Rose Medical v. State Farm

Citations: 903 P.2d 15; 1994 WL 671403Docket: 93CA2071

Court: Colorado Court of Appeals; January 11, 1995; Colorado; State Appellate Court

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Rose Medical Center, a non-profit organization, successfully enforced a statutory hospital lien against State Farm Mutual Automobile Insurance Company in a case involving Claudia Holland, who was injured in a vehicle accident while a passenger in her husband's car. Following the accident, Claudia sued her husband for damages, with State Farm insuring him and providing her personal injury protection (PIP) coverage. Rose rendered medical services to Claudia and filed a hospital lien for $15,702.93 in accordance with Colorado law.

Claudia initiated arbitration against State Farm for PIP benefits, during which Rose was recognized as a service provider. The arbitration resulted in Claudia being awarded $52,913.42 in PIP benefits, which State Farm paid without addressing Rose's lien. Subsequently, Claudia settled her claims against her husband for a nominal amount of $1.00, which did not satisfy Rose's lien. Rose then sought to enforce the lien against State Farm, leading to the appeal after an adverse ruling against State Farm.

The court affirmed that the hospital lien, established by statute, secures the hospital's right to payment for services provided to individuals injured due to another's negligence, ensuring that hospitals are compensated from any recovery the injured party receives from the responsible party.

A hospital lien can only be perfected by adhering to specific statutory requirements. At the time Rose filed its lien, the relevant statute mandated that a written notice must include the injured person's name and address, the accident date, the hospital's name and location, and the liable person's name. This notice must be filed with the division of insurance, which maintains records for hospital liens. Within ten days of filing, the hospital must send a certified copy of the notice to the injured party, their attorney, the alleged liable person, and their insurance carrier, if known. If a damage action is pending, the notice can be filed in that action instead, with copies sent to the parties' attorneys.

Rose perfected its lien using the latter method, and the statute specifies that anyone who pays the injured party after receiving notice of the lien is liable to the hospital for that amount. Actions to enforce the lien must be initiated within one year of the payment date, and reasonable attorney fees may be awarded for enforcement.

The trial court determined that State Farm was liable for the full amount of Rose's hospital lien, including attorney fees. The primary issue on appeal was whether State Farm received adequate notice of the lien. The court concluded that the notice was sufficient, noting that Rose's lien was perfected before any PIP benefits were received by Mrs. Holland. Although defense counsel did receive notice of the lien, they could not confirm if State Farm was informed before the distribution of PIP benefits. The court acknowledged the complex relationship between the insured, the insurer, and defense counsel but found that State Farm was aware of the lien's existence for bodily injury liabilities. State Farm contested that the lien, perfected through litigation, did not extend to PIP benefits, but the court found otherwise regarding the notice sufficiency.

Bodily injury claims are managed separately by State Farm, but notice provided for one coverage is deemed effective for all coverages under the same policy. The court rejects the argument that separate administration negates this notice, particularly since both coverages originate from the same insurer. While Colorado lacks specific authority on this matter, precedent from other jurisdictions supports the conclusion that adequate notice under one coverage suffices for all, especially when the information provided is comprehensive. The court cites several cases affirming this principle, emphasizing that distinctions between lien statutes and claims should not affect the outcome. In particular, the Dietlin case illustrates that timely notice of disability to one division of an insurer does not preclude recovery under other policies held with the same insurer. The court asserts that modern communication methods should not alter these longstanding principles. The notice from Rose Medical Center to State Farm specified the medical care provided to Claudia J. Holland following an accident and asserted a lien on any compensation owed, reinforcing the adequacy of the notice given to State Farm regarding the claim.

Hospital liens can apply to Personal Injury Protection (PIP) benefits, as established in Fernandez v. South Carolina Insurance Co., where a lien on all claims accruing to a patient was upheld. The notice provided by Rose sufficiently encompassed all payments owed to Mrs. Holland, regardless of the source. State Farm's argument that applying a perfected hospital lien to PIP benefits violates due process is rejected; the cited case, Dickman v. Demoss, is distinguishable because defense counsel represents the insured, not State Farm. No other authority supports State Farm's position, and any deficiencies in notice do not constitute a constitutional issue. The judgment is affirmed with concurrence from Justices Plank and Hume.