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North Carolina Baptist Hospitals Inc. v. Mitchell12/8/1988
The facts are essentially undisputed in this case. The record reveals that Henry L. Clark was treated at North Carolina Baptist Hospitals, Inc. (hereinafter "the hospital") for injuries he sustained in an automobile accident. Total charges for the medical services he received from the hospital amounted to $27,579.69. Clark executed an assignment to the hospital of all amounts he
had "received or shall receive as a result of" his injuries, up to the amount necessary to satisfy his indebtedness to the hospital.
Clark retained the defendant, Beverly R. Mitchell, Esq., as counsel to represent him in his personal injury claim against the driver of the other automobile involved in the accident which caused his injury. The defendant Mitchell received copies of Clark's assignment in favor of the hospital. Thereafter, she settled Clark's claim for $25,000.00, the limit of the other driver's liability insurance policy.
Pursuant to N.C.G.S. § 44-50, Mitchell caused the funds she had received to be distributed as follows: $6,250.00 to herself for legal fees, $5,812.50 to the hospital for medical bills, $3,562.50 for other medical bills, $45.00 to David Martin for investigative work, and the balance of $9,330.00 to Clark. The hospital later obtained a default judgment against Clark for the entire amount of its medical charges plus costs and interest. The hospital received the $5,812.50 paid to it from the funds the defendant had received on behalf of her client Clark, but the balance of the judgment against Clark remained unsatisfied. Consequently, the plaintiff hospital brought this action against the defendant Mitchell seeking damages for her failure to honor the assignment executed by Clark.
Upon timely motion by the defendant pursuant to N.C.G.S. § 1A-1, Rule 41(b), the trial court entered judgment dismissing the plaintiff's action. The plaintiff appealed to the Court of Appeals which affirmed the judgment of the trial court. We allowed discretionary review by order entered on 6 April 1988.
The only issue before us is whether an attorney who follows the disbursement provisions of N.C.G.S. § 44-50 when disbursing a client's funds from a personal injury settlement can be held liable for the client's unpaid debt to a medical service provider whom the attorney knew had obtained the client's assignment of all such funds up to the full amount of the client's debt for medical services. Although the dissenters discuss other interesting questions, we consider that issue only and conclude that an attorney cannot be held liable for following the statute in such situations. Accordingly, we affirm the decision of the Court of Appeals.
Noting that a purported assignment of a claim for relief for personal injury is invalid as contrary to public policy, the Court of Appeals focused on the question of whether there is a difference between the assignment of such a claim and the assignment of proceeds resulting from the claim. That court concluded that any distinction drawn between the assignment of a claim and the assignment of the proceeds of the claim is a mere fiction; therefore, such an assignment of proceeds is a violation of public policy and invalid. After concluding that the assignment was invalid, the Court of Appeals went on to hold that the defendant had complied with the provisions of N.C.G.S. § 44-50 in disbursing the funds she received in settlement of her client's personal injury claim and could not be held liable to the plaintiff hospital. We affirm the decision of the Court of Appeals, but for different reasons.
The plaintiff contends that th
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