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Nash Hospitals, Inc. v. State Farm Mutual Automobile Insurance Co.

Court of Appeals of North Carolina

August 1, 2017

NASH HOSPITALS, INC., Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant.

          Heard in the Court of Appeals 15 November 2016

         Appeal by Defendant from an order entered 15 February 2016 by Judge Cy Grant in Nash County Superior Court No. 14-CVS-1152

          Creech Law Firm, P.A., by J. Christopher Dunn, for Plaintiff-Appellee.

          Butler Snow LLP, by Scott Lewis and Pamela L. Carter, for Defendant-Appellant.

          INMAN, Judge.

         This appeal arises from a $757 hospital bill. It concerns an insurance company's payment of a total settlement directly to a pro se personal injury claimant by check made payable jointly to the claimant and two of her medical providers, each of which held valid liens on the settlement funds. We affirm the trial court's ruling, in granting summary judgment for a lienholder, that the insurance company violated the North Carolina medical lien statutes by failing to retain funds subject to medical liens and committed an unfair or deceptive trade practice by failing to pay directly to the lienholder its pro rata share of funds for several months despite repeated demands. Because the trial court miscalculated the statutory amount required to satisfy the lien, however, we vacate that portion of the judgment and remand for entry of judgment in an amount consistent with the statute and this opinion.

         State Farm Mutual Automobile Insurance Company ("Defendant") appeals from an order granting summary judgment in favor of Nash Hospitals, Inc. ("Plaintiff" or "Nash Hospitals") and denying Defendant's motion for summary judgment. Defendant argues that its issuance to a pro se personal injury claimant of a check for a total settlement-without retaining funds owed to medical lienholders- did not violate N.C. Gen. Stat. §§ 44-50 and 44-50.1 because the check was made payable jointly to the claimant and the lienholders. Defendant also argues that the trial court erred in concluding that Defendant committed an unfair or deceptive trade practice, in part because Nash Hospitals suffered no injury as a result of Defendant's issuance of the multi-party check to the claimant. After careful review, we affirm the trial court's order in part and vacate and remand the trial court's order in part.

         Facts and Procedural Background

         The undisputed facts are as follows:

         On 9 April 2013, Jessica Whitaker ("Whitaker") was injured in an automobile accident caused by Defendant's insured, Christopher Helton ("Helton").

         Whitaker incurred $2, 272 in medical expenses following the accident. The majority of these expenses-$1, 515-was for treatment at Rocky Mount Chiropractic ("Rocky Mount"); the remaining $757 was for treatment at Nash Hospitals.

         On 10 May 2013, counsel for Nash Hospitals sent Defendant a notice of medical lien pursuant to N.C. Gen. Stat. §§ 44-49 and 44-50. A month later, Rocky Mount sent a similar notice of medical lien to Defendant.

         Defendant evaluated Whitaker's claims and questioned whether all Whitaker's medical treatment was related to the accident. Defendant negotiated with Whitaker and reached a settlement on 28 October 2013 for $1, 943. The settlement amount was insufficient to satisfy the medical liens in full.

         On 10 December 2013, Defendant received Whitaker's signed release for the settlement and sent her a check for $1, 943, made payable to Whitaker, Nash Hospitals, and Rocky Mount. Whitaker did not present the settlement check to Nash Hospitals, nor did Defendant notify Nash Hospitals of the settlement.

         In February 2014, an employee of Nash Hospitals contacted Defendant regarding Whitaker's claim and Nash Hospitals' lien. Defendant's representative disclosed that it had reached a settlement with Whitaker and had delivered to her a check payable to Whitaker, Nash Hospitals, and Rocky Mount. Defendant's representative said the multi-party check protected Nash Hospitals' lien and told Nash Hospitals' employee to contact Whitaker.

         On 13 March 2014, counsel for Nash Hospitals sent a letter to Defendant asserting that Defendant's issuance of the multi-party check violated North Carolina law, noting that N.C. Gen. Stat. § 44-50 "specifically requires the liability insurer to retain out of any recovery, before any disbursements, a sufficient sum to pay lien holders." (emphasis in original). The letter also asserted that "by issuing a check that can't be cashed by the patient, State Farm is forcing the patient to obtain an attorney and incur unnecessary expense." Defendant did not respond.

         In April 2014, Nash Hospitals made a third unsuccessful attempt to collect on its lien from Defendant.

         On 25 August 2014, Nash Hospitals filed a verified complaint against Defendant alleging violations of N.C. Gen. Stat. §§ 44-49 and 44-50 and alleging that Defendant engaged in an unfair or deceptive trade practice. On 19 September 2014, Defendant asked Whitaker to return the uncashed multi-party check, and on 17 November 2014, Defendant issued a check payable solely to Nash Hospitals for $757, the total amount of Nash Hospitals' lien. Nash Hospitals did not agree to accept the payment as satisfaction of the lawsuit or the underlying lien. Both parties then filed motions for summary judgment.

         On 15 February 2016, the trial court issued an order granting Nash Hospitals' motion for summary judgment and denying Defendant's motion for summary judgment. The trial court found damages in the full amount of the lien-$757-and awarded Nash Hospitals treble damages pursuant to N.C. Gen. Stat. § 75-16 for a total award of $2, 271. Defendant timely filed notice of appeal.

         Analysis

         I. Standard of Review

         The standard of review for an appeal from summary judgment is de novo. In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation omitted). Summary judgment is appropriate "only when the record shows that 'there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.' " Id. at 573, 669 S.E.2d at 576 (quoting Forbis v. Neal, 361 N.C. 519, 523-24, 649 S.E.2d 382, 385 (2007)). "When considering a motion for summary judgment, the trial judge must view the presented evidence in a light most favorable to the nonmoving party." Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707 (2001) (citation omitted). "Evidence properly considered on a motion for summary judgment 'includes admissions in the pleadings, depositions on file, answers to Rule 33 interrogatories, admissions on file[, ] . . . affidavits, and any other material which would be admissible in evidence or of which judicial notice may properly be taken.' " Murray v. Nationwide Mut. Ins. Co., 123 N.C.App. 1, 8, 472 S.E.2d 358, 362 (1996) (alteration in original) (quoting Kessing v. Nat'l Mortg. Corp., 278 N.C. 523, 533, 180 S.E.2d 823, 829 (1971)).

         The material facts are undisputed. Therefore, we examine the applicable law to determine whether either party was entitled to judgment as a matter of law.

         II. Violation of N.C. Gen. Stat. §§ 44-50 and 44-50.1

         Once Defendant received proper notice of Nash Hospitals' lien and agreed to a negotiated settlement with Whitaker, Nash Hospitals was entitled-under North Carolina's medical lien statutes-to receive payment from Defendant for a pro rata portion of its unpaid bill before Defendant disbursed funds to Whitaker. Defendant argues that the statutes do not prohibit an insurance company from issuing a check payable jointly to a claimant and her medical lienholders in lieu of directly paying the lienholders, and that its issuance of the multi-party check did not amount to a disbursement of funds. For the reasons explained below, we disagree.

         Chapter 44, Article 9 of the General Statutes contains a series of statutes enacted by the General Assembly to help medical providers recover payment for services rendered to patients who later collect compensation for medical treatment resulting from a personal injury incident. N.C. Gen. Stat. § 44-49 creates a lien "upon any sums recovered as damages for ...


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