue in the

particular action; and (iii) is qualified by experience or

demonstrated competence in the subject of the case; that

the reviewing health professional has determined in a

written report, after a review of the medical record and

other relevant material involved in the particular action

that there is a reasonable and meritorious cause for the

filing of such action; and that the affiant has concluded

on the basis of the reviewing health professional's review

and consultation that there is a reasonable and meritorious

cause for filing of such action. If the affidavit is filed

as to a defendant who is a physician licensed to treat

human ailments without the use of drugs or medicines and

without operative surgery, a dentist, a podiatrist, a

psychologist, or a naprapath, the written report must be

from a health professional licensed in the same profession,

with the same class of license, as the defendant. For

affidavits filed as to all other defendants, the written

report must be from a physician licensed to practice

medicine in all its branches. In either event, the

affidavit must identify the profession of the reviewing

health professional. A copy of the written report, clearly

identifying the plaintiff and the reasons for the reviewing

health professional's determination that a reasonable and

meritorious cause for the filing of the action exists, must

be attached to the affidavit, but information which would

identify the reviewing health professional may be deleted

from the copy so attached.

(Howard Zimmerle is a medical malpractice lawyer in the Quad Cities of Illinois and Iowa. He can be reached at 309-794-1660 or hzimmerle [at] mjwlaw.com)

Illinois Health Care Services Lien Act – New Case

(NOTE that as of 5/21/2015, Stanton v. Rea, discussed below, has been OVERRULED by the Illinois Supreme Court and is no longer good law.)

One of the great tools in a plaintiff lawyer’s arsenal in Illinois is the Health Care Services Lien Act, which reduces the amount of certain medical liens in some cases. It can really help increase the total amount your client ends up with in a settlement.

A new case from the 5th District, Stanton v. Rea, notes that the 40% of the settlement that goes to the medical lienholders should not be calculated until after costs have been subtracted from the settlement. In other words, the Act doesn’t mean 40% of the pie, it means 40% of the pie after costs. In some cases, that can make a big difference.

My partner, Mike Warner, just spoke on some new aspects of the Lien Act at the recent Rock Island County Bar Association Seminar. I think a thorough “how to” post is forthcoming.

(Howard Zimmerle is a personal injury lawyer in the Quad Cities of Iowa and Illinois, helping people who have been injured due to someone else’s fault. He can be reached at 309-794-1660 or hzimmerle [at] mjwlaw.com).