Lawyers’ Corner: Attorney Fees in Blacksher v State Farm

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How will you be paid as a no-fault lawyer? Your clients are injured, likely not working, and often poor. So where do the attorney fees come from. A recent unpublished Court of Appeals decision reviews the No-Fault Act’s attorney fee awards, including when it does, and doesn’t apply.

A major concern for most auto accident clients is how your attorney bill can be paid. The legal fees and expert witness fees related to a no-fault claim can add up quickly and put a strain on your attorney-client relationship. That’s why the Michigan No-Fault Act includes an attorney fee provision that makes sure you get paid for the work you do, sometimes.

Michigan No-Fault Act Attorney Fees

MCL 500.3148 describes when an attorney can be paid attorney fees in a no-fault case:

(1) An attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property protection insurance benefits which are overdue. The attorney’s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.

(2) An insurer may be allowed by a court an award of a reasonable sum against a claimant as an attorney’s fee for the insurer’s attorney in defense against a claim that was in some respect fraudulent or so excessive as to have no reasonable foundation. . . .

The recent unpublished decision in Blaksher v State Farm, is the second time the Michigan Court of Appeals has addressed attorney fees in the case. The first time, in December 2014, the court reviewed a denial of attorney fees to the insurer under MCL 500.3148(2). The court found that the conflicting medical evidence presented at trial was evidence of the plaintiff’s reasonable foundation for the claim.

This time, the case was back on an appeal of the plaintiffs’ attorney fee awards, under MCL 500.3148(1), for overdue and unreasonably delayed benefits. The court noted that the question before the court this time was:

“[W]hether State Farm had a reasonable basis for its refusal to pay the claim at the time the claim was first submitted.

It held that evidence presented at trial did not automatically apply to this determination. Rather, the statute creates a rebuttable presumption that the delay was unjustified, putting the burden on the insurer to justify the delay.

Here, State Farm was not able to establish that the conflicting medical information presented at trial was available when it rejected the plaintiffs’ claims (as an injured motorist and medical provider). The defense medical examination reports the insurance company used on appeal were issued in 2008, after the insurance company had already delayed or refused to pay expenses incurred in the fall of 2007. Therefore, the court found that attorney fees were appropriate under MCL 500.3148(1).

What Taxable Costs Can Be Awarded as Attorney Fees?

Having established that plaintiffs were entitled to some attorney fees, the court next summarized what fees could be awarded. The trial court judge had awarded the medical provider, McLaren Medical Center $16,871.79 in attorney fees based on bills submitted by the attorney of record.

The court noted that any attorney fee is statutory, so if an item is not listed in a relevant statute, it must be excluded from the award. Among the awards improperly included were:

  • Copying Charges
  • Postage Expenses
  • Case Evaluation Fees,
  • Mileage For Attorneys,
  • Parking Expenses
  • Courier Fees,
  • Transcript Costs Related To Post-Trial Motions (See MCL 600.2543(2))
  • Deposition Costs For Transcripts Not Filed With The Clerk’s Office (See MCL 600.2549)
  • Exhibit Presentation Board Costs.

All of these costs were included in the invoice submitted along with the plaintiffs’ attorneys’ motion for attorney fees. The court also found that consultation or contractor fees paid to attorneys outside the firm were not payable as taxable costs. The court classified this work as “nonlegal services” that fell outside the statute.

Collecting Attorney Fees in Light of Blacksher

No-fault attorneys can take a lesson from the court’s meticulous review of the attorney fee award in Blacksher v State Farm. While most firms keep a ledger of all attorney fees, costs, and expenses related to each case, that isn’t the fee to be submitted to the court. Rather, plaintiffs’ attorneys should take the time to remove all of the various non-taxable costs from the invoice submitted to the court. Otherwise, the entire attorney fee award could be reversed because of some sloppy accounting.

Make sure you are representing your clients with integrity. When you file post-trial motions for attorney fees, make sure your request complies with the statute, and excludes all the non-taxable costs that go along with litigation. You could end up saving your clients money in the long run.

David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. He represents car crash victims against insurance providers and at fault drivers. If your client is facing a challenging no-fault issue, contact Christensen Law today for a referral.