State Supreme Court Rules That Hospitals Cannot Put Liens on Settlements of Some Insured Patients
Hospitals that accept a patient's insurance as "payment in full" cannot put a lien on any money an injured patient receives in a settlement with the party who caused the injury, the state Supreme Court ruled Monday, the San Francisco Chronicle reports.
In the lawsuit, a patient sued San Joaquin Community Hospital for putting a lien on the $15,000 settlement he received from the party who caused his injury. Attorneys for the patient said the hospital could not attempt to collect hospital costs because all costs specified under a PPO network agreement had been paid. The patient paid a $1,000 deductible, and his insurer paid the remaining $4,000 in charges included in the agreement (Egelko, San Francisco Chronicle, 4/5).
Justice Janice Rogers Brown wrote, "Because [the patient] no longer owes a debt to the hospital for its services, we conclude that the hospital may not assert a lien ... against [the patient's] recovery." She added that the court was following "the lead of most of our sister courts" across the country (Kravets, AP/San Jose Mercury News, 4/5).
According to the Chronicle, the court "expressed sympathy" for the financial situation of California hospitals. However, Rogers Brown wrote, "Hospitals may look to the Legislature for relief from these financial pressures, but not to this court."
William Hanagami, an attorney for the patient, said hospitals' ability to put a lien on insured patients "defeats the whole concept of PPO insurance" (San Francisco Chronicle, 4/5). He added, "This decision strikes down a practice by the hospital industry here in California that's been going on for well over 10 years, ... and it was a relatively well-kept secret from the general public."
Officials from Adventist Health Systems/West, the SJCH's parent company, were not available for comment, according to the Los Angeles Times.
Daron Tooch, a lawyer for hospitals involved in health plan disputes, said, "Hospitals should be more careful about the contract they do enter into ... to make sure they are being fully compensated" (Girion, Los Angeles Times, 4/5).