Illinois Appellate Court Rules that Health-Care Service Liens Must Be Calculated from the Total Amount of the Recovery

The issue in this case was how to calculate the lien-payment math in a personal injury lawsuit that involved treatment at the county-owned Stroger Hospital. The Illinois Appellate Court ruled that health-care service liens must be calculated from the total amount a plaintiff recovers, not from the amount after attorney fees and costs have been deducted.

There were actually two cases that were consolidated from the Circuit Court of Cook County. Each involved plaintiffs injured in car accidents and treated at Stroger Hospital. Each plaintiff settled the case and then moved to adjudicate their health-care service liens, arguing that legal fees should be deducted from the sum before calculating what they would owe the county for their medical treatment.

The law in Illinois caps the total amount of health-care liens at 40% of the settlement or verdict amount. When liens reach that threshold, lien-holding health-care professionals get a 20% cut, while any health-care providers get the remaining 20%.

In addition, the Attorneys Lien Act caps an attorney’s lien at 30% when health-care liens are 40% or more of the verdict of settlement. What that means is that in many cases the attorney’s fees are discounted to allow for the preferential payment of health-care liens.

A plaintiff cited the case of Stanton v. Rea, 2012 IL App (5th) 110187, in which the appellate court ruled that the legislature intended for plaintiffs to keep the remaining 30% not assigned by statute to the attorney or health-care liens. In Stanton, the court found it necessary to calculate the 40% for liens only after the attorney fees were deducted.

In the first case, the associate judge ruled that Stroger should receive its entire $5,093 lien amount based on plaintiff Kimberly Wolf’s full $27,000 settlement rather than on the amount of her settlement less $8,100 for her attorney’s fee and $751 in court costs.

In the second case, the plaintiff agreed to a $24,110 settlement. She faced a $23,734 in liens held by health-care professionals and providers. In that case, the circuit court judge subtracted $7,233 in attorney fees and $3,480 and other costs before calculating the lien amounts for the health-care professionals and providers.

Stroger argued that, although it received $2,673, it was owed another $4,185.

In coming to a decision, the justices looked through the plain language of the Health-Care Services Lien Act. The court said the language in the Attorneys Lien Act and the Health-Care Services Lien Act made it clear that the intended calculation was from the settlement or recovery amount, and not the amount less attorney fees and cost. The court stated that the way the plaintiff attorneys interpreted the statute would allow for attorneys to collect a portion of a health-care lien. The court was not persuaded by the Stanton case. The appeals panel affirmed the order in the Wolf case and reversed and remanded the other case because of the contrary decision. Plaintiffs’ lawyers were disappointed with the decision, stating that the incentive to pursue cases where health-care liens are present would diminish the desire to take on cases because of the inevitability of reduced attorney fees.

As might be expected, the hospital and health-care community applauded the decision in that they believed it created a legal foundation for equitable handling of health-care service liens.

Kimberly Wolf v. Bernard Toolie, 2014 IL App (1st) 132243.

Kreisman Law Offices has been handling car accident cases, injury cases, wrongful death cases, nursing home abuse cases, truck accident cases and bicycle injury 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 Berwyn, Brookfield, Oak Park, Worth, South Holland, Schiller Park, South Barrington, Palos Heights, Park Forest, Prospect Heights, River Grove, Robbins, Rolling Meadows, Sauk Village, Rosemont, Matteson, Maywood, Melrose Park, Northfield, Northbrook, North Riverside and Olympia Fields, Ill.

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