Opinion ID: 2638534
Heading Depth: 3
Heading Rank: 2

Heading: The Consortium's Claims to Settlement Funds Obtained on Behalf of E.R.

Text: In December 1999 E.R., a minor, suffered second- and third-degree burns on his feet and legs when he was placed in a bathtub of scalding water. As an Alaska Native, E.R. was entitled to free medical services at the Alaska Native Medical Center, a facility operated by the Consortium. E.R. was treated on first an inpatient and then an outpatient basis, with his last treatment occurring on August 11, 2000. On October 25, 2000, the Consortium filed a health care provider's lien pursuant to AS 34.35.450-.482 for $30,081.65 for the services provided to E.R. J. Mitchell Joyner represented E.R., through his parent Martha Ridley, in a suit against Richard Knowles, who owned the property on which E.R. was injured. On March 26 and 27, 2001, Joyner apparently called and then wrote to the Consortium offering to settle the lien claim for $5,000 in light of Joyner's assertion that the lien was deficient on its face. On March 30, 2001, E.R. moved under Alaska Civil Rule 90.2 for approval of a settlement agreement to resolve its claim against Knowles for $95,000. That motion specifically addressed the Consortium lien, declaring that the lien was unenforceable. The superior court approved the settlement on April 2, 2001. Notice of the approval was sent to counsel for Knowles, who was insured by State Farm. Following the superior court's approval, Joyner drew from the $95,000 settlement his attorney's fees of $31,666 (the one-third contingency fee agreed upon with Ridley) and roughly $9,260 in costs. On April 3, 2001, Joyner advised the Consortium of the settlement and explained that, given E.R.'s challenge of the lien's validity, Joyner would hold the $30,081.65 in his trust account until the disputed matter was resolved. In August 2001 the Consortium filed a complaint in superior court against Settlement Funds Held for or to be Paid on Behalf of E.R. seeking to foreclose on its lien. E.R.'s answer denied the lien's validity, and in a motion for summary judgment, argued that the lien was invalid because it was filed in an untimely manner, more than the ninety days after the last service provided by a physician, required by AS 34.35.460. In the alternative, E.R. asserted that if the lien was valid, then the amount owed to the Consortium should be subject to a pro rata reduction for the cost incurred in obtaining the recovery from Knowles. The Consortium also moved for summary judgment. In May 2002 the superior court rendered its decision and entered judgment. The court ruled that [f]ederal law and decisions indicate that the Consortium's lien was valid, declared that any attack by Joyner on the lien was denied because of his conflict of interest in advocating the lien while pursuing a settlement yet later challenging it, and held that the Consortium was entitled to 100% of its liened amount, $30,081.65, less a proportionate share of the costs and attorney fees incurred. The Consortium did not seek a stay of the decision, and the trust funds were disbursed to E.R. and the Consortium in accordance with the court's order. Joyner's trust account thus currently contains no settlement funds. The Consortium appeals the superior court's ruling that its recovery should be reduced by a proportionate share of Joyner's attorney's fees and costs.