Articles Posted in Insurance liens & Healthcare liens

The common fund doctrine serves to limit an insurance company’s recovery of insurance liens from a Plaintiff’s settlement. The common fund doctrine is an exception to the American rule on attorney’s fees. Typically, each party is responsible for their own attorney’s fees unless there is a statute or an agreement between the parties to the contrary. However, the common fund doctrine allows an attorney to collect a reasonable fee from a fund created through the attorney’s efforts. The rationale is to prevent the unjust enrichment of other parties, such as an insurance company, through the lawyer’s hard work, without paying their fair share.

Commonly, this doctrine is applied in cases involving car accidents, pedestrian accidents, and bicycle accidents in which the plaintiff’s insurance company has paid for medical expenses for the plaintiff’s injuries and is seeking repayment from the at-fault defendant’s insurance company. For the common fund doctrine to apply, the attorney must create the fund through legal services, the subrogee or claimant must not have participated in bringing about the creation of the fund, and the subrogee received a benefit from the common fund. However, the doctrine will not apply when the subrogee expresses a prompt, clear, and unequivocal desire to pursue its own subrogation claim against the defendant’s insurance company.
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When a Plaintiff settles his personal injury claim, he may also have one or more liens against the amount of the recovery. Healthcare liens against a settlement may be asserted by the medical providers who have treated and rehabilitated the Plaintiff after suffering an injury. These liens are covered by the Health Care Services Lien Act. 770 ILCS 23/1, et seq. Any licensed hospital, doctor, or physical therapist which has provided medical services may elect to place a lien on the claim.

If the Plaintiff recovers a settlement or judgment, notice of the recovery must be given to each lien holder. The lien holder may seek payment of the amount of reasonable charges which remain unpaid. The Health Care Services Lien Act places limitations on the amount a lien holder can recover from the settlement or judgment.
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