In Vande Corput v. Pekin Insurance Co. (2017AP357), the Court of Appeals District III ordered recalculation of attorney fees and maintained that circuit courts can mandate settlement agreements in third-party liability worker’s compensation disputes.

After Jody Vande Corput was injured in a car accident during his employment, Continental Western Insurance Co. paid him worker’s compensation benefits. Vande Corput and his wife filed a third-party liability lawsuit against the other driver’s insurer Pekin Insurance Co. Continental was added as an involuntary plaintiff. The Vande Corputs and Continental settled with Pekin, leaving the circuit court to apportion settlement proceeds. The Vande Corputs appealed the circuit court’s distribution.

The appeals court agreed with the Vande Corputs and remanded the case to the circuit court to properly follow the three-step distribution process laid out by the Wisconsin Supreme Court in Anderson v. MSI Preferred Insurance Co.

The Wisconsin Association for Justice (WAJ) filed an amicus brief in this case arguing that Continental’s lawyers should not recover any fees because they did not have a written fee arrangement with Continental. However, the court disagreed with WAJ because the Supreme Court Rules WAJ cited apply in disciplinary, not civil proceedings. Furthermore, Continental and its lawyers still maintained a contract for services, and the third-party liability worker’s compensation statute (Wis. Stat. § 102.29(1)(c)) expresses clear intent that both the employee’s and the worker’s compensation insurer’s attorneys should be entitled to attorney fees in a joint third-party claim.

The appeals court also rejected the Vande Corputs’ request to mandate the circuit court to use the quantum meruit theory to determine the allocation of attorney fees to Continental’s lawyers. This theory multiplies the number of hours worked on the case by a reasonable hourly rate to determine the appropriate fees.

The appeals court further held that the circuit court could compel the Vande Corputs to accept the settlement agreement, even though it contained the unfulfilled contingency of the allocation of settlement payments. The court argued that precedent shows circuit courts can compel settlements in third-party liability worker’s compensation actions despite objections from employees or their insurers.