David Hudson
David Hudson (Rebecca Breyer)

The Georgia Supreme Court on Monday scuttled a lawsuit against an Augusta hospital over its collection practices, rejecting a patient’s attempt to test the limits of the state’s lien laws.

Although the unanimous decision was a victory for the hospital run by MCG Health Inc., plaintiffs lawyers who were watching the case could take some comfort in the high court distancing itself from remarks in a Court of Appeals decision that appeared to give hospitals even greater leeway to place liens on their patients’ personal injury suits.

Personal injury lawyers had been watching the case closely because they fear if liens are large enough, they could prevent patients from collecting on their personal injury settlements, depriving them of the full benefit of health insurance.

Some patients with cases against parties who allegedly caused their injuries claimed the hospital filed liens even when the patients’ health insurers had paid their bills.

The winning lawyer for the hospital, David Hudson of Hull Barrett in Augusta, noted that Monday’s decision rejected the plaintiff’s contention that a hospital must know at the time it files a lien the exact amount that it ultimately could collect via that route. He has said a lien can protect a hospital if a patient’s health insurer won’t pay and tells the hospital to seek recourse from the party that caused the injury, or if health coverage has lapsed.

The bottom line, said Hudson on Monday, is that “what a hospital can and cannot recover under a hospital lien will be governed by the language of the contract … with the patient’s insurer.”

A lawyer for the plaintiff, Harry Revell of Nicholson Revell in Augusta, said it was “somewhat comforting” that the Supreme Court hadn’t adopted in full the Court of Appeals opinion in the case—which he said allowed hospitals to “balance bill” through liens to collect the difference between what a plaintiff’s health insurer has agreed by contract to pay and what the hospital considers the value of the services provided, regardless of what the hospital’s contract with the insurance company says. But he said it was disappointing that Monday’s opinion didn’t acknowledge that it took a lawsuit and several months of litigation for MCG to reduce by about $35,000 what it was seeking from the plaintiff via a lien.

In the case decided by the state Supreme Court on Monday, plaintiff Christopher Kight was injured in an automobile accident in which he was a passenger in a car driven by an allegedly intoxicated driver. He received medical care for his injuries from MCG.

In March 2007, the hospital filed a lien for $36,177.68 in hospital charges against any causes of action Kight might have based on his injuries. That amount didn’t take into account that Kight was entitled to lower prices due to the discounted rate in the contract between the hospital and Kight’s health insurance carrier, Blue Cross/Blue Shield.

That December, after Kight received an offer from the driver to settle his claim, Kight demanded that the hospital cancel its lien, saying there were no unpaid charges in light of Kight’s insurance with Blue Cross/Blue Shield. When the hospital failed to cancel the lien, Kight sued the hospital.

In September 2008, while the suit was pending, the hospital filed an amended lien for only $863.10 that the hospital said superseded the previous lien. The hospital said Kight owed deductibles and co-pays in that amount.

Augusta Circuit Superior Court Judge Sheryl Jolly granted partial summary judgment to Kight and declared the March 2007 lien void and invalid. She later awarded Kight $40,950 in attorney fees and $3,376.60 in expenses, subject to a set-off of $863.10, representing what Kight owed the hospital.

The hospital appealed, and the case went to all 12 judges of the Georgia Court of Appeals because one of the court’s precedents was under consideration. In a unanimous decision written by Judge Gary Andrews, the court reversed. Andrews wrote that because Kight’s claim against the driver was not limited to the discounted charges the insurer paid to the hospital and, under the state lien statute, the hospital steps into Kight’s shoes for purposes of receiving payment from the driver or the driver’s insurer, the hospital could file a lien for the unpaid portion of the charges it had billed.

In a special concurrence representing half of the court, Judge Anne Elizabeth Barnes said that a 2005 Court of Appeals opinion that Andrews said had been implicitly overruled in part by the Georgia Supreme Court remained good law for this proposition: a hospital can contractually waive its right to collect on a hospital lien through a “no recourse” provision in the hospital’s contract with a patient’s health insurer.

The state Supreme Court initially denied the plaintiff’s request that it hear the case but changed course after the plaintiff filed a motion for reconsideration. The court later received amicus briefs in support of the plaintiff from the Georgia Trial Lawyers Association and Blue Cross.

On Monday, the court affirmed the appeals court’s ruling that the lien was valid and the award of attorney fees to the plaintiff was improper. In a relatively brief five-page opinion, Justice Harold Melton emphasized the court’s ruling was limited to the facts of Kight’s case and said unspecified portions of Andrews’ opinion were “dicta” and not relevant to the case at hand.

The Supreme Court’s decision appeared to turn on the Court of Appeals’ finding that the hospital was owed some money when it filed its initial $36,177.68 lien—albeit only $261.10 in unpaid discounted payments due from Blue Cross and $186.48 in unpaid deductibles or co-pays due from Kight. (The $863.10 amount sought by the subsequent lien reflected additional care Kight received following the filing of the first lien.)

“Contrary to the ruling of the trial court and Kight’s arguments to this court,” wrote Melton, “the hospital was owed money on the date that the lien was filed. As a result, Kight’s principal argument that there was no debt on which to base any lien must fail.”

Melton added that the hospital hadn’t waived its right to impose a lien in Kight’s case, saying that, unlike in cases in which a hospital has agreed it had no recourse whatsoever except against a patient’s insurer, the hospital in its contract with Blue Cross had explicitly reserved its right to collect deductibles and co-pays directly from Kight.

Melton also rejected Kight’s argument that the hospital’s lien was void because it did not reflect the correct amount owed on the day it was filed, saying there was nothing in the state lien statute that required that.

Not long after the Court of Appeals had ruled in Kight’s case, a panel of that court reversed class certification in a similar lawsuit against MCG, noting the hospital treats insured patients under at least 35 different contracts with 35 different insurance carriers. Lawyers for both sides said Monday’s decision spelled the end to the claims of the named plaintiffs in that case, Revell explaining that in that case the hospital had canceled its liens altogether.

The case is Kight v. MCG Health, No. S14G0603.