On September 21, 2012, the Alabama Supreme Court upheld the 2011 decision by the Alabama Court of Appeals and announced its opinion in Ex Parte State Farm (2012 WL 4238631) by stating MedPay lienholders must abide by the Common Fund Doctrine when an attorney recovers damages from a third party. A Plaintiff’s insurance company must now pay their share of the attorney’s fees and costs when a settlement or verdict has been reached in the plaintiff’s favor.
The Court’s holding affects plaintiffs who have retained an attorney, have received payments from their MedPay carrier related to their injuries in an auto accident, and have recieved a settlement or jury verdict in their favor. When the MedPay carrier asks to be reimbursed from the settlement proceeds, an experienced personal injury attorney can now require the MedPay carrier to acecpt less than what they originally paid as a result of the Court’s holding. This change in the law can potentially keep thousands of dollars in the hands of the injured plaintiff.