Kreisman Law Offices Professional Corporation
In a recent Illinois Appellate Court case, the issue was whether to deduct attorney fees and litigation expenses from the personal-injury settlement amount or judgment before calculating the 40 percent maximum that hospitals and doctors are entitled to receive as their share of lawsuit proceeds under Illinois’ Health Care Services Lien Act.
In a 2012 5th District Appellate Court decision, that court interpreted the health-care lien act as meaning that “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.” Stanton v. Rea, 2012 IL App (5th) 110187.
However, the Illinois Appellate Court for the 1st District has ruled in a consolidated appeal that involved liens asserted by Cook County’s Stroger Hospital that “a circuit court may not subtract attorney fees and costs from a plaintiff’s recovery before calculating health-care services liens from the resulting subtotal; the calculation of the health-care services lien must be made from plaintiff’s total recovery. To that extent, the 5th District in Stanton suggested otherwise. We disagree.” That quote comes directly out of the text of the decision in the Wolf case discussed below. Justice Margaret Stanton McBride wrote the opinion.
In the two cases, Stanton and the Wolf case, the two circuit court judges decided the question of whether to deduct attorney fees and litigation costs before or after applying the calculation of the health-care professional’s lien and the results were different. In one case, the circuit court did not deduct attorney fees and litigation costs from the plaintiff’s total recovery before calculating the amount to be awarded to Stroger Hospital for its lien against the plaintiff. In a different circuit court case, the judge did deduct attorney fees and costs from the plaintiff’s total litigation before calculating the amount to be awarded to Stroger Hospital for its lien against the plaintiff.
According to the plain language of the Health-Care Lien Act and the Attorneys’ Lien Act, if the total amount of the health-care liens exceeds 40 percent of plaintiff’s verdict, judgment, award, settlement or compromise, then attorney liens are limited to 30 percent of the verdict, judgment, award, settlement or compromise. In these cases, the court noted that if it were to be persuaded in applying or interpreting the statute (Health-Care Services Lien Act), it would require the court to read into the act and the attorneys’ lien act an exception that was not expressed by the legislature, which the court would not do.
Moreover, the definitions of these words do not alter the understanding of the statutes. According to Black’s law dictionary: “Verdict” is defined as a “jury’s finding or decision on the factual issue of a case” or “in a non-jury trial, a judge’s resolution of the issues of a case”; “judgment” is defined as a “court’s final determination of the rights and obligations of the parties in a case”; “award” is defined as a “final judgment or decision, especially one by an arbitrator or by a jury assessing damages”’; “settlement” is defined as “an agreement ending a dispute or a lawsuit’; “compromise” is defined as an “agreement between two or more persons to settle matters in dispute between them.”
None of the words used in the Health-Care Services Lien Act suggests that the legislature intended a health-care lien to be calculated based on the “verdict, judgment, award, settlement or compromise” after the subtraction of attorney fees and costs. The statute simply states that the health-care lien total may not exceed 40 percent of the “verdict, judgment, award, settlement or compromise.” The health-care act expressly provides that health-care liens “shall be satisfied to the extent possible” and that the statutory limitations be reduced or waived “only by the lienholder.” 770 ILCS 23/10(c).
This language, the court pointed out, shows that the legislature intended to health-care providers to receive as much of their liens as possible within the limitations of the statute. The court went on to conclude that based on the plain language of the act and the Attorney’s Lien Act, held that both health-care liens and attorney liens are calculated from the same total: They must be calculated based on an injured plaintiff’s total recovery resulting from the plaintiff’s claims or causes of actions based on the injury. The court stated that its interpretation of the health-care statute is supported by case law including the Illinois Supreme Court, which is held that shifting attorney fees to a health-care lienholder is not permitted. See Maynard v. Parker, 75 Ill.2d 73 (1979); Wendling v. Southern Illinois Hospital Services, 242 Ill.2d 261 (2011).
In the Wolf case, the jury awarded damages to the plaintiff in the amount of $13,506.80 plus $3,919.79 for costs. In total a check was issued by the defendant’s insurance company in the amount of $14,520.86. The plaintiff filed a petition to adjudicate liens and the court divided up the funds applying 30% of the verdict to attorney fees, 40% of the verdict to the payment of the plaintiff’s medical liens and the court ordered the plaintiff to pay the costs in acquiring the verdict. Therefore, after the distribution, the plaintiff was left with nothing. The plaintiff appealed arguing that the circuit court erred in making her pay all the costs of acquiring the verdict and incorrectly interpreted the act.
“According to the plaintiff, the only clear and fair interpretation is to begin the computation after expenses have been deducted from the amount of the original verdict.”
The 5th District agreed with the plaintiff and distinguished the “Wendling” case. However, because of the ruling of the Stanton case, the court explained that the common fund doctrine did not apply and based its analysis solely on interpretation of the act. In this case, the attorney’s lien was reduced to 30%, down from the 1/3 contingency fee agreed to by plaintiff, and lienholders under the act were limited to 40% of the judgment. However, because of the high cost it took to secure the judgment, there was literally no money left for the plaintiff. The cost of the litigation simply wiped out plaintiff’s recovery. After carefully reading the Health-Care Services Lien Act, the court agreed that this was not the intention of the General Assembly. The intent of the law was clear that plaintiff should receive 30% of the amount of the settlement for her injuries after all liens, expenses and medical bills have been paid.
“In order to insure the plaintiff receives 30% of the judgment as intended by the act, it is necessary that the computation of the 40% does not begin until costs associated with the bringing of the case to trial and securing payment of the judgment have been deducted from the amount of the original judgment. In the instant case, the trial court should have begun its calculations of 40% for the lienholders after payment of attorney fees and costs necessary in securing the judgment.” The 5th District therefore reversed the judgment, and the circuit court remanded the case for further proceedings.
Nonetheless, for the reasons stated above, the 1st District Appellate Court found that a circuit court may not subtract attorney fees and costs from the plaintiff’s recovery before calculating health-care services liens from the resulting subtotal; the calculation of a health-care services lien must be calculated from the plaintiff’s total recovery. To the extent that the 5th District in Stanton suggests otherwise, the 1st District Appellate Court disagreed. The appellate districts are therefore in conflict over this issue.
Wolf v. Toolie, 2014 IL App (1st) 132243 (Sept. 30, 2014).
Kreisman Law Offices has been handling catastrophic injury cases, medical negligence cases, nursing home abuse and negligence cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Cicero, Naperville, Hillside, LaGrange Park, LaGrange, Hickory Hills, Chicago (Midway, Chinatown, Wicker Park, Ukrainian Village, Goose Island, Old Town, Gold Coast, Lincoln Park, Lincoln Square, Irving Park, Jefferson Park), Skokie, Niles, Park Ridge and Des Plaines, Ill.
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