Bustell v. AIG Claims Service, Inc. [05/03/05] 2005 MTWCC 23

Attorney Fees: Medical Benefits. Attorney fees awarded against aninsurer must be credited pro rata against fees due the claimant’s attorneyboth from the claimant and from medical providers subject to Lockhart liens.The amount of the credit must be determined by dividing the amount of theattorney fee award by the claimant’s estimated lifetime benefits. Theresulting percentage is the percentage by which the Lockhart lien must bereduced and also the percentage by which the fees owed by the claimantwith regard to non-medical benefits must be reduced.Attorney Fees: Lien. Attorney fees awarded against an insurer must becredited pro rata against fees due the claimant’s attorney both from theclaimant and from medical providers subject to Lockhart liens. The amountof the credit must be determined by dividing the amount of the attorney feeaward by the claimant’s estimated lifetime benefits. The resulting percentageis the percentage by which the Lockhart lien must be reduced and also thepercentage by which the fees owed by the claimant with regard to nonmedicalbenefits must be reduced.1 This Court previously awarded the claimant attorney fees in the total sum of$66,794. That amount is payable by the insurer and is to be credited by the claimant’sattorney against the attorney fees otherwise due him under his attorney fee contract withthe claimant.2 Following the award of attorney fees, a question arose concerning what portion ofthe fees should be credited against the Lockhart lien on medical benefits. Medical benefitsare payable directly to medical providers, but in Lockhart v. New Hampshire Ins. Co., 1999MT 205, 295 Mont. 467, 984 P.2d 744, the Supreme Court held that attorney fees withrespect to medical benefits obtained through the efforts of an attorney must be paid out ofthe medical benefits, thus reducing proportionately the amounts actually payable to medicalproviders. I previously held that the Lockhart lien applies to future as well as past medicalbenefits. Bustell v. AIG Claims Service, Inc. and The Insurance Co. of Pennsylvania, 2003MTWCC 50.3 The insurer herein denied liability altogether. After trial, this Court held that the claimis compensable and ordered the respondent insurer to pay both indemnity and medicalbenefits. Bustell v. AIG Claims Service, Inc. and The Insurance Co. of Pennsylvania, 2002MTWCC 26. The difficulty in allocating the attorney fee award against the fees otherwisepayable by the claimant and the medical providers arises from the fact that the claimant ispermanently totally disabled and will be entitled to both future indemnity and medicalbenefits.4 As of November 11, 2003, the respondent had paid the following benefits:Final Order Regarding Attorney Fee Award, Including Apportionment to Lockhart Lien - Page 2