State Farm Mut. Auto. Ins. Co. v. Huff

• Decision Date: 11 June 2013
• Docket Number: D062550
• Citation: 157 Cal.Rptr.3d 863,216 Cal.App.4th 1463
• Court: California Court of Appeals Court of Appeals
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Plaintiff, v. Michael HUFF, Defendant and Appellant; Pioneers Memorial Healthcare District, Defendant and Respondent.

216 Cal.App.4th 1463
157 Cal.Rptr.3d 863

STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Plaintiff,
v.
Michael HUFF, Defendant and Appellant;
Pioneers Memorial Healthcare District, Defendant and Respondent.

D062550

Court of Appeal,
Fourth District, Division 1, California.

Filed June 11, 2013

See 13 Witkin, Summary of Cal. Law (10th ed. 2005) Personal Property, § 244.

APPEAL from a judgment of the Superior Court of Imperial County, Donal B. Donnelly, Judge. Reversed and remanded with directions. (Super. Ct. No. ECU06448)

Nordstrom, Steele, Nicolette and Blythe, Alan K. Nicolette; Guizot & Mouser, Damon Guizot and Marlena J. Mouser for Defendant and Appellant.

Franklin J. Love for Defendant and Respondent.

IRION, J.

[216 Cal.App.4th 1466]

In this interpleader action, Michael Huff appeals the judgment awarding Pioneers Memorial Healthcare District (the District) a portion of the damages he recovered in a personal injury action against third parties arising out of a motor vehicle collision. The District provided collision-related medical services to Huff at one of its hospitals for which he did not pay. When Huff later obtained a judgment for damages against the third parties who caused his injuries, the District asserted a lien on Huff's damages recovery pursuant to the Hospital Lien Act (Civ.Code, §§ 3045.1–3045.6). Huff contends the District was not entitled to any of the damages because it did not prove the charges for its services were “reasonable and necessary.” (Id., § 3045.1.) We agree and reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Huff sustained serious injuries in a motor vehicle collision involving Steven and Matthew Wilkins. (Huff v. Wilkins (2006) 138 Cal.App.4th 732, 736–737, 41 Cal.Rptr.3d 754 (Huff ).) Huff was taken to Pioneers Memorial Hospital, a facility operated by the District, where he received treatment for his injuries over the course of seven days. At the time of discharge, Huff owed the District $34,320.86 for medical services. The District never received payment for these services.

Huff subsequently sued the Wilkinses for negligence. (Huff,supra, 138 Cal.App.4th at p. 737, 41 Cal.Rptr.3d 754.) After a jury trial, he obtained a judgment on special verdict against them for $356,587.92 in damages. The jury found that Huff's past medical expenses totaled $232,708.80.

Shortly after entry of judgment, a collection agency acting on behalf of the District sent the Wilkinses' insurer, State Farm Mutual Automobile Insurance Company (State Farm), a written notice pursuant to the Hospital Lien Act that the District was claiming a lien in the amount of $34,320.86 on any damages State Farm might pay Huff. Huff disputed the amount of the lien and demanded that State Farm pay the entire judgment amount to him and his attorneys.

Faced with conflicting claims to a portion of the funds to be paid to satisfy Huff's judgment against the Wilkinses, State Farm filed an interpleader action against Huff and the District, and deposited the amount of the District's

[216 Cal.App.4th 1467]

claimed lien with the trial court. (See Code Civ. Proc., § 386, subd. (b).) ¹ The conflicting claims of Huff and the District then proceeded to a bench trial.

At the trial, four witnesses testified and several documents were introduced as evidence:

(1) The District's director of patient accounting authenticated a copy of Huff's hospital bill, which the court admitted into evidence. He testified the bill remains unpaid and the itemized charges listed on the bill were based on standard rates applicable to all patients. The director admitted he is not a doctor or a nurse and never met or talked to Huff.

(2) The District's former patient financial counselor testified she spoke to Huff while he was in the hospital to discuss why he was there, whether he had insurance, and what programs might be available for payment of his medical expenses. Huff told her “he didn't have any insurance and [she] should be billing the person responsible for the accident.”

(3) The general manager of the collection agency acting on behalf of the District testified that he served State Farm by certified mail with a notice of hospital lien concerning Huff's unpaid bill. The court admitted a copy of the notice into evidence. The general manager also testified the current balance due on Huff's bill was $34,320.86. He admitted he had no personal knowledge about the actual services the District furnished Huff.

(4) An attorney who represented Huff in his negligence action against the Wilkinses testified that at the trial of that action he introduced evidence of all of the medical expenses Huff incurred during his hospitalization at the District's hospital. The attorney also authenticated a copy of the judgment on special verdict in Huff's negligence action against the Wilkinses, which the court admitted into evidence.

After hearing argument from counsel and taking the matter under submission, the trial court ruled the District “met its burden to establish a valid and enforceable claim of lien for emergency medical care and services under the [Hospital Lien Act].” Specifically, the court found: (1) the testimony of the District's patient financial counselor established that Huff had received medical services at the District for injuries caused by a third party; (2) the testimony of the District's director of patient accounting established that the District has not been paid for those services; and (3) the testimony of the District's director of patient accounting and the general manager of the

[216 Cal.App.4th 1468]

collection agency retained by the District established that the District gave State Farm valid notice of its lien. The trial court also ruled the District was “not required under the [Act] to present expert testimony or otherwise affirmatively prove that the amounts it claims in the lien are for ‘reasonable and necessary charges.’ ” According to the court:

“[T]he authenticated hospital statement of charges serves as prima facie evidence that services were rendered and billed for.... [The Act] does not require a detailed description of the services, much less an expert declaration of reasonableness and necessity. That would gravely impair the utility of the statutory lien as a low[-]cost, simpler, and speedier alternative to litigation. In addition, the requirement that medical services be proven to have been ‘reasonable and necessary’ traditionally only applies for the purpose of proving causation and damages in contested tort cases. It need not be proved in collections cases on ‘common counts' and should have no application to the alternative statutory enforcement of a lien on a debt. Had the legislature intended to impose such additional requirement, it would have so specified in the statutory language.”

Based on these rulings, the trial court entered judgment in favor of the District for $34,320.86, less its pro rata share of the costs and attorney fees incurred by State Farm. (See Code Civ. Proc., § 386.6, subd. (a).)

DISCUSSION

Huff contends the judgment must be reversed because the trial court erroneously relieved the District of its burden under the Hospital Lien Act to prove the charges for the services it provided Huff were reasonable and necessary, and the District submitted no evidence to establish the reasonableness or necessity of those charges. The District counters that the judgment must be affirmed because sufficient circumstantial evidence established the charges were reasonable and necessary, and Huff did not prove otherwise. As we shall explain, we agree with Huff.

A. Standard of Review

We review the trial court's construction of the Hospital Lien Act de novo. (Weston Reid, LLC v. American Ins. Group, Inc. (2009) 174 Cal.App.4th 940, 946, 94 Cal.Rptr.3d 748.) In considering a challenge to the sufficiency of the evidence to sustain a judgment, we examine the record to determine whether it contains substantial evidence (i.e., evidence that is reasonable, credible, and of solid value), resolving all conflicts and drawing all reasonable inferences in favor of the party who prevailed at trial. (Wilson v. County of Orange (2009) 169 Cal.App.4th 1185, 1188, 87 Cal.Rptr.3d 439; Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d 496, 506–507, 286 Cal.Rptr. 714.)

[216 Cal.App.4th 1469]

B. Legal Analysis

To resolve this appeal, we must answer two related questions. First, must a hospital asserting a right under the Hospital Lien Act to a portion of judgment proceeds payable to an injured person treated by the hospital prove that its claimed charges were reasonable and necessary? Second, did the District meet its burden of proof in this case? As we shall explain, the answers to these questions are, respectively, yes and no.

We look first to the language of the Hospital Lien Act to determine what a hospital must prove to enforce its lien rights, because a lien under the Act is statutory and thus subject to...