The November 2011 issue of the Illinois Bar Journal contains an article entitled “Creditors Are Not Freeloaders: The Common Fund Doctrine Does Not Apply to Hospital Lienholders.” The law article was written by Kreisman Law Office principal Robert D. Kreisman. Kreisman has been representing Illinois plaintiffs in personal injury and medical malpractice lawsuits for over 35 years in the Chicago and Cook County areas.
The Illinois Bar Journal article analyzes a recent Illinois Supreme Court decision in Wendling v. Southern Illinois Hospital Services, 242 Ill.2d 261, 950 N.E.2d 646 (2011). The Wendling case was significant in that the court’s decision removed any doubt as to whether or not the common fund doctrine applies to a healthcare services lien; the Supreme Court determined that the common fund doctrine does not apply.
In litigation, the general rule is that each party is responsible for paying his or her own attorney fees and costs. However, the common fund doctrine is an exception to that general rule. Under the common fund doctrine is applied when a common fund is created through the efforts of the litigant’s attorney, which in turn ends up benefiting a third party. When this occurs, the attorney who created the common fund can recover reasonable fees and costs from the third party, even though he/she is not technically the attorney’s client.
In Wendling, the Illinois Appellate Court had authorized the plaintiffs’ attorney request to apply the common fund doctrine to his client’s hospital liens. The logic behind this was that if the plaintiff attorney had not negotiated the settlement with the defendants, that the hospital liens would not have been paid out of that settlement. Therefore, the hospital was able to recover funds because of the plaintiffs’ attorney’s efforts and should be able to recover reasonable fees under the common fund doctrine.
However, the Illinois Supreme Court disagreed and held that the common fund should not be applied in Wendling. In support of its decision, the Supreme Court notes the hospital’s lien was distinguishable from other liens in that:
(1) the lien was limited by the Healthcare Services Act to 40% of the plaintiff’s recovery;
(2) a creditor-debtor relationship was established between the hospital and patient; and
(3) the hospital was not dependent on the plaintiff’s or patient’s recovery in litigation to collect its payment.
The nature of the unique relationship between the hospital and patient is further explained in the November 2011 Illinois Law Journal article on the Wendling decision.
Kreisman, Robert. “Creditors Are Not Freeloaders: The Common Fund Doctrine Does Not Apply to Hospital Lienholders.” Illinois Bar Journal, Volume 99, No. 11, pg 568.
Chicago’s Kreisman Law Offices has been handling Illinois personal injury matters for consumers, individuals and families for more than 35 years in and around Chicago, Cook County and surrounding areas, including Tinley Park, Morton Grove, Des Plaines, Hinsdale and Chicago’s Beverly neighborhood.
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