The effects of Wendling on injured people.

by keith on 05/04/11 at 9:46 am

Wendling Chart

Yesterday we discussed the recent case from the Illinois Supreme Court, Wendling v. Southern Illinois Hospital Services.

We did not discuss the most important aspect of the decision of the Supreme Court, what effect does it have on real people?

Under the lien statute, the total recoverable liens can only be a maximum of 40% of the settlement. After the 40% threshold is reached, the full amount of the liens must be paid. Under the common fund, the lienholders were required to pay 1/3 of the lien amount as legal fees for recovery of the settlement. This reduces the lien amount by 1/3 regardless of the amount recovered in the settlement.

I generated the following chart to demonstrate the practical effect of the Wendling decision on the amount an injured person takes home after prosecuting a personal injury case.

The chart assumes $5000 in medical expenses and does not take into account any attorneys fees or expenses (for simplicity’s sake). The bottom axis is the amount of the settlement. The Blue line represents the settlement amount, the yellow line is the lien amount payable under the lien statute. The important lines for our discussion are the red line, which is the net paid to the injured person after the common fund reduction, and the green line, the net paid to the injured person under the lien statute.

As you can see, if the settlement is less than the medical expenses, the application of the lien statute can result in a better recovery for the injured person. However, once that point is passed, the net recovery is always less for the client than the application of the common fund doctrine. So the practical effect of the Wendling decision is that injured people will recieve a smaller portion of any settlement they can extract from the insurance companies.

Does this seem fair? Let us know in the comments section.

38 Responses to “The effects of Wendling on injured people.”

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