Hospitals Allowed to Assert Liens for Amounts Over and Above What Health Insurers Pay

In spite of this language, MCG filed a hospital lien against Kight in connection with his personal injury claim against the tortfeasor for not only deductibles and co-pays but the amount “written off” by MCG pursuant to its contract with Blue Cross.  The full Georgia Court of Appeals agreed that this was appropriate under the Georgia Hospital Lien Statute, O.C.G.A. § 44-14-470, which provides that a hospital shall have a lien for the reasonable charges for care and treatment of an injured person upon any and all causes of action accruing to that person which gave rise to the hospital care.  The lien allows the hospital to step into the shoes of the injured person for purposes of receiving payment from the tortfeasor or the tortfeasor’s insurance company for the economic damages represented by the hospital bill.  The Court of Appeals pointed out that Kight was allowed, pursuant to the collateral source rule, to seek the entire amount of the hospital bill from the tortfeasor.  Kight was entitled to seek full recovery from the tortfeasor of reasonable and necessary hospital charges undiminished by any insurance payments or “write-offs” under MCG’s contract with Blue Cross.

The absence of debt owed to MCG under the contract with Blue Cross and the Hospital’s agreement in the contract not to balance-bill Blue Cross members to collect the difference between the reduced charges and the bill charges cannot, according to the Court of Appeals, be construed as a waiver or preclusion of the Hospital’s lien rights under O.C.G.A. § 44-14-470.

In determining the validity of a hospital lien, you should look closely at the contract between the hospital and the injured party’s health insurer.  In a previous decision, which is arguably still good law, Constantine v. MCG Health, Inc., the contract provided that in no event would the hospital have “any recourse” against an injured insured for hospital services covered by the agreement.  The Court in Constantine found that these provisions prohibit balance-billing by the hospital and the health care insurer’s payment to the hospital of reduced amount due under contract extinguished any debt owed to the hospital under the contract, and the absence of debt precluded the Hospital from filing a lien under O.C.G.A. § 44-14-470.  In a concurrence to the Kight opinion, six judges of the Court of Appeals emphasized that Constantine remained good law for the proposition that a hospital can contractually waive it right to collect on a hospital lien through a “no recourse” provision in the hospital’s contract with a patient health insurer.

Based on these decisions, hospitals are likely to become more aggressive in seeking “debt” resulting from reduced charges required by insurance contracts and will seek to alter their contracts with insurers so as to allow recourse against tortfeasors and plaintiff.

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About the Author

Michael Rust graduated from Emory University in 1980 and Emory University School of Law in 1983 where he was Notes and Comments editor of the Emory Law Journal (Law Review). Since that time, he has maintained an active trial practice in the state of Georgia both in State and Federal Courts. Mr. Rust teaches litigation as part of Emory University School of Law’s annual Trial Practice Program. He has received AV rating from Martindale Hubble, the highest rating afforded to lawyers by their peers.