Judges divided over complicated issue of wrongful-death attorney fees

A complex and complicated case regarding whether attorney fees awarded from the Indiana Patient’s Compensation Fund are capped at 15 percent led to a split in the Indiana Court of Appeals. The majority decided that the cap does not apply to the calculation of excess damages of any type from the fund.

“As attorney fees are recoverable as pecuniary damages in an adult wrongful death action, we cannot adopt the Fund’s position that the total amount of attorney fees recoverable may be only 15% of what is taken from the Fund, without regard to whether or to what extent that amount includes attorney fees on the amount recovered before the Fund is reached. Instead, the 15% limitation applies only to new monies from the fund, not monies that otherwise might be characterized as attorney fees on the amount recovered before the Fund is reached, but that is included as damages when applied to the Fund,” Judge Melissa May wrote in Indiana Patient's Compensation Fund v. Judy Holcomb, Personal Representative of the Estate of Mable Louis Cochran, Deceased, 49A05-1207-CC-340. Judge Rudolph Pyle III joined her decision.

The issue of the amount of legal fees owed by the Patient’s Compensation Fund stems from the death of Mable Louise Cochran in 2011 allegedly caused by medical malpractice. Judy Holcomb, her personal representative, opened the estate to pursue a wrongful death claim under the Adult Wrongful Death Statute against the nursing home where Cochran resided.

The trial court awarded Holcomb’s attorneys $50,440 in attorney fees to be paid by the fund after she settled with the nursing home and sought additional money from the fund. That amount was calculated by Holcomb’s attorneys based on a $400 hourly rate and hours worked. But the IPCF claimed the amount exceeds that permitted under I.C. 34-18-18-1, which says the attorney fees may not exceed 15 percent of any recovery from the fund. The fund sought the attorney fee award cut to $17,852.98, which would be 15 percent of the $101,166.89 awarded.

“Under the facts the parties have placed before us, including an agreement regarding the Fund’s liability that purported to include no attorney fees as damages, it is impossible to reach a result that is fair to the Estate and to its counsel, yet consistent with the statutory 15% limitation. As the trial court’s award does not accurately reflect either the proper amount of attorney fees or proper allocation of money awarded from the Fund, we must reverse and remand for further proceedings consistent with this opinion,” May wrote.

The judges on the appellate panel at times were stumped during oral arguments on the issues in this case, which is reflected in Chief Judge Margret Robb’s dissent. She pointed out the majority addressed issues that weren’t before the court. All the COA should rule on is the total amount of the fund’s excess damages liability. She would affirm the trial court’s award, plus the $50,000 in attorney fees.

She wrote the probate court should determine how much Holcomb’s counsel receives from the excess damages payment, taking into account the Medical Malpractice Act’s 15 percent limitation.

“In other words, when the time comes to distribute the Fund payment – which is not now – the probate court could not approve distribution of more than $22,741.03 of the Fund’s payment to the Estate’s attorneys ($151,606.89 x .15 = $22,741.03). Any fee balance remaining due to the attorneys pursuant to the fee agreement would have to be paid out of the earlier provider payment to the Estate,” she wrote.