BMC Appellate Division holds that attorney not authorized to bring PIP subrogation claim on behalf of insurer is not entitled to attorney's fees

In Ulysse v. Safety Ins. Co., 2009 WL 5154970, Ulysse, insured by Safety, was in a car accident with Derek Roy, insured by NE insurance. Ulysse was represented by an attorney in connection with the accident.

Safety paid Ulysse PIP benefits for medical treatment amounting to $3,070.74. Ulysse, with the assistance of his attorney, settled his third-party claim against Roy and his insurer for $13,000. Ulysse executed a release which included a provision that the settlement "includes consideration for any monies which have been paid for or which may be due in the future from any applicable PIP auto insurer." Ulysse's attorney agreed to be responsible to repay Safety any moneys owed in connection with PIP payments made by Safety to Ulysse. (See this post for an explanation of what that agreement refers to.)

Ulysse, through his attorney, sent a letter to Safety proposing to pay Safety $1,954.63, which was the amount Safety paid Ulysse in PIP benefits reduced by attorney's fees and costs. Safety had not authorized Ulysse or Ulysse's attorney to settle the PIP reimbursement claim on its behalf. It disregarded the proposal and received the full PIP reimbursement of $3,070.74 from NE Insurance.

At issue in the case was whether Ulyesse's attorney was entitled to attorney's fees and costs for the collection of the PIP subrogation amount.

The Appellate Division of the Boston Municipal Court held that he was not entitled to attorney's fees, because he was not authorized by Safety to settle its PIP reimbursement claim.

There are a number of things about this case that seem odd to me, including: 1) If NE Insurance thought it was settling the PIP reimbursement claim when it settled the third-party claim, why did it later pay the PIP reimbursement amount directly to Safety? 2) Assuming that, as is usual in such cases, Ulysse's attorney was representing Ulysse pursuant to a contingency fee agreement, he would have received one third of the total settlement amount. Once Safety rejected his proposal to send it PIP reimbursement less attorney's fees, the part of the settlement that represented the PIP reimbursement claim should have gone to Ulysse less the usual one third contingency fee. Having been paid, why did he also seek this amount from Safety?

It is also worth noting that Ulysse appears to have been given a double recovery. He received PIP payments from Safety, and also received PIP reimbursement from NE Insurance. Settlements are, of course, an art not a science, and absent any clear documentation that part of the settlement was for a PIP reimbursement claim a double recovery theory would not go very far.