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Court declines to adopt medical liens rule amendment

Senior Editor Regular News

Court declines to adopt medical liens rule amendment

Senior Editor

The third time was not the charm when it came to the Bar Board of Governors’ attempt to win a change to contingency fee rules addressing the hiring of special lawyers to resolve complex medical liens and related issues at the end of personal injury and wrongful death cases.

The Supreme Court on October 6 rejected the Bar request to amend Rule 4-1.5 to allow, in exceptional cases, additional charges to the client to hire lawyers who concentrate on handling subrogation and medical liens at the end of the personal injury case.

The court said the attorney with the underlying contingency fee contract had the duty to provide that service, even if it means paying out of his or her pocket for an outside attorney to negotiate the liens.

The issue first came to the Bar several years ago as a question to the Professional Ethics Committee: Could an attorney handling a personal injury or wrong death case under a contingency fee contract hire another attorney to handle medical liens, with that second attorney being paid a percentage of the money saved for the client (called a reverse contingency fee) even if that meant the contingency fees exceed the limit allowed in Rule 4-1.5?

The issue wound up before the Board of Governors, which decided a rule amendment was necessary to address the matter. The board, in 2012, proposed an amendment that would require disclosure to the client about medical liens and subrogation issues, would allow the hiring of an outside attorney with the client’s consent to handle those matters, and that the attorney handling the lien matters could not share fees with the attorney with the underlying contingency fee contract.

Board members contended that even though clients would pay higher fees, in the end they would get more money because of the reduction in lien and subrogation payments. They also said many personal injury lawyers do not have expertise in complex Medicare, Medicaid, ERISA, and other laws and regulations needed to negotiate and settle medical liens.

The court rejected that amendment, saying “that lawyers representing a client in a personal injury, wrongful death, or other such case charging a contingent fee should, as part of the representation, also represent the client in resolving medical liens and subrogation claims related to the underlying case.”

The board then revised its amendments and resubmitted them to the court. But after sharp questioning by justices during oral arguments in May 2015, the board filed for a stay and revised its proposals yet again. Oral argument were heard in June.

Under the latest revision, the contingency contract would specify that the lawyer with the underlying contingency fee contract “must provide ordinary lien resolution as part of the lawyer’s representation of the client under the fee contract,” must disclose at the start whether extraordinary lien or subrogation services might be required, which would necessitate additional fees, and could not charge additional fees for those services if that would violate the limits in Rule 4-1.5.

If an additional attorney was hired to handle those liens because the services were extraordinary, the combined fees could exceed the limits in Rule 4-1.5, but only after the client consented in writing and a court reviewed the arrangement. The lien lawyer could not share fees with the contingency contract lawyer. The judge reviewing the agreement also would be empowered to reduce the original contingency contract fee if a lien resolution attorney were hired — a provision opposed by some members of the Board of Governors.

The proposal also defined what would constitute ordinary versus extraordinary lien resolution services.

The court, in its per curiam opinion, complimented the board for its work on the issue, but said it would not adopt the rule amendments.

“On balance, we wish to re-emphasize that lawyers representing clients in personal injury, wrongful death, or other cases where there is a contingency fee should, as part of the representation, also represent those clients in resolving medical liens and subrogation claims related to the underlying case,” the court said. “This should be done at no additional charge to the client beyond the maximum contingency fee, even if the attorney outsources this work to another attorney or nonattorney. Although it may be true that, given the increased complexity of modern litigation, there will be some cases where the amount of work required to resolve a lien is more than initially anticipated, the notion of the percentage fee contract contemplates that there will be some cases that are profitable for the lawyer handling the claim and others that are unprofitable. That risk and reward is built into the contingency fee contract.”

The court added if the original contingency fee will be insufficient to address the lien resolution work, then the attorney and client can go to court under Rule 4-1.5(f)(4)(B)(ii) “to obtain an increased fee appropriate for the circumstances of the specific case.”

Chief Justice Jorge Labarga and Justices Barbara Pariente, Fred Lewis, Peggy Quince, Ricky Polston, and James Perry concurred in the opinion. Justice Charles Canady dissented without an opinion.

The court acted in In Re: Amendments to Rule Regulating The Florida Bar 4-1.5—Fees and Costs for Legal Services, case no. SC16-104.

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