Hobson v. Mid-Century Insurance Company
In Hobson v. Mid-Century Insurance Company, 199 Ariz. 525, 19 P.3d 1241 (App. 2001), the court discussed the common fund doctrine in the context of workers' compensation benefits.
It stated that the "common fund doctrine is a general rule of equity that 'a person or persons who employ attorneys for the preservation of a common fund may be entitled to have their attorney's fees paid out of that fund.'" Id. at 531, P 15, 19 P.3d at 1247.
In Hobson, the claimant sustained a compensable industrial injury and received workers' compensation benefits from his employer's insurance carrier.
The claimant also pursued a third-party action, which eventually was settled with the workers' compensation carrier's approval.
Pursuant to A.R.S. 23-1023(C), the workers' compensation carrier claimed a lien for the benefits it had paid against the claimant's settlement proceeds, after deduction of the claimant's attorney's fees and costs.
The claimant argued that under the common fund doctrine, the workers' compensation carrier should be required to pay a portion of his attorney's fees from its lien proceeds.
The court disagreed. It held that the language in A.R.S. 23-1023(C) that the "lien shall not be subject to a collection fee" precluded any reduction of the lien amount. Id. at 530-31, P 15, 19 P.3d at 1247.