Diane West et al. v. Shelby County Healthcare Corporation d/b/a Reginal Medical Center at Memphis

This appeal involves the ability of a hospital to use a hospital lien to recover from a third-party tortfeasor the unadjusted cost of the medical services it provided to a patient whose injuries were caused by the third party. Three patients were injured in separate, unrelated motor vehicle accidents in Memphis, Tennessee. All of them were treated at the Regional Medical Center at Memphis, and either their insurance company or TennCare paid the hospital the full amount of the adjusted charges for their care, in accordance with their contracts with the hospital. Despite receiving these payments, the hospital declined to release the lien it had perfected under the Tennessee Hospital Lien Act, Tenn. Code Ann. §§ 29-22-101 to -107 (2012). The patients filed suit in the Circuit Court for Shelby County seeking to quash the liens and monetary damages. In response, the hospital asserted that its refusal to release the liens was consistent with the Tennessee Hospital Lien Act and was permitted by its contracts with the patients’ insurance companies. The trial court dismissed the suit on the merits, and the patients appealed to the Court of Appeals. The intermediate appellate court reversed the trial court, determining that the hospital could not maintain its lien because each of the patients’ debts had been extinguished when the hospital accepted payment from the patients’ insurance companies for the full amount of the hospital’s bill based on the adjusted charges it had agreed to with either the patient’s insurance company or TennCare. West v. Shelby Cnty. Healthcare Corp., No. W2012-00044-COA- R3-CV, 2013 WL 500777 (Tenn. Ct. App. Feb. 11, 2013), reh’g denied (Tenn. Ct. App. Mar. 12, 2013). We granted two of the three patients’ Tenn. R. App. P. 11 applications for permission to appeal. We have determined that, except for the unpaid co-pays and deductibles which are a patient’s responsibility, neither the Tennessee Hospital Lien Act nor the hospital’s contracts with the patients’ insurance companies authorized the hospital to maintain its lien after the patients’ insurance company paid the adjusted bill. However, we have also determined that one of the patients who had not extinguished her debt to the hospital was not entitled to have the lien against her extinguished.