1997 -NMSC- 26, Wright v. First Nat. Bank in Albuquerque

• Citation: 941 P.2d 498,123 N.M. 417,1997 NMSC 26
• Decision Date: 19 May 1997
• Docket Number: No. 23656,23656
• Parties: , 1997 -NMSC- 26 Crusita M. WRIGHT, Plaintiff-Petitioner, v. FIRST NATIONAL BANK IN ALBUQUERQUE, Defendant-Respondent, and Lovelace Healthcare System and the United States Department of the Air Force--CHAMPUS Program, Lienholders-Respondents.
• Court: Supreme Court of New Mexico

Page 498

941 P.2d 498

123 N.M. 417, 1997 -NMSC- 26

Crusita M. WRIGHT, Plaintiff-Petitioner, v. FIRST NATIONAL BANK IN ALBUQUERQUE, Defendant-Respondent, and Lovelace Healthcare System and the United States Department

of the Air Force--CHAMPUS Program, Lienholders-Respondents.

No. 23656.

Supreme Court of New Mexico.

May 19, 1997.

John R. Polk, Albuquerque, for Plaintiff-Petitioner.

Modrall, Sperling, Roehl, Harris & Sisk, Jay Frontinio, Max J. Madrid, Law Office of Manny M. Aragon, Calvin Wells, Albuquerque, Robert Colvin, White Sands Missile Range, for Respondents.

OPINION

FRANCHINI, Chief Justice.

¶1 Crusita Wright sued the First National Bank of Albuquerque, presently known as First Security Bank, seeking damages for personal injury suffered when she slipped on ice, fell and was injured as she entered the Bank. Her recovery was insufficient to pay attorneys' fees, costs, and taxes, and to reimburse her insurer and Lovelace Healthcare System ("the Hospital") where she received treatment. On Wright's motion, the trial court apportioned her recovery, first deducting a fixed amount from each of the claims made by the insurer and the Hospital to cover their share of attorneys' fees, and then apportioning the remaining amount to the claimants. The apportionment resulted in a net loss to Wright. On appeal the Court of Appeals held: (1) that the insurer, the United States Military Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), was not entitled to any of the monies remaining in the common-fund obtained in plaintiff's judgment; and (2) that the Hospital should receive all the funds remaining in the fund pursuant to its hospital lien claim. Wright appeals to this Court. Because CHAMPUS is not a party to this appeal we do not reach point one; as to point two we reverse.

¶2 Facts and Proceedings. On December 7, 1992, Wright slipped on ice and fell on the walkway near the entrance to the First National Bank of Albuquerque. Following a bench trial, Wright was awarded $30,450.00. The trial court reduced the amount by fifty percent due to Wright's negligence. Wright was treated by the Hospital, which charged $5,705.16 for her care. CHAMPUS, under a contract with the Hospital, reimbursed the Hospital in the amount of $2,475.76.

¶3 CHAMPUS provided a detailed statement to Wright entitled "CHAMPUS Explanation of Benefits" ("the Explanation") listing the amounts billed, the amounts not covered, and the amounts allowed under her insurance coverage. The total allowable amount was $3,270.76. Because Wright's arrangement with CHAMPUS required her to pay a cost-share of $795.00, CHAMPUS paid the Hospital $2,475.76--the allowed amount of $3,270.76 minus the cost-share amount of $795.00.

¶4 In the bottom quarter of the Explanation, in a separate box, printed in upper-case letters appeared the following remarks:

AMT ALLOWED IS BASED ON AN AGREEMENT BETWEEN THE GOVT & YOUR PROVIDER UNDER THE HEALTH CARE FINDER PGM, AND IS PAYMENT IN FULL, SUBJECT TO THE STANDARD COST-SHARES & DEDS. PLEASE NOTE: AMOUNT ALLOWED WAS CALCULATED USING DIAGNOSIS RELATED GROUPING (DRG) NUMBER 219[.] PAYMENT WAS MADE UNDER THE CHAMPUS DRG-BASED PAYMENT SYSTEM. BENEFICIARY LIABILITY IS LIMITED TO THE COST-SHARE AND CERTAIN NON-COVERED ITEMS, SUCH AS TELEPHONE CHARGES.

(emphasis added). At the Bottom of the Explanation was printed "payments are subject to the provision that the beneficiary cost-share is collected by the provider. The provider's failure to collect the cost-share can [be] considered a false claim and/or may result in reduction of payment."

¶5 Following its reimbursement by CHAMPUS, the Hospital filed a notice of hospital lien pursuant to the Hospital Lien Act ("the Act") in the amount of $2,561.36, and sometime later filed an additional lien in the amount of $242.43. CHAMPUS asserted a claim against the Bank under the Federal Medical Care Recovery Act, 42 U.S.C. § 2651, for inpatient hospital care for $2,475.76, representing the CHAMPUS payment.

¶6 Wright motioned the court to reduce the amount of liens for medical treatment by a pro-rata share of the attorneys' fees, taxes, and costs, and to equitably apportion the remaining proceeds between Wright, the Hospital, and CHAMPUS. The trial court reduced the Hospital's claim and the CHAMPUS claim each by $1,000.00, representing the reasonable cost of attorneys' fees which the court determined would have been incurred in the usual collection process.

¶7 The Court of Appeals held that CHAMPUS was not entitled to any part of the common-fund since, under 42 U.S.C. § 2651, CHAMPUS had a cause of action against the Bank only, and could not proceed against Wright. The Court determined that the $1,505.85 remaining in the common-fund should be paid to the Hospital pursuant to its hospital lien claim. Although the Court agreed with Plaintiff, that she was "entitled to an equitable offset out of such fund for her attorney's fees and costs expended in obtaining such judgment," it determined that "this offset may effectively be matched by a like sum awarded to Lovelace for its attorney's fees and costs in seeking to enforce its lien." Lastly, the Court held that neither the Hospital nor CHAMPUS were precluded from seeking recovery for "additional amounts which may be owing to them."

¶8 Discussion. Wright first argues that the Hospital was not entitled to file a lien under the Act, since her obligation to the Hospital was satisfied by the payment made by CHAMPUS. We agree. The Act is intended to provide a mechanism for hospitals to recover when a patient has not paid a hospital bill. Under the Act

[e]very hospital located within the state that furnishes emergency, medical or other service to any patient injured by reason of an accident ... is entitled to assert a lien upon that part of a judgment, settlement or compromise going, or belonging to such patient, less the amount paid for attorneys' fees, court costs and other expenses necessary thereto in obtaining the judgment, settlement or compromise....

NMSA 1978, § 48-8-1(A) (Repl.Pamp.1995). Under the Act, the lien would attach to any judgment, settlement, or compromise that Wright received from or reached with the Bank.

¶9 In this case, the Hospital was not...