Z.T., an Infant by Her Parents and Natural Guardians, Annie Taylor et al. v. Long Island College Hospital et al., Index No. 13797/2008, 7/12/2016 (Demarest, J.)

Public Health Law § 2999, Judiciary Law § 474-a, Attorney Fees

By: Madeline Collins | Staff Writer

A child represented by her natural guardian, Plaintiff was born prematurely at Defendant hospital. During delivery admission at Defendant, the child sustained severe brain injuries resulting in the child developing significant neurological and developmental disabilities. The parties subsequently proposed an infant compromise order driven by Public Health Law § 2999-h, which provides aid with all future health care costs, and Public Health Law § 2999-h (3) through the New York State Medical Indemnity Fund (hereinafter “MIF”), which provides “a funding source for future health care costs associated with birth related neurological injuries.” Defendant established a trust which administers and pays claims made against Defendant for medical and professional malpractice. MIF applies to qualifying claims presented to the Defendant trust.

Through negotiation, the parties entered into a settlement which included an established claim value (hereinafter “ECV”) of five million dollars, deducting a $50,000 payment to the parents. As part of the settlement calculations, approximately three million (60%) was attributable to the MIF fund allocation and approximately two million (40%) was for non-fund damages for which the trust was liable. Pursuant to the Judiciary Law § 474-a, the settlement also included attorney’s fees in the amount totaling approximately four million and derived from the sum recovered by Plaintiff, not the full ECV. The parties then submitted such terms to the Court for approval.

The Court directed the parties to prepare and execute an amended settlement agreement and to release and submit to the court a proposed compromise order. The Court noted two areas that needed to be included in the settlement agreement. The Court first held that an amended damage analysis needed to include birth-related neurological injuries. Public Health Law § 2999-j (6) (a) provides that, upon a determination that a claimant has suffered birth-related neurological injury, “all payments for future medical expenses shall be paid by the MIF in lieu of that portion of the settlement agreement that provides for the payment of such expenses.” Here, the proposed settlement satisfied § 2999-j(6)(a) because approximately three million (60%) was attributable to the MIF fund allocation. Therefore, the Court confirmed that the damage analysis was included in the settlement paperwork submitted by the parties.

Second, the Court held that the settlement agreement needed to include attorney’s fees. Public Health Law § 2999-j (14) provides that the fee of a qualified plaintiff’s attorney is to be based upon the “full sum of the settlement” and is to be paid by the defendants or an insurer in a lump sum, except that the fee allocated to the non-fund damages is to be deducted from the non-fund portion of the award and is thus paid by the plaintiffs. Judiciary Law § 474-a defines the sum of the settlement to include only the sum recovered by plaintiff and not upon the full ECV of the case. Here, the Court added the fund portion of the award, approximately three million, to the total initial distribution of non-fund damages, about one million, to yield about four million as the present full amount of the settlement. This calculation would be subject to any further payout by the trust which would result in a further attorney’s fee of 10% of such payout, as noted above. Applying the sliding scale set forth in the Judiciary Law here yielded a total attorney’s fee of about five and a half million dollars due to plaintiffs’ counsel, plus reimbursement for costs and disbursements. Apportioning this sum, as directed by the statute, 40% to the trust non-fund payout, about two million, is the amount of attorney’s fees to be deducted from plaintiffs’ recovery. Therefore, Plaintiff’s counsel was entitled to receive approximately an additional three million attributable to the fund damages directly from the trust. Plaintiffs’ counsel, however, has agreed to accept only about two and a half million in full satisfaction of MIF-related fees. Accordingly, the Court held that the damage analysis needs to include such additional attorney’s fees.

Z.T., an Infant by Her Parents and Natural Guardians, Annie Taylor et al. v. Long Island College Hospital et al., Index No. 13797/2008, 7/12/2016 (Demarest, J.).


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