In a unanimous opinion, the Tennessee Supreme Court has decided that hospitals are required to release their hospital lien against a patient as soon as the patient and the patient’s insurance company have paid the full amount of the hospital charges.
This lawsuit involves a common practice in the hospital industry. Hospitals charge uninsured patients more for the same services than they charge insured patients. This occurs because hospitals routinely contract with health insurance companies to discount their charges for the medical services they provide.
In return for these discounts, insurance companies agree to pay their customers’ medical bills promptly.
The Regional Medical Center in Memphis (“the Med”) routinely categorizes its patients according to the type of injury and the circumstances surrounding the injury. It also calculates the charges for the medical services provided based on whether the patient is insured or not. If the patient is insured, the Med sends its discounted bill to the patient’s insurance company. The insurance company is contractually obligated to pay the patient’s bill, except for the deductibles and co-pays that are the patient’s responsibility. Hospitals also have a right by law to file a lien against the patient’s property to assure that they are paid for the services they provide.
When the Med decides that another person might be liable for a patient’s injuries, it routinely files a hospital lien against the patient for the full, non-discounted amount of its medical charges, even if the patient has insurance. Even when the patient and the patient’s insurance company pay the entire amount of the Med’s bill, the Med customarily declines to release its lien against the insured patient’s property in hope that it will be able to recover additional money from the person or persons responsible for the patient’s injuries.
In this case, three patients who received treatment at the Med’s emergency room filed suit in the Circuit Court for Shelby County challenging the Med’s practice of filing liens against its patients and declining to release these liens after they had been paid. The trial court dismissed the lawsuit, but the Court of Appeals reversed.
The Tennessee Supreme Court granted the Med’s appeal. In a unanimous decision, the Court ruled that neither the laws authorizing hospital liens nor the Med’s contract with health insurance companies permitted the Med to maintain its lien after the patient’s debt to the Med has been fully extinguished with payments from the patient and the patient’s insurance company.
To read the West v. Shelby County Healthcare Corporation opinion, authored by Justice William C. Koch, Jr., visit the Opinions section of TNCourts.gov.