SLG sent GEICO a letter of representation, notifying GEICO that SLG "had a fee interest" in Ms. Maldonado's claims.

SLG asserted that Ms. Maldonado's assignment of interest in the contingent fee agreement "included all proceeds recovered on [Ms.] Maldonado's behalf, including the past medical expenses."

SLG alleged that GEICO, through a company called ClaimTECH and "without the permission" of Ms. Maldonado or SLG, settled Ms. Maldonado's outstanding hospital medical bill of $12,795.50 for $7,677.30. SLG alleged that because this amount was paid from insurance policy benefits on behalf of Ms. Maldonado to settle her past medical expenses, SLG "was entitled to a fee interest in the payment." Accordingly, SLG asserted that it was owed $2,559.10 and that GEICO refused to pay that amount to SLG.

GEICO moved for partial summary judgment, arguing that it had the "right to act on its own behalf and on behalf of its insured to make sure [the] hospital lien" related to Ms. Maldonado's outstanding medical bill was "satisfied." It further asserted that it owed no duty to SLG and that it was "legally privileged and/or justified to negotiate and resolve the hospital lien" related to Ms. Maldonado's outstanding medical bill. Moreover, according to GEICO, Ms. Maldonado incurred no damages as a result of GEICO's satisfaction of the lien. "GEICO obtained a release from the hospital which absolved [Ms. Maldonado] of any obligation to pay any amount of the hospital lien or of any other related expenses."

SLG countered that "GEICO violated SLG's property rights when [it], despite knowing of SLG's assigned interest, paid [the hospital] without accounting for SLG's interest." SLG said that GEICO had been notified that SLG had a one-third property interest in Ms. Maldonado's personal injury damages, and that a personal injury claim included "claims for medical expenses incurred as a result of the injury." SLG argued that GEICO had to pay it a one-third contingent fee interest of the amount paid to the hospital.

SLG also moved for partial summary judgment, arguing that it was entitled to judgment as a matter of law that GEICO was liable to pay it an amount equal to one-third of the amount it paid to the hospital related to Ms. Maldonado's outstanding medical bill.

The trial court granted SLG's partial summary judgment motion and denied GEICO partial summary judgment motion.

GEICO appealed.

The Appellate Court's Decision

The appellate court reversed.

In its decision, the appellate court found that whether SLG was entitled to a one-third contingent fee on Ms. Maldonado's gross recovery, as opposed to her net recovery, was governed by the terms of its contingent fee agreement with Ms. Maldonado. However, the appellate court continued, even if SLG's contingent fee agreement with Ms. Maldonado provided for a percentage of Ms. Maldonado's gross recovery, this was a matter to be resolved between SLG and Ms. Maldonado.

The appellate court declared that SLG had provided "no basis in the law, by contract or otherwise," as to why it was entitled to additional payment from GEICO based on the proceeds GEICO paid to the hospital related to Ms. Maldonado's outstanding medical bill.

It pointed out that Ms. Maldonado had executed an assignment of rights in connection with her treatment at the hospital, which "irrevocably assign[ed] and transfer[ed] to the [the hospital] all rights, title and interest in any benefits payable . . . against all Insurance companies . . . and/or persons or entities responsible . . . for the payment of benefits, services, or products provided by [the hospital] . . . and . . . appoint[s the hospital] as . . . attorney in fact, with the power of substitution to . . . obtain payment of benefits from Responsible Parties." As such, the appellate court ruled, GEICO acted in accordance with this assignment, as an insurance company on behalf of its insured who was alleged to have caused the injuries to Ms. Maldonado, in resolving the hospital's claim against Ms. Maldonado for her outstanding medical bills.

The appellate court concluded by holding that SLG did not have a right to maintain a separate cause of action against GEICO for recovery of additional attorneys' fees in this case. It also held that the trial court erred in granting SLG's summary judgment motion and in not granting GEICO's summary judgment motion.

The case is GEICO Choice Ins. Co. v. Stern, No. 01-18-00013-CV (Tex. Ct. App. Aug. 15, 2019).