Summary:
Jessica Whitaker was injured in an automobile accident and incurred, with $1,515 in costs to other medical providers, $757 for treatment at Nash Hospitals. State Farm, the insurer for the driver of the other vehicle, received notice of Nash Hospital’s medical liens under N.C.G.S. §§ 44-49 and 50. After questioning the necessity of all of the medical treatment, State Farm settled with Ms. Whitaker, who was unrepresented, for a total of $1,943, providing her with a check payable to Ms. Whitaker, Nash Hospital and the other medical provider. By statute, Nash Hospital was entitled to a pro rated share of no more than 50% of the settlement. Nash Hospital was not notified of the settlement nor presented with the check. Nash Hospital eventually sued asserting that N.C.G.S. § 44-50 “specifically requires the liability insurer to retain out of any recovery, before any disbursements, a sufficient sum to pay lien holders”, and that the failure by State Farm to comply constituted an unfair trade practice.
The Court of Appeals held that the “obvious intent of [N.C. Gen. Stat. §§ 44-49 and 44-50] is to protect hospitals that provide medical services to an injured person who may not be able to pay but who may later receive compensation for such injuries which includes the cost of the medical services provided.” Smith v. State Farm Mut. Auto. Ins. Co., 157 N.C. App. 596, 602, 580 S.E.2d 46, 50 (2003), rev’d per curiam on other grounds by 358 N.C. 725, 599 S.E.2d 905 (2004). A multi-party check did not comply with the clear requirements regarding disbursements.
The Court of Appeals also affirmed the conclusions by the trial court that these acts satisfied the requirements of N.C.G.S. § 75-1.1 et seq. as an unfair or deceptive act and practice. Nash Hospital was, accordingly, entitled to treble damages for its pro rated share of the settlement or a total of $971.07.
Commentary:
N.C.G.S. § 75-1.1 also will allow for attorney’s fees, which will likely be substantially more than $971.07,
This case additionally makes clear that a medical lien “is perfected when the insurer has ‘received notice’ of the ‘just and bona fide claims’ of the medical service provider.” Id. at 602-03, 580 S.E.2d at 51. For bankruptcy purposes, this means that a medical debt which is not perfected before the filing of a bankruptcy cannot later be perfected without violating the automatic stay or discharge. A medical lien could also be avoided if notice was sent within 90 days prior to filing bankruptcy.
For a copy of the opinion, please see:
Nash Hospitals v. State Farm- Failure to Honor Perfected Medical Lien
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