Rose Medical Center v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 01 December 1994
• Docket Number: No. 93CA2071,93CA2071
• Citation: 903 P.2d 15
• Parties: ROSE MEDICAL CENTER, a non-profit Colorado corporation, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Appellant. Div. II
• Court: Colorado Court of Appeals

Page 15

903 P.2d 15

ROSE MEDICAL CENTER, a non-profit Colorado corporation, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois

corporation, Defendant-Appellant.

No. 93CA2071.

Colorado Court of Appeals,

Div. II.

Dec. 1, 1994.

As Modified on Denial of Rehearing

Jan. 12, 1995.

Certiorari Denied Aug. 28, 1995.

Sabey, Johns, Ordelheide & Smith, P.C., Melvin B. Sabey, Mark L. Sabey, Denver, for plaintiff-appellee.

Rodman & Ross-Shannon, Bradley Ross-Shannon, Denver, for defendant-appellant.

Opinion by Judge ROY.

In this action to enforce a statutory hospital lien, defendant, State Farm Mutual Automobile Insurance Company (State Farm), appeals the summary judgment entered in favor of plaintiff, Rose Medical Center (Rose), enforcing the lien. We affirm.

The facts are not in dispute. Claudia Holland was injured in a two-vehicle accident while a passenger in a vehicle driven by her husband, Wesley Holland. She then commenced an action against her husband seeking damages for bodily injuries she sustained. State Farm was the bodily injury insurer for Mr. Holland and it provided his defense. State Farm also provided personal injury protection (PIP) coverage for Mrs. Holland under, apparently, the same policy.

Rose provided medical services to Mrs. Holland for her injuries. On April 24, 1991, Rose filed a notice of hospital lien for $15,702.93 in the then pending litigation, gave notice to Mrs. Holland's counsel on that date, and to insurance counsel on July 11, 1991, all pursuant to, and in a manner provided by, § 38-27-102, C.R.S. (1994 Cum.Supp.).

Mrs. Holland commenced an arbitration proceeding against State Farm with respect to PIP benefits on March 28, 1991, and listed Rose as a provider of services. State Farm appeared in and defended the arbitration proceeding through other counsel. Mrs. Holland was awarded $52,913.42 in PIP benefits on November 27, 1991, including interest to date, together with undetermined attorney fees and costs. State Farm paid Mrs. Holland $70,000 pursuant to the arbitration award on January 17, 1992, which amount included costs, attorney fees, and interest to date without first satisfying the hospital lien filed by Rose.

Thereafter, on June 11, 1992, Mrs. Holland settled her claims against Mr. Holland for $1.00 and dismissed the litigation. The $1.00 was not paid to Rose.

Rose then filed this proceeding against State Farm seeking to enforce its hospital lien. From an adverse ruling, State Farm brings this appeal.

I.

A hospital lien is established and controlled by statute. Section 38-27-101, C.R.S. (1994 Cum.Supp.) provides with respect to the scope of such lien as follows:

Every hospital ... which furnishes services to any person injured as the result of the negligence or wrongful acts of another person ... shall ... have a lien for all reasonable and necessary charges for hospital care upon the net amount payable to such injured person ... out of the total amount of any recovery or sum had or collected, or to be collected, whether by judgment, settlement, or compromise, by such person ... as damages on account of such injuries....

The obvious intent of the hospital lien statute is to protect hospitals that provide medical services to an injured person who may not be able to pay but who may later receive compensation for such injuries which includes the cost of the medical services provided. See Annotation, Construction, Operation, and Effect of Statute Giving Hospital Lien Against Recovery from Tortfeasor Causing Patient's Injuries, 16 A.L.R. 5th 262 (1993).

A hospital lien may be perfected only by following certain statutory requirements. At the time Rose filed its lien, the pertinent statute establishing the requirements provided:

Such lien shall take effect if, prior to any such judgment, settlement or compromise, a written notice of lien containing the name and address of the injured person, the date of the accident, the name and location of the hospital, and the name of the person alleged to be liable to the injured person for the injuries received is filed by the hospital in the office of the division of insurance, which shall maintain and index appropriate records for hospital liens. Within ten days after such filing, the hospital shall mail by certified mail, return receipt requested, a copy of said notice to such injured person, to his attorney, if known, to the person alleged to be liable to such injured person for the injuries sustained, and to the insurance carrier, if known, which has insured such person alleged to be liable against such liability. If an action for damages on account of such injuries or death is pending, the requirements of notice contained in this section shall be satisfied by the filing of the said notice of lien in the pending action, with copies thereof to the attorneys of record for the parties thereto.

Section 38-27-102, C.R.S. (1982 Repl.Vol. 16A) (emphasis added). Cf. § 38-27-102, C.R.S. (1994 Cum.Supp.) (changing the place for filing to the secretary of state).

This section establishes two separate and distinct but equal methods by which a hospital may perfect a lien against proceeds payable to an injured party. Rose perfected its lien by the second method.

The enforcement provision of the statute states:

Any person, private or corporate, who pays over any money to any such injured person, his attorney, heirs, assigns, or legal representatives against whom there is a lien as provided in this article of which he has received notice ... is liable to the hospital having such lien for the amount thereof.... Any action under this section shall be commenced within one year after the date of such payment, and the court shall allow a reasonable attorney's fee for the collection and enforcement of such lien.

Section 38-27-103, C.R.S. (1982 Repl.Vol. 16A).

Pursuant to these provisions, the trial court found that State Farm was liable for the full amount of the hospital lien filed by Rose plus reasonable attorney fees.

II.

The sole issue on appeal is whether State Farm had adequate notice of the lien filed by Rose. We conclude that, under the circumstances presented here, the notice was adequate.

It is unquestioned that Rose's lien was perfected in accordance with the statute well prior to Mrs. Holland receiving any PIP benefits pursuant to the arbitration award or the proceeds of the settlement in her personal injury action. Also, it is undisputed that defense counsel received notice of the hospital lien and would normally have informed State Farm, but has no specific recollection or record of doing so prior to the distribution of the PIP benefits. State Farm states that it was not notified by defense counsel of the hospital lien prior to distribution of the PIP benefits.

We are cognizant that defense counsel is not counsel to the insurance company nor is defense counsel an agent for the insurance carrier for all purposes. See Colorado Bar Association Ethics Opinion, No. 91 (1992). While there is inherent tension in the tripartite relationship among the insured, the insurance company, and defense counsel, we conclude our holding, under the facts presented here, does not further...