The Common Fund Doctrine and Med Pay Claims

The Alabama Court of Civil Appeals has ruled that the common fund doctrine applies to the determination of the payment of attorneys’ fees when monies for payments made under  medical payments coverage are collected in a personal injury case. 

In Mitchell v. State Farm, No 2100184 (Ala. Civ. App.  10/7/11),  Mitchell’s attorney thought that State Farm, which paid monies for some of Mitchell’s medical bills, should have its subrogation interest reduced by the amount Mitchell paid the lawyer to recover the money for the benefit of State Farm. The attorney for the plaintiff relied on the common fund doctrine to assert the claim against State Farm.

The Court of Civil Appeals held that the common fund doctrine applied.  It then rejected State Farm’s argument that its policy voided any obligation to pay an attorney’s fee for the recovery of the med pay coverage for its benefit.  Finally, and perhaps most importantly, the Court rejected the argument that the common fund doctrine was voided by the "active participation" of its lawyer.  The Court noted that although State Farm said it didn’t need the plaintiff’s lawyer to collect its money for it, State Farm did nothing to collect the subrogation interest until after the plaintiff’s attorney negotiated the settlement.

This is a common problem faced by plaintiff’s lawyers and their clients, and this decision is another tool we can use to stop insurance companies from getting a free ride on the back of the plaintiff’s lawyer.

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Are you a non-lawyer who discovered this blog post while doing research on the Internet?  The author of this post is John Day, a lawyer who represents the injured and the families of those who have died because of the negligence of others.  This blog post is no substitute for the advice of an experienced personal injury lawyer.  

John writes a blog for non-lawyers who have questions about Tennessee personal injury and wrongful death law.  Here are some posts from that blog, the Tennessee Injury Law Center, that are relevant to this topic.

If you have a question about any aspect of Tennessee personal injury or wrongful death law, please fill out the Contact form on this page.