Common-Fund Doctrine Overruled

Michael Lovett was seriously injured when his vehicle was rear-ended by a truck. Lovett received chiropractic treatment for his injuries and psychotherapy for his depression. He gave four health care providers each a lien against the proceeds of any settlement, judgement or verdict.

Before trial at a mandatory settlement conference the parties entered into an agreement for a $125,000 settlement. Lovett insisted on netting $50,000 for himself. Lovett’s attorney, Friedstad & Associates, convinced the San Diego superior court that the judge had the authority to reduce each of the health care providers’ liens by means of the common fund doctrine.

Lovett’s attorney filed a motion for reduction of the medical liens. The attorneys requested that the doctors be required to “share” the attorney fees and costs which Friedstad alleged were necessary to pay Lovett’s medical bills. The court granted attorney Friedstad’s motion and signed an order substantially reducing each of the health care providers’ liens.

On April 15, 1998, the Court of Appeals (4th District, Division I) reversed the trial court’s order and determined that “the common fund doctrine does not apply to contractual medical lien holders.” Dr. Denise Shanley (Palmer West, 1986) runs a busy La Jolla practice. She diagnosed Lovett’s injuries as severe and extensive. When she heard that the judge arbitrarily reduced her lien, she recruited three other doctors in appealing the decision.

Dr. Shanley finally had enough. Her bills were regularly cut by attorneys. She heard every excuse under the sun. Finally, when this judge cut her bills in half for a very complicated case with a good settlement, she was determined not to take it anymore. For several thousand dollars, she hired her own attorney to file an appeal against the judge’s order. This is another good example that one chiropractor can change a poor decision by asserting their rights.

The Court of Appeals agreed with Dr. Shanley and determined that “the common-fund doctrine” has no applicability when the relationship of the litigation plaintiff and the hospital lien claimant is a creditor … the amount of the lien cannot be reduced or diminished by apportioning attorney fees.” The court conceded that a judge could be reasonable, but the court ruled it had no discretion to reduce the medical liens. The court finalized its opinion by stating that only the legislature could give such power to a judge.

Once again, another anti-chiropractic barrier falls. Despite the bad news on the managed care front, this case strengthens the chiropractors’ rights for payment in personal injury cases.

Shawn Steel, JD, MA, BA
Assistant Professor, Ethics & Jurisprudence
Cleveland Chiropractic College-Los Angeles
Los Angeles, California