January 30, 2015

Colorado Court of Appeals: Substantial Compliance with Notice Provisions Sufficient for Hospital to Enforce Lien

The Colorado Court of Appeals issued its opinion in Wainscott v. Centura Health Corporation on Thursday, August 14, 2014.

Auto Accident—Hospital Lien Statute—Notice—Substantial Compliance—Colorado Consumer Protection Act—Fraudulent Concealment.

Donald Wainscott was injured in an auto accident caused by third parties (tortfeasors). He received treatment at St. Anthony Central Hospital, which is managed and operated by Centura Health Corporation. To secure payment of these medical expenses, Centura asserted a statutory hospital lien against any settlement or judgment that Donald Wainscott might receive as a result of the accident. The trial court declared that Centura’s failure to strictly comply with the hospital lien statute rendered its lien unenforceable.

On appeal, Centura argued that it substantially complied with the hospital lien statute and that the trial court erred in finding the lien was unenforceable. Because minor filing and notice deficiencies should not invalidate an otherwise valid hospital lien, substantial compliance may be sufficient to satisfy the filing and notice provisions of Colorado’s hospital lien statute. A lienholder substantially complies when it satisfies the statute’s purposes through timely actual notice of the lien to those against whom the lienholder attempts to enforce the lien. Because Centura did identify and serve the tortfeasors’ insurer and Donald Wainscott, Centura substantially complied with the hospital lien statute and the trial court erred in finding the lien was not enforceable.

On cross-appeal, the Wainscotts contended that the district court erroneously dismissed their Colorado Consumer Protection Act (CCPA) and fraudulent concealment claims under CRCP 12(b)(5) for failure to state a claim on which relief can be granted. The basis of the Wainscotts’ CCPA claim was an injury resulting from Centura’s failure to bill Medicare. However, during the period of time in question, Centura was required to refrain from billing Medicare and to seek payment from the tortfeasors’ liability insurer. Thereafter, it had the option of billing Medicare. Centura’s failure to advise the Wainscotts that it was obeying the law did not constitute a deceptive or unfair trade practice. Further, Centura did not have a duty to disclose that it planned to pursue payment from the tortfeasors or their insurer.Accordingly, the district court properly dismissed the CCPA and fraudulent concealment claims.

The district court’s dismissal of the Wainscotts’ CCPA and fraudulent concealment claims was affirmed. The summary judgment as to the Wainscotts’ declaratory action to determine the validity of Centura’s hospital lien was reversed. The case was remanded for further proceedings to determine whether the amount of Centura’s asserted lien represents “reasonable and necessary charges” under CRS § 38-27-101.

Summary and full case available here, courtesy of The Colorado Lawyer.

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