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Garcia v Farmers Insurance Exchange and Butterworth Hospital; (COA-PUB, 10/31/1997; RB #1977)


Michigan Court of Appeals; Docket No. 187928; Published  
Judges Cavanagh, Holbrook, Jr., and Jansen; Unanimous; Per Curiam  
Official Michigan Reporter Citation:  226 Mich App 254; Link to Opinion alt   

Not Applicable

Attorney Fee Liens  
Intervention by Service Providers and Third Party Payors in PIP Claims   

In this unanimous per curiam published Opinion, the trial court held that a one-third attorney fee should not be subtracted from first party benefits paid by Farmers Insurance to Butterworth Hospital for medical bills incurred by plaintiff Garcia because there was no pending lawsuit and no statutory basis upon which to award such fees.  

Plaintiff was a passenger in a vehicle which was hit by an uninsured driver. Because there was no other applicable insurance, plaintiff sought benefits through the Assigned Claims Facility, and his claim was assigned to Farmers Insurance Exchange. A dispute arose as to the benefits required to be paid, including those owed to Butterworth Hospital. Plaintiffs counsel filed a lawsuit against Farmers, but that action was never served and was ultimately dismissed for lack of service. Farmers worked out an agreement to pay Butterworth, and issued a three party check payable to plaintiff, plaintiff’s attorney, and Butterworth Hospital. Plaintiff moved for a determination of attorney fees, explaining that the lawsuit had never been served because Farmers Insurance accepted and paid plaintiffs first party benefits, and the lawsuit had been filed only as a "protective measure" because the one year statute of limitations was about to expire.   

In reversing the trial court determination that one-third of the payment should be deducted as plaintiffs attorney fee, the Court of Appeals held that attorney fees are not usually recovered unless a statute, court rule, or common law exception provides to the contrary. Here, because there was no pending lawsuit, no statute applied. Further, the court found the previous decision in Aetna Casualty & Surety Company v Starkey, 116 Mich App 640 (1982) [Item No. 539], to be distinguishable. Here, unlike Starkey, plaintiffs insurer agreed beforehand to pay for any treatment connected to plaintiff’s accident, and then paid them without contesting them. Further, it appeared that defendant Farmers and Butterworth worked out the matter between themselves without the intervention of plaintiff s attorney, and plaintiff’s attorney's efforts were not comparable to the considerable effort put forth by the attorney in Starkey.

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