Dorr v. Sacred Heart Hospital

• Decision Date: 25 May 1999
• Docket Number: No. 98-1772.,98-1772.
• Citation: 228 Wis.2d 425,597 N.W.2d 462
• Parties: Thomas F. DORR and Beverly A. Dorr, Plaintiffs-Appellants-Cross-Respondents, v. SACRED HEART HOSPITAL, Defendant-Respondent-Cross-Appellant.
• Court: Wisconsin Court of Appeals

228 Wis.2d 425

597 N.W.2d 462

Thomas F. DORR and Beverly A. Dorr, Plaintiffs-Appellants-Cross-Respondents, v. SACRED HEART HOSPITAL, Defendant-Respondent-Cross-Appellant.¹

No. 98-1772.

Court of Appeals of Wisconsin.

Oral argument March 30, 1999.

Decided May 25, 1999.

On behalf of the plaintiffs-appellants-cross-respondents, there were briefs and oral argument by John P. Richie of Misfeldt, Stark, Richie & Wickstrom, Eau Claire.

On behalf of the defendant-respondent-cross appellant, the cause was submitted on the briefs of Ralph v. Topinka and Elizabeth A. Hartman of Quarles & Brady LLP, Madison, and George W. Hallstein of Wilcox, Wilcox, Enright, Hallstein, McMahon & Adler LLC, Eau Claire. There was oral argument by Ralph v. Topinka.

A nonparty brief was filed by Timothy A. Hartin of Madison for Wisconsin Health and Hospital Ass'n, Inc.

Before Cane, C.J., Myse, P.J., and Hoover, J.

MYSE, P.J.

Thomas and Beverly Dorr appeal the portion of the trial court's summary judgment dismissing their claims against Sacred Heart Hospital for: (1) false representation contrary to § 100.18, STATS.; (2) unfair debt collection practice contrary to § 427.104, STATS.; (3) breach of contract; (4) racketeering contrary to §§ 946.82(4) and 946.83, STATS.; and (5) punitive damages. Sacred Heart cross-appeals the portion of the summary judgment granted in the Dorrs' favor on their claims for conversion and tortious interference with their Group Health HMO contract. The trial court awarded the Dorrs $27,051.65 on these claims.

This case arose as a result of the hospital filing a hospital lien pursuant to § 779.80, STATS., on liability insurance settlement proceeds due Beverly, who sustained injuries in an automobile accident. The Dorrs had medical insurance coverage through an HMO that had contracted with the hospital to render medical services to its subscribers at an agreed upon rate; nevertheless, the hospital pursued payment by filing a lien on the insurance proceeds due the Dorrs. The Dorrs contend that Sacred Heart's filing of the lien violated the Dorrs' right to be held harmless against the hospital's collection efforts under the HMO enrollee immunity provision of § 609.91, STATS., and under the "Hold Harmless" provision of the Provider Agreement between Sacred Heart and Group Health Cooperative of Eau Claire, Inc. (Group Health), the Dorrs' HMO. The Dorrs' causes of action flow from their allegation that Sacred Heart improperly filed the hospital lien.

In its cross-appeal, Sacred Heart contends that the trial court erred when it granted judgment in the Dorrs' favor on the conversion and tortious interference claims because § 779.80, STATS., creates a right to attach the insurance proceeds irrespective of the Dorrs' immunity from recourse under § 609.91, STATS., and the Provider Agreement's "Hold Harmless" provision.

We conclude that the statutory HMO enrollee immunity provisions of § 609.91, STATS., and the contractual HMO enrollee hold harmless provision of the Provider Agreement between the hospital and Group Health operate to exclude a debt owed the hospital by the Dorrs. Because a lien requires an underlying debt, Sacred Heart was without legal authority to utilize § 779.80, STATS., to seek payment for the medical services rendered to Beverly Dorr. For the reasons stated below, we further conclude that the trial court erred when it dismissed the Dorrs' claims for: false representation, unfair debt collection practice, breach of contract, racketeering, and punitive damages. Accordingly, we reverse the court's judgment of dismissal and remand those claims for trial. Finally, we conclude the trial court properly granted judgment in the Dorrs' favor on the conversion and tortious interference with a contract claims and therefore affirm the trial court's judgment on those claims.

BACKGROUND

Beverly Dorr, wife of Thomas Dorr, was injured in an auto accident caused by Deborah Goldsmith, the driver of a car that struck the Dorrs' car. Beverly sustained serious injuries and was taken to Sacred Heart Hospital where she was admitted as an emergency patient for a surgical stay for a splenectomy. Upon admission, the Dorrs gave the hospital their health insurance information, indicating that they had full coverage with Group Health. This information was entered into the hospital's financial data sheets. The Dorrs' Group Health insurance policy provided coverage for all of Beverly's surgical and medical expenses. Thus, all of the expenses for the surgical stay were covered under the Dorrs' health insurance with Group Health. Shortly after her discharge, Beverly developed pneumonia and was readmitted to Sacred Heart for what was classified as a medical stay. Again, all of the expenses for the medical stay were covered under the Group Health policy. The total cost for both hospitalizations was $27,051.65, but because of the agreed rate charged to Group Health subscribers, the hospital could only bill Group Health $17,618.

Goldsmith, the driver of the other car, was insured by Wisconsin American Mutual Insurance Company (WAMIC) for auto liability with a $50,000 per person liability limit. The Dorrs eventually settled their personal injury claims against Goldsmith and WAMIC for the full liability limit. The Dorrs signed a release relinquishing further claims against Goldsmith and WAMI C Sacred Heart Hospital filed a hospital lien against Beverly's personal injury claim for the sum of $27,051.65 pursuant to its practice and interpretation of § 779.80, STATS., which authorizes hospitals to file liens for services rendered to any person sustaining injuries as the result of a tortfeasor's negligence.² The lien names Thomas Dorr and Deborah Goldsmith, along with their respective insurers, as persons alleged to be responsible parties. The lien satisfaction identifies Beverly Dorr as the party against whom the lien was filed.

At the time of Beverly's hospitalization, Sacred Heart Hospital had negotiated a Provider Agreement with Group Health whereby Group Health subscribers would be admitted to Sacred Heart to receive the hospitalization services Group Health offered to subscribers in its insuring certificate. In exchange, Sacred Heart agreed that, rather than billing on an itemized cost basis, Group Health would pay and Sacred Heart would accept payment at a reduced "per diem" rate. Under the per diem arrangement, Group Health paid a flat fee of $674 per day for a hospitalization due to medical illness and $1,075 per day for a hospitalization due to a surgical stay. Sacred Heart agreed to accept the per diem rates as full payment for the medical services provided. These per diem rates generally allowed the hospital to recover its costs plus generate a profit.

The Provider Agreement also contains a "Hold Harmless" provision, whereby Sacred Heart would not bill or hold Group Health subscribers liable for any hospital expenses covered by the subscriber's Group Health insurance contract. Under the hold harmless provision, Sacred Heart also agreed not to exercise its right under § 609.92, STATS., to elect to be exempt from the HMO enrollee immunity protections § 609.91, STATS., accords.

Group Health's insurance certificate to its members indicates that patients would be provided "full benefit" for hospitalizations at no cost or expense other than payment of premiums. Group Health can only make payment to Sacred Heart after Sacred Heart submits a proper bill.

Sacred Heart did not bill Group Health for Beverly's hospital expenses; instead, it filed a lien pursuant to § 779.80, STATS., against the Dorrs' liability insurance settlement proceeds. This action arises out of that hospital lien, which claims an amount due of $27,051.65, a combined total for the two hospitalizations. When they learned of the lien, the Dorrs and Group Health notified Sacred Heart on several occasions that they believed the Dorrs were immune from collection under § 609.91, STATS., and requested the lien be dropped. Sacred Heart refused to drop the lien. Sacred Heart wrote to WAMIC requesting that $27,051.65 of the Dorr's insurance settlement be sent directly to Sacred Heart to satisfy the hospital lien. When WAMIC paid its liability limits in settlement of the Dorrs' claims, it sent $27,051.65 directly to Sacred Heart and the remaining $22,948.35 to the Dorrs.

STANDARD OF REVIEW

[1,2]

We review a trial court's decision on summary judgment de novo, as a question of law. M&I First Nat'l Bank v. Episcopal Homes Mgmt., 195 Wis. 2d 485, 496-97, 536 N.W.2d 175, 182 (Ct. App. 1995). In making this determination, we apply the same methodology as the trial court. Id. at 496, 536 N.W.2d at 182. Because that methodology has been set forth numerous times, we do not repeat it here except to emphasize that if a genuine dispute of material fact exists or if the evidence presented is subject to conflicting inferences or factual interpretations, summary judgment must be denied. Grams v. Boss, 97 Wis. 2d 332, 338, 294 N.W.2d 473, 476 (1980). Inferences drawn from facts contained in the supporting materials are viewed in the light most favorable to the nonmoving party. Kraemer Bros. v. United States Fire Inc. Co., 89 Wis. 2d 555, 567, 278 N.W.2d 857, 862 (1979). Furthermore, questions of law are appropriate for summary judgment. Jones v. Sears Roebuck & Co., 80 Wis. 2d 321, 327, 259 N.W.2d 70, 72 (1977).

ANALYSIS

Although each of the Dorrs' claims against the hospital must be examined, the parties agree that resolution of these contentions rests upon a preliminary determination. Can a hospital file a § 779.80, STATS., lien, claiming the full itemized cost of the medical services, against liability insurance settlement proceeds due an HMO insured patient? We must determine whether the immunity provision of § 609.91, STATS., or the hold harmless provision of the Provider Agreement affect the hospital's ability to file a lien under § 779.80. We conclude that when §...