Parkview Hosp., Inc. v. Roese

• Decision Date: 25 May 2001
• Docket Number: No. 02A05-0009-CV-386.,02A05-0009-CV-386.
• Citation: 750 N.E.2d 384
• Parties: PARKVIEW HOSPITAL, INC., Appellant-Defendant, v. Mildred v. ROESE, Appellee-Plaintiff.
• Court: Indiana Appellate Court

750 N.E.2d 384

PARKVIEW HOSPITAL, INC., Appellant-Defendant, v. Mildred v. ROESE, Appellee-Plaintiff.

No. 02A05-0009-CV-386.

Court of Appeals of Indiana.

May 25, 2001.

Rehearing Denied July 12, 2001.

Christine M. Stach, Rothberg Logan & Warsco LLP, Fort Wayne, IN, Attorney for Appellant.

Robert L. Thompson, Thompson & Rogers, Fort Wayne, IN, Attorney for Appellee.

OPINION

DARDEN, Judge.

STATEMENT OF THE CASE

Parkview Hospital, Inc. ("Parkview"), appeals the trial court's granting of Mildred Roese's ("Roese") Motion to Quash Hospital Lien.

We reverse.

ISSUE

Whether Indiana's Hospital Lien Statute requires Parkview to first seek payment for medical services from Medicare before filing a lien against Roese.

FACTS

The undisputed facts reveal that the Department of Health and Human Services ("DHHS") administers the federal Medicare program through the Health Care Financing Administration ("HCFA"). On June 13, 1996, Parkview received a notice sent to all region V contractors regarding the "current HCFA enforcement policy with respect to provider and supplier billing options in Medicare secondary payer to liability insurance situations." (R. 68).

Subsequently, Roese was injured in an automobile accident on November 2, 1998. Her injuries were treated at Parkview, and she was charged for services through March 31, 1999. At the time of her hospitalization, Roese was over 65-years-of-age and eligible for Medicare coverage. Parkview charged Roese $56,457.08 for the services rendered. Further, at no time did Parkview seek payment under Medicare.

On April 15, 1999, Parkview, pursuant to Indiana Code § 32-8-26-4(a)(6), gave notice and timely filed a lien against Roese, Stephanie Longbrake, the alleged tortfeasor, and her insurance carrier, Allstate Insurance ("Allstate"), for the amount charged. On October 1, 1999, Roese, through her attorney Robert Thompson ("Thompson"), sent a letter to Parkview requesting that her bill be submitted to Medicare "and, to the extent not paid by Medicare, to Mrs. Roese's supplemental insurance." (R. 18). On November 11, 1999, Allstate paid $100,000 on behalf of its insured to Roese for her injuries sustained in the accident. The payment was made with two checks. One of the checks was made payable to the order of Roese, Thompson, and Parkview in the amount of the lien. This check has not been negotiated and is the subject of this appeal.

On November 17, 1999, Roese filed a motion to quash Parkview's lien. Roese alleged that, despite her requests, Parkview failed to submit the amount owed to Medicare. The trial court held an unrecorded hearing on June 30, 2000. On August 15, 2000, the trial court issued a general judgment without findings of fact and conclusions of law granting Roese's motion. The trial court also granted Parkview's motion for a stay of execution while this appeal is pending.

DECISION

Parkview argues that the trial court erroneously granted Roese's motion to quash. Specifically, Parkview argues that federal Medicare statutes and regulations prevent it from pursuing payment from Medicare when automobile liability insurance is available. Roese argues that Indiana's Hospital Lien Statute requires Parkview to make all reasonable efforts to collect from medical insurance proceeds before "the establishment of a valid hospital lien...." Roese's Brief at 7. Roese also argues that federal statutes and regulations do not prevent Parkview from collecting payment from Medicare.

"Our standard of review for the interpretation of statutes is de novo. We review legal determinations to ascertain whether the trial court erred in application of the law." Clark v. Madden, 725 N.E.2d 100, 104 (Ind.Ct.App.2000). "When a statute is clear and unambiguous on its face, we may not interpret the statute. Rather, words are to be given their plain, ordinary, and usual meaning unless a contrary purpose is clearly shown by the statute itself. Additionally, language employed in a statute is deemed to have been used intentionally." Schafer v. Sellersburg Town Council, 714 N.E.2d 212, 215 (Ind.Ct.App.1999) trans. denied. (citations omitted).

Indiana Code § 32-8-26-3(a) gives a hospital "a lien for all reasonable and necessary charges for hospital care, treatment, or maintenance of a patient" if the injuries giving rise to the claim required the hospital care. "The underlying purpose of the Hospital Lien Statute is to `insure that hospitals are compensated for their services.'" Community Hosp. v. Carlisle, 648 N.E.2d 363, 365 (Ind.Ct.App. 1995) (quoting National Ins. Association v. Parkview Memorial Hospital, 590 N.E.2d 1141, 1144 (Ind.Ct.App.1992)).

The lien's priority and the steps necessary to maintain perfection are described as follows: (1) it applies to any amount recovered by the patient through a settlement; (2) it is subordinate to an attorney's lien; (3) it does not apply to worker's compensation accidents or injuries; and (4) it is not assignable. Ind.Code § 32-8-26-3(b). Ending the same subsection, the statute requires that

[t]he lien ... must be reduced by the amount of any medical insurance proceeds paid to the hospital on behalf of the patient after the hospital has made all reasonable efforts to pursue the insurance claims in cooperation with the patient.

I.C. § 32-8-26-3(b)(5).

Roese argues that I.C. § 32-8-26-3(b)(5) establishes "a requirement for, or a condition precedent to, the establishment of a valid hospital lien, and ... render[s] invalid any lien claimed in circumstances where a hospital has failed or refused to pursue available insurance coverage, or has failed to reduce the amount of the lien by the amount of any insurance proceeds received." (Roese's Brief at 7).

Indiana Code § 32-8-26-3 is clear and unambiguous. Subsection (b) describes the priority and necessary steps to maintain perfection of the lien. For example, subsection (b)(5) requires that a hospital's lien be reduced by the amount it receives from insurance proceeds "after the hospital has made all reasonable efforts to pursue the insurance claims in cooperation with the patient." Id. This subsection imposes a duty upon the hospital to also seek reimbursement for medical services from the patient's medical insurer if the lien's perfection is to be maintained. The unpaid portion can then be secured through a lien, insuring "that hospitals are compensated for their services." Community Hosp., 648 N.E.2d at 365.

However, federal legislation or regulations may affect whether a hospital can submit a claim to Medicare before pursuing payment from another source. If so, the existence of Medicare may preempt the Hospital Lien Statute.

The Supremacy Clause of Art. VI of the Constitution provides Congress with the power to pre-empt state law. Pre-emption occurs when Congress, in enacting a federal statute, expresses a clear intent to pre-empt state law, when there is outright or actual conflict between federal and state law, where compliance with both federal and state law is in effect physically impossible, where there is implicit in federal law a barrier to state regulation, where Congress has legislated comprehensively, thus occupying an entire field of regulation and leaving no room for the States to supplement federal law, or where the state law stands as an obstacle to the accomplishment and execution of the full objectives of Congress.

Louisiana Public Service Com'n v. F.C.C., 476 U.S. 355, 368-69, 106 S.Ct. 1890, 1898, 90 L.Ed.2d 369 (1986).

On August 14, 1935, Congress passed the Social Security Act, and it was subsequently amended in 1965. Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 286 (1965). These amendments created an entitlement to hospital insurance benefits for those over 65 years of age; the purpose was to "insure the availability of adequate medical care for the aged." Lord v. Richardson, 356 F.Supp. 232, 235 (S.D.Ind.1972).

"Originally, medicare was a primary payer because the private health insurance industry made its coverage secondary to medicare's." Michael A. de Freitas, Annotation, Validity, Construction, and Application of Medicare Secondary Payer Provisions of Social Security Act (42 USCS § 13[9]5y(b)) and Regulations Promulgated Thereunder, 126 A.L.R. FED. 553 (1995). However, the 1965 amendments also contained a section excluding certain expenses from coverage. Social Security Amendments of 1965 § 1892 (codified as amended at 42 U.S.C. § 1395y). Within this section, Congress added a series of amendments making Medicare a secondary payer under certain circumstances. 126 A.L.R. FED. 553. In other words, medical service providers were no longer able to seek reimbursement from Medicare if another source was available.

Additional, relevant amendments were enacted during the 1980s. During this period, Congress specifically made Medicare a secondary payer to automobile or liability insurance plans. Omnibus Reconciliation Act of 1980, Pub.L. No. 96-499, 94 Stat. 2647 (1980). Additional amendments were also enacted in 1987 and 1989. See Omnibus Reconciliation Act of 1987, Pub.L. No. 100-203, 101 Stat. 1379 (1987); Omnibus Reconciliation Act of 1989, Pub.L. No. 101-239, 103 Stat. 2231 (1989) (codified as amended at 42 U.S.C. § 1395y(b)(2)(A)(ii)). In its present form, the relevant subsection reads as follows:

(A) In general

Payment under this subchapter may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that—

* * * * *

(ii) payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen's compensation law or plan of the United States or a State or an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.

Id. (emphasis added). "The intent of this statute was to cut the costs of the Medicare program by requiring that Medicare pay `secondary' to alternate sources." U.S. v....