Articles Posted in Subrogation

Dealing with hospital liens is a common experience for attorneys dealing with insurance companies. This recent Texas Supreme Court is a must read. It is styled McAllen Hospitals v. State Farm. Here is what the case tells us.

To assist hospitals with securing payment for medical services provided to accident victims, Texas Property Code chapter 55 (the Hospital Lien Statute) allows a hospital to file a lien on a patient’s cause of action against a person whose negligence caused the injury that necessitated the patient’s treatment. If the hospital’s charges secured by a proper lien are not “paid” within the meaning of the statute, any release of the patient’s cause of action is invalid. In this case, two patients treated at the petitioner’s hospital settled with the negligent third party. That party’s liability insurer made the settlement checks jointly payable to the patients and the hospital and delivered the checks to the patients, who deposited them without the hospital’s endorsement. The issue presented is whether the hospital’s charges were “paid” under the Hospital Lien Statute and the Uniform Commercial Code even though the hospital never received notice that the settlement funds had been delivered to the patients and were never reimbursed for the treatment costs. This court said no.

Gil and Hernandez settled with Benavidez for $5,200 and $2,100, respectively, and released their claims against him. The Hospital was not a party to the releases, nor was it informed the parties had settled. State Farm, aware of the Hospital’s liens, informed Gil that he was responsible for paying the Hospital for its services out of the settlement funds. State Farm issued Gil’s settlement check payable to “Jose Antonio Gil & Rafaela Balderas, Individually and as husband and wife & McAllen Medical Center,” and issued Hernandez’s check payable to “Melinda De La Garza Hernandez, a Single Individual & McAllen Medical Center.” State Farm sent the checks to Gil and Hernandez without notifying the Hospital. Both Gil and Hernandez deposited their settlement checks without the Hospital’s endorsement. The Hospital’s charges for treating Gil and Hernandez remain outstanding.

Weatherford insurance attorneys already know there are situations where a settlement with an insurance company has to, in part, go to satisfying out-standing child support liens.

Under Texas Family Code, Section 157.317(a), a lien for unpaid child support attaches to the child support obligor’s personal injury claim. This lien is inferior to that of a health care provider with a valid lien, and a child support lien does not attach to the injured party / child support obligor’s attorney fees in the personal injury case. Actual notice of the lien is required for enforcement. These liens arise by operation of law and attach to all of the obligor’s property, as well as to an injury claim. Texas Family Code, Sections 157.261(a) and 157.312(d) make this clear.

Child support liens may be filed with the County Clerk in the county where the injury suit is filed, the county where the divorce (or suit in the interest of the child) originated, or in the county of the child support obligor’s residence. Child support isn’t just for dads, either; a court may order either or both parents to pay support pursuant to Texas Family Code, Section 154.001.

Grand Prairie insurance attorneys need to know how subrogation and liens work as it relates to insurance claims. One of these interests to be aware of is the Veterans Administration rights to recover money they spend on behalf of their members.

The reimbursement rights of the Veterans’ Administration are statutory, and are set forth the United States 4th Circuit Court of Appeals case styled, United States v. Maryland. It is a 1990 case. It says that “Federal law pertaining to veterans benefits places the United States on an equal footing with private hospitals in its attempts to recover from third parties the cost of medical services provided veterans for non-service related injuries.” Such equality is ensured by 38 U.S.C. Section 629(a)(1), which provides:

“In any case in which a veteran is furnished care or services under this chapter for a non-service connected disability … the United States has the right to recover or collect the reasonable cost of such care or services … from a third party to the extent that the veteran (or the provider of the care or services) would be eligible to receive payment for such care or services from such third party if the care or services had not been furnished by a department or agency of the United States.”

Fort Worth insurance lawyers need to have an understanding as to how to handle subrogation interests and liens. As for Medicaid, maybe this will be helpful.

Medicaid is a Federal program which is administered by the State. When discussing Federal Government liens and subrogation claims, it is prudent to assume that such liens attach and are superior to other liens, even if a person has no actual notice of them. There is case law and statutes that apply. As to the statutes see, 42 U.S.C.A. 1395(y)(b) and 42 C.F.R. 411.20, 411.23, 411.24, and 411.26. However, a Medicaid lien and a Medicare lien are very different creatures, especially following the United States Supreme Court case, Arkansas Department of Health and Human Services v. Ahlborn. This case suggests there may be room for parties to discuss reductions of Medicaid liens. The United States Supreme Court held that Medicaid subrogation would be limited to the funds allocated to medical costs. A copy of the 2006 memo setting forth the Federal Government’s position on Ahlborn’s impact on Medicaid reimbursement / subrogation is available on the Internet at: http://www.nasmd.org/issues/docs/CMS_Advisory_Settlement_Options_July%202006.doc This memo contains the following language about the Ahlborn decision: “A State’s lien laws may only operate to recover from that portion of a settlement that is allocated to healthcare items or services, even if it means that Medicaid must forego full recovery of its claim.” The memo included the following section:

What This Means for Medicaid Third Party Liability Recovery Programs:

Dallas insurance lawyers know to be aware of liens and subrogation interests related to insurance claims. As these relate to Medicare, a 2006, Beaumont Court of Appeals case is a must read. The style of the case is, Tom Lewis v. Allstate Insurance Company. Here is what it tells us.

Lewis, who was insured under an automobile liability policy issued by Allstate Indemnity Company (“AIC”), made a claim for uninsured motorist benefits after being injured in an automobile accident. After corresponding for several months with AIC about his claim, Lewis retained counsel. Lewis’s counsel sent a demand letter to AIC for full uninsured motorist benefits under the policy. A representative of AIC responded, indicating she would be responsible for handling the claim and requesting additional information. Allstate’s representative subsequently sent a letter to counsel which stated, in pertinent part:

You have asked us to make payment to you and your client without protecting the federal government’s right of subrogation in this claim. We have information that Medicare has made payments for treatment rendered as a result of this accident and we do not feel that we can safely send a check to you and your client without protecting their interest.

Fort Worth insurance attorneys and those in Grapevine, Haslet, Rhome, Newark, and other places around Tarrant County need to have an understanding of subrogation issues when handling insurance cases.

The Eastland Court of Appeals issued an opinion in 2006, that dealt with subrogation. The style of the case is, State Farm Mutual Automobile Insurance Company v. Perkins. Here is some relevant background:

Shannon Perkins was involved in an automobile accident with Eddie Mike Cooper Jr. on May 22, 2003. At the time of the accident, Cooper was driving a dump truck owned by Harold Oaks. Perkins had an automobile insurance policy with State Farm. Cooper did not have automobile liability insurance. As a result of the accident, State Farm paid $25,000 in uninsured/underinsured motorist benefits (UM) to Perkins for her injuries under the terms of her policy.

Grand Prairie attorneys and those in Fort Worth, Dallas, Hurst, Euless, Bedford, Garland, and other areas in the metroplex area have to keep up with legal issues related to subrogation. Many insurance situations involve subrogation, especially cases involving injury claims.

There are three types of subrogation, (1) equitable, (2) contractual, and (3) statutory.

(1) Equitable subrogation arises by operation of law. While insurance contracts typically give an insurer a right to subrogation, upon payment of a loss, an insurer is equitably subrogated to any right the insured may have against a third party causing the loss, whether or not the policy provides expressly for subrogation.

Weatherford lawyers and those in Springtown, Hudson Oaks, Aledo, Azle, Mineral Wells, Graford, Brock, and other places in Parker and Palo Pinto Counties need to have an understanding of subrogation any time they are dealing with a case involving insurance claims.

An insurance company who has paid an insured loss may be entitled to reimbursement from a third party that is responsible for causing the loss. This right of recovery arises under the equitable doctrine of “subrogation.” Some insurance policies also provide a contractual subrogation right.

Subrogation places one party in the place of another so that the new party gains the right of the former party regarding a claim. In this context, the insurance company “steps into the shoes” of the insured to pursue a claim against the tortfeasor.