Hospital Services, Inc. v. Brackey

• Decision Date: 02 August 1979
• Docket Number: No. 9565,9565
• Citation: 283 N.W.2d 174
• Parties: HOSPITAL SERVICES, INC., a corporation, Plaintiff and Appellant, v. Loren E. BRACKEY, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 174

283 N.W.2d 174

HOSPITAL SERVICES, INC., a corporation, Plaintiff and Appellant, v. Loren E. BRACKEY, Defendant and Appellee.

Civ. No. 9565.

Supreme Court of North Dakota.

Aug. 2, 1979.

Pearson & Christensen, Grand Forks, for plaintiff and appellant; argued by Douglas A. Christensen, Grand Forks.

Bjella, Neff, Rathert & Wahl, Williston, for defendant and appellee; argued by James F. Twomey, Senior Law Student.

SAND, Justice.

This case concerns the procedure involved under Chapter 25-09, NDCC, in the collection of accounts for the care and treatment of state hospital patients. The question presented for our review is whether or not an application for relief on grounds of inability to pay, filed by a patient after litigation is started for collection on his state hospital account, serves as a bar to the continuance of the litigation.

The facts, as they relate to the issue before us, are not in dispute. On 28 October 1972, Loren E. Brackey voluntarily committed himself to the state hospital for treatment of alcoholism. He was released from treatment on 16 December 1972. Brackey was again committed to the hospital on 8 February 1973, this time involuntarily. He was released on 24 April 1973. The value for Brackey's care and treatment during the two periods was $3,148.05.

Prior to the commencement of this action, the state hospital requested payment from Brackey for the value of his care and treatment. Brackey neither made a payment on the account nor did he make application for relief on grounds of inability to pay. The state hospital subsequently assigned Brackey's account to Hospital Services, Inc., for collection. Hospital Services served a summons and complaint on 19 May 1975 seeking a judgment against Brackey for the amount of the value of the care and treatment rendered to him. On 16 June 1976, Brackey made application to the state hospital for relief from payment on his account on grounds of inability to pay. The state hospital refused to process the application because the account had been turned over to Hospital Services for collection. Brackey subsequently made a motion to dismiss the complaint for failure to state a claim upon which relief could be granted, based upon the state hospital's refusal to process his application. Briefs were submitted to the district court on both the merits of the case and the motion to dismiss. On 6 July 1978 the district court issued a memorandum opinion granting the motion to dismiss, concluding that until Brackey's application for relief was processed, no action could be maintained for the collection of his account. An order was entered dismissing Hospital Services' claim without prejudice and without costs, and judgment was entered accordingly. Hospital Services appealed.

Section 25-09-02, ¹ NDCC, provides that the supervising department of the state hospital shall recover from a person who has been a patient of that institution for the expenses of care and treatment, if possible.

Section 25-09-07(2), ² NDCC, allows the state hospital to contract with nonprofit hospital collection agencies for the collection of patient accounts.

Section 25-09-05(1), ³ NDCC, allows a patient to make application, based upon an inability to pay, to pay less than the costs or none of the costs incurred by the State for the patient's care and treatment at the state hospital.

In addition, § 25-09-06(1), ⁴ NDCC, provides for a periodic review process of the patient's inability to pay. That also allows a redetermination of ability to pay based upon a periodic review to be made retroactive.

These four statutes relate to the same subject matter in general, or are in pari materia; thus, every effort should be made to give meaningful effect to each without rendering one or the other useless. State v. Mees, 272 N.W.2d 61 (N.D. 1978).

The district court concluded that until a patient's initial application for relief on grounds of inability to pay is processed, including any appeal that may be taken, no action may be maintained on behalf of the State for collection on the patient's account. Hospital Services argued on appeal, however, that a patient's liability for care and treatment provided by the state hospital is not discharged upon a determination of inability to pay. Rather, the obligation is an unconditional liability which the State has a right to reduce to a judgment regardless of ability to pay. Consequently, it contended, an application for relief based upon an inability to pay does not affect the State's right to seek a judgment on a patient's account. We agree.

That the patient's obligation is not discharged but merely suspended is indicated by the statutory provision allowing a reexamination of a patient's ability to pay with the power to make a redetermination retroactive. If the initial determination was intended to provide for a discharge of the obligation, a reexamination would be meaningless as an obligation would no longer exist. Also, that the statute allows the redetermination to be made retroactive further defies a logical conclusion that the prior determination of inability to pay effected a total and complete discharge of liability. In addition, § 25-09-09, NDCC, ⁵ by providing it is not necessary to bill currently any person not having present ability to pay, implies that liability exists despite a determination of inability to pay. We conclude a determination of a patient's inability to pay does not discharge his liability for care and treatment provided by the state hospital.

In filing an action against Brackey, Hospital Services was seeking a judgment on his account. A judgment is a judicial determination on matters submitted to a court for decision which fixes the rights and duties of the parties. Hunt Oil Company v. Kerbaugh, 283 N.W.2d 131 (N.D. 1979); In re Clark, 24 Wash.2d 105 163 P.2d 577, 580 (1945); 49 CJS Judgments, § 1. This is so whether or not the judgment is collected. It should also be noted that a judgment determines any defenses to an action. Frayer v. Crain, 196 Okl. 172, 163 P.2d 966, 968 (1945). An inability to pay, however, is generally not considered a defense to an action for entry of judgment. Nor is an inability to pay, based upon a determination made pursuant to § 25-09-05, NDCC, a defense to an action brought by the state hospital. As we have stated previously, a determination that a patient is unable to pay does not discharge his obligation or liability to the state hospital for the value of the care and treatment he received. Consequently, an inability to pay, with or without a formal determination by the state hospital, cannot serve as a valid defense to any action to ascertain such a liability or obligation. Although a determination, under § 25-09-05(1), NDCC, of an inability to pay may serve as a defense or means of staying an execution, that is not the situation here. Because a determination of inability to pay is not a defense to an action on a state hospital account, the filing of an application for relief on grounds of inability to pay cannot serve as a bar to the present action.

Brackey argued the legislative history of Chapter 25-09, NDCC, indicated a determination by the state hospital of inability to pay was a prerequisite to an action on a patient's account. In support of his argument he quoted the following language from a report of the North Dakota Legislative Research Committee which led to the enactment of Chapter 25-09:

"If the state is to assume the responsibility of paying all costs of operations of these three institutions, it also appears desirable that the Board of Administration assume the responsibility for the billing and collection of the average costs of care from the patients, their estates, or responsible relatives, in such instances Where it has been determined that such persons or their estates are unable to pay these costs without undue hardship." (Emphasis added.) Report of the North Dakota Legislative Research Committee, Finance, pp. 19-20, 37th Legislative Assembly (1961).

We agree a determination of ability to pay is a prerequisite to the execution of a judgment or the collection of an account for care and treatment...