No Attorney Lien for Action Against Insurer To Pay Hospital Bill

Today, the Indiana Court of Appeals decided the case of Wilson v. Sisters of St. Francis (pdf). At issue was whether an attorney could be paid from a health insurance payment to a hospital for medical expenses incurred by the attorneys’ client.

The patient went to the hospital for emergency cancer treatment. The patient’s insurer declined to pay. So, the patient retained an attorney who agreed to pursue the matter for a contingent fee of 1/3 of the sums collected. The attorney was successful and got the insurer to pay the hospital bill; but the payment went directly to the hospital. The attorney tried to claim that the hospital had to give him 1/3 of the medical bill payment. The hospital said they didn’t and litigation ensued. The trial court found for the hospital, and the attorney appealed.

The Court of Appeals determined that the hospital was not a party to the contingency fee agreement; so the attorney could not recover based on a contract. It said that the hospital was not “unjustly enriched” because it simply got paid for the amount of its services. It was true that it benefited from the actions of the attorney, but so did the attorney’s client and, besides, if the attorney got 1/3 of the payment; then the client would simply owe that 1/3 to the hospital for payment of the original services.

The Court of Appeals further stated that the hospital lien statute was inapplicable. That statute was designed to make sure hospitals get paid when they provide treatment to a person who gets injured by a third party. The hospital can assert a lien on the proceeds of a personal injury claim; however, that lien is subordinate to the fees owed to the personal injury attorney pursuing that claim. However, this was not a personal injury claim and, therefore, the attorney’s fee did not take priority.