UNIVERSITY OF SO. ALA. v. PROGRESSIVE INS.

• Decision Date: 30 December 2004
• Docket Number: No. 1030955.,1030955.
• Citation: 904 So.2d 1242
• Parties: UNIVERSITY OF SOUTH ALABAMA d/b/a University of South Alabama Medical Center Hospital v. PROGRESSIVE INSURANCE COMPANY.
• Court: Alabama Supreme Court

904 So.2d 1242

UNIVERSITY OF SOUTH ALABAMA d/b/a University of South Alabama Medical Center Hospital v. PROGRESSIVE INSURANCE COMPANY.

No. 1030955.

Supreme Court of Alabama.

December 30, 2004.

Thomas R. Boller, Mobile, for appellant.

Alex L. Holtsford, Jr., of Nix Holtsford Gilliland Higgins & Hitson, P.C., Montgomery, for appellee.

WOODALL, Justice.

University of South Alabama d/b/a University of South Alabama Medical Center Hospital ("USAMC") appeals and Progressive Insurance Company ("Progressive") cross-appeals from a judgment in USAMC's favor in USAMC's action against Progressive for damages on account of an alleged impairment of a statutory hospital lien.¹ We affirm in part, reverse in part, and remand.

The relevant facts are undisputed. On May 14, 2002, Clarence Bell was injured when the bicycle he was riding was struck by a motor vehicle driven by Timothy Smith. Bell was transported from the accident scene to USAMC and was admitted for treatment. He remained there until June 5, 2002. The reasonable charges for Bell's hospital care, treatment, and maintenance were $57,097.

Ala.Code 1975, § 35-11-370, provides:

"Any person, firm, hospital authority or corporation operating a hospital in this state shall have a lien for all reasonable charges for hospital care, treatment and maintenance of an injured person who entered such hospital within one week after receiving such injuries, upon any and all actions, claims, counterclaims and demands accruing to the person to whom such care, treatment or maintenance was furnished, or accruing to the legal representatives of such person, and upon all judgments, settlements and settlement agreements entered into by virtue thereof on account of injuries giving rise to such actions, claims, counterclaims, demands, judgments, settlements or settlement agreements and which necessitated such hospital care, subject, however, to any attorney's lien."

After Bell was discharged from its hospital, USAMC properly perfected such a lien in the manner provided by § 35-11-371, Ala.Code 1975.

At the time of the accident, Timothy Smith maintained automobile liability insurance coverage with Progressive. Smith reported the accident involving Bell to Progressive, and the matter was assigned to Maureen Cordell, a Progressive claims adjuster. On June 20, 2002, Cordell received actual notice of USAMC's lien. On June 21, Cordell wrote to USAMC, stating, in pertinent part, that "[i]f liability is decided that we will owe for the injuries sustained to Clarence Bell as a result of the accident we will protect the hospital's interest when payment is made."

After Progressive completed its investigation, Cordell informed Bell by letter that Progressive was "deny[ing] any and all claims [he] might assert as a result of [the] accident." After sending that letter, Cordell had no further involvement with Bell or USAMC.

After Progressive denied his claim, Bell continued to pursue the matter. Ultimately, Bell agreed that he would not sue Smith if Progressive would pay him $6,000. On December 2, 2002, Progressive paid Bell $6,000, and Bell executed a full release of all his claims and demands against Smith. USAMC did not join in the release, nor did it execute any separate release of its lien.

After learning that Progressive had paid Bell $6,000 and had obtained a release from him, USAMC filed this action against Progressive, alleging that Progressive had impaired USAMC's statutory hospital lien and seeking damages. USAMC demanded judgment against Progressive "for the reasonable cost of [Bell's] hospital care, treatment and maintenance, plus costs and reasonable attorneys fees."

In answering the complaint, Progressive denied that it had impaired USAMC's lien. Further, Progressive asserted the following defenses:

"19. [Progressive] affirmatively aver[s] that [USAMC] is not entitled to recover any amount beyond the claim payment actually made by [Progressive] in this case.

"20. [Progressive] affirmatively aver[s] that [USAMC] is not entitled to any recovery unless and until it can prove as a matter of law that Clarence L. Bell was entitled to recover legal damages from [its] insured....

"21. [Progressive] affirmatively aver[s] that Ala.Code Section 35-11-372 is violative of the due process clause of the Fourteenth Amendment to the Constitution of the United States and is violative of the due process [clause] of the Constitution of the State of Alabama in that enforcing the lien in any amount in excess of the claim payment by the insurer is arbitrary and capricious, does not provide sufficient notice to the insurer that it may be subject[ed] to such a punitive application of the statute as being sought herein by [USAMC], provides insufficient logical standards, criteria, and guidelines for imposition of a judgment against the insurer as being sought herein by [USAMC], and constitutes a punitive taking of property without due process of law.

"22. [Progressive] affirmatively aver[s] that any enforcement of a hospital lien in an amount in excess of the actual insurance payment violates Article II, Section 10, of the United States Constitution, which prohibits laws that impair the obligations of contracts and contractual relationships.

"23. [Progressive] affirmatively aver[s] that any enforcement of a hospital lien in an amount in excess of the monetary limitations upon an insurance policy contract violates Article II, Section 10, of the United States Constitution prohibiting laws that impair the obligations of contracts."

After discovery was conducted, USAMC filed a motion for a summary judgment. It contended, in substance, that Progressive's acceptance of the release from Bell had impaired its statutory hospital lien, and that, therefore, it was entitled to recover as damages $57,097, the reasonable cost of Bell's hospital care, treatment, and maintenance.

Progressive also filed a motion for a summary judgment, stating alternative arguments. First, it argued that it had no duty to protect USAMC's hospital lien, because its insured, Timothy Smith, was not liable for the injuries to Clarence Bell. Alternatively, it argued, based upon its interpretation of § 35-11-370, that if it had impaired USAMC's lien, its liability to USAMC could not exceed the $6,000 it had paid Bell in exchange for the release.

On February 26, 2004, the trial court entered its final judgment, stating the following findings of fact and conclusions of law:

"FINDINGS OF FACT

"1. Clarence L. Bell received care, treatment and maintenance at one of [USAMC's] hospitals in Mobile County from 14 May 2002 until 5 June 2002 as a result of injuries he received on 14 May 2002.

"2. [USAMC] had a hospital lien duly perfected pursuant to Alabama Code 1975, § 35-11-371, of which Defendant Progressive Insurance Company had both actual and constructive knowledge. That lien has not been released or satisfied.

"3. On 2 December 2002 Defendant Progressive Insurance Company paid $6,000.00 and entered into a `FULL RELEASE OF ALL CLAIMS AND DEMANDS' with Clarence L. Bell `on account of or in any way growing out of, any and all known and unknown personal injuries and damages resulting from an automobile accident which occurred on or about 5/14/02 at or near Springhill Avenue, Mobile, Alabama,' and the acceptance of that release by Defendant Progressive Insurance Company constituted an impairment of [USAMC's] hospital lien.

"4. The reasonable cost of the hospital care, treatment and maintenance by [USAMC] of Clarence L. Bell for his injuries received 14 May 2002 was $57,097.00.

"CONCLUSIONS OF LAW

"1. [USAMC's] Motion for Summary Judgment is due to be granted, but its damages are limited to that amount actually paid by Defendant Progressive Insurance Company, that being $6,000.00, for which judgment is rendered against Progressive Insurance Company, plus costs, and $2,000.00 attorney's fees.

"2. Defendant Progressive Insurance Company's Motion for Summary Judgment is granted in part in the amount of $6,000.00."

(Emphasis added.) From that judgment, USAMC appeals, contending that "[t]he trial court erred in interpreting the hospital lien statute as limiting damages to the amount of the settlement between Progressive and Bell." USAMC's brief, at 8. Progressive cross-appeals, arguing that its "insured was not liable for the accident and therefore Progressive had no duty to protect and/or satisfy [USAMC's] lien." Progressive's brief, at 10.

A party is entitled to a summary judgment when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Rule 56(c)(3), Ala. R. Civ. P. "Our review of a summary judgment is de novo." Crutcher v. Wendy's of North Alabama, Inc., 857 So.2d 82, 85 (Ala.2003). "The trial court's interpretation of [§ 35-11-372] involves a question of law; it is reviewed de novo by an appellate court, without any presumption of correctness." Simcala, Inc. v. American Coal Trade, Inc., 821 So.2d 197, 200 (Ala.2001).

This case involves the interpretation of the hospital-lien statute. Both parties remind us of the following principle:

"The fundamental rule of statutory construction is to ascertain and give effect to the intent of the legislature in enacting the statute. Words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says. If the language of the statute is unambiguous, then there is no room for judicial construction and the clearly expressed intent of the legislature must be given effect."

IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So.2d 344, 346 (Ala.1992). We note that "[t]he purpose of Alabama's hospital-lien statute is, by giving a hospital an automatic lien for the reasonable value of its services, to induce it to receive a patient injured in an accident, without first considering whether the patient will...