Aetna Cas. & Sur. Co. v. Starkey

• Decision Date: 01 September 1982
• Docket Number: Docket No. 51175
• Citation: 323 N.W.2d 325,116 Mich.App. 640
• Parties: AETNA CASUALTY & SURETY CO., a foreign corporation, Plaintiff-Appellee, v. Annie Fay STARKEY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 325

323 N.W.2d 325

116 Mich.App. 640

AETNA CASUALTY & SURETY CO., a foreign corporation, Plaintiff-Appellee, v. Annie Fay STARKEY, Defendant-Appellant.

Docket No. 51175.

Court of Appeals of Michigan.

Submitted Nov. 3, 1981.

Decided May 6, 1982.

Released for Publication Sept. 1, 1982.

Edward M. Miller, Southfield, for Annie Starkey.

Bodman, Longley & Dahling by Andrew J. Broder, Troy, for health care providers.

Before J. H. GILLIS, P. J., and BEASLEY and DEEGAN, ^* JJ.

PER CURIAM.

Defendant, Annie Fay Starkey, appeals the trial court's order directing payment to various medical providers of all personal protection insurance (PIP) benefits payable under her no-fault automobile insurance policy with plaintiff, Aetna Casualty & Surety Co.

This cause arose out of an automobile accident in which an uninsured motorist struck and seriously injured Anthony Starkey, six-year-old son of defendant. Plaintiff was defendant's automobile insurer at the time of the accident.

After the accident, Anthony required extensive medical treatment which was rendered by Children's Hospital of Michigan and various doctors (medical providers). During one of Anthony's admissions to the hospital, defendant assigned to Children's Hospital any insurance benefits from Aetna which would become due and payable as a result of medical treatment and care.

Some of the medical bills were sent by the medical providers directly to Aetna, which refused payment under the policy, claiming that no connection had been established between Anthony's condition and the automobile accident.

At this point, defendant retained an attorney under a contingent fee agreement who was able to establish to Aetna's satisfaction a causal connection between the accident and Anthony's heart problem. Aetna then agreed to pay the bills submitted by the medical providers but informed defendant's attorney that, under its insurance policy with defendant, it intended to set off against the uninsured motorist benefits payable under the policy the total amount paid to the medical providers under the PIP benefit provisions.

Defendant's attorney informed the medical providers that ordinarily he would have collected his fee from the uninsured motorist benefits, but, because of the set-off provision, this fund was nonexistent and he would seek his fees from the PIP fund. He informed Aetna of his attorney's lien on that fund. The medical providers demanded that they be paid in full.

The right of the injured child to recover uninsured motorist benefits and the effect of Aetna's policy provision setting off PIP benefits against the uninsured motorist coverage were the subject of a separate appeal which was dismissed by stipulation.

Aetna sought declaratory relief in respect of the conflicting claims upon the PIP benefits otherwise payable. Counsel for defendant made a motion for partial summary judgment under the provisions of M.C.L. § 500.3112; M.S.A. § 24.13112, seeking payment by Aetna of two-thirds of the amount of its billing to each medical provider and the other one-third to defendant's counsel. The medical providers, by cross-motion for summary judgment, sought an order requiring Aetna to pay the full amount of the bills submitted by each medical provider.

The trial court initially ordered payment of the uncontested two-thirds of the medical bills to the medical providers. In its final order, directing payment of the entire amount of the PIP benefits to the medical providers, the trial court concluded:

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"Counsel claims entitlement to the aforementioned fee based upon his efforts in getting Plaintiff to acknowledge that the sums are payable under the policy. His claim is characterized as a valid attorney's lien. The reasonableness of the claim of one-third of the amount due Medical Providers (Defendant's [sic] herein) is based upon GCR 928.

"The Court rejects this contention. M.C.L.A. § 500.3148(1) provides for reasonable attorney fees in cases such as this. Any attorney fees paid are charged against the insurer and not against the benefits."

We do not agree. We find that defendant's attorney had a valid attorney's lien against the fund recovered and that the trial court erred in ordering payment of the entire amount of PIP benefits to the medical providers.

In Michigan, the law creates a lien of an attorney upon the judgment or fund resulting from his or her services. Wipfler v. Warren, 163 Mich. 189, 194, 128 N.W. 178 (1910); Kysor Industrial Corp. v. D. M. Liquidating Co., 11 Mich.App. 438, 445, 161 N.W.2d 452 (1968); Miles v. Krainik, 16 Mich.App. 7, 9, 167 N.W.2d 479 (1969); Ambrose v. The Detroit Edison Co., 65 Mich.App. 484, 487-488, 237 N.W.2d 520 (1975), lv. den. 397 Mich. 888 (1976). Such a lien, if not waived or released, will be upheld. Daul v. Sill Mortgages, Inc., 37 Mich.App. 708, 711, 195 N.W.2d 309 (1972).

In the instant case, defendant and her attorney entered into a contingent fee arrangement whereby the attorney would receive his fee from any settlement or judgment recovered. On the basis of the general principles of law concerning attorneys' charging liens, defendant's attorney had the right to receive his fee from any fund, including the PIP fund, recovered as a result of his services in connection with the auto-accident injuries suffered by defendant's son.

We do not find that the no-fault act creates any exception to the operation of these general principles applicable to the instant case.

The medical providers, relying on Drieband v. Candler, 166 Mich. 49, 131 N.W. 129 (1911), argue that the retainer agreement acts as an assignment of no-fault benefits and is, therefore, void under the nonassignability section of the no-fault act, M.C.L. § 500.3143; M.S.A. § 24.13143, which provides:

"An agreement for assignment of a right to benefits payable in the future is void."

While no attorney's lien can arise if the retainer agreement is void, Hightower v. Detroit Edison Co., 262 Mich. 1, 247 N.W. 97 (1933), we do not find that the retainer agreement under consideration here was an assignment. Plaintiff's reliance on Drieband v. Candler, supra, is misplaced. There, the Court, in determining whether an attorney forfeited his lien when he purchased an interest in the litigation by arranging to pay preliminary costs for his client after agreeing to a fee arrangement which stated that the client was to advance costs, stated:

"The contention is not sound. The theory upon which a lien follows a lawful agreement entered into between attorney and client with respect to compensation is that the agreement amounts to an assignment of a portion of the judgment sought to be recovered or expected as the fruit of the litigation." 166 Mich 49, 51.

See also, Dep't of Treasury v. Campbell, 107 Mich.App. 561, 574, 309 N.W.2d 668 (1981).

Drieband is not authority for the proposition advanced by the medical providers that an attorney's lien is an assignment and therefore void under the statute. The Drieband Court stated that an attorney's lien "amounts to an assignment" in order to analogize its function for purposes of explanation.

An attorney's lien is not an assignment but is a specific encumbrance on a fund or judgment which the client has recovered through the professional services of the attorney. A lien is not a property right in, or right to, the thing itself, but constitutes a charge or security thereon. An assignment is a transfer of the property right.

Defendant's attorney's lien, which resulted from the retainer agreement and subsequent recovery, was not an assignment of the fund recovered and is, therefore, not void under M.C.L. § 500.3143; M.S.A. § 24.13143.

On the other hand, the assignment defendant made to Children's Hospital of Michigan of any benefits which would become payable to defendant under her policy of insurance with plaintiff is void under the nonassignability section, § 3143. We reject the claim of the medical providers that that assignment is valid, in spite of the prohibition against assignment, because the assignment furthers the purposes of the no-fault act. The providers' position is not supported by case law, nor is there any...