Kratz v. Kratz, 77602

• Decision Date: 20 June 1995
• Docket Number: No. 77602,77602
• Citation: 905 P.2d 753,1995 OK 63
• Parties: Dollie KRATZ and Sheila Kratz, Appellants, v. James KRATZ and Prudential General Insurance Company, Appellees.
• Court: Oklahoma Supreme Court

Page 753

905 P.2d 753

1995 OK 63

Dollie KRATZ and Sheila Kratz, Appellants, v. James KRATZ and Prudential General Insurance Company, Appellees.

No. 77602.

Supreme Court of Oklahoma.

June 20, 1995.

As Corrected Nov. 6, 1995.

Rehearing Denied Nov. 16, 1995.

Certiorari to the Court of Appeals Divison 2 an appeal from the District Court of Washington County; John C. Lanning, Trial Judge.

Rick W. Bisher, Roger B. Hale, Oklahoma City, for appellants.

Barry A. Heaver, Tulsa, for appellees.

SIMMS, Justice.

Title 42 O.S.1991 § 43 provides that a hospital which furnishes medical care to a person injured in an accident shall have a lien for the amount of its charges on the proceeds of the patient's recovery from a claim asserted "against another for damages" suffered. ¹ The question presented in this case is whether the lien can be enforced against uninsured motorist proceeds paid by the patient's own insurer. We find it cannot.

Dollie Kratz was seriously injured while she was a passenger in an automobile driven by her husband, James. She received care and treatment from Appellee Jane Phillips Memorial Medical Center and incurred expenses of $17,775 for that treatment. The hospital filed its lien for that amount and gave the required notice pursuant to 42 O.S.1991, §§ 43, 44.

Plaintiff filed a claim with her own insurer, Prudential General, but the parties were unable to reach a settlement. Plaintiff then filed suit against Prudential and James Kratz seeking to recover under her liability coverage, but she was prohibited from doing so because of a household exclusion clause. Plaintiff's recovery was limited to the uninsured motorist portion of the policy and she and Prudential settled for $30,000, the policy limits of the uninsured motorist coverage.

The trial court enforced the hospital's lien against the settlement proceeds, rejecting appellant's arguments that the statute was intended to apply only to damages recovered from a tortfeasor or his insurer and did not extend to her uninsured motorist payment which was a benefit of her private contractual arrangement with her insurer obtained in an action which sounds in contract, not tort.

The Court of Appeals, over a vigorous and well-reasoned dissent, affirmed the ruling of the trial court in favor of the hospital. The court found the statutory language was clear and unambiguous and would apply to funds received by an injured party from a source other than the tortfeasor, even her own insurer. We agree with appellant and the view of the dissenting opinion that the statute is not clear regarding who is meant to be included as "another". It is uncertain and ambiguous as to whether uninsured motorist benefits received from a party's own insurer are "damages" recovered from a "claim against another".

Appellee hospital concedes that appellant's recovery was a benefit of her contract, but it contends that there is no basis in § 43 to infer that appellant's uninsured motorist proceeds "Any person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages."

should be treated any differently than if that same amount had been recovered under the liability portion of her policy which was appellant's initial claim. Hospital's argument that the statute is not ambiguous and that "damages" explicitly includes these contractual benefits in "any recovery or sum had or collected to be collected by [a] patient" only underscores the ambiguity on this point. Title 23 O.S.1991 § 3 sets out the right to damages and the definition of damages as follows:

Benefit in an insurance context is defined in Black's Law Dictionary, Fifth Edition, as "[f]inancial assistance received in time of sickness, disability, unemployment, etc., either from insurance or public programs ..."

We have recognized that uninsured motorist coverage is a carrier's direct promise to its insured to pay the insured for a loss, rather than a promise to its insured to pay a third party; it is "first-party coverage" like collision insurance, not "third-party coverage" like public liability insurance. The recovery of the insured is based on the terms of the policy and the action is one in contract. Uptegraft v. Home Ins. Co., 662 P.2d 681 (Okl.1983).

The parties believe this is a case of first impression in Oklahoma. They have called our attention to several decisions from other jurisdictions and rely on them as supportive of their respective positions. We do not find them so, however, because the statutory language involved in those cases is significantly different from the language before us in § 43.

In Storey v. University of New Mexico Hospital, 105 N.M. 205, 730 P.2d 1187 (1986), the court found that a hospital lien could be enforced against the proceeds of an uninsured motorist policy but the language of that statute specifically included "[a]ny person, firm or corporation, including an insurance carrier, making any payment to a patient ..." Likewise in Dade County v. Pavon, 266 So.2d 94 (Fla.App.D3, 1972), the court held that a hospital would be entitled to a lien on uninsured motorist proceeds under a statute which provided a lien "upon any and all causes of action, suits, claims ..." In Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325 (Tex.1984), a statute which expressly excluded all insurance proceeds other than "public liability insurance" was held not to subject uninsured motorist proceeds to a hospital lien.

This is not a case of first impression in Oklahoma, however. There is an unpublished opinion, Hillcrest Medical Center, Inc. & Okmulgee Memorial Hospital Authority v. Webber, (Okl.App.1983), No. 57,169, ² in which a hospital lien was enforced against uninsured motorist proceeds. The Court of Appeals, Division No. 1, found it would be "illogical" to allow a hospital lien to attach to liability insurance funds but not uninsured motorist funds because the insurance coverages were, in the court's opinion, intended to protect against the same risks. This Court granted certiorari to the Court of Appeals to review the opinion but certiorari was subsequently recalled as improvidently granted and this Court ordered the Court of Appeals opinion withdrawn from publication. 55 OBJ 2256. There is also a recent published decision of the Court of Appeals, Woods v. Baptist Medical Center of Okl., 890 P.2d 1367 (Okl.App.1995), enforcing a hospital lien against funds recovered from uninsured motorist coverage which was based in large part on the court's belief in the soundness of the reasoning in Hillcrest Medical Center and Okmulgee Memorial Hospital v. Webber, supra.

When words and phrases of a statute are not explicit, the Court must determine their meaning in a way that produces a reasonable result and promotes the general purpose for which they were enacted. AMF Tubescope Company v. Hatchel, 547 P.2d 374 (Okl.1974). It is axiomatic that the cardinal rule of statutory construction is to ascertain the intent of the legislature and if possible to give effect to all its provisions.

The obvious purpose of the hospital lien statute is to encourage hospitals to care for accident victims who might otherwise be non-paying patients. We recognized in Vinzant v. Hillcrest Med. Center, 609 P.2d 1274 (Okl.1989) that the legislatures of several states have enacted hospital lien statutes in an attempt to lessen the burden imposed on hospitals by non-paying patients by giving hospitals liens on any recovery a patient might obtain from a tortfeasor. See also, Annot. Construction, Operation and Effect of Statute Giving Hospital Lien Against Recovery from Tortfeasor Causing Patients Injury. 16 ALR 5th 262.

Although the purpose of the statute is to assure hospitals of compensation for their treatment of emergency patients, we are not free to "read in" the inclusion of funds which are not fairly embraced by the terms of the statute. We have recognized that there is no basis for a hospital lien in the absence of statute. Vinzant v. Hillcrest Med. Center, supra.

This Court must strictly construe statutes creating liens. Liens are property rights and it is not the function of the courts to create them from a sense of justice in a particular case. Young v. J.A. Young Mach. & Supply Co., 224 P.2d 971 (Okl.1950). Liens can be created either by contract or by law. 42 O.S.1991 § 6. A statutory lien such as the hospital lien at issue stands in derogation of the common law and must be strictly construed. A lien that is not provided by the clear language of the statute cannot be created by judicial fiat, for the words of the statute are the measure of the right and the remedy. A court cannot create a lien out of a sense of fairness if the terms of the statute are found too narrow and have not been met. Riffe Petroleum C. v. Great Nat. Corp., Inc., 614 P.2d 576 (Okl.1980); Harriss v. Parks, 77 Okl. 197, 187 P. 470 (1920); Interurban Construction Co. v. Central State Bank of Kiefer, 76 Okl. 281, 184 P. 905 (1909).

The title to an Act is a valuable aid in its construction and may be considered in determining legislative intent. The Title of the Act, Laws 1969 C. 231, provides:

"An Act relating to liens; creating lien against judgment in personal injury actions in favor of hospital rendering services to injured party; providing for exceptions; making lien effective only upon filing of notice; and declaring an emergency." (Emphasis added)

The title explicitly restricts the reach of the statutory lien to proceeds recovered in a personal injury action from a tortfeasor or his insurer. This narrowed scope of the people who comprise the class of "another" is determinative of the question before us because the constitution has made the title of an act, as restricted by the legislature, the index to the legislature's intention governing operation of the provision of the act. In view of Art. 5, § 57, Okl. Const., which requires the...