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07/27/87 Robert S. Pinzur, Ltd., v. the Hartford

July 27, 1987





511 N.E.2d 1281, 158 Ill. App. 3d 871, 110 Ill. Dec. 961 1987.IL.1066

Appeal from the Circuit Court of Lake County; the Hon. John R. Goshgarian, Judge, presiding.


JUSTICE HOPF delivered the opinion of the court. LINDBERG, P.J., and WOODWARD, J., concur.


This appeal is taken by the Hartford, an insurance company, from a grant of summary judgment which awarded attorney fees to plaintiff professional corporation, Robert S. Pinzur, Ltd. Pinzur sought fees pursuant to an alleged statutory attorney's lien on insurance proceeds due to his client. Hartford contends that the trial court erred in enforcing the alleged lien because Pinzur's client had no claim to which a lien could attach and no determination was made that the insurer's conduct was vexatious and unreasonable. Hartford also asserts that the trial court abused its discretion by awarding an excessive amount of attorney fees to Pinzur.

The record reveals the following facts. Hartford issued a group health and disability insurance policy to Buford Television, Inc., in October 1981. Debra Patka worked for Buford and was insured under the Hartford policy. In June 1982, Patka was hospitalized with a gall bladder problem and Crohn's disease. At the time she was admitted to the hospital Patka signed an admission contract which included the following language:


I hereby authorize direct payment to Mease Hospital and Physicians of the proceeds payable under the terms of the policies submitted to Mease Hospital and Clinic in satisfaction of my bill."

Around the middle of August Patka was discharged from the hospital.

When Hartford failed to pay the claims they submitted, various of the providers who had rendered services to Patka began billing Patka directly. She received the first of these billing notices before she was discharged from the hospital and eventually was threatened with collection agency action. In December 1982 the bills were still unpaid, and Patka obtained the services of Pinzur to secure the benefits she claimed were due under the group insurance policy. According to the terms of a written agreement Pinzur was to receive 33 1/3% of the gross amount it recovered from Hartford on behalf of Patka whether by suit, settlement, or otherwise.

Pinzur notified Hartford that it claimed an attorney's lien upon any recovery secured for Patka in letters received by Hartford on December 6, 1982, and December 20, 1982. In the second of these letters Pinzur confirmed a telephone conversation with Hartford in which Hartford had acknowledged its liability to Patka for medical/hospital coverage. Hartford had also explained that the delay in payment of the claim was due to an audit of the individual hospital bills by the insurer's home office and that when the audit was completed, Patka's bills would be paid. A December 27, 1982, letter from Hartford to Pinzur also stated that Patka's file was being reviewed by Hartford's home office. An affidavit and attached exhibits filed by Hartford's health claims manager indicate that an audit of Patka's hospital bill by Hartford discovered an overcharge in the amount of $4,507.66. Another exhibit shows repayment of the overcharge by the hospital.

Starting on January 11, 1983, Hartford began issuing drafts payable directly to the treating hospital and physicians. These checks were made payable only to the providers; Pinzur was not named as an additional payee on any of them. The total amount paid to the providers was $35,757.33. On March 23, 1983, a draft in the amount of $2,313.44, for disability benefits rather than medical expenses, was issued jointly to Patka and Pinzur.

In numerous communications subsequent to its December 14 notice of claim for lien, Pinzur repeatedly demanded that Hartford honor its lien by including it as a payee on drafts to Patka or the various providers. Pinzur's letters of February 1, 1983, February 8, 1983, and March 10, 1983, were directed initially to matters concerning Patka's benefits under the Hartford policy and merely added a request that Hartford name Pinzur as a payee pursuant to its lien. Letters sent by Pinzur on February 16, 1983, May 2, 1983, and June ...

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