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Georgia Supreme Court Clarifies Deadline for Hospital Lien Lawsuits

Hospital liens are a legal device used to ensure medical providers receive payment for services rendered to accident victims. The lien is applied against the proceeds of any personal injury claim made by the victim. Georgia law regulates the enforcement of such medical liens.

Recently, the Georgia Supreme Court issued a decision interpreting a disputed part of the state’s law governing hospital liens. The Court was asked to review a lower court’s opinion on the applicable statute of limitations–that is, the period of time in which a court action to enforce a medical lien can be filed–and ultimately decided in favor of the hospital. While the Supreme Court’s decision was unanimous, several justices wrote separately to note the underlying confusion in the written statute.

Hospital Authority of Clarke County v. Geico General Insurance Co.

This case began with a March 2010 car accident. One victim received medical treatment at Athens Regional Medical Center. The hospital subsequently filed three liens totaling nearly $67,000 to cover the victim’s care. The victim then sued three other persons she deemed responsible for the accident.

The defendants had an insurance policy with Geico. They finally settled in September 2010 with the victim for $100,000. The settlement required the victim to satisfy the medical liens out of that amount, but by June 2011, the liens had not yet been paid. The hospital then tried to obtain payment directly from Geico, which refused, citing the settlement with the victim. In October 2011, the hospital sued Geico.

Geico claimed the hospital waited too long to file its lawsuit. Under Georgia law, there is a one-year statute of limitations in hospital lien cases. Specifically, the statute provides:

“The action shall be commenced against the person liable for the damages or such person’s insurer within one year after the date the liability is finally determined by a settlement, by a release, by a covenant not to bring an action, or by the judgment of a court of competent jurisdiction.”

In this case, Geico said the one-year clock began in September 2010, when the victim settled. The hospital did not file its lawsuit until October 2011, more than one year later. Ergo, Geico said it was entitled to summary judgment.

The lower courts disagreed on this point. The trial judge ruled against Geico, but a three-judge panel of the Georgia Court of Appeals reversed. The appeals court found the statute “unambiguously states” that the lawsuit had to be filed within one year of the settlement.

But the Supreme Court disagreed. All seven justices agreed that the “plain wording” of the law actually meant that the one-year clock began when there was a settlement or release that constituted a final determination of the insurer’s liability. And although the victim reached a settlement with Geico in September 2010, she did not actually sign a release settling all outstanding claims until October 2010–one year before the hospital filed its lawsuit. Therefore, the Supreme Court said the lawsuit could proceed. Three justices wrote separately to note the statute itself is “difficult to understand and apply,” because settlements and releases are actually devices that usually absolve a party of liability (rather than determine it), and there is nothing in the law to clearly notify the party asserting the lien of the proper deadline.