Question: Can my lawyer deduct the lien amount for the medical bills from my share of the settlement and not from the gross amount?

Question Detail: I was just awarded small dollar amount in a personal injury case. My medical bills were paid by workers comp. My lawyer deducted the lien amount for the med bills from my share of the settlement and not from the gross amount. Can he do that?

Answer: Yes, the lawyer can deduct lien amounts from the settlement left after deducting legal fees and litigation costs. If he were to do otherwise he’d be paying for a third of your medical bills. At the beginning of the representation there is no way for any lawyer to know the amount of the bills owed, liens held or subrogation amounts that might be owed. A contingent fee doesn’t imply a free ride or that the lawyers are supposed to share in payment of medical expenses. We have no obligation to share the medical costs of treating the client’s injury. We don’t control the effort the client might put into getting better or the choice of the medical care. That effort is controlled by the patient who is also our client. We don’t choose the doctors whose skill levels are so varied that outcomes are too unpredictable. A bad result with higher costs should not reduce he lawyer's fee for recovering compensation

Contingent fees are contingent upon gross recovery not net recovery; if you wanted a net contingent fee agreement you’d need to ask at the inception of the relationship. But understand what that might mean. The lawyers would want a 50% or higher contingent fee agreement.  

I know it is difficult to see how little you sometimes receive after all the deductions, but that’s a matter of insurance law, and insurance contracts you bought. The lawyers have nothing to do with what insurance you buy and those policies contain subrogation language that allows insurance companies to simply trade checks. When you come to us subrogation is decided, it is way too late for us to advise you about what will happen if you get into an accident. And here is another thing about that policy you bought; you actually have a duty to sue and to include your insurance company’s claims for subrogation. And if you think that’s bad – just look at ERISA provided health insurance.

I’m not totally unsympathetic to your recovery problem, but I’m also not in the business of recovering sympathy. It is about the recovery of money - and that is what the lawyer succeeded in doing.

Good luck with your case.

Resources:

Steve Lombardi
Iowa personal injury, workers' compensation, motorcycle, quadriplegic, paraplegic, brain injury, death
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