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).