Hospital can enforce lien without billing insurer first

A hospital‘s decision not to bill a patient’s insurer for medical care provided after a car crash didn’t prevent the hospital from putting a medical lien on any recovery the patient obtained in the ensuing negligence lawsuit, the North Carolina Court of Appeals has ruled in a case of first impression.

Derrick Sykes was injured in a car accident and sought care at Nash Hospital. After learning that another driver, Emmanuel Vixamar, was likely liable for the injuries, Nash chose not to bill Sykes’s health insurer for his care and instead opted to rely on a statutory medical lien on any payments Sykes received from Vixamar.

Hospitals frequently rely on statutory liens against personal injury judgments to recover what they’re owed, but Vixamar’s auto insurer, Progressive, argued that the failure to bill Sykes’ insurer created a conflict with a different state law that prevents hospitals from billing patients for charges that would have been covered by health insurance if the hospital had timely submitted a claim. Progressive argued that, since Nash could no longer bill Sykes directly for his care, it had no enforceable lien against him.

As a result, Progressive sought to exclude evidence of Sykes’ medical bills during a subsequent trial. The trial judge allowed the evidence anyway, and the jury returned a verdict in Sykes’ favor. Progressive appealed, arguing that the hospital bills were inadmissible.

Flo’s theory flawed

But Judge Richard Dietz, writing for a unanimous panel in a June 18 ruling, disagreed, saying that the purpose of the fair medical billing statute is to protect patients from being billed for charges that should have been covered by their health insurance, not to force hospitals to bill health insurers when other sources of payment are available. Reading the law the way Progressive requested would have the perverse effect of forcing hospitals to bill patients and their insurers immediately.

“This, in turn, would mean the fair medical billing statute—a statute designed to protect patients from unnecessary hospital bills—would instead force patients to pay deductibles and other charges upfront even though the hospital would have been content to wait and recover those costs solely from a liability judgment or settlement in the future,” Dietz wrote. “That is not what the text of the fair billing statute requires, and certainly not what the legislature intended.”

Dietz noted that when Nash chose not to submit a claim to Sykes’ insurer, it abandoned its right to seek payment from Sykes and his insurer directly, but it didn’t follow that Nash was thereby wiping away his debt. Rather, Sykes remained indebted to Nash because the hospital still expected to be paid for its services, and there were still lawful means through which it could collect those payments.

Meredith Hinton of the Ricci Law Firm in Greenville represented Sykes. Hinton could not be reached for comment on the ruling.

Camilla DeBoard and Kara Bordman of Teague, Rotenstreich, Stanaland, Fox & Holt in Greensboro represented Vixamar and Progressive. Bordman declined to comment on the case.

The 13-page decision is Sykes v. Vixamar (Lawyers Weekly No. 011-169-19). The full text of the opinion is available online at nclawyersweekly.com.

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