Fineberg v. Harney & Moore

Citations: 207 Cal. App. 3d 1049; 255 Cal. Rptr. 299; 1989 Cal. App. LEXIS 87Docket: B032887

Court: California Court of Appeal; February 7, 1989; California; State Appellate Court

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In the case of Jay Mark Fineberg v. Harney Moore et al., the Court of Appeals of California addressed whether a client can waive the fee limitations set by Business and Professions Code section 6146 in contingent fee agreements. Plaintiff Jay Mark Fineberg engaged defendants Harney and his firm for representation in a medical malpractice lawsuit, entering a fee agreement that acknowledged the statutory limits on attorney fees. Despite the statutory provisions, the agreement included a waiver of these limitations, allowing Harney to charge a 40% fee on the recovery.

The case settled with Fineberg receiving $275,000 and $25,000 from two providers. Harney claimed 40% of the total recovery after costs, leading Fineberg to request a refund of $26,069.20, arguing the fee exceeded statutory limits. Harney refused, prompting Fineberg to file suit. During the trial, Fineberg acknowledged he waived the statutory protection to secure Harney's representation, having been informed that the firm would not take his case otherwise. Although pleased with the outcome, Fineberg claimed he was misled regarding the fee structure and Harney's confidence in the potential unconstitutionality of section 6146. The court ultimately determined that the protections of section 6146 serve a significant public policy interest and cannot be waived, resulting in a reversal of the judgment in favor of the defendants.

The trial court recognized the reputation and expertise of Harney and its predecessor firm, which documented monthly overhead expenses of $300,000 and typical litigation costs of around $20,000 for cases like the plaintiff's. Harney asserted that a plaintiff could not secure equivalent legal representation for fees limited by section 6146. The firm estimated that a non-specialized personal injury attorney could only achieve a maximum settlement of $100,000 in the plaintiff's case, arguing that the fee restrictions imposed by section 6146 made it financially unviable to effectively practice in medical malpractice law. The court concluded that (1) there was no public policy concern regarding the contingent fee restrictions in Business and Professions Code section 6146, and (2) the plaintiff waived the protections of this statute, resulting in a judgment favoring the defendants.

The excerpt references the Medical Injury Compensation Reform Act of 1975 (MICRA), enacted in response to escalating medical malpractice insurance premiums. The Governor's proclamation called for legislative measures to address the crisis affecting the relationship between the public, medical professionals, and the insurance industry, proposing limitations on contingency fees, elimination of double payments, and adequate compensation for medical expenses and lost earnings. The legislative intent was to provide a reasonable remedy while considering public health and safety concerns, as noted in the Hathaway v. Baldwin Park Community Hospital case.

The Supreme Court has upheld several provisions of the Medical Injury Compensation Reform Act (MICRA), including: (1) the requirement for periodic payments of future damages exceeding $50,000, (2) the prohibition on collateral sources seeking reimbursement from medical malpractice defendants or their insurers, (3) a cap on noneconomic damages at $250,000, and (4) the allowance for defendants to present evidence of benefits received from collateral sources. Additionally, Business and Professions Code section 6146, which limits attorney fees in medical malpractice cases on a contingency basis, has been deemed rationally related to legitimate legislative objectives, thus not violating due process or equal protection rights. The court emphasized that the intent behind MICRA was to protect California's healthcare system by reducing medical malpractice insurance costs. 

In related cases, such as Hathaway and Roa, courts ruled that section 6146 restricts trial courts from awarding attorneys' fees beyond specified limits and that this limitation does not infringe on the right to counsel, merely regulating fee amounts. Plaintiffs in Roa argued the statutory fee limits were unconstitutionally low, claiming it would hinder their ability to secure legal representation; however, the court found no supporting evidence for this claim and noted that the fee limits were not unusually low compared to other statutory schemes. The court rejected the notion that the fee limitations would prevent injured persons from finding adequate legal counsel, despite assertions from Harney and his expert that such limitations would deter lawyers from representing malpractice plaintiffs.

The assumptions that medical malpractice lawyers are willing to violate their duties to clients and that the statutory provision allows for such violations are rejected. The claim that the Legislature intended to permit waivers of Business and Profession Code section 6146 is also dismissed, as the legislative history does not support this notion. The June 12, 1975 amendment regarding contingency fee agreements was later deleted and did not make prior agreements voidable; rather, it eliminated them entirely, requiring court approval for validity. Additionally, Business and Profession Code section 6147 outlines mandatory provisions for contingency fee agreements and specifies that non-compliance renders such agreements voidable at the plaintiff's option. The intent of the Legislature was to limit contingency fees to those outlined in section 6146, reinforcing that any agreement exceeding these limits is not permissible. The overarching purpose of the Medical Injury Compensation Reform Act (MICRA) is to reduce medical malpractice insurance costs for better healthcare access, which cannot be undermined by private agreements, per Civil Code section 3513. The judgment is reversed, with respondents responsible for appeal costs. A petition for rehearing was denied, and a subsequent review by the Supreme Court was also denied. The document notes that section 6146 has since been amended to allow for higher fees.