By: Whitney James

On December 13, 2017, the Arkansas Court of Appeals issued a rather interesting opinion.  In State Farm Mutual Automobile Insurance Co. v. Alvaro Esparza, the Court affirmed the decision of the Benton County Circuit Court awarding attorney fees to counsel for Alvaro Esparza for his work helping his client seek payment for medical bills submitted to the client’s insurance carrier, State Farm.

Appellee Alvaro Esparza and his two children were in an automobile accident in October of 2013.  Mr. Esparza was insured with State Farm and had medical payments coverage in the amount of $5,000.00 per person.  He submitted his medical bills to State Farm but State Farm did not pay them.  Mr. Esparza eventually filed a lawsuit against State Farm.  The jury awarded Mr. Esparza and his children $12,535.00 for the delayed medical expense payments.

Mr. Esparza and his attorney filed a motion for attorney’s fees, which the Circuit Court granted.  The fees amounted to $21,197.50 and were based on an hourly rate calculation.

Mr. Esparza and his attorney had entered into a contingency fee agreement for the personal injury claims of Mr. Esparza and his children.  In the appeal of the Circuit Court’s decision, State Farm argued that because Mr. Esparza and his attorney had entered into a contingency fee agreement, the hourly fee award was not permissible.

In its brief, Appellant State Farm made the argument that because the attorney-client agreement entered into between Mr. Esparza and his attorney stated that the attorney was authorized to pursue “any claim” by Mr. Esparza and his children, that agreement covered the claim for medical expenses.

The Appellee stated that the contingency fee agreement was for the personal injury claim only and that Mr. Esparza’s attorney would be entitled to a portion of the recovery from the tortfeasor and not State Farm.

The Court of Appeals held that it had been provided with enough evidence for it to conclude that the contingency fee agreement applied to the attorney’s representation of Mr. Esparza and his children regarding the personal injury case only and not to the claim for delayed medical payments.  The contingency fee agreement referred to “damages sustained,” listed the date of the automobile accident, and mentioned that a copy of the agreement could be provided to “the defendant or any insurance company of the defendant” for use in establishing an attorney’s lien.  This indicated to the Court that the anticipated defendant was the tortfeasor and not the insurance company.

Additionally, Mr. Esparza signed an affidavit stating that it was not his intention for his attorney to take as his fee a portion of the medical expenses recovered.  The Court also considered the correspondence Mr. Esparza’s attorney sent to State Farm advising of his time spent on the case, the additional time he would spend if the case went to trial, and the type of hourly fee he had been awarded in other delayed medical payments cases.

Whitney James focuses on Workers’ Compensation, Personal Injury Litigation and Business and Commercial Litigation in the Little Rock office.

This blog contains general information about legal matters. The information is not advice, and should not be treated as such. Communication of information by, in, to or through this blog and your receipt or use of it: (1) is not provided in the course of and does not create or constitute an attorney-client relationship; (2) is not intended to convey or constitute legal advice; and (3) is not a substitute for obtaining legal advice from a qualified attorney.