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COURT OF APPEALS
DECISION
DATED AND FILED
November 11, 2010
A.
John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT IV
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Jaymie A. Gister, Ethan A. Gister, a minor by his Guardian
ad Litem, David E. Sunby, and Jared L. Ellis, a minor by
his Guardian ad Litem, David E. Sunby,
Plaintiffs-Appellants,
v.
American Family Mutual Insurance Company,
Defendant,
Saint Joseph’s Hospital of Marshfield, Inc.,
Defendant-Respondent.
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APPEAL
from an order of the circuit court for Dane County: patrick
j. fiedler, Judge. Order
reversed and cause remanded with directions.
Before Lundsten, Higginbotham, and Sherman, JJ.
¶1 PER CURIAM. Several former medical patients
appeal an order denying their claim that hospital liens filed against them are
invalid. We reverse and remand with
directions.
¶2 This action was commenced by Jaymie Gister, Ethan Gister, and
Jared Ellis (collectively, “the Gisters”).
They sought a judgment declaring that liens filed by Saint Joseph’s Hospital were invalid. The complaint alleged that the Gisters were injured
in an automobile accident caused by an insured of American Family Insurance;
that they were treated at Saint Joseph’s;
and that they were covered by “BadgerCare” (medical assistance). The Gisters further alleged that Saint Joseph’s
did not submit the medical bills to medical assistance, but instead filed a
hospital lien against each of them for recovery of the medical bills; that the
insurance policy limits are insufficient to cover their damages; and that
American Family is now prepared to settle their injury claims, but any such
payments to the Gisters would be reduced or eliminated to pay the hospital, if
the liens are valid.
¶3 The above factual allegations do not appear to have been
disputed for purposes of this appeal, and no evidentiary hearing was held. The circuit court ruled in favor of Saint Joseph’s and held
the liens valid.
¶4 Saint Joseph’s
filed the liens under Wis. Stat. § 779.80 (2007-08). In short, that statute gives charitable
hospitals “a lien for services rendered … to any person who has sustained
personal injuries as a result of … any tort of any other person.” § 779.80(1). The lien attaches to any judgment or
settlement the injured person might obtain against the tortfeasor. § 779.80(2).
¶5 One focus of the parties’ arguments is our decision in Dorr
v. Sacred Heart Hospital, 228 Wis. 2d
425, 597 N.W.2d 462 (Ct. App. 1999). We
conclude, for the reasons that follow, that if no other law permits a hospital
lien against medical assistance patients, Dorr bars such a lien.
¶6 In Dorr, the injured patient was
insured by a health maintenance organization (HMO) that had a contract with the
treating charitable hospital. Id. at
432-33. That contract included a “hold
harmless” provision that barred the hospital from seeking payment from the
patient directly. Id. at 433-34. The hospital did not submit the patient’s bill
to the HMO, but instead it filed a hospital lien on any tortfeasor payment to
the patient. Id. at 434. The patient obtained a tortfeasor payment but,
as required by the lien, some of that money was sent to the hospital. Id.
¶7 The patient then sued the hospital for its return, claiming
that the hospital had no right to impose the lien in the first place. Id.
at 431. The hospital argued that it
could file a lien regardless of the fact that it could not bill the
patient. Id.
We held that “when a contract between an HMO and hospital contains a
hold harmless provision, no hospital lien can be filed against an HMO patient’s
property because the HMO patient is not indebted to the hospital for the
medical services provided.” Id. at
435.
¶8 Several holdings in Dorr relate to the present
case. The first is that the function of
a hospital lien is debt collection, not the creation of a substantive claim benefiting
the hospital. Responding to the hospital’s
argument that it could use the lien statute even though it was forbidden from
billing the patient, we wrote that “the essence of any lien statute, including § 779.80,
Stats., requires the existence of
an obligation due the lienholder from the person whose property to which the
lien attaches.” Id. at 438. We concluded:
“To suggest that a lien can exist independent of a debt turns the
purpose and provisions of a lien statute on its head. Lien statutes are
designed to facilitate debt collection, not to encumber property when the
property holder owes no obligation to the lienholder.” Id.
¶9 We further held that the debt owed to the hospital must be
owed by the patient. Id.
at 438-39 (“the plain language of § 779.80, Stats., contemplates that the underlying debt to which the
lien attaches is an obligation owed by the person receiving medical services
from the hospital”). In other words, the
fact that the hospital was potentially owed money by the HMO did not support
the filing of a lien against the patient’s tort payment. Thus, it is clear from Dorr that the function of
the hospital lien statute is to help hospitals collect debt from patients that
personally owe a debt to the hospital.
¶10 We also discussed a statute that we said immunizes an HMO
enrollee from personal liability for the costs of covered health care
received. Id. at 440. The hospital conceded that because of that
statute, the patient owed no debt to the hospital. Id. at
441. We then concluded that the hospital
was precluded from filing a lien under Wis.
Stat. § 779.80
because there was no underlying patient debt.
Id.
at 441-42.
¶11 The hospital in Dorr next argued that its lien did
not violate that HMO statute because the hospital was not seeking payment from
the patient, but was instead seeking recourse against the tortfeasor. We rejected that argument: “The plain language of § 779.80, Stats., however, does not authorize the
hospital to pursue collection from the tortfeasor; it only authorizes the
hospital to attach a lien on insurance proceeds due to the injured party from
the tortfeasor’s insurer.” Id. at
442.
¶12 Finally, we reviewed the hospital’s contract with the HMO,
under which the hospital had agreed to hold patients harmless. We said that the hospital’s use of the lien
violates that provision: “Pursuing the
[tort] insurance proceeds is an attempt to seek recourse against the Dorrs
because the claim to the proceeds belongs to the Dorrs.” Id. at
444.
¶13 To summarize Dorr, it holds that: (1) a hospital cannot file a lien under Wis. Stat. § 779.80 unless it is owed money by the patient; (2) § 779.80
does not give the hospital a direct claim against the tortfeasor; and (3)
filing a hospital lien is a form of recourse against the patient because the tort claim belongs to the patient.
¶14 The Gisters argue, and Saint
Joseph’s does not appear to dispute, that when a
hospital treats a medical assistance patient, the patient cannot be charged for
the services. The hospital is forbidden
from direct billing the patient. See Wis.
Stat. § 49.49(3m). A medical
assistance patient thus appears closely analogous to the HMO patient in Dorr. In both cases, the hospital is forbidden from
billing the patient, and thus the patient does not owe it a debt. And, in both cases, the hospital can normally
obtain payment from a source other than the patient, either from the HMO or
medical assistance.
¶15 Saint Joseph’s
attempt to distinguish Dorr is unconvincing. It asserts that Dorr is inapplicable
because here “a debt does exist.” But the
hospital fails to acknowledge that the debt is not owed to it by the Gisters. Therefore, if the only applicable law is Dorr and
the hospital lien statute, Dorr controls here. Dorr would require us to hold that the
Gisters cannot be billed and therefore do not owe the hospital a debt; that the
hospital lien statute does not give Saint Joseph’s a claim against the
tortfeasor; and, therefore, Saint Joseph’s had no legal basis to file liens
against the Gisters’ tort recoveries and doing so was an improper attempt at
recourse against the patients.
¶16 That conclusion brings us to the question of whether some other
law makes the medical assistance context here different from Dorr. Saint
Joseph’s asserts that such law exists. It argues that Wisconsin
laws “expressly grant health care providers the right to elect to seek payment
from third-party liability settlement proceeds.” In support it cites one statute and one
rule. However, as we will discuss, the
statute and rule do not, on their face, lead to the conclusion Saint Joseph’s
advocates.
¶17 The statute cited by Saint
Joseph’s is Wis.
Stat. § 49.46(2)(d). Wisconsin
Stat. § 49.46(2) defines medical assistance benefits, that is,
charges that may be paid to medical assistance providers. Wis.
Stat. § 49.46(2)(a). The
provision the hospital relies on limits benefits otherwise authorized under the
benefits subsection. The part the
hospital relies on provides: “Benefits
authorized under this subsection may not include payment for that part of any
service payable through 3rd-party liability or any federal, state, county,
municipal or private benefit system to which the beneficiary is entitled.” § 49.46(2)(d). If, for purposes of this appeal, we assume Saint Joseph’s is correct that tort liability is a form of
“3rd-party liability,” the result is that the provision appears to bar St. Joseph’s from
seeking medical assistance payment as to injuries caused by tortfeasors. In any event, contrary to Saint Joseph’s assertion, this statute does
not “expressly” grant health care providers the right to seek payment from
third-party liability settlement proceeds.
This statute is only a prohibition.
It says nothing affirmative about how a hospital might go about
obtaining payment for treating tort-caused injuries.
¶18 Saint Joseph’s
also relies on Wis. Admin. Code § DHS
106.03(8) (Mar. 1993). We will assume Saint Joseph’s is correct that the rule
relates to treatment for injuries caused by torts, and allows a hospital to
bill medical assistance for such treatment, despite the above statute. The rule then offers an alternative to
billing medical assistance: “The
provider may alternatively elect to seek payment by joining in the recipient’s
personal injury claim ….”
¶19 Again contrary to Saint
Joseph’s assertion, this rule does not “expressly”
grant it the right to seek payment from third-party liability settlement
proceeds. It says only that the hospital
can “join[] in the recipient’s personal injury claim.” The rule does not explain what the hospital’s
legal theory would be, what the procedure would be, or against whom the
hospital would have a claim. Was the
rule intended to create a new legal claim for hospitals, such as a subrogation
interest or a direct claim against the tortfeasor? Or, was it intended only to permit a hospital
to “join in the claim” to facilitate the vindication of some separately
identified legal right, such as a contractual subrogation right with the
patient?
¶20 The rule does not expressly say that the patient owes a debt to
the hospital; or that the hospital is authorized to file a lien under Wis. Stat. § 779.80; or that the hospital has priority to recover its
bill before the patient receives damages; or that the hospital has a direct
claim against the tortfeasor. The text
of this cursory and vague rule does not, by itself, lead to the conclusion that
a hospital may file a lien against a medical assistance patient.
¶21 Saint Joseph’s
does not develop an argument in this appeal that answers these questions about
the rule or explains how the rule necessarily leads to a conclusion that a
hospital may file a lien. To the extent Saint Joseph’s relies on
public policy arguments, those arguments are not sufficient to support such a
specific conclusion. Nor are they
sufficient to overcome Dorr’s clear and thorough analysis
of the lien statute. Because Saint
Joseph’s has not developed an argument showing that the statute and rule authorize
a hospital lien, we decline to explore these questions further and attempt
answers on our own. Perhaps such an
argument can be developed, but it has not been in this appeal.
¶22 Accordingly, we conclude that, because Saint Joseph’s has not
persuaded us that any law requires a different result in a medical assistance
case, Dorr bars a hospital from filing a lien against a medical
assistance patient. Therefore, we
reverse the order holding the lien valid and remand with directions to issue an
order holding the lien invalid and ordering such other relief as may be
necessary to relieve the Gisters and American Family from complying with the
lien.
By the Court.—Order reversed and cause remanded with directions.
This
opinion will not be published. See Wis.
Stat. Rule 809.23(1)(b)5.