Hospitals don't have to pay lawyers on personal injury liens, high court rules

Steve Korris Mar. 31, 2011, 11:10am


SPRINGFIELD – Hospitals that collect on liens against judgments in personal injury suits don't have to pay lawyers who win the suits, the Illinois Supreme Court ruled on March 24.

The Justices reversed Fifth District appellate court judges, who held Southern Illinois Hospital Services responsible for attorney fees in two cases from Williamson County.

The Justices held that Fifth District judges overturned a precedent from 1979, Maynard v. Parker, when they should have followed it.

"Plaintiffs present no compelling reason to depart from our long standing precedent, which, until the appellate court's decision in the instant case, has been consistently followed by Illinois courts," Justice Anne Burke wrote.

"The plaintiffs argue that the hospitals benefited from their attorneys' efforts because the hospitals avoided having to pay their own attorney to pursue collection of the unpaid medical bills," she wrote.

"While this is true, the hospitals also had no opportunity to choose their own counsel or to negotiate a settlement on their own terms in the personal injury litigation," she wrote.

The decision disappointed lawyers John Foley of Anna and Neal Heflin of Galatia, who saw their pay day slip away.

Foley represented Sherry Wendling in a suit blaming Bobby Woolard for injuries that required treatment at Herrin Hospital.

Heflin represented Nancy Howell in a suit blaming Jessica Dunaway for injuries that required treatment at St. Joseph Memorial Hospital in Carbondale.

Williamson County Circuit Judge Brad Bleyer entered judgment for Wendling, and Circuit Judge John Speroni entered judgment for Howell.

Speroni once made history by entering a class action judgment of $1.2 billion in Avery v. State Farm, a decision the Illinois Supreme Court reversed in 2005.

Southern Illinois Hospital Services, owner of St. Joseph Memorial and Herrin Hospital, asserted liens it had filed against proceeds from the Williamson County actions.

Foley and Heflin petitioned for a third of the liens under a doctrine that a lawyer who recovers a fund for the benefit of persons other than a client is entitled to a fee from the common fund.

Bleyer and Speroni granted their petitions, and the Fifth District affirmed.

Justice Thomas Welch wrote that the Supreme Court expanded the common fund doctrine in Bishop v. Burgard, a decision from 2002.

Justices Richard Goldenhersh and Stephen Spomer agreed, but the Supreme Court disagreed.

"The appellate court's interpretation of Bishop is incorrect," Burke wrote.

"Not only do the facts in that case bear little resemblance to those at bar, but our analysis in Bishop supports a finding that the common fund doctrine does not apply to the facts presented in this case," she wrote.

She wrote that in Bishop, a pension plan administrator obtained reimbursement it wouldn't have obtained without creation of a common fund.

"Thus, the plan was unjustly enriched by the attorney's efforts and was required to contribute to the costs of the fund," she wrote.

The hospitals in Carbondale and Herrin weren't unjustly enriched because their claims weren't contingent on the rights of plaintiffs, she wrote.

"The hospitals' claims existed irrespective of the outcome of the personal injury litigation," she wrote.

She wrote that unlike a member of a class action, the hospitals lacked standing to participate in the personal injury suits.

"Because the attorneys obtained the funds for the plaintiffs' benefits, regardless of the hospital's interests, the plaintiffs and the hospitals are not similarly situated with respect to the fund and do not share the same interests in the fund," she wrote.

Justices Charles Freeman, Robert Thomas, Rita Garman and Mary Jane Theis concurred.

Chief Justice Thomas Kilbride and Justice Lloyd Karmeier did not participate.

Michael Dahlen and John Daly of Carbondale represented the hospitals.

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