Florida Supreme Court Rules on Conflict Between Hospital Liens and Insurance Coverage in a Car Accident Case: Shands Teaching Hospital v. Mercury Insurance
After a woman received an insurance settlement for injuries she sustained in a car accident, a dispute arose between the insurance company and the hospital that treated her over payment of the hospital’s lien. In many personal injury cases, receipt of a settlement or judgment is far from the end of the case. Medical providers and insurers may have claims to all or part of a settlement or judgment amount, and they sometimes fight amongst themselves for how to split a limited amount of money. In Shands Teaching Hospital v. Mercury Insurance, an insurance company asked the Florida Supreme Court to rule on the constitutionality of laws allowing private hospitals to impose primary liens on injury settlements. The court found the state law to be unconstitutional, but upheld the county ordinance.
The case originated with a claim for personal injuries by a woman injured in a car accident. The woman sought treatment at Shands Teaching Hospital in Gainesville, Florida, and received care valued at $38,418.20. A law enacted by the Florida Legislature known as the Alachua County Lien Law (the “Lien Law”), and an ordinance passed by the county known as the Alachua County Lien Ordinance (the “Ordinance”), enabled the hospital to perfect a lien against any potential settlements or judgments that the woman might receive as a result of the accident.
The driver who struck the woman had an auto insurance policy through Mercury Insurance Company of Florida that provided $10,000 in bodily injury coverage and $10,000 in Personal Injury Protection (PIP). Mercury settled for $10,000 in exchange for her signed release. The release did not include Shands, which had already perfected its lien. Shands sent Mercury a copy of its lien, and Mercury sent it $10,000, representing the remaining amount available under the policy. Alleging that Mercury had impaired its lien, Shands sued Mercury for the remaining lien amount, $28,418.20.