Ga. Court of Appeals Revives Excessive Hospital Lien Class Action

Following a serious auto accident, many victims are surprised to learn their medical providers may place a lien against any potential personal injury lawsuit they might file in connection with their injuries. Such “hospital liens” are permitted under Georgia law. There are limits to how far hospitals can go with such liens, as illustrated by a recent decision from the Georgia Court of Appeals.

Clouthier v. Medical Center of Georgia, Inc.

In Clouthier v. Medical Center of Georgia, Inc., the plaintiff sued the hospital that treated him following an accident for fraud and negligent misrepresentation. According to the lawsuit, the plaintiff was “injured in a tractor-trailer collision in August 2016.” He was taken by ambulance from the accident scene to the defendant’s hospital.

The defendant later learned the plaintiff’s accident-related injuries were the result of third-party negligence. This prompted the defendant to file a hospital lien against the plaintiff’s potential personal injury lawsuit against the third party. The lien was in the amount of $56,856.89.

The plaintiff ultimately settled his personal injury case out of court. He then sued the defendant, alleging the amount of its lien was “not reasonable” as required by state law. Instead, the plaintiff said he was charged a “sticker price” for his care, which far exceeded the reasonable cost of his medical treatment. The plaintiff filed his lawsuit as a potential class action on behalf of himself and similarly situated patients.

A trial judge dismissed the plaintiff’s lawsuit, holding that original affidavit filed by the defendant in support of its hospital lien never “swore that the lien amount was reasonable.” The judge therefore said there was no “false statement” to support the plaintiff’s claims for fraud and negligent misrepresentation.

But the Court of Appeals disagreed and reversed the trial judge’s order dismissing the case. By law, a hospital lien is only allowed for “reasonable charges.” If the plaintiff can show the defendant knowingly claimed an “excessive and unreasonable” amount on its lien, that could prove fraud and misrepresentation. Contrary to the defense’s position, the amount of the lien was not a mere “expression of opinion,” as the plaintiff reasonably relied on the purported accuracy of the figure.

The Court of Appeals also said the plaintiff had pleaded sufficient allegations to support a claim under Georgia’s anti-racketeering (RICO) law. The RICO Act makes it illegal for anyone “to acquire or maintain, directly or indirectly, any interest in or control of … personal property of any nature, including money.” This includes “theft by deception, or even an attempt thereof.” In this case, the plaintiff alleges the defendant attempted to commit theft by deception by intentionally filing excessive hospital liens against him and other patients.

Again, the Court of Appeals did not rule on the merits of the plaintiff’s claims. It simply determined he offered sufficient facts and allegations to survive a motion to dismiss. The case was returned to the trial court, where the parties will engage in additional discovery.