Opinion ID: 853605
Heading Depth: 1
Heading Rank: 3

Heading: Attorney's Fees in Third-party Actions

Text: The employer or the employer's compensation insurance carrier shall pay its pro rata share of all costs and reasonably necessary expenses in connection with asserting the third party claim, action or suit, including but not limited to cost of depositions and witness fees, and to the attorney at law selected by the employee or his dependents, a fee of twenty-five per cent (25%), if collected without suit, of the amount of benefits which benefits shall consist of the amount of reimbursements, after the expenses and costs in connection with the third party claim have been deducted therefrom, and a fee of thirty-three and one-third per cent (33 1/3%), if collected with suit, of the amount of benefits after deduction of costs and reasonably necessary expenses in connection with the third party claim[,] action or suit. (emphasis added). We think the term benefits discussed in the with suit situation in Ind.Code § 22-3-2-13 has the same meaning as the benefits defined earlier in that very same sentence (in the without suit situation). Ind.Code Ann. § 22-3-2-13 (West 1991). Whether the claim is resolved with or without suit, the benefits are the same: reimbursements. Our Court has already spoken on the meaning of the term reimbursements, in Indiana State Highway Comm'n v. White, 259 Ind. 690, 694, 291 N.E.2d 550, 553 (1973). In White, a widow had been collecting weekly worker's compensation benefits from the insurance carrier of her deceased husband's employer, pursuant to a Worker's Compensation Board award. She also pursued a third-party tortfeasor, with whom she settled before trial. She reimbursed the worker's compensation carrier the sum it had paid her prior to the settlement. The carrier was thus required to pay her attorney his percentage (25% of the reimbursements, according to Ind. Code § 22-3-2-13). The insurance carrier contended that it owed fees only for the amounts it actually paid to White, that is, on the amount of its lien. Justice DeBruler, writing for the Court, disagreed. After deciding that the term reimbursements was ambiguous, necessitating judicial interpretation, id. at 553, he concluded that in a case such as this the term is to be construed as the entire award, not just the sum already paid out by the employer or its insurance carrier at the time the third-party settlement became final. See id. at 554. [10] We held, therefore, that the term reimbursements meant the entire worker's compensation award. Spangler argues that White supports its claim of entitlement to a fee on the future medical expenses. We disagree. The distinguishing factor between the future medical expenses in the present case and the future worker's compensation benefits in White is that the benefits in White were readily ascertainable. White died while acting within the scope of his employment. His death effectively fixed the amount of medical and funeral expenses and weekly wage benefits. Because Weidenaar was gravely injured, however, his medical expenses will be ongoing. To receive a fee on those unascertained expenses, Spangler would have to prove their value. Litigating that value would be a task of some consequence; the briefs before us demonstrate that the present parties disagree how such expenses should be measured, let alone what the facts might be. Spangler is unlikely to expend its resources to make such a showing because, as we will explain, there is no way to pay the firm a fee for doing so without paying it twice for delivering the same dollar to the client. B. One Complete Fee. The fact that the insurance carrier must pay fees on the whole worker's compensation award does not mean that the injured employee's attorney may keep a fee on the award in addition to the percentage of the third-party judgment he should receive. The attorney's entire fee for a third-party action should be no more than a percentage of the whole third-party judgment or settlement. [11] Limiting Spangler's recovery from Indiana Insurance to a percentage of the carrier's lien provides Spangler one complete fee for its part of the work: the third-party action that benefits both Weidenaar and Indiana Insurance. If an attorney could keep a percentage of both the entire third-party judgment and a percentage of the future medical expenses the carrier would have paid but for the third-party tort action, that lawyer would be paid twice for the same dollar recovered. When an attorney sues for an injured employee, he has only one chance to sue the third parties for his client's injury and must necessarily seek compensation for all of the client's damages, economic (such as lost future wages and medical expenses) and non-economic (such as pain and suffering). Ordinarily, whatever the attorney obtains for his client, the client uses to reimburse the worker's compensation carrier and pay attorney's fees. The client then keeps the remainder. [12] Both economic and non-economic damages are subject to the reimbursement/lien of the worker's compensation carrier. Dearing v. Perry, 499 N.E.2d 268, 270 (Ind.Ct.App.1986). An injured employee cannot sue a third-party for non-economic damages and then try to avoid the carrier's lien on the ground that the lien is meant to reimburse the carrier for the economic damages of wage loss and medical expenses. Id. If an attorney does not sue for all types of damages, economic and non-economic, when the lien is finally paid, his client will be left with an incomplete recovery. Cf. Wedel v. American Elec. Power Service Corp., 681 N.E.2d 1122, 1131 (Ind.Ct.App.1997), trans. denied. Because we presume that Spangler did its job, we assume that the future medical expenses were part of the verdict that Spangler won for Weidenaar, and upon which it negotiated a settlement. If Spangler could collect one-third of the entire third-party settlement and also keep one-third of the future medical expenses that should have been included in that settlement, Spangler would indeed be double dipping. [13] C. Channeling the Excess Fees to the Client. Spangler should have already received one-third of the third-party judgment, in part from Weidenaar, and in part from Indiana Insurance. [14] Any fee Indiana Insurance pays the law firm on future medical expenses must, therefore, be forwarded to the client. We explained the reason for this in White: [T]he purpose the Legislature had in mind [when it enacted § 22-3-2-13] ... was to free the injured workman ... from paying attorney['s] fees for legal services for recovering the equivalent of the employer or compensation insurance carrier subrogation claim. In effect, the Legislature intended that the ultimate recovery of the employee should not be diluted by having to pay that portion of the attorney[`s] fees required to collect that, which the injured employee ... [is] entitled to collect under a compensation award, without any suit or settlement. White, 259 Ind. at 695-96, 291 N.E.2d at 553-54. In other words, the injured employee should not have to pay attorney's fees on the worker's compensation award, because the employee should get those fixed benefits without doing anything at all. Weidenaar's worker's compensation award included a segment of fixed-value, weekly payments, upon which Indiana should pay an attorney's fee under the rule of White. If Spangler has not yet received the fee to which it was entitled under its agreement with Weidenaar and Ind.Code § 22-3-2-13, then this amount goes to Spangler. Otherwise, it goes to the client.