Labor Code Trumps Hospital Lien - Hospital Charges Satisfied By Accepting Comp Payment

Monday, July 16, 2007
Contributed by: Kelly Utsinger

[Daughters of Charity Health Services of Waco v. Linnstaedter, --- S.W.3d ----, 2007 WL 1576045, 50 Tex. Sup. Ct. J. 819, Tex., June 01, 2007 (No. 05-0108.)]

After Donald Linnstaedter and Kenneth Bolen were injured in an auto accident in the course and scope of employment, the Daughters of Charity Health Services of Waco filed a hospital lien for the full amount of its medical charges (TEX. PROP. CODE sec 55.001-.008), while accepting reduced payment from the workers' compensation carrier under the Texas Labor Code's reimbursement guidelines. When Linnstaedter and Bolen settled with the other driver, the driver's insurance carrier paid the almost $13,000 hospital lien, despite the Labor Code's prohibition against hospitals pursuing private claims against workers' compensation claimants. TEX. LAB. CODE sec. 413.042(a). The Daughters' charity did not extend to releasing the lien because Linnstaedter and Bolen had sued to recover the entire amount of the bill. Linnstaedter and Bolen then sued the Daughters of Charity to recover the hospital lien payment. The Texas Supreme Court agreed with the workers, holding that the hospital lien violated the Labor Code's prohibition of private claims against compensation patients. The hospital lien was not enforceable in light of acceptance of the workers' compensation payment. The importance of this decision is magnified by footnote 22 in which the Texas Supreme Court explained that the hospital's contention that the lien was recoverable since the workers had sued the other driver for the full amount of the hospital bill was of no significance because recovery of health care expenses incurred is limited to the amount actually paid or incurred on behalf of the claimant. TEX. CIV. PRAC. & REM. CODE sec. 41.0105. This footnote seems to affirm Mills v. Fletcher, 2007 WL 1423883, Tex.App.- San Antonio May 16, 2007, just as the Texas Legislature seems bent on amending the scope of sec. 41.0105 (see HB 3281 limiting sec. 41.0105 to health care liability claims).

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