Thursday, March 14, 2013

Illinois Appellate Court Maximizes Recovery to Injury Victims

In Stanton v. Rea, 2012 IL App (5th) 110187, the Fifth District Appellate Court scored a huge victory for personal injury plaintiffs by maximizing the amount a personal injury victim is entitled to receive out of a settlement or judgment.  Under the Health Care Services Lien Act, 770 ILCS 23/1, medical providers asserting a lien on a personal injury claim are entitled to up to 40% of a verdict or settlement on behalf of a personal injury plaintiff.  If the liens total 40% or more of a settlement or judgment, the law limits attorney’s fees to 30%.  Prior interpretation of the law left a personal injury plaintiff with a maximum of 30% of their personal injury recovery.  In essence, the medical providers received the greatest benefit from the plaintiff’s recovery while also retaining the right to collect any remaining balance on their bill after reimbursement from the settlement or judgment.

In Stanton, the Fifth District determined that calculation of the 40% due to medical providers should only begin after reducing the recovery by the total attorney’s fees and costs.  The example below demonstrates exactly how important this is to an injured victim’s recovery:

            Prior interpretation of the Act:

              $100,000 settlement/judgment
            - $  30,000 attorney’s fees (30%)
            - $  10,000 costs
            - $  40,000 medical liens (40%)
            =$  20,000 net recovery to injury victim

            Interpretation of the Act after Stanton v. Rea:
              $100,000 settlement/judgment
            - $  30,000 attorney’s fees
            - $  10,000 costs
            =$  60,000 amount subject to Act computation
            *40% of $60,000=$24,000 (amount lienholder entitled to under the Act)

              $100,000 settlement/judgment
            - $  30,000 attorney’s fees
            - $  10,000 costs
            - $  24,000 lienholders share
            =$  36,000 net recovery to injury victim

Based upon the Appellate Court’s interpretation of the Act, the injury victim’s net recovery in the above example increased by $16,000, a substantial amount.  Medical providers, however, are still entitled to bill and collect the outstanding balance left after reimbursement of their lien. 

The Illinois Supreme Court denied certiorari in Stanton v. Rea, so this case is currently the law of Illinois.  


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