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Despite Attorney Fee Award Six Times Greater than Contract Claim, Superior Court Affirms

The Superior Court of Pennsylvania recently affirmed an award of attorney’s fees in the amount of $34,850, holding that the trial court did not abuse its discretion in awarding attorney’s fees under Section 1798 of the Motor Vehicle Financial Responsibility Law (“MVFRL”) after finding that the insurer unreasonably refused to pay first-party medical benefits in the amount of $5,994.65.  The Superior Court further found that attorney’s fees for time spent preparing the fee petition were properly awarded.  See Jackson v. USAA a/k/a, d/b/a and/or t/a, Garrison Property and Cas. Ins. Co., 2020 WL 2096025 (Pa.Super.Ct. 2020).

In Jackson, Plaintiff, a pedestrian who neither owned a vehicle nor lived with anyone who owned a vehicle, sustained injuries when she was struck by a motor vehicle.  Plaintiff filed a complaint against the insurer of the driver for first party medical bills (“PIP claim”).  She also sought interest, attorney’s fees, and treble damages.  By the date of the trial, the parties stipulated the PIP claim was fully paid in the amount of $5,994.65.  The case proceeded to a bench trial to determine whether Plaintiff’s attorney was entitled to attorney’s fees.  The trial court held that the insurer unreasonably refused to pay Plaintiff’s PIP claim and, pursuant to Section 1798 of the MVFRL, Plaintiff’s attorney was entitled to an award of attorney’s fees for time expended in securing payment of Plaintiff’s PIP claim.  Plaintiff’s attorney submitted a fee petition in the amount of $100,648.86, and the trial court ultimately awarded Plaintiff’s attorney $34,850 in attorney’s fees—an award six times greater than the contract claim.

The insurer appealed the trial court’s decision, arguing 1) attorney’s fees were not properly awarded under Section 1798 of the MVFRL because the PIP claim was pursued on a contingency fee basis and the statute precludes an award of attorney’s fees in this context, and 2) attorney’s fees for the time spent preparing the fee petition were improper because Plaintiff had no material interest in the fee litigation.

With respect to the insurer’s first argument, the Superior Court looked to the plain language of Section 1798(a) and (b).  The Superior Court acknowledged that subsection (a) precludes an award of attorney’s fees in connection with representation in a PIP claim on a contingent fee basis.  But the Superior Court noted that the trial court found that there was no contingency agreement between Plaintiff and her attorney.  The Superior Court then turned to subsection (b), which expressly provides for the imposition of attorney’s fees when an insurer has acted unreasonably in refusing to pay the benefits enumerated in subsection (a).  Because the trial court found that the insurer unreasonably refused to pay Plaintiff’s PIP claim, an enumerated benefit under subsection (a), the Superior Court held that Plaintiff was entitled to the payment of her attorney’s fees under subsection (b).

In response to the insurer’s argument that the trial court abused its discretion by including attorney’s fees incurred for the preparation of the fee petition, the Superior Court noted that the relevant inquiry was whether the award of fees “would, in the circumstances of the particular case under consideration, promote the purposes of the specific statute involved.”  The Superior Court ultimately decided that Section 1798(b), by its language, seeks to deter the unreasonably denial of claims by the insurer, so an award of fees for preparing a fee petition is proper because it promotes the specific purposes of the statute involved.