This article has been published in “The Advocate”, a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, March-April 2017 issue, @2017 by Steven J. Bruzonsky, Esq.
March/April 2017 Lien Updates
AHCCCS Balance Billing: Abbott v. Banner Health Network:
The U.S. Supreme Court denied Abbott’s Petition for a Writ of Certiorari regarding the Arizona Supreme Court’s decision issued on May 23, 2016 regarding the “Closed-Lien Plaintiffs” (the fifteen plaintiffs who had settled their hospital AHCCCS balance billing liens with the hospitals filing Lien Releases, prior to the litigation). The Arizona Supreme Court held that the “Closed-Lien Plaintiffs” hospital AHCCCS balance billing lien settlements were supported by adequate consideration and therefore the agreements were valid and not void for illegality. Note that the trial court’s injunction against AHCCCS balance billing is still in force and the case involving the “Open-Lien Plaintiffs” (who had not settled their hospital AHCCCS balance billing liens) will now continue in the trial court, with anticipated further litigation concerning the legality of hospital AHCCCS balance billing and related issues. Information on this case including pleadings is available at http://www.lienfall.com/
FEHBA Balance Billing: Wigand v. Scottsdale Healthcare Hospitals:
Attorney Geoffrey M. Trachtenberg and his law firm, Levenbaum Trachtenberg, in addition to handling the Abbott class action, have also recently filed the Wigand class action against Scottsdale Healthcare Hospitals dba Honor Health regarding their hospital FEHBA balance billing liens. They need “Open-Lien Plaintiffs” (who have not settled their hospital FEHBA balance billing lien claims). Assuming that your client consents, provide attorney Trachtenberg’s law firm with the following information regarding your hospital FEHBA balance billing lien plaintiff(s): Name of Your Client; Name of hospital asserting lien; Name of Your Client’s FEHBA healthplan; Amount paid by the FEHBA plan to the hospital. Once this is done, you can discuss with attorney Trachtenberg your client’s willingness to serve as class representative against the relevant hospital. Information on this case including pleadings is available at http://www.paymentinfullisforever.com/
Use of ER 1.15(f) Ninety Day Notices in Balance Billing Lien Situations:
Unfortunately, Andrews v. Samaritan Health System, 36 P. 3d 57, 201 Ariz. 379 (2001) is still on the books to some extent as “good” (actually, as far as we plaintiff attorneys are concerned, “bad”) law regarding A.R.S. §33-931 healthcare provider liens. Arizona appellate courts have yet to expressly overrule Andrews to hold that A.R.S. §33-931 healthcare balance billing lien claims are an attempt to collect personally from the patient/injured party in violation of Arizona law (A.R.S. §20-1072) and the terms of the healthplan and its contracts with healthcare providers. Thus, unless you have a clear case where federal law (Medicare, AHCCCS, etc.) preempts and prohibits balance billing under Arizona law (A.R.S. §§33-931 to 33-934), healthcare providers which file A.R.S. §33-931 healthcare provider liens will need to be negotiated and/or litigated using all available defenses including but not limited to that the healthcare provider has already been paid it’s “customary charges” by health insurance.
As of January 1, 2014, ER 1.15(f), as then amended, allows a lawyer to serve written notice upon a third party that the lawyer will distribute the property to the client “unless the third party initiates legal action and provides the lawyer with written notice of such action within 90 calender days.” If the third party fails to provide timely written notice of a legal action, then the lawyer may ethically disburse the property to the client, provided that the disbursement is not prohibited by law or court order. See ER 1.15 for the requirements regarding the contents of this Ninety Day Notice. The rule does not require you to make a written determination that a lien claim is unenforceable or otherwise not a matured legal or equitable claim. Nonetheless, you should not use this notice rule to intentionally avoid paying legitimate lien claims, even if there may be a dispute regarding the amount of the lien. See my November/December 2015 “Liens Corner” article for more information on this including a sample ER 1.15 Ninety Day Notice letter.
You might think that you can simply serve an ER 1.15 Ninety Day Notice letter on the healthcare provider
when you believe that the healthcare provider’s statutory lien claim has no value; and then that once the 90 days expires and the health care provider does not file a lawsuit, that you can disburse the settlement funds and be done with it. Beware this may not be the case! In particular, Honor Health (Scottsdale Healthcare and John C. Lincoln Hospitals) has filed a number of lawsuits against third party tortfeasors to collect its balance billing lien claims. Honor Health often files the lawsuits well after the ninety days and even after the plaintiff attorney has disbursed all settlement funds. And as the injury settlement included a written indemnification promise or provision, the injured plaintiff remains legally responsible to not only reimburse the healthcare provider for any payment/settlement of the lien, but also to indemnify the healthcare provider for its attorney’s fees and costs and/or take over the defense of the lien from the healthcare provider and its attorneys. Moreover, there is exposure for the healthcare provider’s attorney’s fees as well. So in some cases you may determine it is appropriate to file litigation to resolve the healthcare provider lien and not rely on an ER 1.15 Ninety Day letter.