How Medical Provider Liens Affect a Personal Injury Case
Charlotte-Mecklenburg Hospital Authority v. First of Georgia Insurance Co.
340 N.C. 88 (1995)
North Carolina Supreme Court
This case arose out of an accident involving Mark and Tammi Baughn, who were treated by plaintiff, Charlotte-Mecklenburg Hospital Authority (hospital). The hospital brought this action against the Baughns; the insurance company of the other driver, First of Georgia Insurance Co. (First Georgia); and the insurance adjuster T. M. Mayfield & Company.
The district court in Mecklenburg County dismissed the plaintiff’s action, and the plaintiff appealed to the North Carolina Court of Appeals. The Court of Appeals unanimously affirmed the judgment of the district court, and the case was then certified for discretionary review in the North Carolina Supreme Court.
Mark and Tammi Baughn were injured as a result of an automobile accident and were then treated by plaintiff hospital. Tammi’s medical expenses were $4,401.18, while Mark’s bill totaled $2,977.77. Following the services provided by plaintiff, the Mayfield company was notified of a lien for medical services against any recovery the Baughns might collect against the at-fault driver. The plaintiff also notified Mayfield of the assignment signed by Mark Baughn. The Baughns’ claim was settled by Mayfield’s agent, Mr. Fultz, in the amount of $14,000.00 for Tammi and $8,500.00 for Mark. The Baughns were not represented by counsel in the matter, and the payments made to the Baughns were made in ignorance of the plaintiff’s lien claims.
The Baughns never made any attempt to settle their debt with the hospital, so the hospital then sought to recover money judgments against the Baughns, as well as the other defendants based on the liens and assignment. As stated before, both the district court and the court of appeals dismissed the case.
Rules of Law
(a) From and after March 26, 1935, there is hereby created a lien upon any sums recovered as damages for personal injury in any civil action in this State. This lien is in favor of any person, corporation, State entity, municipal corporation or county to whom the person so recovering, or the person in whose behalf the recovery has been made, may be indebted for any drugs, medical supplies, ambulance services, services rendered by any physician, dentist, nurse, or hospital, or hospital attention or services rendered in connection with the injury in compensation for which the damages have been recovered. N.C.G.S. § 44-49.
b) A lien as provided under G.S. 44-49 shall also attach upon all funds paid to any person in compensation for or settlement of the injuries, whether in litigation or otherwise. If an attorney represents the injured person, the lien is perfected as provided under G.S. 44-49. Before their disbursement, any person that receives those funds shall retain out of any recovery or any compensation so received a sufficient amount to pay the just and bona fide claims for any drugs, medical supplies, ambulance services, services rendered by any physician, dentist, nurse, or hospital, or hospital attention or services, after having received notice of those claims. N.C.G.S. § 44-50.
These statutes help to ensure that medical providers who render care in a personal injury situation will receive at least some form of recovery for their services. When the two statutes are read in conjunction, it is clear that they allow for the attachment of a lien if there is a recovery of damages. A lien may also be initiated before any money is paid in the form of a settlement. Thus, if the proper procedure for asserting a lien is followed by the medical provider, the hospital may enforce the lien against the money which is payable for the personal injury.
The Supreme Court ultimately reversed the ruling of the Court of Appeals and held that the liens for medical expenses that the plaintiff assigned for the medical treatment provided to Mark Baughn were valid and could be enforced. The Court noted another seminal case concerning the disbursement of payments, N.C. Baptist Hospitals, Inc., v. Mitchell. In N.C. Baptist, the hospital sought recovery against the attorney whose client had signed an assignment of benefits for the medical care. In that case, the Court held that assignment of the proceeds of a claim for personal injury were void as this would be against public policy. However, in N.C. Baptist, the settlement was first received by the attorney, a third party. In this case, the settlement monies were received by the Baughns, who did not hire an attorney. Thus, in this case, the only party who could have paid the medical lien was First Georgia.
Because First Georgia and their adjusters, T. M. Mayfield & Company, were aware of the assignment made by Mark Baughn, they had a duty to ensure that the liens were paid first out of the proceeds. The key from this case is that, in instances in which a settlement is made, and the party receiving such funds is not represented by counsel, there may be a duty upon the third party to ensure that liens for medical services are paid.