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Andrews v. Samaritan Health System12/11/2001
Plaintiffs in this class action appeal from the entry of summary judgment in favor of Samaritan Health System and Banner Health Systems (the hospitals). The trial court found that the hospitals may validly enforce medical liens pursuant to Arizona Revised Statutes (A.R.S.) § 33-931 (2000) against plaintiffs for the balance of the hospitals' customary charges not paid by plaintiffs' health insurers (insurers) pursuant to the provider contracts with the hospitals. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs were all injured by the negligence of third-parties and as a result became patients at the hospitals. The services the hospitals provided plaintiffs were covered by plaintiffs' various health insurance plans. Six of the nine plaintiffs were covered under a type of health care service organization (HCSO); the other three were covered under a preferred provider organization (PPO) or another managed care organization (MCO).
Pursuant to the provider contracts between the hospitals and the insurers, the hospitals received payment from the insurers in an amount less than the full charges for their services. Each provider contract, except Markland's, contained language reserving to the hospitals the right to recourse against third-party payors and most specifically referenced the medical lien statute. All of the contracts had some type of language indicating that the insurers' discounted payments were "payment in full" for treatment.
Eventually all of the plaintiffs filed personal injury lawsuits against the third-party tortfeasors who caused their injuries. In their various personal injury suits, plaintiffs all quantified their damages by including the hospitals' full charges for medical services, rather than the discounted amount paid by their insurers.
The hospitals filed medical liens, also known as "recapture liens," against all of the plaintiffs except Parks to recover the unpaid portion of plaintiffs' treatment. It is undisputed that the medical liens were all untimely recorded under A.R.S. § 33-932, the lien perfection statute.
Plaintiffs brought this declaratory judgment action to prevent the hospitals from enforcing medical liens against judgments plaintiffs obtained in tort actions against the third-parties or the third-parties' liability insurers. See A.R.S. § 33-931. The parties filed cross motions for summary judgment.
The trial court granted summary judgment in favor of the hospitals, finding that the medical liens were valid, that the hospitals could assert liens for amounts under $250, and that voluntary payments made by plaintiffs were not subject to reimbursement for conversion. The trial court also found that the untimely recording of the medical liens did not affect their validity. Plaintiffs timely appealed. This court has jurisdiction pursuant to A.R.S. § 12-2101(B) (1994).
ISSUES
1. If the plaintiffs' insurers paid a contracted discount rate as "payment in full" for treatment, can the hospital still assert recapture liens pursuant to A.R.S. § 33-931 against plaintiffs' tort recoveries for the unpaid customary cost of services?
2. May the hospitals assert recapture liens against enrollees of Health Care Services Organizations given the protections of A.R.S. § 20-1072?
3. Is the reservation of a recapture lien in the provider contracts an unenforceable assignment of plaintiffs' personal injury claims?
4. May the hospitals assert recapture liens in amounts less than $250?
5. Are the hospitals' recapture liens invalid because they were not recorded timely under the medical lien perfecti
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