Hospital’s Lien For Treating Injuries Caused By Insured Tortfeasor.

Three patients, covered under a Kaiser Permanente health plan, were treated at an emergency room after being injured in a car accident caused by a third party’s negligence. The third party had insurance through California Automobile Association [AAA] and Allstate Insurance Company. Kaiser provided coverage through an agreement it had with the hospital, but neither AAA nor Allstate had a contract with the hospital. The hospital sought to collect from AAA and Allstate its customary billing rates by asserting liens under the Hospital Lien Act [HLA; Civil Code section 3045.1], but AAA and Allstate ignored the hospital’s liens when they paid settlements to the three Kaiser patients. When it learned of the settlements, the hospital sued AAA and Allstate to recover its HLA liens. The trial court granted the summary judgment motions of AAA and Allstate on the ground the patients’ debts had been fully satisfied by their health care plans, reasoning the HLA liens were extinguished for lack of an underlying debt. In the hospital’s appeal, the appellate court phrased the issue this way:  Does a health care service plan’s payment of a previously negotiated rate for emergency room services insulate the tortfeasor’s automobile liability insurer from having to pay the customary rate for medical care rendered? The appellate court talks at length about the holding in Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595, [109 P.3d 69; 26 Cal.Rptr.3d 569], where the California Supreme Court stated hospitals may not recover their customary rates for emergency room care when they have contractually agreed to accept negotiated rates as payments in full. In the instant case, the contract between the hospital and Kaiser preceded the Parnell holding by ten years, and is silent as to whether the hospital may collect from tortfeasors and their automobile insurers after receiving negotiated rate payments from the patients’ health care service plans. In affirming the grant of summary judgment, the appellate court said it was “for lack of contractual reservation of billing rights against third party tortfeasors.”  (Dameron Hospital Association v. AAA Northern California (Cal. App. Third Dist.; September 4, 2014) 229 Cal.App.4th 549, [176 Cal.Rptr.3d 851].)