A terrible new AZ Court ruling for State, County, and Municipal employees who have been injured
The Arizona Supreme Court announced yesterday that it would not grant review to a Division Two Arizona Court of Appeals case, Ariz. Dep’t of Trans. v. Cox.
Jennifer and Richard Cox were injured in a motor vehicle accident and incurred medical expenses of $25,000.00. They obtained a total of $30,000.00 from the motorist who hit them. They were insured through a state plan. The court ruled that the state could take up to 100 percent of a person’s injury settlement, but not more, to reimburse the state for the medical expenses.
Up until this decision, the normal practice would be that the state would be reimbursed for, at the most, 66 percent of the medical bills under the so-called “common fund” doctrine. The idea of the common-fund doctrine is that because the Coxes had to hire an attorney to get that settlement, and since the state directly benefited from that attorney’s work and would have most likely collected nothing without it, the state should contribute to the attorney fees. Otherwise the attorney is working for the state, for free.
What the common-fund doctrine does is it gives an attorney some incentive to take a case that otherwise wouldn’t pay. Cases like the Cox case, where the medical bills are high and the tortfeasor’s insurance (the torfeasor is the person at fault) is low. The common-fund doctrine lets the victim get an attorney, make at least some recovery, gets the state back most of its money, and pays the attorney.
Without the common-fund doctrine, the attorney has no reason to take the case since he or she will literally be working for free, and possibly for no other reason than to reimburse the state, which can now literally take 100 percent of a victim’s settlement.
I think this is an insane decision that benefits no one except the insurance companies. It is only going to result in the state obtaining less money over the long run, because tort victims are not going to be able to secure representation and there is no way insurance companies are going to pay the state anything if they don’t have to — which they won’t.
And of course the decision hits bicyclists harder than most, because bicyclists (and pedestrians) are much more likely to rack up large medical bills if hit by a car.
The decision does not affect people who are privately insured.
–Erik Ryberg
March 11th, 2010 at 3:30 pm
I’m curious about what happens to the balance beyond what’s owed to the state between you and your client. Is it divided by percent, by some sort of weight, or does the attorney get to keep all of the surplus if it doesn’t exceed what he would of gotten?
I’m also puzzled by the notion that the attorney gets paid, the state gets paid, and the injured gets paid last if at all, beyond his debts to the state, which are odd debts as any other sort of income would not be confiscated…
My advice to injured is to not use there low income status to confiscate money from there attorney as the state will advance it instead to the doctors. Most emergency care ignores whether the state is paying. Let the Docs stand in line behind the injured and the attorney. Let them sue the one at fault for payment themselves.