McMeans v. Med. Liabilities Recoveries, Inc.,

McMeans v. Med. Liabilities Recoveries, Inc.,
No. D039761 (Super. Ct. No. 722004) (Cal. Ct. App. Dec. 19, 2002)

Several patients who were treated at a hospital for injuries caused by third
parties ultimately sued the third parties who caused their injuries. The patients
were insured by medical insurance carriers, some of which had entered into contracts
with the hospital that specified fixed charges agreed to in advance for covered
services. The patients and/or their medical insurance carriers paid the hospital
for services provided to them. Defendant (on behalf of the hospital) placed
liens on the judgments or settlements the patients received from the third parties
or their liability insurance carriers under the state’s Hospital Lien Act ("HLA").

In each case, the liens were greater than the amounts the hospital had been
paid by the patients or their medical insurance carriers. The patients sued,
and the trial court granted summary judgment in favor of the hospital and the
defendant. The plaintiff patients appealed, arguing that they and/or their medical
insurance carriers paid the hospital in full for its services and, by placing
liens on their recoveries, the defendant (on behalf of the hospital) sought
amounts greater than the amounts the hospital agreed to accept for its services.

The California Court of Appeals held that, under state law, the amount a personal
injury plaintiff can recover for medical services is limited to the amount that
has been paid or incurred for those services, even if that amount is less than
the market rate. Accordingly, the hospital’s lien rights did not extend beyond
the amount it agreed to receive from the patients’ medical insurance carriers
as payment in full for services provided to patients. The amount of an HLA lien
may not exceed the amount the patient is indebted to the hospital. Based on
the court’s review of the provisions of the patients’ medical insurance contracts
and the contracts the hospital entered into with the medical insurance carriers,
the court determined that the defendant was not entitled to place a lien on
one of the patient’s recovery, but was entitled to place liens on the recoveries
of two other patients. Because a triable issue of fact existed as to the reasonable
value of the services the hospital provided to two of the patients, the trial
court erred by granting summary judgment for the defendant.