Shands Teaching Hosp. & Clinics, Inc. v. Mercury Ins. Co. of Fla.

• Decision Date: 04 September 2012
• Docket Number: No. SC09–2069.,SC09–2069.
• Citation: 97 So.3d 204
• Parties: SHANDS TEACHING HOSPITAL AND CLINICS, INC., Appellant/Cross–Appellee, v. MERCURY INSURANCE COMPANY OF FLORIDA, Appellee/Cross–Appellant.
• Court: Florida Supreme Court

97 So.3d 204

SHANDS TEACHING HOSPITAL AND CLINICS, INC., Appellant/Cross–Appellee,

v.MERCURY INSURANCE COMPANY OF FLORIDA, Appellee/Cross–Appellant.

No. SC09–2069.

Supreme Court of Florida.

June 7, 2012.

Rehearing Denied Sept. 4, 2012.

Held Unconstitutional

Ch. 88–539, Laws of FloridaJoel W. Walters, Elinor E. Baxter and Thomas C. Valentine of Walters, Levine, Klingensmith and Thomison, P.A., Sarasota, FL, for Appellant/Cross–Appellee.

Jeffrey W. Kirsheman, and Jamie B. Moses of Fisher, Rushmer, et al., Orlando, FL, for Appellee/Cross–Appellant.

Pamela Jo Bondi, Attorney General and Louis F. Hubener, III, Deputy Solicitor General, Tallahassee, FL, on behalf of the Attorney General's Office; Edward J. Pozzuoli, III, of Tripp, Scott, P.A., Fort Lauderdale, FL, Stephanie D. Alexander of Tripp, Scott, P.A., Tallahassee, FL, on behalf of the Florida Hospital Association; and Philip M. Burlington of Burlington and Rockenback, P.A., West Palm Beach, FL, on behalf of the Florida Justice Association, As Amicus Curiae.

CANADY, C.J.

In this case we consider the constitutionality of the Alachua County Lien Law, chapter 88–539, Laws of Florida (Lien Law), and the Alachua County Hospital Lien Ordinance, Alachua County Code sections 262.20–262.25 (1997) (Ordinance), both of which establish certain lien rights for charitable hospitals in Alachua County. We have for review the decision of the First District Court of Appeal in Mercury Insurance Co. of Florida v. Shands Teaching Hospital & Clinics, Inc., 21 So.3d 38 (Fla. 1st DCA 2009), which reversed the trial court's judgment for Shands Teaching Hospital and Clinics, Inc. (Shands) and held that the Lien Law and Ordinance were unconstitutional under the prohibition on “special law[s]” pertaining to “liens based on private contracts” contained in article III, section 11(a)(9) of the Florida Constitution. We have jurisdiction. Art. V, § 3(b)(1), Fla. Const.

For the reasons set forth below, we conclude that the Lien Law is unconstitutional under article III, section 11(a)(9) of the Florida Constitution. We hold, however, that the Ordinance is not unconstitutional and that the First District should have upheld the trial court's judgment on the basis of the Ordinance. In addressing a cross-appeal presented by Mercury Insurance Company of Florida (Mercury), we hold that the trial court properly limited Shands' damages to $10,000 and properly awarded Shands attorney fees. We reverse the First District's decision, and we remand the case for proceedings consistent with this opinion.

I. BACKGROUND

Krystal Price was struck by a vehicle insured by Mercury. As a result of this accident, Ms. Price received treatment at Shands valued at $38,418.20. Pursuant to the Lien Law and the Ordinance, Shands perfected and recorded a lien on Ms. Price's potential causes of action arising from her injury and any judgments or settlements entered by virtue of such causes of action. Shands sent a copy of the lien to Ms. Price on the date the lien was recorded.

Mercury's insured carried a policy with bodily injury liability coverage in the amount of $10,000 and Personal Injury Protection (PIP) coverage in the amount of $10,000. After Shands' lien had been recorded, Mercury tendered to Ms. Price $10,000, the full amount of bodily injury liability coverage and accepted Ms. Price's signed release. Mercury did not join Shands in the release, nor did Mercury satisfy Shands' lien prior to obtaining the release.

After the settlement between Mercury and Ms. Price, Shands sent a copy of the hospital lien to Mercury. Subsequently, Mercury paid Shands $10,000, the remaining coverage available under the policy. Shands then filed suit against Mercury to recover the remaining $28,418.20 of Ms. Price's medical expenses, alleging that Mercury had impaired Shands' lien. Mercury served a settlement proposal on Shands pursuant to section 768.79, Florida Statutes (2006), offering to pay Shands $17,700 as final satisfaction of Shands' lien. Shands did not accept the settlement offer.

The trial court denied cross-motions for summary judgment, rejecting Mercury's arguments that the Lien Law violated article III, sections 11(a)(9) and (12) of the Florida Constitution; the impairment of contracts clauses found in article I, section 10 of the United States Constitution and article I, section 10 of the Florida Constitution; and Mercury's substantive due process rights under the Fifth and Fourteenth Amendments of the United States Constitution and article I, section 9, of the Florida Constitution. Ultimately, the trial court determined that Mercury had impaired Shands' lien and that but for the impairment, Ms. Price's underlying cause of action would have resulted in a judgment far greater than the cost of her treatment. The trial court also found, however, that all damages in excess of $10,000 were “nominal damage[s]” because the “judgment would have been uncollectible and of no commercial value.” Shands Teaching Hosp. & Clinics, Inc. v. Mercury Ins. Co. of Fla., No. 01–2006–CA–3631 (Fla. 8th Cir. Ct. final judgment filed Feb. 7, 2008) (Final Judgment). Therefore, the trial court limited Shands' damages to $10,000, the amount of the liability coverage that Mercury had paid to Ms. Price, as well as attorney fees and costs.

Mercury appealed the judgment, asserting that the Lien Law and Ordinance violated article III, sections 11(a)(9) and 11(a)(12) of the Florida Constitution, as well as Mercury's substantive due process rights under the Florida and United States Constitutions. Mercury also argued that if the Lien Law and Ordinance were upheld, any damages awarded to Shands must be limited to the $10,000 amount of the settlement between Mercury and Ms. Price or, at most, the $20,000 policy limits. Finally, Mercury appealed the award of attorney fees to Shands and claimed entitlement to attorney fees and costs pursuant to its settlement proposal. The First District reversed the trial court's judgment, holding that the Lien Law and Ordinance were unconstitutional under article III, section 11(a)(9) of the Florida Constitution. Accordingly, the First District remanded the case with instructions to enter judgment in favor of Mercury and to consider whether Mercury was entitled to attorney fees pursuant to the settlement proposal. Mercury Ins., 21 So.3d at 39.

Shands now appeals the First District's decision, arguing that the Lien Law and Ordinance are constitutional under article III, section 11(a)(9). Shands further contends that it should receive damages for the full reasonable amount of Ms. Price's treatment and attorney fees as the prevailing party in this case. Mercury cross-appeals, arguing that the Lien Law and Ordinance also violate both the prohibition on special laws granting a privilege to private corporations in article III, section 11(a)(12) of the Florida Constitution, and Mercury's substantive due process rights under the Fifth and Fourteenth Amendments of the United States Constitution and article I, section 9 of the Florida Constitution. Mercury also argues on cross-appeal that if this Court reverses the First District's decision, Shands' damages should be limited to the $10,000 settlement amount that Mercury paid Ms. Price.

II. ANALYSIS

In the analysis set forth below, we first explain that we affirm the First District's conclusion that the Lien Law is unconstitutional because it is a proscribed “special law” pertaining to “liens based on private contracts” under article III, section 11(a)(9) of the Florida Constitution. We then explain that the Ordinance—which is not a “special law”—is not unconstitutional and that the First District erred in failing to uphold the trial court's judgment on the basis of the Ordinance. Finally, we explainthat the trial court properly limited Shands' damages to $10,000 and properly awarded attorney fees to Shands.

“The determination of a statute's constitutionality and the interpretation of a constitutional provision are both questions of law reviewed de novo by this Court.” Fla. Dep't of Revenue v. City of Gainesville, 918 So.2d 250, 256 (Fla.2005). “While we review decisions striking state statutes de novo, we are obligated to accord legislative acts a presumption of constitutionality and to construe challenged legislation to effect a constitutional outcome whenever possible.” Id. (quoting Fla. Dep't of Revenue v. Howard, 916 So.2d 640 (Fla.2005)).

The relevant portion of the Lien Law and the corresponding portion of the Ordinance provide:

Any nonprofit corporation operating a hospital that has qualified pursuant to s. 501(c)(3) of the Internal Revenue Code as a charitable hospital, located in Alachua County, shall be entitled to a lien for all reasonable charges for hospital care, treatment, and maintenance of ill or injured persons upon any and all causes of action, suits, claims, counterclaims, and demands accruing to such persons or the legal representatives of such persons, and upon all judgments, settlements, and settlement agreements rendered or entered into by virtue thereof, on account of illness or injuries giving rise to such causes of action, suits, claims, counterclaims, demands, judgment, settlements, or settlement agreements and which necessitate or shall have necessitated such hospital care, treatment and maintenance.

....

... No release or satisfaction of any action, suit, claim, counterclaim, demand, judgment, settlement, or settlement agreement, or of any of them, shall be valid or effectual as against such lien unless such lienholder shall join therein or execute a release of such lien. Any acceptance of a release or satisfaction of any such cause of action, suit, claim, counterclaim, demand, or judgment and any settlement of any of the foregoing in the absence of a release of satisfaction of the lien referred to in this act shall prima facie constitute an impairment of such lien and the lienholder shall be entitled to an action at law for damages on...