76 Pa. Commw. 294 | Pa. Commw. Ct. | 1983
Opinion by
This ease comes before the Court on appeal by the attorney-petitioners from an order of the Administra-, tor for Arbitration Panels for Health Care (Administrator) directing the said attorneys to relinquish certain disputed funds relating to the settlement of a medical malpractice action. This Court must now determine the constitutionality of Section 604(a) of the Health Care Services Malpractice Act (Act),
In 1977, petitioners commenced a medical malpractice action
In addition to the approval of the court of common pleas, the petitioners were required by Section 307
The Attorney General then filed a petition on behalf of the Administrator, by which he sought to modify the common pleas court order granting distribution of the settlement funds, and requesting that the sum in the escrow account plus the interest thereon be paid to the guardian of the estate of the injured minor. The common pleas court denied that petition, concluding that Sections 604(a) and 307(b) of the Act were inconsistent with Pa. R.C.P. 2039, which governed the procedures to be followed. The court therefore suspended the said sections of the Act.
That order was appealed to this Court, which vacated same, opining that the common pleas court lacked jurisdiction to entertain the petition filed under Pa. R.C.P. 2039 to obtain approval of the medical malpractice settlement.
Discussion
Petitioners assert that Section 604(a) of the Act contravenes the due .process and equal protection clauses of both the United States and Pennsylvania Constitutions by identifying the parameters of contingent fees payable to plaintiff’s attorneys in malpractice actions. They further maintain that the said section violates the constitutional principle of separation of powers by usurping that duty of the Commonwealth judiciary to supervise and regulate both the practice of law and those attorneys’ fees, contingent or otherwise, which may reasonably be charged as an adjunct of such practice.
The Office of the Attorney General of Pennsylvania asserts on behalf of the Administrator that since Article III, Section 1, of the Pennsylvania Constitution vests the General Assembly with authority to promulgate the substantive law of this Commonwealth and to enunciate public policy, Section 604(a) of the Act, which limits attorneys’ fees, is a valid exercise of extant authority and does not constitute interference with the power of the judiciary. The Administrator additionally contends that the fee limitation of Sec
We initially note that the existence of contiugent fee arrangements is acknowledged by those portions of the Code of Professional Responsibility which govern their provisions. See, e.g., Canon 2, Ethical Consideration 2-20, Disciplinary Rule 2-106 (B)(8) and Ethical Consideration 2-17, which collectively impose upon such fee arrangements a requirement of reasonableness, the determination of which depends upon a consideration of “¡all relevant circumstances.” Ethical Consideration 2-18.
The Commonwealth does not here allege that the fee charged by the petitioners in this case, absent the statutory language of Section 604(a), was either unfair, unusual, or unreasonable in this case or oases of this kind, involving a minor plaintiff with serious injuries caused by medical malpractice, nor would we so conclude.
Of primary importance in this case, however, is the question of the interplay of the legislative and judicial
In its original form, the Act provided for initial compulsory arbitration of medical malpractice claims with the right of appeal de novo to the court. It did not abolish common law malpractice actions for money damages. As the Superior Court noted in Gallagher, supra, in reiterating the unconstitutionality of the language divesting the common pleas court of original jurisdiction of such oases, “(i)t follows from the Supreme Court’s holding in Mottos that original jurisdiction in such actions has been retained in the courts of common pleas. ...” 287 Pa. Superior Ct. at 252, 429 A.2d at 1195. The petition filed under Pa. R.C.P, 2039 for approval of the settlement in this matter was thus properly before the court of common pleas. That court reached the correct result in declining to accord to the Administrator, and Section 604(a) of the Act, legislative ascendance over the procedural rules by which the judiciary governs the professional conduct of attorneys handling malpractice actions.
This issue has been examined previously in the Commonwealth. Petition of Splane, 123 Pa. 527, 16 A.
The provision of the Pennsylvania Constitution which records the power of the Supreme Court to prescribe general rules for admission to and regulation of tbe bar, Article V, Section 10(c),
Included in that “.regulated” conduct of attorneys which falls well within the ambit of the constitutionally discrete power of the judiciary is the fee changed by lawyers. As early as 1793, the counts of this Commonwealth were addressing such issues. See, Breckenridge v. McFarland, Addison Reporter 49 (1793). More recently, in Schlesinger v. Teitelbaum, 475 F.2d 137, 141 (3rd Cir. 1973), cert. denied, 414 U.S. 1111 (1973), the Federal Appeals 'Court noted that “in its supervisory power over the members of its bar, a court has jurisdiction of certain activities of such members, including the charges of contingent fees.” (Emphasis added.) We conclude that Section 604(a) infringes upon the exclusive power of the courts of this Commonwealth to govern the activities of attorneys relative to their contingent fee agreements, and is thus unconstitutional.
Medical malpractice litigation has evoked strong emotions on both sides of the controversy in recent years. The debate in this Commonwealth has been replicated in other states as well. Plaintiffs’ attorneys in these cases have been swept into the maelstrom, as it is their fees which have been affected. The Courts of this Commonwealth have the power and authority to examine and approve those fees, as discussed herein, and such regulation cannot be usurped.
Order
And Now, this 11th day of August, 1983, the order of the Administrator in the above-captioned matter is hereby vacated.
Act of October 15, 1975, P.L. 390, §604, as amended, 40 P.S. §1301.604. The Act provides as follows:
Attorney’s fees
(a) When a plaintiff is represented by an attorney in the prosecution of his claim the plaintiff's attorney fees from any award made from the first $100,000 may not exceed 30%, from the second $100,000 attorney fees may not exceed 25%, and attorney fees may not exceéd 20% on the balances of any award.
This action was commenced prior to Mattos v. Thompson, 491 Pa. 385, 421 A.2d 190 (1980), which declared unconstitutional Section 309 of the Act, 40 P.S. §1301.309, the section granting “original exclusive jurisdiction” to arbitration panels established under the Act.
The Regulation provided as follows:
Requirement of Court Approval of Settlements
Approval of a settlement involving fiduciaries, minors or incompetent parties by the Administrator or the arbitration panel shall not relieve the parties of obtaining approval by an appropriate court where such is required by the Pennsylvania Rules of Oivil Procedure, 37 Pa. Code, §171.30, adopted July 1, 1976.
Pursuant to Pa. R.O.P. 2039(a) :
No action to which a minor is a party shall be compromised, settled or discontinued except after 'approval by the court pursuant to a petition presented by the guardian of the minor.
Section 307 of the Act, 40 P.S. §1301.307(to) reads in pertinent part:
The administrator shall have the power to consider and approve offers of settlement for fiduciaries, minors and incompetent parties at any time prior to 'the first meeting of the arbitration panel.
See, 42 Pa. C. S. §1722(a)(1), formerly the Act of June 21, 1937, P.L. 1982, as amended, 17 P.S. §61.
But See, Gallagher v. Caliguiri, 287 Pa. Superior Ct. 250, 429 A.2d 1195 (1981), decided four months after this Court’s decision
We note that the Florida Supreme Court in In the Matter of the Florida Bar, Be Amendment to Oode of Professional Besponsibility (Contiugent Fees), 349 So 630, (1977) rejected a proposed amendment to court rules which would have imposed a maximum contingent fee on plaintiff’s attorneys, finding an infringement upon the constitutional guarantee of freedom of contract. It has been suggested that to,
arbitrarily deny a claimant the right of competent legal representation by fixing unreasonably low remuneration for services rendered by attorneys is a serious matter and may amount to a denial of due process.
Cline v. Warrenberg, 126 P.2d 1030, 1031 (Colo. 1942). See Anno. Constitutionality of Statute Limitmg Amount of Attorney’s fees or Charges, 69 L. Ed. 775 (1925) (“. . . doubtless any statute attempting to do this would be held unconstitutional. .. .”)
Brief of Respondent, p. 8.
That act, since repealed, was the Act of May 7, 1885, as amended. P.L. 16, entitled, “An act to further regulate the admission of attorneys and counsellors at law to practice in the several courts of this commonwealth (sic).”
Article V, Section 10(e) of the Pennsylvania Constitution reads as follows:
(c) The Supreme Count shall have the power to prescribe general rules governing practice, procedure and the conduct of all courts, justices of the peace and all officers serving process or enforcing orders, judgments or decrees of •any court or justice of the peace, including the power to provide for assignment and reassignment of classes of ac*303 tions or classes of appeals among the several courts as the needs of justice shall require, and for admission to the bar and to practice law, and the administration of all courts and supervision of all officers of the judicial branch, if such rules are consistent with this Constitution and neither abridge, enlarge nor modify the substantive rights of any litigant, nor affect the right of the General Assembly to determine the jurisdiction of any court or justice of the peace, nor suspend nor alter any statute of limitation or repose. All laws shall be suspended to the extent that they are inconsistent with' rules prescribed under these provisions.
Because of our disposition of the separation of powers issue, we need not address the due process question raised by petitioners. We note, however, that a controversy similar to that presently before us was recently resolved in New Hampshire, when the Supreme Court of that state voided a limitation on plaintiffs’ attorney fees contained in the New Hampshire medical malpractice act. That court declared that such a provision
*304 unfairly burdens malpractice plaintiffs and, to a lesser eostent, their attorneys, (since) the regulation of attorney's fees solely in the area of medical malpractice inevitably will malee such cases less attractive to the plaintiff bar. . . . This statute also unjustly discriminates by interfering with the freedom of contract between a single class of plaintiffs and their attorneys. It does not regulate contingency fees generally nor does it apply to defense counsel in medical malpractice eases, whose fees consume approximately the same percentage of the insurance premium dollar as do those of the plaintiff bar. (Emphasis added.)
Carson v. Mauer, 120 N.H. 925, 424 A.2d 825, 839 (N.H. 1980). See also, 12 ALR 4th 23.