STATE OF MICHIGAN
COURT OF APPEALS
ADLER STILMAN, PLLC UNPUBLISHED
February 13, 2018
Plaintiff-Appellant,
v No. 333538
Wayne Circuit Court
OAKWOOD HEALTHCARE, INC., and STATE LC No. 16-003850-NZ
FARM MUTUAL AUTOMOBILE INSURANCE
ASSOCIATION,
Defendants-Appellees.
Before: MURRAY, P.J., and FORT HOOD and GLEICHER, JJ.
PER CURIAM.
Plaintiff appeals as of right from the trial court’s order granting summary disposition in
favor of defendants in this action involving attorney fees. We affirm.
I. FACTS AND PROCEDURAL HISTORY
Plaintiff Adler Stilman PLLC is a law firm that represented a truck driver, Ronald Reese,
in connection with injuries he received on the job in January 2014. Defendant Oakwood
Healthcare, Inc. (Oakwood) provided medical treatment to Reese after his accident. By way of
written correspondence, plaintiff informed Oakwood in March 2014 that it represented Reese;
that it was searching for no-fault insurance coverage of his damages, including the fees owed
Oakwood; and that plaintiff asserted a lien on any recovery under the contingent-fee arrangement
between plaintiff and Reese under which plaintiff was entitled to one-third of any recovery.
Oakwood does not contest that plaintiff sent this correspondence to it and it does not appear from
the record that Oakwood immediately replied to this correspondence.
Because Reese was an independent contractor and did not own the truck or trailer he was
operating, and because the owner apparently did not insure the truck or the trailer, plaintiff began
significant efforts over the next several months to find coverage for Reese’s damages, including
his medical bills incurred treating with Oakwood. Then, in late November 2014, plaintiff, after
determining that no other no-fault or workers compensation coverage existed, filed a lawsuit on
Reese’s behalf against the Michigan Assigned Claims Plan (MACP), as well as the owner of the
truck and trailer and several related entities in Case No. 14-015087-NO in the Wayne Circuit
Court (the first lawsuit). After the lawsuit was filed, the MACP assigned Reese’s claim to
defendant State Farm Mutual Automobile Insurance Association (State Farm). A few days later,
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Oakwood intervened in that lawsuit. Oakwood also sent a letter to the MACP asserting that it
had its own separate legal counsel and disclaiming plaintiff’s right to payment of any attorney
fees from Oakwood.
After a period of discovery, the case went to case evaluation. Reese and Oakwood
received separate case-evaluation awards against State Farm. All three parties accepted those
two awards, and State Farm paid Reese $99,000 and $93,500 to Oakwood as a result. Oakwood,
objecting to plaintiff’s attempt to assert an attorney’s charging lien for one-third of the amount
awarded to Oakwood, subsequently filed a motion seeking to quash the lien, but then withdrew
the motion without it being heard. Oakwood did not pay plaintiff any portion of its recovery,
asserting that it had separate representation in the lawsuit and owed plaintiff no attorney fees.
Plaintiff sued Oakwood and State Farm in the present case, asserting that (1) Oakwood
should have paid plaintiff one-third of its case-evaluation award against State Farm as an
attorney fee, and (2) that State Farm paid Oakwood directly without regard to plaintiff’s claimed
charging lien for attorney fees. Specifically, plaintiff sought $32,500 in costs and attorney fees.
Oakwood and State Farm filed motions for summary disposition in lieu of responsive pleadings,
arguing that plaintiff was not entitled to the one-third of Oakwood’s case-evaluation award. The
trial court, after a brief hearing, agreed with defendants and granted them summary disposition.
On appeal, plaintiff argues that the trial court erred in granting summary disposition of
his claims alleging an attorney fee lien against the amount paid to Oakwood by State Farm. We
disagree.
II. STANDARD OF REVIEW
“This Court reviews de novo a trial court’s decision regarding a motion for summary
disposition.” Ensink v Mecosta Co Gen Hosp, 262 Mich App 518, 523; 687 NW2d 143 (2004)
(citation omitted). In Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817 (1999), the
Michigan Supreme Court recognized:
A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint.
In evaluating a motion for summary disposition brought under this subsection, a
trial court considers affidavits, pleadings, depositions, admissions, and other
evidence submitted by the parties, MCR 2.116(G)(5), in the light most favorable
to the party opposing the motion. Where the proffered evidence fails to establish
a genuine issue regarding any material fact, the moving party is entitled to
judgment as a matter of law. MCR 2.116(C)(10), (G)(4). Quinto v Cross &
Peters Co, 451 Mich 358; 547 NW2d 314 (1996).1
1
While both Oakwood and State Farm brought their motions for summary disposition pursuant
to MCR 2.116(C)(8) and (10), where it appears from the record that the trial court relied on
documentation beyond the pleadings in deciding the motion, we review the trial court’s order as
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Whether to impose a claimed attorney’s lien is a matter reserved to the trial court’s discretion,
and such determinations are reviewed by this Court for an abuse of discretion. Reynolds v Polen,
222 Mich App 20, 24; 564 NW2d 467 (1997). “An abuse of discretion occurs when the decision
results in an outcome falling outside the principled range of outcomes.” Radeljak v
Daimlerchrysler Corp, 475 Mich 598, 603; 719 NW2d 40 (2006) (citations omitted).
III. ANALYSIS
A. CHARGING LIEN
In Souden v Souden, 303 Mich App 406, 411; 844 NW2d 151 (2013), this Court set forth
the following legal principles with respect to the creation of what is known as an attorney’s
charging lien:
A special or charging lien is “an equitable right to have the fees and costs due for
services secured out of the judgment or recovery in a particular suit.” George v
Sandor M. Gelman, PC, 201 Mich App 474, 476; 506 NW2d 583 (1993). The
charging lien “creates a lien on a judgment, settlement, or other money recovered
as a result of the attorney’s services.” Id. Attorney charging liens are not
recognized by statute but exist in the common law. Id. at 477.
The Souden Court also recognized the underlying rationale for the creation of an attorney’s
charging lien:
The [attorney’s charging] lien exists as part of the court’s inherent power
to oversee the relationship of attorneys, as officers of the court, with their clients.
It does provide a means of securing the legitimate interest of the attorney in
payment for his services and expenses on behalf of the client, but it is subject to
the control of the court for the protection of the client and third parties as well[.]
[Souden, 303 Mich App at 411, quoting Kysor Indus Corp v DM Liquidating Co,
11 Mich App 438, 445; 161 NW2d 452 (1968) (quotation marks and citations
omitted in original).]
Therefore, “[a]n attorney-client relationship must be established by contract before an attorney is
entitled to payment for services rendered.” Plunkett & Cooney, PC v Capitol Bancorp Ltd, 212
Mich App 325, 334; 536 NW2d 886 (1995). Put another way, while the law will create a lien on
a monetary judgment arising out of an attorney’s services, such services must inure to the benefit
of the attorney’s client. Reynolds, 222 Mich App at 23-24.
In this case, there is no dispute that Oakwood was not plaintiff’s client and that the
parties had not entered into a retainer agreement or a contingent fee agreement. Accordingly,
under the facts of this case, plaintiff is not entitled to payment from Oakwood for any alleged
having been granted pursuant to MCR 2.116(C)(10). Hughes v Region VII Area Agency on
Aging, 277 Mich App 268, 273; 744 NW2d 10 (2007).
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services rendered to Oakwood on plaintiff’s own initiative. While the parties do not dispute that
plaintiff sent written correspondence to Oakwood Southshore Hospital and Oakwood Heritage
Hospital in March of 2014,2 the written correspondence advised Oakwood that plaintiff had been
hired “to track down insurance through a personal injury protection carrier.” The written
correspondence further stated, in pertinent part, as follows:
We are placing you on notice that Mr. Reese has no funds to hire an
attorney to pursue this matter. Therefore, he has hired us on a contingent fee
arrangement calling for payment to us of 1/3 of the amount of any amounts
recovered. Pursuant to the Michigan No-Fault Act[,] we are placing you on
notice that we will be charging your facility a fee for collecting this money on his
behalf. 3
Absent from this agreement was any indication that Oakwood and plaintiff had agreed to enter
into an attorney-client relationship. We also observe that this correspondence was sent directly
to Oakwood’s locations where Reese received treatment, but it does not appear that a copy was
forwarded to or received by legal counsel for Oakwood. In any event, while we are mindful of
the significant efforts plaintiff allegedly undertook before litigation was filed in the first lawsuit,
as set forth in the May 27, 2016 affidavit of attorney Barry D. Adler filed in the trial court, the
record reflects that Oakwood expressly rejected plaintiff’s overture to perform legal services on
its behalf. For example, in correspondence to the MACP on December 3, 2014, attorney Bruce
K. Pazner expressly informed the MACP and attorney Barry D. Adler, “[p]lease be advised that
Oakwood Healthcare, Inc. does not authorize Barry Adler or any attorney, other than my office,
to represent its interests with respect to this claim.”
In support of its assertion that it is entitled to recover 1/3 of the $93,500 paid to Oakwood
by State Farm, plaintiff points to this Court’s decision in Aetna Casualty & Surety Co v Starkey,
116 Mich App 640; 323 NW2d 325 (1982).4 In Aetna Casualty & Surety Co, the defendant and
her attorney had executed a contingent fee agreement which allowed the attorney to receive his
fee “from any settlement or judgment recovered.” Id. at 644. Notably, while the insurer, Aetna
2
On appeal, State Farm is adamant that it did not receive notice of any claimed attorney lien on
the part of plaintiff.
3
Notably, on appeal, plaintiff does not specify which provision of the no-fault act, MCL
500.3101 et seq., it was referring to.
4
We note that in a previous decision issued after November 1, 1990, this Court declined to
follow Aetna Casualty & Surety Co on the basis of what is now MCR 7.215(J)(1). See Garcia v
Butterworth Hosp, 226 Mich App 254, 257; 573 NW2d 627 (1997). Aetna Casualty & Surety
Co has also been abrogated on other grounds to the extent that it held that a healthcare provider’s
direct cause of action against an insurer was prohibited. See Wyoming Health Chiropractic
Health Clinic, PC v Auto-Owners Ins Co, 308 Mich App 389, 399; 864 NW2d 598 (2014),
overruled by Covenant Med Ctr v State Farm Mut Auto Ins Co, 500 Mich 191, 203 n 23; 895
NW2d 490 (2017) (holding that under the terms of the no-fault act, a healthcare provider does
not have an independent statutory cause of action against a no-fault insurer).
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had originally denied payment under the applicable policy, “claiming that no connection had
been established between [the defendant’s son’s condition] and the automobile accident[,]” the
defendant’s attorney “was able to establish to Aetna’s satisfaction a causal connection between
the accident and [the defendant’s son’s] heart problem.” Id. at 642. The defendant’s attorney
then claimed that he would seek his fees from the personal injury protection (PIP) fund at issue,
and the medical providers “demanded that they be paid in full.” Id. The trial court ruled that the
defendant’s attorney was not entitled to be paid out of the PIP fund, and that Aetna, as the
insurer, was liable for his fees. This Court disagreed, stating 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.” Id. at 643-644. This Court
further recognized, in pertinent part, as follows, in its holding:
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. [Id. at
644.]
Specifically, plaintiff points to the following language from Aetna Casualty & Surety Co,
asserting that it supports its claim for relief:
Finally, we reject the contention of the medical providers that they never
requested the assistance of defendant’s attorney and therefore have no obligation
to him. It can be said that medical providers would have an obligation to the
attorney, his lien notwithstanding, on the theory of unjust enrichment. The
providers knew that the attorney was expending time and energy in substantiating
the insurance claims which led to their payment by Aetna. They were willing to
accept his assistance in the knowledge that it would result in their payment. Only
when it became clear that the attorney would have to assert his lien against the
only existing fund, the PIP benefits, did the providers move to deny the attorney
his share. [Aetna Casualty & Surety Co, 116 Mich App 640.]
The facts of Aetna are clearly distinguishable from the present case, particularly where
Oakwood, shortly after plaintiff filed suit on behalf of Reese, expressly disavowed plaintiff’s
attempts to render legal services on its behalf in the recovery of PIP benefits. While it is unclear
from the record why Oakwood did not do so earlier in response to plaintiff’s March 2014
correspondence, there is also no indication in the record that anyone authorized to make such a
decision on behalf of Oakwood received the March 2014 correspondence. The record also
reflects that throughout the first lawsuit, Oakwood actively participated in the discovery process
and vigorously protected its own interests. Therefore, we are not persuaded that this Court’s
decision in Aetna Casualty & Surety Co supports plaintiff’s attempt to recover what is essentially
a contingent fee under a theory of unjust enrichment.
The present case is also factually distinguishable from Miller v Citizens Ins Co, 288 Mich
App 424, 433; 794 NW2d 622 (2010), aff’d in part and rev’d in part on other grounds 490 Mich
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905 (2011), where this Court held that the plaintiff’s attorneys were “entitled to have attorney
fees deducted from the payment” that a medical provider earned in a no-fault case. In so ruling,
this Court observed that the plaintiff’s attorneys were instrumental in resolving the lawsuit at
issue and conducting settlement negotiations and that as a result, the medical providers were not
required to establish that their fees were reasonable as contemplated by § 3157 of the no-fault
act. Miller, 288 Mich App at 434. The Court also found it noteworthy that the medical
providers in that case, pursuant to the law existing at the time of that decision, could have
brought independent legal actions against the no-fault insurer, but did not do so and “thus they
were spared the expense of litigating their own claims.” Id. at 435. Underlying this Court’s
rationale was also its recognition that without the plaintiff’s attorneys actions in facilitating a
settlement, the medical providers in that case would likely not have received as favorable a
settlement as they ultimately did. Id. at 437. Additionally, this Court observed that the Detroit
Medical Center (the DMC), asserting that it was not liable for the plaintiff’s attorney lien arising
from the funds it recovered, could have advised the no-fault insurer “not to pursue payment for
[the DMC’s] services or advised [the no-fault insurer] that [the] plaintiff’s attorneys did not
represent its interests, but the DMC did neither.” Id. at 438. Under such circumstances, the
Miller Court concluded, “[it] would be unfair to allow the DMC, and other medical providers, to
benefit from the efforts of plaintiff’s attorneys without contributing to the costs incurred in
securing insurance proceeds[.]” Id. The Miller Court also distinguished its ruling from that of
Garcia v Butterworth Hosp, 226 Mich App 254; 573 NW2d 627 (2010), where the plaintiff’s
counsel’s conduct in that case was far less involved, further stating that the award of attorney
fees in Miller “principally arises from the contingency agreement between plaintiff and her
attorneys, not merely “‘equitable principles.’” Miller, 288 Mich App at 439.
B. UNJUST ENRICHMENT
We likewise conclude that the trial court properly dismissed plaintiff’s unjust enrichment
claim. Plaintiff’s claim is that it expended investigatory efforts prior to filing the complaint, that
the complaint ultimately led to Oakwood recovering approximately $90,000, and it is inequitable
for Oakwood to retain that amount without compensating plaintiff $32,500 for its work.
Unjust enrichment is defined as the unjust retention of “ ‘money or
benefits which in justice and equity belong to another.’ ” McCreary v Shields, 333
Mich 290, 294; 52 NW2d 853 (1952) (citation omitted). “No person is unjustly
enriched unless the retention of the benefit would be unjust.” Buell v Orion State
Bank, 327 Mich 43, 56; 41 NW2d 472 (1950). Buell also explained: “ ‘One is not
unjustly enriched ... by retaining benefits involuntarily acquired which law and
equity give him absolutely without any obligation on his part to make restitution.’
” Id. (citation omitted). [Tkachik v Mandeville, 487 Mich 38, 47-48; 790 NW2d
260 (2010)].
“[I]n order to establish a claim of unjust enrichment, plaintiff must demonstrate: (1) the receipt
of a benefit by the other party from the complaining party and (2) an inequity resulting to the
complaining party because of the retention of the benefit by the other party.” Karaus v Bank of
New York Mellon, 300 Mich App 9, 23; 831 NW2d 897 (2012). The equitable doctrine of unjust
enrichment must be employed with caution because it “vitiates normal contract principles.”
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Kammer Asphalt Paving Co v East China Twp Schools, 443 Mich 176, 186; 504 NW2d 635
(1993).
Based on the evidence presented to the trial court prior to its decision on the motion for
summary disposition, we conclude that there was no genuine issue of material fact that plaintiff
did not establish the elements necessary to establish unjust enrichment.5 We base this conclusion
on several grounds.
First, we see no inequity in Oakwood retaining its full case evaluation award. As already
made clear, both Reese and Oakwood were separately represented by counsel throughout the
litigation, and both received their own separate case evaluation award. Each of their counsel
presumably received compensation-pursuant to contractual agreements, consistent with the
American rule-from their own clients. In general terms, nothing is inequitable about that.
Second, we categorically reject plaintiff’s (and the dissent’s) more specific propositions
that equity demands it be compensated for (1) work performed prior to filing the lawsuit and (2)
work performed during the litigation while Oakwood was represented by counsel. As to the first
proposition, the work plaintiff performed prior to filing suit was done for its client, and
(accepting plaintiff’s assertions as true) was necessary for his client to proceed in court. Most, if
not all, of the asserted work focused on what insurer might cover the client’s medical bills.6 And
rightly so, because as the complaint makes clear, plaintiff’s client Reese owed Oakwood over
$108,000 for services rendered. To properly serve Reese, i.e., to get him out from under a
significant debt, plaintiff searched far and wide for insurance coverage.
But the benefit of this work to Oakwood was only incidental. After all, Oakwood knew
who owed it for the services rendered (Reese), and thus was not in need of any investigation in
order to file suit, if necessary, to recover what was owed. In addressing unjust enrichment
arguments in the context of a common fund theory, other courts and commentators have
concluded that a medical provider only receives an incidental benefit from the injured party’s
attorney’s efforts, since the medical provider is entitled to be paid for the services rendered to the
injured person. See, e.g., Hayden v MedCenter One Inc, 828 NW2d 775, 786 (ND, 2013) (“The
law firm obtained the insurance proceeds not for the benefit of the medical providers but for the
benefit of its clients who hired the law firm to attempt to compel BCBSTX to provide medical
insurance coverage. The medical providers received an incidental benefit in this case. We
5
We are somewhat puzzled by the dissent’s reference to “the twin doctrines of unjust enrichment
and restitution.” Plaintiff’s claim against Oakwood in Count III is entitled “Unjust Enrichment,”
with no mention of the remedy of “restitution.” Nor is the word “restitution” contained within
plaintiff’s briefs filed with this Court. But as the dissent does recognize, unjust enrichment can
be employed by courts when equity requires that restitution be made to another. Kammer
Asphalt, 443 Mich at 185. The proper analysis is on unjust enrichment, and nothing more.
6
Mr. Adler’s affidavit establishes this fact. When describing the pre-filing work performed on
behalf of his client, each paragraph relates the different avenues taken in search of an insurance
policy with the potential to cover his client’s bills.
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conclude the district court correctly ruled the common fund doctrine does not apply.”); Wilson v
Sisters of St Francis Health Servs Inc, 952 NE2d 793, 797 (Ind App, 2011) (“There is no dispute
that St. Francis provided services to T.W. and is entitled to full payment for its services. Wilson
presented no evidence that a measurable benefit has been conferred on St. Francis under such
circumstances that St. Francis’s retention of the Kaiser Permanente insurance payment without
payment of attorney fees to Wilson would be unjust.”); and Lynch v Deaconess Med Center, 113
Wash 2d 162, 165-166; 776 P2d 681 (1989). See also, Reporter’s Note, 1 Restatement (Third) of
Restitution and Unjust Enrichment, § 29, p 457 (the majority view holds that “an ordinary
creditor [including one whose claim has been reduced to a judgment] cannot be liable on a
common-fund theory to contribute to the cost of successful litigation by the debtor,
notwithstanding that [the] debtor’s tort claim might be [the] creditor’s only realistic hope of
payment”). Similarly, the work performed by Adler prior to instituting the lawsuit was for his
retained client, and any benefit to Oakwood from that work was merely incidental.
As to the second proposition, plaintiff and the dissent argue that, under both unjust
enrichment and the common fund exception to the American rule, plaintiff could potentially
recover fees from Oakwood for work performed during the litigation. We respectfully disagree.
The common fund exception is simply inapplicable. For one, both the plaintiff and dissent gloss
over the narrow realm of cases in which the exception applies. As recognized in both Mills v
Electric Auto-Lite Co, 396 US 375, 391-392; 90 S Ct 616; 24 L Ed 2d 593 (1970) and In re
Attorney Fees of Kelman, Loria, Downing, Schneider & Simpson, 406 Mich 497, 460; 280
NW2d 457 (1979), relied upon by the dissent, the exception has been limited to use in class
actions or, for example, shareholder suits that benefit a large number of shareholders. This case
is not within that realm of cases, and as explained above, Miller-the only case supporting the
common fund exception in an individual, non-class insurance case-is significantly
distinguishable from our facts.
Additionally, we read the Miller Supreme Court order, in conjunction with what the
Court of Appeals panel held, to legally dispose of plaintiff’s common fund argument. As
explained, the Miller panel held that the common fund exception applied because (1) “litigation
against automobile insurers for failure to pay personal protection insurance benefits in breach of
their contract with their insured parallels a class action,” and (2) “[a]n insured plaintiff who
prevails in a litigation against the plaintiff’s insurer secures payment not only for the plaintiff’s
benefit, but for the benefit of the plaintiff’s medical providers … .” Miller, 288 Mich App at
438. On appeal the Supreme Court concluded, amongst other things, that “the Court of Appeals’
reliance on the common-fund exception to the American rule was erroneous because no common
fund was created.” Miller, 490 Mich at 905.7 That rather straight-forward language makes clear
7
The Court also concluded that the medical provider in that case “is not liable for plaintiff’s
attorney’s fees under the no-fault act,” and that “plaintiff is responsible for payment of her
attorney fees consistent with the contingency fee agreement,” Miller, 490 Mich at 905.
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that the Miller panel’s conclusion that the common fund exception to the American rule was
applicable under these circumstances was erroneous.8
Finally, the dissent would prefer to remand the issue for the trial court to “flesh out”
plaintiff’s entitlement to pre-and post-filing attorney fees. To do so, however, would likely
create a “mini-trial” quite unlike what is typically done when one party seeks an award of
attorney fees. Here, both plaintiff and counsel for Oakwood would have to submit evidence
(billings, pleadings, testimony, etc.) and argue over who did the most (or most important) work
towards the ultimate success. Would that be based on the number of billable hours, or who filed
the most motions, or which motions or arguments caused the ultimate success, or who came up
with the successful strategy? And if the court finds that one counsel did “more” to cause the
plaintiff to prevail, it would then have to determine whether equity required the party whose
counsel did less towards the ultimate success to make a contribution towards the other party’s
attorney fees.9 That is, in fact, precisely the arguments made by present counsel. To allow such
a procedure to occur in the absence of a statute or court rule would be imprudent, indeed
impermissible. We therefore conclude that in an individual no-fault case like this, where both
parties are represented by their own counsel from the start of the litigation, the American rule
prevails and each party is responsible for its own fees.
On the basis of the foregoing analysis, we conclude that the trial court properly granted
summary disposition in favor of defendants. Given our disposition of this appeal, we need not
address plaintiff’s remaining arguments that its claims were not barred by the doctrine of res
judicata or as a result of the judgment entered following case evaluation in the first lawsuit.
IV. CONCLUSION
We affirm the trial court’s order granting summary disposition in favor of defendants.
Defendants, as the prevailing parties, may tax costs pursuant to MCR 7.219.
/s/ Christopher M. Murray
/s/ Karen M. Fort Hood
8
As noted, there are sound decisions from our Sister States concluding that the common fund
exception does not apply to the recovery of funds for medical providers as a result of an
individual insurance benefit coverage case. See, e.g., Wendling v Southern Illinois Hosp
Services, 242 Ill 2d 261, 271; 950 NE2d 646 (2011)(“Plaintiffs’ attorneys did not recover the
settlements for the benefit of a class, but, rather, for the benefit of their clients.”); Hayden, 828
NW2d at 784-786.
9
And, of course, the court would also have to determine whether the requested fees are
reasonable.
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