Michigan Court of Appeals; Docket No. 69067; Published
Judges MacKenzie, Gillis, and Megargle; Unanimous; Opinion by Judge Mackenzie
Official Michigan Reporter Citation: 131 Mich App 496; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Attorney Fee Liens
CASE SUMMARY:
This unanimous Opinion by Judge MacKenzie deals with the determination of an appropriate attorney fee which could be charged by a lawyer for representing an estate in the collection of "uncontested no-fault benefits." In this case, the guardian of a legally incapacitated person hired an attorney to recover, among other things, certain no-fault benefits due and payable as the result of the disabling injury. The attorney filed an application for no-fault benefits and shortly thereafter submitted medical bills for payment. The insurer voluntarily began paying the medical bills approximately 12 days after they were submitted. Thereafter, the attorney and the guardian entered into a contingent fee agreement allowing the lawyer an attorney fee of 1/3 of any benefits recovered. Presumably the contingent fee agreement also encompassed third-party tort work. The attorney claimed he was entitled to 1/3 of the of the voluntarily paid no-fault medical benefits. One of the health care providers intervened in the probate court challenging the attorney fee on the basis that, if allowed, there would be insufficient funds left to pay the health care providers.
After a hearing, the probate court found that the claim for uncontested no-fault benefits was a separate and distinct matter from certain contested no-fault benefits and from any tort case. The probate court ruled that the attorney fee for collecting the uncontested no-fault benefits should be based on an hourly rate as opposed to a contingent fee.
The Court of Appeals affirmed. Judge MacKenzie noted that the No-Fault Statute contains no provision which promulgates guidelines for the payment of attorney fees in "uncontested cases." Absent legislation on this point, the court should adhere to the six part test enumerated in Crawley v Schick, 48 Mich App 728 (adopted by the Supreme Court in Wood v DAIIE, item number 535). While a contingent fee agreement may be considered as one factor in determining reasonableness of the fee it is not determinative. In this particular case, the probate court held a hearing which gave careful consideration to all of the applicable elements of the Crawley test Such a determination should not be overturned on appeal unless die trial court "abused its discretion."
The Court distinguished the holding in Aetna Casualty v Starkey (item number 539) which upheld an attorney fee lien on no-fault medical benefits to the extent of the amount provided under a contingent fee agreement In Starkey, the no-fault benefits were "overdue" as the insurer had refused to pay the claim on the grounds that there was an inadequate causal relationship. Thus, the attorney was required to allocate considerable time and effort to prove the claim. The Court stated, "the benefits in this case were not overdue and the only step that [the attorney] took towards procuring the benefits was the filing of a no-fault application with the insurance company. This is hardly comparable to the efforts put forth by the attorney in Starkey. The trial court recognized this distinguishing factor in his determination of the reasonableness of [the attorney's] fee."
[Author's Comment: For further information regarding charging attorney fees to recover "uncontested no-fault benefits" see Revised State Bar Formal Ethics Opinion C-223 which states that a contingent fee in such cases is not unethical "if reasonable under all the circumstances."]
