Lee Mem'l Health Sys. v. Progressive Select Ins. Co.

• Decision Date: 20 December 2018
• Docket Number: No. SC17-1993,SC17-1993
• Citation: 260 So.3d 1038
• Parties: LEE MEMORIAL HEALTH SYSTEM, Appellant, v. PROGRESSIVE SELECT INSURANCE COMPANY, Appellee.
• Court: Florida Supreme Court

260 So.3d 1038

LEE MEMORIAL HEALTH SYSTEM, Appellant,

v.PROGRESSIVE SELECT INSURANCE COMPANY, Appellee.

No. SC17-1993

Supreme Court of Florida.

December 20, 2018

Hala Sandridge of Buchanan Ingersoll & Rooney PC, Tampa, Florida, for Appellant

Valerie A. Dondero of Kubicki Draper, P.A., Miami, Florida, for Appellee

David A. Wallace of Bentley & Bruning, P.A., Sarasota, Florida, for Amicus Curiae Safety Net Hospital Alliance of Florida

Angela C. Flowers and Bretton C. Albrecht of Kubicki Draper, P.A., Ocala, Florida, for Amicus Curiae Geico General Insurance Company

John P. Joy and Sara M. Sandler of Walton Lantaff Schroeder & Carson LLP, Fort Lauderdale, Florida, for Amicus Curiae Allstate Insurance Company

LAWSON, J.

This case is before the Court on appeal from a decision of the Second District Court of Appeal, Lee Memorial Health System v. Progressive Select Insurance Co. , 230 So.3d 558 (Fla. 2d DCA 2017), which held chapter 2000-439, section 18, Laws of Florida, ("the LMHS Lien Law") invalid under the Florida Constitution. This Court has jurisdiction of the appeal under article V, section 3(b)(1) of the Florida Constitution.

The Second District held that the LMHS Lien Law violates article I, section 10 and article III, section 11(a)(9) of the Florida Constitution. For the reasons explained below, we agree with the Second District as to the violation of article III, section 11(a)(9) and therefore approve of and affirm that part of the opinion. However, we disagree with the Second District's decision to reach the question of whether the LMHS Lien Law violates article I, section 10, as well as an additional issue pertaining to the damages available under the statute. Accordingly, we reverse those portions of the Second District's opinion.

FACTS AND PROCEDURAL HISTORY

Lee Memorial Health System is a "public health care system in Lee County" created by chapter 2000-439, Laws of Florida, and is the beneficiary of certain rights against private citizens and companies under the LMHS Lien Law.

Lee Mem'l Health Sys. v. Progressive Select Ins. Co. , 230 So.3d 558, 559 (Fla. 2d DCA 2017). Specifically, the LMHS Lien Law entitles Lee Memorial to liens for its charges for healthcare services, defines what actions constitute impairment of those liens, and creates a cause of action to recover damages for impairment of those liens by others—including persons, firms, or corporations who are neither the providers nor the beneficiaries of the healthcare services at issue. To these ends, the LMHS Lien Law provides as follows:

Lee Memorial Health System shall be entitled to a lien for all reasonable charges for hospital, physician, or other health care services provided by the Lee Memorial Health System to ill or injured persons, upon the proceeds of all causes of action, suits, claims, counterclaims, and demands accruing to said persons or to their legal representatives, and upon all judgments, settlements, and settlement agreements rendered or entered into by virtue thereof, on account of injuries giving rise to such causes of action, suits, claims, counterclaims, demands, judgments, settlements, or settlement agreements, which injuries shall have necessitated such hospital, physician, and other services provided to such ill or injured persons....

....

... No release or satisfaction of any cause of action, suit, claim, counterclaim, demand, judgment, settlement, or settlement agreement shall be valid or effectual as against the lien of Lee Memorial Health System unless the lienholder shall join therein or execute a release of its lien prior to the payment of any proceeds thereof. Any acceptance of a release or satisfaction of any cause of action, suit, claim, counterclaim, demand, judgment, settlement, or settlement agreement in the absence of a release or satisfaction of the lien of Lee Memorial Health System shall prima facie constitute an impairment of such lien and the lienholder shall be entitled to a cause of action for damages against any and all persons, firms, or corporations giving or accepting such release or satisfaction, or paying or accepting the proceeds from the same. In such action, Lee Memorial Health System may recover the full amount of its charges for such hospital, physician, or other health care services; regardless of the amount of proceeds paid or received in impairment of its lien.

Ch. 2000-439, § 18, Laws of Fla.

The constitutional challenge to this law arose out of a lawsuit filed by Lee Memorial against Progressive Select Insurance Company for the impairment of two liens Lee Memorial had filed based on the provision of medical treatment to an injured person. Lee Memorial Health Sys. , 230 So.3d at 559-60. Lee Memorial alleged that Progressive impaired these liens by settling a claim with the injured person on behalf of Progressive's insured without the knowledge or consent of Lee Memorial and without the satisfaction or release of Lee Memorial's liens. Id. at 560.

In the trial court, Progressive moved for summary judgment, raising three arguments relevant to our review. First, Progressive argued that the LMHS Lien Law is "unconstitutional as a special law pertaining to the creation, enforcement, extension and/or impairment of liens based on private contracts in violation of Article III, § 11(a)(9), of the Florida Constitution." Id. Second, Progressive argued that chapter 2000-439 "is an unconstitutional impairment of the insurance contract between Progressive and its insured ... under Article I, § 10 of the Florida Constitution." Id. Third, Progressive argued in the alternative that, if Lee Memorial is entitled to any recovery for the impairment of its lien, that recovery must be limited to the amount of the settlement proceeds and/or the limits of the insurance policy, rather than for the amount of the entire hospital lien. The trial court entered final summary judgment for Progressive, declaring the LMHS Lien Law unconstitutional under article III, section (11)(a)(9). The trial court's order was silent as to the remaining issues.

Lee Memorial appealed the trial court's decision to the Second District, arguing error as to the issue decided. Progressive responded to this argument and further requested that the Second District address the damages issue in the event it found the LMHS Lien Law constitutional. The Second District affirmed the trial court, not only because it determined that the LMHS Lien Law violates article III, section 11(a)(9), but also because it determined that the LMHS Lien Law violates the constitutional prohibition against the impairment of contracts under article I, section 10. Lee Mem'l Health Sys. , 230 So.3d at 560-64. The Second District also addressed the damages issue, viewing Progressive's arguments concerning that provision of the LMHS Lien Law as part of the contract-impairment issue. See id. at 564. Accordingly, the Second District declared the LMHS Lien Law unconstitutional under article I, section 10, and article III, section (11)(a)(9). Id. Lee Memorial appealed the Second District's decision to this Court pursuant to our mandatory jurisdiction to review decisions of district courts that declare state statutes invalid.

ANALYSIS

Lee Memorial argues that the Second District erred in addressing the contract-impairment issue because that issue was not raised to the Second District and the Attorney General was not served with proper notice as to that issue under Florida Rule of Civil Procedure 1.071. Lee Memorial further argues that the Second District erred on the merits as to both constitutional rulings. We agree with Lee Memorial that the Second District should not have addressed the contract-impairment issue. Progressive did not serve proper notice on the Attorney General, and the trial court's decision not to rule on that issue was therefore proper. Accordingly, we reverse the portion of the Second District's decision declaring the LMHS Lien Law a violation of article I, section 10 and do not address the merits of this claim. However, we disagree with Lee Memorial as to the violation of article III, section 11(a)(9). We agree with the trial court and the Second District that the LMHS Lien Law violates article III, section 11(a)(9) as a special law pertaining to the "creation, enforcement, extension or impairment of liens based on private contracts." This holding renders Progressive's arguments concerning the statutory damages moot. We explain our determinations as to the Second District's error in addressing the contract-impairment issue and the Second District's correct holding as to the article III, section 11(a)(9) below.¹

A. Notice Requirement of Rule 1.071

Rule 1.071 provides the following requirements for challenging the constitutionality of a law:

A party that files a pleading, written motion, or other document drawing into question the constitutionality of a state statute or a county or municipal charter, ordinance, or franchise must promptly

(a) file a notice of constitutional question stating the question and identifying the document that raises it; and(b) serve the notice and the pleading, written motion, or other document drawing into question the constitutionality of a state statute or a county or municipal charter, ordinance, or franchise on the Attorney General or the state attorney of the judicial circuit in which the action is pending, by either certified or registered mail.

Fla. R. Civ. P. 1.071.

In this case, Progressive filed a "notice of constitutional question" and served it on the proper parties before the summary judgment hearing. However, this notice indicated only that the statute was being challenged under article III, section 11(a)(9), not that it was also being challenged under article I, section 10. After receiving full arguments from the parties on the merits of both constitutional issues at the summary judgment hearing, the trial court orally ruled that the article I, section 10 issue was not ripe for decision because Progressive had not served...