Hauptman, O'Brien v. Auto-Owners Ins. Co.
310 Neb. 147
| Neb. | 2021Background
- Auto-Owners paid $1,000 in medical payments to insured Charlyn Imes after a motor-vehicle accident; the policy/endorsement reserved the insurer’s subrogation right.
- Imes hired Hauptman, O’Brien, Wolf & Lathrop (the law firm) on contingency to sue the negligent third party; suit sought medical expenses of $40,100.
- The insurer notified the third-party carrier it would protect its subrogation interest and would not pay attorney fees unless it requested assistance.
- Imes settled the third-party claim for $48,200; the law firm sought one-third of the insurer’s $1,000 subrogation interest ($333.33) under the common fund doctrine; the insurer refused.
- The law firm sued the insurer; county court, district court, and the Court of Appeals awarded the law firm a pro rata share under the common fund doctrine; insurer appealed to the Nebraska Supreme Court.
- The narrow legal question: does Neb. Rev. Stat. § 44-3,128.01 preempt the common-law common fund rule permitting an attorney to recover a pro rata share of fees from an insurer’s subrogated medical-payments recovery?
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 44-3,128.01 preempt the common-fund doctrine and bar an attorney from collecting a pro rata fee from an insurer’s medical-payments subrogation recovery? | Statute is silent as to attorney fees; longstanding common-fund doctrine requires insurers who benefit to bear a share of fees. | Statute validates an insurer’s subrogation right for medical payments and thus occupies the field or conflicts with fee-sharing, entitling insurer to full recovery. | No preemption or abrogation. § 44-3,128.01 is silent on fees and does not evince legislative intent to displace the common fund; law firm’s fee recovery affirmed. |
Key Cases Cited
- United Services Automobile Assn. v. Hills, 172 Neb. 128, 109 N.W.2d 174 (1961) (applied common fund doctrine to insurer’s subrogation interest)
- Milbank Ins. Co. v. Henry, 232 Neb. 418, 441 N.W.2d 143 (1989) (addressed validity of medical-payments subrogation clause; split decision)
- Sprague v. Ticonic Bank, 307 U.S. 161 (1939) (describes chancery equity authority over attorney fees from recovered funds)
- Peterson v. Jacobitz, 309 Neb. 486, 961 N.W.2d 258 (2021) (standard for independent appellate review of questions of law)