Geek

Why I'm going to law school: Because this kind of stuff is super intriguing to me...

The author spells it out, but, what incentive does one have to go to court if the state is going to take all of the settlement. As a lawyer, why would you represent someone knowing that all of the settlement is going to the state? By allowing the state to take 100% of the settlement, it takes away any incentive to seek a settlement. Law and economics. Gotta love it.

A terrible new AZ Court ruling for State, County, and Municipal employees who have been injured

from Tucson Bike Lawyer by Erik

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