To the relief of Chicago personal injury lawyers, a divided Illinois Appellate Court for the Fourth District recently held that the “common fund doctrine” applied reimbursement of injured plaintiff’s medical payments paid by plaintiff’s insurer. Stevens v. Country Mutual Ins. Co., 2008 WL 5473299 (Ill. App. Ct. 4th Dist. Dec. 31).
The facts of the case involve Mr. Stevens, who was injured in an auto accident, and received $20,420 from his insurance company, Country Mutual Ins. Co., under the medical-payments provision of his auto policy. Mr. Steven’s personal injury attorney negotiated a $50,000 settlement with the tortfeasor.
Mr. Stevens’ insurance policy granted Country Mutual a right of reimbursement for benefits it paid to Mr. Stevens if the insured received compensation from a third party. Therefore, Country Mutual argued that it was entitled to a reimbursement of the full $20,420, without having to pay any discount under the “common fund doctrine.”
Conversely, plaintiff’s attorney argued that the “common fund doctrine” — under which attorneys who create a “fund” for the benefit of a third-party are entitled to be reimbursed from the fund in the form of attorney’s fees – obligated Country Mutual to pay a portion of plaintiff’s attorney’s fees.
The majority of the Illinois appellate court agreed with the plaintiff. The majority held that if Country Mutual were to be fully reimbursed from the $50,000 settlement or “fund” created by the plaintiff’s attorney, Country Mutual would be “unjustly enriched.”
The court held that, contrary to Country Mutual’s assertions, Country Mutual benefited from the creation of the common fund (the $50,000 settlement) by plaintiff’s attorney. The court found that but for plaintiff’s attorney’s actions, Country Mutual would have expended substantial administrative and legal resources to recover the $20,420 it paid to Mr. Stevens pursuant to its subrogation agreement. Furthermore, the majority noted that at no time did Country Mutual state to plaintiff’s attorney that it did not want him to recover its subrogation lien and would not pay him if he did.
Accordingly, Country Mutual was ordered to pay the plaintiff’s attorney for his services in creating the common fund. The appellate court remanded the case to the trial court to determine the amount of attorney’s fees to be paid by Country Mutual.
Experienced Chicago car accident lawyers and attorneys practicing personal injury law in Illinois should keep in mind the “common fund doctrine” when negotiating settlements on behalf of their injured clients.