Counsel Fees on Future Medical Damages in Medical Malpractice Cases: Do We Have To Cut Another Check?

Pennsylvania – Health Care

Key Points:

• A case of first impression regarding the payment of the proportionate share of counsel fees on future medical damages pursuant to Section 509 of Mcare Act.
• The Sayler Court determined that medical defendants are not responsible for payment of plaintiff's counsel fees when there is an award of future medical damages.

In Sayler v. Skutches, 2011 Pa. D&C. LEXIS 59 (Lehigh County March 4, 2011), the Honorable Carol K. McGinley addressed the issue of first impression regarding the payment of the proportionate share of counsel fees on future medical damages pursuant to Section 509 of the Medical Care Availability and Reduction of Error (Mcare) Act. Sayler involved a medical malpractice case concerning an alleged failure to diagnose and treat breast cancer. After trial in January 2008, the jury awarded a verdict in favor of the plaintiff, Barbara Glasow, in the gross amount of $3,973,000. The jury found 35% contributory negligence, which resulted in a molded verdict in damages totaling $2,582,450. The jury awarded $170,000 per year in future medical expenses payable over five years, for a total of $850,000. When that amount was reduced by the 35% comparative negligence, the jury award for future medical expenses over the five-year period totaled $110,500 yearly to be paid in quarterly installments of $27,625. The plaintiff died on May 23, 2009, prior to the expiration of the five-year period. The trial court ordered that the plaintiff was entitled to six quarterly payments of future medical expenses, totaling $165,750, plus interest. Pursuant to the Mcare Act, the remaining obligation to pay future medical expenses, an amount of almost $385,000, terminated.

The plaintiffs assert that the statutory language of Section 509(b)(1) of the Mcare Act makes the defendant medical providers responsible for the payment of counsel fees. The defendant medical providers contend that the statutory language does not provide for payment of counsel fees in addition to the award entered by the jury. By Order and Opinion dated March 4, 2011, Judge McGinley ruled that the defendants are not responsible for the payment of attorney's fees and costs in addition to the medical expenses awarded by the jury. The plaintiffs filed an appeal to the Pennsylvania Superior Court, which is currently pending.

Section 509(b)(1) of the Mcare Act provides that "future damages for medical and other related expenses shall be paid as periodic payments after payment of the proportionate share of counsel fees and costs based upon the present value of the future damages awarded." The trial court in Sayler ruled that under Pennsylvania law, there can be no recovery for counsel fees from the adverse party to a cause in the absence of expressed statutory allowance of the same, or a clear agreement by the parties or some other established exception. The court stated that the statutory language of §509(b)(1) does not provide that the adverse party is responsible for the payment of counsel fees as an additional recovery, but merely directs the manner in which the funds are to be distributed.

In the appeal, the plaintiffs argue that the trial court erred in denying payment of the proportionate share of counsel fees and costs based upon the present value of the future medical damages. The plaintiffs argue that the defendant is required to pay, up front, that portion of the future medical expenses awarded by the jury which were contractually earned by counsel. The plaintiffs further assert that if the attorney's fees and costs were to be deducted from the periodic payments awarded by the jury, the injured party would not receive the full amount of the awarded payments and there would be no assurance that the award would be enough to cover the attorney's fees and costs.

On the other hand, the defendant health care providers argue that under the longstanding "American Rule," the plaintiffs are to bear their own litigation expenses. This well-settled legal principle can be abrogated only by express statutory language that is clear and unequivocal. The defendant health care providers argue that Section 509(b)(1) contains no such language of fee-shifting intent. Thus, because the statutory language does not specifically contain language requiring health care providers to pay their adversaries' attorney fees, the defendants maintain that they are not required to do so.

Additionally, the defendant health care providers relied on the overall legislative intent of the Mcare Act. The Pennsylvania Legislature passed the Mcare Act in 2002 as part of comprehensive tort reform designed to reduce the impact of a severe medical malpractice insurance crisis on Pennsylvania health care providers. The defendants argue that every section of the Mcare Act is designed to reduce the burden on health care providers and it would defy logic to suggest that Section 509 stands alone in significantly increasing health care providers' burden by subjecting them to payment of attorney's fees in addition to the payment of future medical damages.

The defendants further contend that, because the statute does not obligate the health care providers to pay attorney's fees, the court need not even consider the additional argument that such fees must be calculated on portions of the award for future damages that were negated as a matter of law by Glasow's death. If the Superior Court considers this argument, the defendants assert that it would be simply unfair to permit plaintiffs' attorneys to seek payment of fees on future damages that cannot be recovered due to Glasow's death.

In conclusion, based upon the statutory language of Section 509 of the Mcare Act, the trial court in Sayler determined that medical defendants are not responsible for payment of plaintiffs' counsel fees when there is an award of future medical damages. The defendant health care providers maintain that the overall legislative intent of the Mcare Act, which is to reduce, not increase, the burden of Pennsylvania health care providers and insurers, must be considered in determining this issue. We must be cognizant of the Superior Court's upcoming opinion regarding this issue. If the Superior Court reverses Judge McGinley, health care providers and insurers will be given additional responsibilities in medical malpractice cases that involve an award of future medical damages.

*Ed, a shareholder in our King of Prussia, Pennsylvania, office, can be reached at 610.354.8268 or emgalang@mdwcg.com.

Defense Digest, Vol. 17, No. 4, December 2011