West v. Shelby Cnty. Healthcare Corp.
| Decision Date | 11 February 2013 |
| Docket Number | No. W2012-00044-COA-R3-CV,W2012-00044-COA-R3-CV |
| Parties | DIANE WEST, ET AL. v. SHELBY COUNTY HEALTHCARE CORP., d/b/a REGIONAL MEDICAL CENTER AT MEMPHIS. |
| Court | Tennessee Court of Appeals |
Direct Appeal from the Circuit Court for Shelby County
This is an appeal from the trial court's denial of Appellants' motion to quash Appellee's hospital liens, which were filed pursuant to Tennessee Code Annotated Section 29-22-101 et seq. In each Appellant's case, the hospital filed a lien and then recovered adjusted amounts for services rendered pursuant to the hospital's agreements with the Appellant's respective insurance providers. Despite having received payment, the hospital argues that it may return these adjusted payments to the insurance provider and may, instead, seek to recover its full, unadjusted bill from the Appellants' third-party tortfeasors by foreclosing its liens. We conclude that: (1) a lien, under the HLA, presupposes the existence of a debt; (2) Appellants are third-party beneficiaries of their respective insurer's service contract with the Appellee hospital; (3) having chosen to accept a price certain for services as "payment in full" and having, in fact, accepted payment from Appellants' insurance providers, the underlying debt is extinguished; (4) in the absence of an underlying debt, the hospital may not maintain its lien; (5) the right to subrogate belongs to the insurance provider and a hospital lien does not create a subrogation right in the hospital. Reversed and remanded.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Circuit Court Reversed and
Remanded
J. STEVEN STAFFORD, J., delivered the opinion of the Court, in which ALAN E. HIGHERS, P.J., W.S., and David R. Farmer, J., joined.
Eugene A. Laurenzi and Lesley Cook, Memphis, Tennessee, and A. Wilson Wages, Millington, Tennessee, for the appellants, Diane West, Jammie Heags-Johnson, and Charles Garland, Individually and on behalf of all other persons similarly situated.
John I. Houseal, Jr. and Don L. Hearn, Jr., Memphis, Tennessee, for the appellees, Shelby County Healthcare Corp., d/b/a Regional Medical Center at Memphis.
Diane West, Jammie Heags-Johnson, and Charles Garland (together, "Appellants") each suffered injuries and damages as a result of another person's negligent operation of a motor vehicle in separate accidents. Each Appellant was taken, by ambulance, to Shelby County Healthcare Corporation d/b/a Regional Medical Center at Memphis (the "Med," or "Appellee"), where treatment was rendered. The Med is a community hospital, specializing in traumatic and indigent care. According to the record, when a patient is admitted to the Med, the patient is immediately categorized in the Med's system by the nature of his or her injury (e.g., a car accident victim struck by another driver, or a pedestrian hit by another driver). This categorization indicates whether there is any potential for third-party tortfeasor liability. If there is potential third-party liability, then the Med files a hospital lien, pursuant to the Tennessee Hospital Lien Act, Tennessee Code Annotated Section 29-22-101 et seq. (the "HLA"). In the case of each Appellant, hospital liens were timely filed by the Med's collections department. Each of the liens was filed for services rendered for the treatment of the respective Appellant's injuries in the full and unadjusted amount of each Appellant's medical bill. In each case, Appellant's respective insurance carrier paid the Med the adjusted amount agreed upon in the contract between the Med and the insurance provider. However, in each case, the Med refused to quash its lien against the Appellant's recovery from the third-party tortfeaser. Rather, the Med's practice, based upon its interpretation of the applicable statutes and rules and regulations, is to consider payments from the insurance provider as "contingent payments." After the Med receives funds from the third-party tortfeasor pursuant to its hospital lien, it then reimburses the provider. As stated in its brief, the Med interprets the applicable law to allow it to "seek payment from a third party tortfeasor even if the Med has received payment [from an insurance provider]." Specifically, in its collection practices, the Med "pursues payment for medical services from liable third party tortfeasors" by filing a hospital lien "to third party tortfeasors of the Med's rights." The Med states that it "never keeps" the insurance payment, which is the amount agreed upon between the Med and the insurer in their contract (a/k/a, hospital services agreement). In doing so, the Med contends that it does not charge the insured for charges beyond those covered by the insurer. In addition to its "contingent payment" argument, the Med further argues that its right of recovery is not against the patient, but directly against the third-party tortfeasor.
Appellants' argument rests upon their contention that the Med's practice in acceptinginsurance payments and, then, not quashing the lien is not in compliance with applicable law. Specifically, Appellants contend that, when the Med accepted payment from each of Appellants' insurance plans, this constituted "payment in full" for each Appellant's bill. Despite receiving "payment in full," so as to discharge the debt secured by the lien, Appellants argue that the Med is using its lien to cover billings above the adjusted amounts that it had agreed to take under its contract(s) with the Appellants' insurers-a practice referred to as "balance billing." River Park Hospital v. Blucross Blueshield of Tennessee, Inc., 173 S.W.3d 43, 55-56 (Tenn. Ct. App. 2002) (), see further discussion infra.
Mr. Garland was treated at the Med after being injured in an automobile accident on January 2, 2006. Mr. Garland is insured by TennCare. On January 31, 2006, before TennCare had paid on Mr. Garland's bill, the Med filed an Affidavit for Hospital Lien in the amount of $1,791.22. On February 2, 2006, the Med perfected and served its hospital lien by registered mail pursuant to the HLA.
The Med has entered into a hospital services agreement (the "TennCare HMO Agreement") with Memphis Managed Care Corporation, which is a health maintenance organization ("HMO") that maintains TennCare's HMO health benefit plan on behalf of TennCare enrollees. Consistent with TennCare's "Third Party Resources" requirements, Tennessee Rules and Regulations 1200-13-1-.04,1 1200-13-13-.09,2 and 1200-13-14-.09, theMed's TennCare HMO Agreement provides:
Coordination of Benefits. Where the Enrollee is entitled to payment or benefits from multiple third-party payors, the obligations of respective third-party payors shall be determined in accordance with the coordination of benefits provisions of the applicable health benefit plans. [The HMO's] total payment under this Agreement shall not exceed that amount of compensation provided for under this Agreement, less the total of all amounts received from other payment sources.
Pursuant to this section of the TennCare HMO Agreement, the Med contends that it has used its hospital lien in an attempt to "determine the obligations of third-party payors potentially liable for Mr. Garland's medical care." TennCare, through the HMO, paid Mr. Garland's Med bill in an amount compliant with the TennCare HMO Agreement. As noted above, the Med contends that this payment was "accepted as a conditional payment that [could] be returned to TennCare upon the Med discovering the identity of or accepting payment from a liable third party tortfeasor."
Because Mr. Garland was injured by a third-party, litigation was commenced against the third-party on Mr. Garland's behalf. After TennCare paid on behalf of Mr. Garland, hisattorney requested that the Med release its hospital lien on the ground that the underlying debt, which was secured by the lien, had been satisfied by TennCare's payment pursuant to the TennCare HMO Agreement. The Med refused to release its lien, taking the position that it was authorized to void a claim previously paid by TennCare in an attempt to collect its payment from a third party tortfeaser. By letter of August 23, 2007, the Med informed Mr. Garland's attorney that:
The Med is not billing Charles Garland any amount of money over and above what TennCare paid. The Med has a lien against the third party liability claim. It is the Med's position that pursuant to the lien and pursuant to the rules of TennCare, they have a right to pursue the third party liability claim up to one-third of the settlement or the amount of their bill, whichever amount is lower. If payment is made pursuant to the liens statute, the Med will reimburse TennCare for any monies that they have paid.
Ms. Heags-Johnson was injured in a motor vehicle accident on July 21, 2006. Ms. Heags-Johnson is insured through an employer-sponsored health plan that is administered by Accordia Insurance Company. Accordia is part of the Baptist Health Services Group of the Mid-South, Inc.'s ("BHSG") provider network, and thus is subject to BHSG's contract with the Med (the "BHSG Network Contract").
Ms. Heags-Johnson received two bills from the Med. The first bill, in the amount of $4,302.94, was for her initial treatment. She received a second bill, in the amount of $338.24, for further treatment at the Med on August 8, 2006. On August 1, 2006, the Med filed its first hospital lien in the amount of $4,302.94; this lien was perfected by registered mail on August 3, 2006. On November 21, 2006, the Med filed an amended hospital lien in the amounts of $4,302.92 and $448.42. The amended lien was also perfected pursuant to Tennessee Code Annotated...
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