Yesterday, a unanimous Illinois Supreme Court resolved an important question for the health care industry. In an unanimous opinion by Justice Mary Jane Theis, the Court held in McVey v. M.L.K. Enterprises, LLC that a health care provider’s lien on a tort recovery cannot be reduced by a share of attorneys’ fees and costs before being distributed. Our detailed summary of the facts and lower court opinions in McVey is here. Our report on the oral argument is here.
McVey began when a waitress at a restaurant owned by the defendant dropped a tray of drinks on the plaintiff’s foot. Plaintiff settled the resulting lawsuit for $7,500. The plaintiff filed a petition to adjudicate liens, but ultimately only the hospital which treated the plaintiff appeared at the hearing.
Although the hospital’s lien was $2,891.64, all parties agreed that it was limited to a maximum recovery under the lien statute of $2,500 – one third of the plaintiff’s recovery. In resolving the motion to adjudicate liens, the trial court acknowledged that the Fifth District’s decision in Stanton v. Rea required that, in order to ensure that the plaintiff received the statutory minimum of 30% of the recovery, fees and costs be deducted before the judgment is allocated. However, the court concluded that Stanton was inconsistent with the Supreme Court’s decision in Wendling v. Southern Illinois Hospital, and the court declined to follow the Fifth District’s decision. The Appellate Court reaffirmed Stanton and reversed.
The Supreme Court reversed the Appellate Court. The Court emphasized that each and every time the statute described the calculation of the hospital’s lien, the statute referred to the “verdict, judgment, award, settlement or compromise” – with no mention of any deduction for fees and costs. The Court commented that its holding was consistent with Wendling, which also involved hospital liens. In Wendling, the lower courts had concluded that the hospital’s lien should be reduced by one third to account for fees and costs pursuant to the common fund doctrine. The Supreme Court held that the plaintiffs’ attorneys had not recovered the fund for the benefit of the hospital, and therefore, there was no basis for deducting fees. The same was true in McVey, the Court held – there was no basis for concluding that the plaintiff’s counsel had recovered the fund for the benefit of the hospital, so there was no reason to require the hospital to bear a portion of the costs of the suit.