MT. VERNON - The Fifth District Appellate Court has largely ruled against a health insurance company that attempted to deny payment of just over $1 million in medical expenses for a 16-year-old beneficiary injured in a car crash.
However, while the appellate court ruled that the claim for medical expenses should be approved, it also sent back for reconsideration the amount of attorney fees awarded by Madison County Circuit Judge Dennis Ruth.
The case has its roots in the denial of medical expenses to Katelynn Watkins, the teenage daughter of Jeffery Watkins, an employee of M Class Mining. Both are beneficiaries of the company health plan.
In a judgment and opinion authored by Justice Judy Cates, the appellate panel rejected the initial denial of the claim based on the fact that Katelynn Watkins was driving without vehicle insurance and upheld an award of just over $1 million for medical expenses. Justices Thomas Welch and Milton Wharton concurred in the decision.
As for the $107,214 award on attorney's fees, the panel reversed the award and ordered the matter back to the lower court for further consideration as it erred in basing an enhancement solely on a contingency fee arrangement.
The action dates back to a February 2016 car crash when Katelynn Watkins was seriously injured. At the time, Jeffery Watkins did not have automobile insurance. Defendant M Class Mining Health Insurance Plan argued that his coverage was excluded by an "illegal act" provision, prompting denial of his claim.
While M Class Mining Health Insurance Plan was correct to argue the plaintiff was engaged in illegally activity by driving without automobile insurance, there is no evidence in the record linking the crash and the injuries to the "illegal act," the appellate court ruled.
The panel also rejected the plan's argument that the $1,095,188.13 award was far too high as other amounts had already been paid.
The appellate court concluded that the circuit court "was well within its province to reject the Plan’s unsupported arguments and calculations," that it failed to provide evidence.
An initial claim for $365,062 in attorney fees, based on a contingency fee of one third of the recovery, was rejected by the circuit court. Instead, Ruth awarded $107,214 based an hourly rate of $600, plus a 67 percent multiplier.
"Here, the circuit court applied a multiplier to enhance the lodestar calculation based solely on the contingency fee arrangement between the plaintiffs and their counsel," the appellate court held.
"While the court erred in doing so, a fee enhancement may still be appropriate in this case, and we make no finding on whether the amount set by the court was an abuse of discretion.
"Nevertheless, because the circuit court erred in relying solely on the contingency fee arrangement in setting the fee enhancement multiplier, we must remand this cause to the circuit court so that the parties may present evidence and argument as to the appropriate enhancement factors, and the circuit court’s consideration of same," the ruling states.