Calculating attorney fees: Court favors insurer in dispute over legal costs
A Texas appellate court recognized that an insurance carrier is entitled to recover all benefits paid to an injured worker out of the "first money" recovered from a liable third party.
The Dallas Court of Appeals ruled that an attorney-fee award of almost 59% of a personal injury settlement far exceeded a statute limiting a lawyer’s share to 30%.
The appellant, Hartford Accident & Indemnity Co., brought suit in Dallas County 68th District Court, Judge Martin Hoffman presiding, to recover a third-party settlement to reimburse The Hartford for a workers’ compensation payment to Janery Francois for a work-related injury sustained in 2015.
Francois was paid $356,669 in medical and indemnity benefits. She then sued the owner of the building where she was injured, Parmenter Realty & Investment Co. Inc. That suit resulted in a $150,000 settlement.
The Hartford intervened, asserting subrogation rights.
During a bench trial Francois’ counsel, Mohammad Said of Modjarrad Abasaad Said Law Firm in Richardson, argued he should keep his 40% contingency fee, plus pro rata expenses and an additional $10,000, “because Hartford refused to negotiate a lesser recovery,” according to the opinion written by Justice Robbie Partida-Kipness.
The Hartford contends the net amount recovered is the gross settlement of $150,000 and the attorney fee must be calculated according to the Texas Civil Practice and Remedies Code section regarding an insurance carrier whose interest is not actively represented by an attorney in a third-party action.
The trial court agreed with Francois’ counsel and awarded him $92,912.
However, the appellate court recognized that an insurance carrier is entitled to recover all benefits paid to an injured worker out of the “first money” recovered from a liable third party.
According to the Civil Practice and Remedies Code, “a reasonable fee for recovery of the insurance carrier’s interest may not exceed one-third of the insurance carrier’s recovery,” Partida-Kipness recited.
The statute does not define “net amount recovered,” but Partida-Kipness relied on decisions in cases decided in the Fourth and Thirteenth courts of appeals — Texas Workers’ Compensation Fund v. Alcorta (Tex. App.-San Antonio 1999) and Delgado v. Tex. Mun. League Intergovernmental Risk Pool (Tex. App.-Corpus Christi-Edinburg 2009). In each case, those courts were in line with The Hartford’s position.
“Applying the authorities cited above, we conclude Hartford was entitled to recover $95,206.03,” the opinion states.
Responding to the additional $10,000 awarded to Said, the appeals court said, “Francois provides no basis for such an award nor any reason why such an award is equitable and just.”
In trying to justify the $10,000, Said argued in trial court that The Hartford “deliberately refused to agree to a three-way split.”
“According to Francois’s counsel, the carrier, employee, and employee’s counsel ‘always’ agree to split a settlement three ways, and he has entered into those agreements ‘dozens of times.’ But Francois cites no authority to support an argument that Hartford was under any obligation to reduce its lien and accept a three-way split,” the opinion states.
The Hartford was represented by Jessica MacCarty and Kevin S. Poteete of the Flahive, Ogden & Latson firm in Austin.
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