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The author reviews a recent Arizona Supreme Court case related to the provider’s right to payment of the
underlying debt, even when the lien has been released.
Healthcare provider liens are common in medical and personal injury litigation. But what effect do such liens have on the healthcare provider’s right to payment of the underlying debt for medical expenses? The Arizona Court of Appeals recently held that such liens do not impair the provider’s right to payment of the underlying debt, even when the lien has been released. See The Pain Management Clinic, P.C. v. Preese, 632 Ariz. Adv. Rep. 16, P.3d ____ (Ct. App. April 19, 2012).
In Preese, The Pain Management Clinic, P.C. (“Pain Management”) treated the plaintiff (“Patient”) for injuries she received in a motor vehicle accident. Id. at ¶ 2. Pain Management recorded a statutory healthcare provider lien against any potential judgment or settlement the Patient might receive arising out of the accident. Id. The case eventually went to trial, which resulted in a jury verdict against the Patient. Id. After the jury verdict, Pain Management voluntarily recorded a release of the lien, but subsequently filed a breach of contract action against the Patient for unpaid medical expenses. Id. at ¶¶ 2-3. The release of Pain Management’s lien stated that the lien had been “compromised or paid.” Id.
The trial court granted judgment in the Patient’s favor, finding that Pain Management waived its right to seek payment for unpaid medical expenses when it stated in the lien release that the lien had been “compromised or paid.” Id. at ¶ 3. The Arizona Court of Appeals disagreed, reaffirming long-standing case law that a healthcare provider “can always proceed even if the absence of a lien, against the patient for the value of services rendered.” Id. at ¶ 6 (quoting Lombard v. Samaritan Health Sys., 195 Ariz. 543, 548, ¶18, 991 P.2d 246, 251 (Ct. App. 1998)) (emphasis added) (internal citations omitted).
The court of appeals went on to hold that the language of the lien release did not waive Pain Management’s right to payment of the
underlying debt for medical expenses. Id. at ¶¶ 8-10. Pain Management’s right to pursue breach of contract remedies was independent of its remedies under the healthcare provider lien statutes, notwithstanding that the release stated that the lien had been “compromised or paid.” Id. 1
The Preese case is a good reminder of the independent nature of healthcare providers’ rights and remedies for breach of contract, as
opposed to attempting to recover medical expenses pursuant to a healthcare provider lien.
International Association of Defense Counsel (IADC)
June 01, 2012