Attorney’s Fees in PIP Lawsuits

 In Law Planet, PIP Claims & Collections

dollar symbolDespite common misconception, PIP lawsuits are litigated as breach of contract claims, not tort actions like bodily injury claims.  Many people think because there was a motor vehicle accident with injuries, the attorneys handling PIP suits are therefore dealing with tort claims.  This misconception may be irrelevant to some, but it actually changes the landscape of litigation and tactics for PIP claims. It changes the timeframe in which a lawsuit must be brought as well as the types of damages a party can typically plead.  But perhaps the most relevant difference to those who wish to bring forth PIP lawsuits is how their attorneys will be paid.

Typically, attorneys who litigate on tort matters either bill their clients as they go, or take a percentage of the damages recovered for their clients.  However, attorneys who successfully litigate for PIP breach of contract claims typically get fee entitlement directly from the insurer defendants pursuant to §§627.736(8) and 627.428, Florida Statutes.  This makes total sense because PIP benefits in Florida do not exceed $10,000.00, and most claims against auto insurers are actually for far less.  It would make no sense for a health care provider who treats and bills under PIP to pay an attorney tens of thousands of dollars to pursue their cases, nor would it be sustainable for an attorney to agree to take on these often arduous, time consuming cases for a percentage of the recovery they obtain for their clients.  This was undoubtedly the same ideology shared by Florida Legislatures when they drafted the attorney fee provision of the PIP statute. 

The result of this is attorneys who agree to handle PIP lawsuits on a contingency basis recoup their fees from the insurance companies after settlement or final judgment.  Those who seek damages for unpaid or underpaid PIP benefits (typically health care providers) do not have to directly pay their attorneys for their services.  In order for a PIP attorney to successfully recoup their fees from the insurers, the fees recovered must: 1) comply with professional standards; 2) not overstate or inflate the number of hours reasonably necessary for a case of comparable skill or complexity; and 3) represent legal services that are reasonable and necessary to achieve the result obtained. 

Under the current version of the Florida PIP statute effective on January 1, 2013, attorneys litigating PIP matters are no longer entitled to fee contingency risk multipliers (hereinafter “multipliers”).  Multipliers multiply recoverable attorney’s fees by a contingency risk factor on cases that are novel, difficult, and pose a likelihood that the case would preclude the handling of other cases by the lawyer.  Prior to January 1, 2013, multipliers were allowed in PIP cases as it relates to attorney’s fees.  While seemingly only a concern for PIP attorneys and their bank accounts, the change in the PIP statute disallowing multipliers in attorney’s fees actually affects all those who wish to litigate for PIP benefits due and owing to them.  If a case is presented that has novel, unusual, or unfavorable circumstances, an attorney may now decline the case because of likelihood of losing the case after putting in extra time and effort to establish new law, or extend, modify, or reverse existing law.  The multipliers had historically given PIP lawyers an incentive to be bold and handle such unfavorable cases.   

Image courtesy of freedigitalphotos.net by Stuart Miles

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