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Gilman v. Dalby (Cal. Ct. App. - Aug. 10, 2009)

By Shaun Martin

Here's a case that's important to any attorney with a personal injury practice. It's also one that I think does an outstanding job of analyzing and resolving the competing public policy considerations at issue.

The simple question is whether an attorney or medical lien has priority when both exist. For example, a guy gets hit by a car, goes to the hospital and incurs expenses for medical services (thereby resulting in a lien), and then goes to a lawyer and incurs costs and fees for legal expenses in suing the defendant (thereby resulting in another lien). If the result of the lawsuit is $X, and X is insufficient to fully pay both the medical provider as well as the hospital, which one of 'em gets stiffed?

The traditional rule is that the lien that's first in time has priority. Which would mean that the medical lien prevails. This result is consistent with the fact that the medical expenses also largely generated the recovery of $X from the defendant as compensation for out-of-pocket losses.

But Justice Scotland rightly holds, I think, that notwithstanding these considerations, the attorney lien has superior priority. Read the whole thing to see why; it's not especially long, and is extremely cogent.

I do wonder whether a group of doctors would write a similar opinion. My sense is that judges -- who know how litigation like this practically works -- have a heightened understanding than outsiders regarding why attorneys need to be paid first. A cynic might view the opinion as lawyers looking out for their own. I can understand such a perspective, though think it's off. I instead think this is an example of lawyers perhaps knowing more than others and, in light of this knowledge, recognizing that public policy is indeed advanced by a decision that favors the lawyers.

I did have a tangential thought regarding why it isn't worth at least considering whether public policy would be maximally advanced by having both liens have equal priority; e.g., each of 'em taking a haircut when there's not enough money to go around. Such a position seems at least plausible to me. Ponder if you think that'd be an even better (or worse) position than the one adopted by the Court of Appeal.

I'm not necessarily advocating it. I just think it's worth thinking about.

Regardless, today: Lawyers 1, Doctors 0.

Full post as published by California Appellate Report on August 10, 2009 (boomark / email).