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Bustell v. AIG Claims Service, Inc.

Court of Workers Compensation of Montana

May 3, 2005

ANN BUSTELL Petitioner
v.
AIG CLAIMS SERVICE, INCORPORATED and THE INSURANCE COMPANY OF PENNSYLVANIA Respondents/Insurers.

          Submitted: April 26, 2005

          FINAL ORDER REGARDING ATTORNEY FEE AWARD, INCLUDING APPORTIONMENT TO LOCKHART LIEN

          Mike McCarter, Judge.

         Summary: The Court previously ordered the insurer to pay $66, 794 in attorney fees. Subsequent to the award, questions arose concerning the allocation of the award and the timing of its payment.

         Held: Attorney fees awarded against an insurer must be credited pro rata against fees due the claimant's attorney both from the claimant and from medical providers subject to Lockhart liens. The amount of the credit must be determined by dividing the amount of the attorney fee award by the claimant's estimated lifetime benefits. The resulting percentage is the percentage by which the Lockhart lien must be reduced and also the percentage by which the fees owed by the claimant with regard to non-medical benefits must be reduced.

         Topics:

Attorney Fees: Allocation of Award. Attorney fees awarded against an insurer must be credited pro rata against fees due the claimant's attorney both from the claimant and from medical providers subject to Lockhart liens. The amount of the credit must be determined by dividing the amount of the attorney fee award by the claimant's estimated lifetime benefits. The resulting percentage is the percentage by which the Lockhart lien must be reduced and also the percentage by which the fees owed by the claimant with regard to non-medical benefits must be reduced.
Attorney Fees: Medical Benefits. Attorney fees awarded against an insurer must be credited pro rata against fees due the claimant's attorney both from the claimant and from medical providers subject to Lockhart liens. The amount of the credit must be determined by dividing the amount of the attorney fee award by the claimant's estimated lifetime benefits. The resulting percentage is the percentage by which the Lockhart lien must be reduced and also the percentage by which the fees owed by the claimant with regard to non-medical benefits must be reduced.
Attorney Fees: Lien. Attorney fees awarded against an insurer must be credited pro rata against fees due the claimant's attorney both from the claimant and from medical providers subject to Lockhart liens. The amount of the credit must be determined by dividing the amount of the attorney fee award by the claimant's estimated lifetime benefits. The resulting percentage is the percentage by which the Lockhart lien must be reduced and also the percentage by which the fees owed by the claimant with regard to non-medical benefits must be reduced.

         ¶1 This Court previously awarded the claimant attorney fees in the total sum of $66, 794. That amount is payable by the insurer and is to be credited by the claimant's attorney against the attorney fees otherwise due him under his attorney fee contract with the claimant.

         ¶2 Following the award of attorney fees, a question arose concerning what portion of the fees should be credited against the Lockhart lien on medical benefits. Medical benefits are payable directly to medical providers, but in Lockhart v. New Hampshire Ins. Co., 1999 MT 205, 295 Mont. 467, 984 P.2d 744, the Supreme Court held that attorney fees with respect to medical benefits obtained through the efforts of an attorney must be paid out of the medical benefits, thus reducing proportionately the amounts actually payable to medical providers. I previously held that the Lockhart lien applies to future as well as past medical benefits. Bustell v. AIG Claims Service, Inc. and The Insurance Co. of Pennsylvania, 2003 MTWCC 50.

         ¶3 The insurer herein denied liability altogether. After trial, this Court held that the claim is compensable and ordered the respondent insurer to pay both indemnity and medical benefits. Bustell v. AIG Claims Service, Inc. and The Insurance Co. of Pennsylvania, 2002 MTWCC 26. The difficulty in allocating the attorney fee award against the fees otherwise payable by the claimant and the medical providers arises from the fact that the claimant is permanently totally disabled and will be entitled to both future indemnity and medical benefits.

         ¶4 As of November 11, 2003, the respondent had paid the following benefits:

BENEFITS RECEIVED AS OF 11/11/2003

Indemnity Benefits

$287, 985.00

Domiciliary Care

$156, 485.00

Medical Benefits

$565, 743.00

TOTAL

$1, 010, 213.00

         Based on her estimated life expectancy, the claimant's future entitlement as of November ...


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