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Hospital Liens

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Case: Diane West v. Shelby County Healthcare Corp.

Facts: Patient received care from Hospital after being injured in a car accident, and Hospital perfected a hospital lien on Patient’s bill. Insurance Company paid a portion of the medical costs in settlement of Patient’s hospital bill. Patient filed a lawsuit against the third-party tortfeasor allegedly responsible for the car accident and sought a release of the lien by Hospital, but Hospital responded that its agreement with Insurance Company gave it the right to pursue its lien up to the full amount of the bill, notwithstanding the settlement. The trial court denied Patient’s suit to quash the lien.

Appellate Decision: The intermediate court reversed, holding that state and federal law prevent a provider from asserting a hospital lien once it has accepted some payment on the patient’s medical bills.

Issue: In its order, the Supreme Court limited review to two issues: (1) Whether the intermediate court’s holding erroneously denied the right to contract by Insurance Company and Hospital, and (2) Whether the intermediate court erred in determining that a contract stating that acceptance of payments constituted “payment in full” when that contract is not in the record.

Review Granted: August 15, 2013.

Prediction: Ben believes the Court is likely to affirm as to the legal issue. Certainly the freedom of parties to contract is important, but the relevant statutes contemplate that a patient’s rights are also important when it comes to agreements between hospitals and insurance companies. No prediction is possible as to the second issue without a full examination of the record.