Court of Appeals Finds Hospital Lien Still Enforceable Against Insurers After Policy Limits Settlement

Written by: James G. Smith, Esq.

The Georgia Court of Appeals recently issued a decision in the case of Tift Regional Medical Center Foundation, Inc. v. Geico General Insurance Company[1] which underscores the critical importance of being aware of and addressing perfected liens prior to entering into a settlement, particularly with a pro se Plaintiff.  In that case, the Plaintiff sustained injuries in car accident and received treatment with Tift Regional, who thereafter filed and perfected a hospital lien totaling $65,060.84. Geico was aware of the perfected lien. The Plaintiff applied for and was granted “free financial assistance” with the hospital, but subsequently settled her case with both Geico and Progressive insurance companies for $100,000.00 and $50,000.00, respectively.  Both Releases included language which appear to shift the burden of satisfying liens to Plaintiff, although neither release specifically referenced the Tift Regional lien, and neither insurance company nor the Plaintiff did anything to satisfy the lien prior to settlement.

After the settlement, the Plaintiff spent all of the settlement proceeds in an undisclosed manner. Then, Tift Regional brought an action against both GEICO and Progressive to enforce its lien under OCGA § 44-14-473(a) and filed a Motion for Summary Judgment, which was denied by the trial court. Tift Regional then filed an appeal on the grounds that the trial court incorrectly (1) allowed GEICO and Progressive to present a defense personal to Plaintiff when all elements of its complaint to enforce the hospital lien had been satisfied ;and (2) found that material issues of fact remained as to whether Plaintiff detrimentally relied upon Tift Regional’s statement that she qualified for “free financial assistance.” Importantly, the question of whether Geico and Progressive successfully shifted their risk of satisfying the lien to the Plaintiff by the general language in their respective releases is the subject of a third party complaint pending in the trial court and was not addressed in this decision.

Instead, in reversing the trial court’s denial of summary judgment, the Court focused on whether Tift Regional was permitted under the law to seek enforcement of its lien, and whether the insurance companies were able to assert an estoppel defense that was specific to Plaintiff instead of the insurance companies. The Court found that Tift Regional had properly perfected its lien and was therefore permitted to seek enforcement; and moreover, the insurers were not able to argue that they had detrimentally relied upon certain “promises” made to Plaintiff by Tift Regional.

Although the court may ultimately conclude that the general release language was sufficient to shield the insurers from further liability, this case suggests that great care should be taken prior to entering into settlements (especially with pro se plaintiffs) when liens are involved. For starters, it is important to always include specific references to known liens in a release as another layer of indemnification. Additionally, prior to settling a claim with a pro se plaintiff, it is prudent to specifically address any known liens both with the plaintiff and the lienholder. If an agreement for satisfaction of the lien cannot be reached before settlement, it may become necessary to file an interpleader action to allow the court to get involved and properly distribute the settlement proceeds.

[1] A20A1266, 2020 WL 6144575 (Ga. Ct. App. Oct. 20, 2020).

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