In a recent decision, the Arizona Court of Appeals decided as a matter of first impression that medical payments coverage in an automobile policy is subject to health care provider liens. Dignity Health v. Farmers Ins. Co., 2019 Ariz. App. LEXIS 566, 2019 WL 2428645 (filed June 11, 2019). In Dignity Health, Farmers’ insured was injured in an automobile accident and received medical treatment at Mercy Gilbert Medical Center. The hospital recorded a health care provider lien for more than $140,000.00 pursuant to A.R.S. § 33-931. Farmers paid its insured $99,000.00 in medical payments coverage without satisfying the lien. The hospital filed an action to enforce the lien, but Farmers successfully moved to dismiss the action for failure to state a claim, arguing that the payment to its insured was not subject to the lien. On appeal, the Court examined the health care provider lien statute and held that the lien was valid and enforceable against medical payments coverage. This holding was based upon the wording of the statue which only excludes “health insurance and underinsured and uninsured motorist coverage” from health care provider liens. A.R.S. § 33-931.
Health care provider liens extend “to all claims of liability or indemnity, except health insurance and underinsured and uninsured motorist coverage as defined in § 20-259.01, for damages accruing to the person to whom the services are rendered . . . on account of the injuries that gave rise to the claims and that required the services.” A.R.S. § 33-931. The Court found the statute clearly and unequivocally only excluded health insurance, uninsured motorist coverage, and underinsured motorist coverage from a health care provider’s lien. Had the legislature intended to exempt medical payments coverage from the reach of a health care provider lien, it would have specifically stated so in the statute.
Automobile insurers must ensure all liens are appropriately addressed when paying a settlement or judgment. While a Petition for Review is pending before the Arizona Supreme Court, the Dignity Health opinion requires insurers to address health care provider liens when paying first party medical payments claims. Pursuant to A.R.S. § 33-934, the health care provider may recover reasonable attorney’s fees from the insurer if it files an action to enforce its lien. Thomas Rubin & Kelley routinely assists Arizona insurance companies with developing best practices for handling health care provider liens. If you need legal assistance on any of your Arizona claims, or have questions regarding Arizona health care provider liens, please do not hesitate to contact us.