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

• Decision Date: 25 October 2017
• Docket Number: Case No. 2D14–5925
• Citation: 230 So.3d 558
• Parties: LEE MEMORIAL HEALTH SYSTEM, Appellant, v. PROGRESSIVE SELECT INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

230 So.3d 558

LEE MEMORIAL HEALTH SYSTEM, Appellant,

v.PROGRESSIVE SELECT INSURANCE COMPANY, Appellee.

Case No. 2D14–5925

District Court of Appeal of Florida, Second District.

Opinion filed October 25, 2017.

Hala Sandridge of Buchanan Ingersoll & Rooney, P.C., Tampa, for Appellant.

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

PER CURIAM.

Lee Memorial Health System (LMHS) appeals from a final summary judgment in favor of Progressive Select Insurance Company (Progressive), in which the trial court held that chapter 2000–439, section 18, Laws of Florida, improperly permitted the creation of a lien based on a private contract in violation of article III, section 11(a)(9), of the Florida Constitution. We affirm.

This case arises from an automobile accident in which Ruben Gallegos was struck by a car and was injured. LMHS provided hospital services related to Mr. Gallegos' injuries during two periods: October 22, 2006, through October 29, 2006, and January 11, 2007, through January 23, 2007. On November 1, 2006, LMHS recorded a hospital claim of lien pertaining to Mr. Gallegos' first stay in the amount of $55,167.49. On January 31, 2007, LMHS recorded a lien in the amount of $29,032.50 pertaining to his second stay, for a total of $84,199.99.

Mr. Gallegos, through counsel, filed a claim against the driver of the car that hit him and the car's owner. The driver and the owner were insured by two different insurance companies, Progressive and MGA Insurance Company (MGA). On December 1, 2006, Progressive offered to pay the limits of its insured's bodily injury coverage "as full and final settlement of your client's claim under a non-admission of liability based upon a copy of the Lee Memorial lien you provided and absent a demand from your firm."¹ On January 9, 2007, Mr. Gallegos' counsel informed LMHS of the availability of bodily injury coverage from the two insurers and asked the hospital to write off the balance of the amount due (at the time, $55,167.49). LMHS responded with a handwritten, signed note indicating that "LMH cannot write off Mr. Gallegos' entire bill. Counter offer of $6,666.66 is made by Patty O'Brien (Mgr.)." The record does not reflect whether Mr. Gallegos' counsel responded to this offer. Mr. Gallegos subsequently signed and delivered a release to Progressive, and on June 27, 2007, Progressive tendered a check for $10,000 to Mr. Gallegos' counsel. Progressive also tendered an additional $4000 as payment for Mr. Gallegos' property damage claim. According to our record, on September 10, 2009, Progressive tendered another $10,000 directly to LMHS from the Personal Injury Protection (PIP) benefits of its insured's policy.

On October 6, 2011, LMHS filed a lawsuit against Progressive and MGA, alleging that both insurers impaired the two liens LMHS had recorded against Mr. Gallegos. The complaint alleged that the entire amount of the two liens, $84,199.99, remained unpaid. MGA was subsequently dismissed from the suit by joint stipulation. On December 13, 2012, Progressive filed a motion for summary judgment in which it argued, in part, (1) that chapter 2000–439, section 18, "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" and (2) 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." Following a hearing, the trial court granted Progressive's motion for summary final judgment, holding that chapter 2000–439 was "unconstitutional as a special law which improperly creates a lien based on a private contract" and that therefore, the lien imposed by LMHS on the proceeds received by Mr. Gallegos from Progressive was invalid.

DISCUSSION

Chapter 2000–439, Laws of Florida (a "codified act," see § 189.429, Fla. Stat (2006)² (often referred to as a "special law" or "special act")) created the Lee Memorial Health System as "a public health care system in Lee County." The special law sets forth the duties and powers of the Lee Memorial Health System, provides for its operation and maintenance, and provides for the execution and enforcement of liens. In this case, we are only concerned with the provisions pertaining to the execution and enforcement of liens, which are found in section 18 of the special law. That provision provides, in pertinent part:

Lee Memorial Health System shall be entitled to a lien for all reasonable charges for hospital, physician, and 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.

...

(3) 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 ....

(4) No person shall be entitled to recover or receive damages based on the expense of hospital, physician, or other health care services provided by Lee Memorial Health System unless that person shall affirmatively show that Lee Memorial Health System's charges have been paid. Provided, however, that [the plaintiff may include his or her hospital expenses as an item of damages if Lee Memorial is notified of the pendency of an action or claim] .... Any judgment rendered in favor of the plaintiff or counterclaimant shall provide that the amount proved by the lienholder to be due shall be deducted from the damages awarded and paid to the Lee Memorial Health System.

Ch. 2000–439, § 18, at 372–73, Laws of Fla. (emphasis added.)

A. Chapter 2000–439, Section 18, violates article II, section 11(a)(9), of the Florida Constitution.

As noted above, the trial court found section 18 of chapter 2000–439 to be unconstitutional because it is a special law which allowed for the imposition of a lien based on a private contract. Specifically, the court determined that the special law ran afoul of article III, section 11(a)(9), of the Florida Constitution, which provides, "There shall be no special law or general law of local application pertaining to ... creation, enforcement, extension or impairment of liens based on private contracts, or fixing of interest rates on private contracts." Stated another way, a special law or general law of local application violates article III, section 11(a)(9), if it attempts to create, enforce, extend, or impair a lien, where that lien is based on a private contract.

The contract at issue in this case is the admissions contract that Mr. Gallegos signed upon being admitted to Lee Memorial Hospital that stated, in pertinent part:

PAYMENT OF BENEFITS ...

1. I certify that the information given by me in applying for payment by the insurance company or Medicare or other governmental or private plan is correct.

2. [Release of medical information to secure payment.]

3. [Assignment of benefits from insurance or Medicare to doctors providing services.]

CONTRACT TO PAY: [Understanding of liability for all balances due at discharge.]

....

... If a lawsuit is filed to collect a bill, the undersigned agrees to pay reasonable attorney's fees, costs and expenses incurred by Lee Memorial Health System in pursuing such action.

Subsequently, LMHS filed two liens (pertaining to two different periods of inpatient care) stating the following:

HOSPITAL CLAIM OF LIEN

Pursuant to Chapter 00–439, Laws of Florida, Special Acts, 2000, [name of director], being duly sworn, deposes and says:

1. That [ ] he/she is Director, Central Business Office of Lee Memorial Health System, 2776 Cleveland Ave, Fort Myers, Florida.

2. That Lee Memorial Health System rendered hospital care, treatment, and maintenance to RUBEN GALLEGOS... from the time of his/her admission ... to the time of his/her discharge ... the Amount Claimed such services and presently remaining unpaid is $55,167.49, for which the Lee Memorial Health System hereby claims a lien by virtue of its authority under Chapter 00–439, Laws of Florida, Special Acts, 2000 .

(Third emphasis added.) Thus, the lien at issue was created pursuant to a special law and was "based on" the admissions contract between LMHS and Mr. Gallegos.

On appeal, LMHS argues, as it did below, that article II, section 11(a)(9), of the Florida Constitution only prohibits special laws that create, enforce, extend, or impair liens based on private contracts. But, it argues, chapter 2000–439 created a public hospital, which means that the contract between itself and Mr. Gallegos was a public contract....