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Hospital doesn't owe attorney any contingency fees

July 27, 2011

A Kokomo attorney is not entitled to collect his contingency fees from a hospital in his representation of a patient caught in an insurance dispute, the Indiana Court of Appeals has held.

Patient T.W. was admitted to St. Francis Hospital in Beech Grove for emergency treatment of kidney cancer. He had insurance with Kaiser Permanente of Southern California, but his insurer refused to pay the $26,524.27 bill because T.W. didn’t receive the treatment in California.

T.W. hired Alan D. Wilson to go after Kaiser for not paying the bill and he agreed to pay Wilson on a contingency fee basis. Kaiser later paid the entire amount directly to St. Francis. Wilson then tried to recover one-third of the amount from St. Francis by asserting an attorney’s lien. St. Francis refused to pay, and Wilson filed his complaint seeking the money.

The Court of Appeals affirmed the entry of summary judgment in favor of St. Francis in Alan D. Wilson v. Sisters of St. Francis Health Services, No. 34A02-1101-CC-57. Wilson also argued he was entitled to the money because St. Francis had asserted a hospital lien, which is subordinate to an attorney fee lien.

Wilson does not have a valid equitable attorney fee lien on the payment made by Kaiser to St. Francis, the judges ruled. Wilson failed to cite any authority that allows a charging lien under these circumstances – that insurance payments made to a third party under the client’s health insurance policy are subject to a charging lien.

The appellate court also rejected Wilson’s claim that he’s entitled to the money based on an unjust enrichment theory. The judges agreed that the hospital, which is a “stranger” to the contingency fee agreement, shouldn’t be forced to carry the burden of T.W.’s contractual obligations. Wilson didn’t prove that a measurable benefit was conferred on St. Francis that it’s retention of the insurance payment without payment of attorney fees would be unjust.

The judges also found that because St. Francis did not have a valid hospital lien and Wilson didn’t have a valid attorney lien, the statutory requirement that a hospital lien be “subject and subordinate to any attorney’s lien” wasn’t applicable.
 

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