Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-02884/USCOURTS-ca8-14-02884-0/pdf.json

Parties Involved:
Barbara Ford
Appellee
Aaron Medford
Appellee
Medford Farm Partnership
Appellee
Shelby County Health Care Corporation
Appellant
Southern Farm Bureau Casualty Insurance Company
Appellee

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-2884

___________________________

Shelby County Health Care Corporation, doing business as Regional Health Center

lllllllllllllllllllll Plaintiff - Appellant

v.

Southern Farm Bureau Casualty Insurance Company; Medford Farm Partnership;

Aaron Medford; Barbara Ford, as Special Administratrix of the Estate of John

Dallas Smiley

lllllllllllllllllllll Defendants - Appellees

____________

Appeal from United States District Court 

for the Eastern District of Arkansas - Jonesboro

____________

 Submitted: April 14, 2015

 Filed: August 14, 2015

____________

Before RILEY, Chief Judge, LOKEN and SHEPHERD, Circuit Judges.

____________

SHEPHERD, Circuit Judge.

Shelby County Healthcare Corporation, doing business as Regional Medical

Center (“the Med”), appeals from four district court orders related to its claim for

impairment of a hospital lien. For the reasons detailed below, we vacate the orders

and remand for further proceedings not inconsistent with this opinion.

Appellate Case: 14-2884 Page: 1 Date Filed: 08/14/2015 Entry ID: 4305942 
I.

John Smiley, a resident of Monroe County, Arkansas, was severely injured

when a vehicle driven by Aaron Medford, a resident of Woodruff County, Arkansas,

struck Smiley’s vehicle. The accident occurred in MonroeCounty, Arkansas. Smiley

wastransported to the Med, a medical center in Memphis, Shelby County, Tennessee,

located just across the Mississippi River from Arkansas, where he received several

weeks of medical care before dying from his injuries. Pursuant to the Tennessee

Hospital Lien Act (“HLA”), Tenn. Code Ann. § 29-22-101 et seq., the Med filed a

statutory hospital lien in the Circuit Court of Tennessee for the Thirtieth Judicial

District at Memphis for the unpaid balance owed on Smiley’s hospital bill, which is

over $355,000. The Med mailed copies of the lien to the attorneys for Smiley’s

estate. 

Barbara Ford was appointed asspecial administratrix for Smiley’s estate by the

Circuit Court of Monroe County, Arkansas, Probate Division (“the probate court”)

to pursue claims the estate and beneficiaries had resulting from Smiley’s death. After

negotiating with Medford’s insurer, Southern Farm Bureau Casualty Insurance

Company (“Southern”), Ford petitioned the probate court to authorize a settlement. 

The probate court noted that Ford had asserted a wrongful death claim against

Medford and wanted to accept Southern’s offer to pay $700,000 in exchange for a

release of any and all claims arising under the Arkansas Wrongful Death Act, Ark.

Code Ann. § 16-62-102. The probate court found that no medical liens had been filed

against Smiley’s estate in Monroe County and that the Med’s hospital lien was void

and unenforceable in Arkansas as the Med did not follow or attempt to follow the

requirements of the Arkansas Medical, Nursing, Hospital, and Ambulance Service

Lien Act (“MLA”), Ark. Code Ann. § 18-46-101 et seq. The probate court entered

judgment authorizing Ford to accept the $700,000 on behalf of the estate, statutory

beneficiaries, and next of kin, in full settlement and satisfaction “of all claims and

-2-

Appellate Case: 14-2884 Page: 2 Date Filed: 08/14/2015 Entry ID: 4305942 
demands” against Medford and Southern. None of the settlement proceeds were paid

to the Med. 

The Med then filed this action in the district court in Arkansas against

Medford, the Medford Farm Partnership (hereinafter, jointly referred to as

“Medford”), Ford, and Southern, claiming they impaired the Med’s hospital lien, in

violation of the Tennessee HLA. See Tenn. Code Ann. § 29-22-104. The Med

argued Southern and Medford impaired its lien because they had notice of the lien but

accepted a release of claims and paid a settlement without honoring the lien. The

Med claimed Ford impaired the lien in making the settlement by using Smiley’s

hospital bills and medicalrecords in settlement negotiations and thenmisrepresenting

to the probate court that all of the settlement proceeds were wrongful death proceeds

to avoid creditors. The Med asserted that Tennessee law applies to the adjudication

of its impairment claim and requested judgment in the amount of one-third of the

amount paid in violation of the lien. See Tenn. Code Ann. § 29-22-101(b) (limiting

the hospital lien’s application to no more than one-third of the damages obtained or

recovered in an applicable cause of action); Shelby Cnty. Health Care Corp. v.

Baumgartner, No. W2008-01771-COA-R3-CV, 2011 WL 303249, at *17-19 (Tenn.

Ct. App. Jan. 26, 2011) (concluding that section 29-22-101(b), while addressing

enforcement and not impairment, “circumscribesthe scope of [the Med’s] underlying

right” in an impairment action, meaning it can only recover as damages no more than

one-third of the amount obtained or recovered (internal quotation marks omitted)). 

Appellees argued that Arkansas law applies to the case and that they did not impair

the Med’s lien because the settlement proceeds were wrongful death proceeds, which

are not subject to the estate’s creditors under Arkansas law, meaning the Med was not

entitled to those proceeds. See Ark. Code Ann. § 16-62-102(e). 

In separate orders, the district court granted summary judgment in favor of

appellees, concluding that Arkansas law applied and would not permit the Med to

recover fromthe wrongful death proceeds paid to Smiley’s beneficiaries. The district

-3-

Appellate Case: 14-2884 Page: 3 Date Filed: 08/14/2015 Entry ID: 4305942 
court also noted that the Med never obtained a judgment that could be enforced in

Arkansas against Smiley’s estate or filed a lien in Arkansas. The district court

awarded all appellees attorney’s fees against the Med pursuant to the Arkansas MLA. 

The Med now appeals. 

II.

We review a district court’s grant ofsummary judgment, interpretation ofstate

law, and choice-of-law determinations de novo. H&R Block Tax Servs. LLC v.

Franklin, 691 F.3d 941, 943 (8th Cir. 2012); Global Petromarine v. G.T. Sales &

Mfg., Inc., 577 F.3d 839, 844 (8th Cir. 2009). Summary judgment is appropriate “if

the movant shows there is no genuine dispute as to any material fact and the movant

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

The Med’s complaint alleged a single claim against appellees: a claim for

damages for impairment of its hospital lien, a statutory cause of action created by the

Tennessee HLA. See Tenn. Code Ann. § 29-22-104. The HLA granted the Med a

lien for unpaid medical expenses “upon any and all causes of action, suits, claims,

counterclaims or demands accruing to” Smiley’s legal representatives as a result of

his accident. See id. § 29-22-101(a). The HLA creates a cause of action for medical

providers to pursue damages when their liens are impaired. The statute reads, in

relevant part: 

(a) No release or satisfaction or any action, suit, claim, counterclaim,

demand, judgment, settlement or settlement agreement, or any of them,

shall be valid or effectual as against such lien unlessthe lienholder shall

join therein or execute a release of the lien.

(b) (1) Any acceptance of a release or satisfaction of any such cause of

action, suit, claim, counterclaim, demand or judgment and any

settlement of any of the foregoing in the absence of a release or

-4-

Appellate Case: 14-2884 Page: 4 Date Filed: 08/14/2015 Entry ID: 4305942 
satisfaction of the lien referred to in this chapter shall prima facie

constitute an impairment of such lien, and the lienholder shall be

entitled to an action at law for damages on account of such impairment,

and in such action may recover from the one accepting such release or

satisfaction or making such settlement the reasonable cost of such

hospital care, treatment and maintenance.

Id. § 29-22-104 (emphasis added). 

The Med sought damages pursuant to this statutory cause of action for

impairment of its lien. The district court, however, construed the Med’s complaint

as asserting a claim to enforce a hospital lien rather than as “an action at law for

damages on account of . . . impairment” of that lien. Id. § 29-22-104(b)(1). Ignoring

this critical distinction, the district court failed to identify the elements of a hospital

lien impairment action and granted appelleessummary judgment because itfound that

the Med “failed to properly enforce [its lien] in the court with jurisdiction over the

Estate of John Smiley” and that “[e]ven if the Med had taken the appropriate steps,

it is clear that Arkansas law – which is appropriate in this case, since all other things

being equal, Arkansas has a strong interest in determining what damages its citizens

may recover in personal injury suits – would not permit The Med to recover from the

wrongful death proceeds of the beneficiaries.” R. Doc. 33, at 4-5. Viewed as a claim

for damages for lien impairment, significant issues remain unaddressed, including

whether the Med’s hospital lien attached to the wrongful death settlement proceeds, 

cf. Shelby Cnty. Healthcare Corp. v. Nationwide Mut. Ins. Co., 325 S.W.3d 88, 98

(Tenn. 2010) (finding it unnecessary to address the Med’s claimthat insurer impaired

its lien by making medical benefit payments because “the attachment of liens under

the HLA is limited to the recovery of ‘damages,’” and the payments at issue were not

“damages,” meaning the Med did not have a valid lien on those proceeds); which 1

Appellees argue that Arkansas law controls and does not allow hospital liens

1

to attach to wrongful death proceeds, but Arkansas courts have not squarely

addressed this question. Other states have found conflicts between their hospital lien

-5-

Appellate Case: 14-2884 Page: 5 Date Filed: 08/14/2015 Entry ID: 4305942 
state’s medical lien law applies, see Ark. Code Ann. § 18-46-105 and Tenn. Code

Ann. § 29-22-102; whether the Med properly perfected its lien, see, e.g.,

Baumgartner, 2011 WL 303249, at *12 (“[I]f The MED failed to perfect its lien in

accordance with subsections (a) and (b) of Section 29-22-102, this would be fatal to

its [impairment] claims against [the insurer] under the lien.”); and whether all

appellees were subject to a claim for impairment under the HLA, see Tenn. Code

Ann. § 29-22-104(b)(1) (stating lienholders may recover damages “from the one

accepting such release or satisfaction or making such settlement”). The parties

disagree on all of these points.

Rather than decide these issues for the first time on appeal, we conclude the

better course is to remand to allow these issues to be developed and decided by the

district court in the first instance. See Loftness Specialized Farm Equip., Inc. v.

Twiestmeyer, 742 F.3d 845, 851 (8thCir. 2014) (remanding where the district court’s

grant ofsummary judgment was not based on the claim actually alleged and appellee

urged affirmance on an alternative basis, explaining that “[a]lthough we may affirm

the district court’s judgment on any basis supported by the record, we are not required

to do so. When it would be beneficial for the district court to consider an alternative

argument in the first instance, we may remand the matter to the district court”

(emphasis in original) (citation omitted)); Murphy v. Aurora Loan Servs., LLC, 699

F.3d 1027, 1033-34 (8th Cir. 2012) (“Although we may affirm . . . on grounds not

relied upon by the district court, where the parties did not adequately develop an

issue, remanding to allow the district court to address the matter in the first instance

and wrongful death statutes and have come out both ways on whether hospital liens

can attach to wrongful death proceeds. Compare Spivey v. Anderson, No. 02A01-

9704-CV-00075, 1997 WL 563199, at *3-4 (Tenn. Ct. App. Sept. 9, 1997) (lien

attaches), and Hall v. Regents of Univ. of N.M., 740 P.2d 1151, 1152 (N.M. 1987)

(same), with Am. Family Mut. Ins. Co. v. Ward, 774 S.W.2d 135, 137-38 (Mo. 1989)

(en banc) (lien does not attach), and Tarrant Cnty. Hosp. Dist. v. Jones, 664 S.W.2d

191, 195 (Tex. Ct. App. 1984) (same). 

-6-

Appellate Case: 14-2884 Page: 6 Date Filed: 08/14/2015 Entry ID: 4305942 
is appropriate.”), cert. denied, 133 S. Ct. 2358 (2013). Accordingly, we vacate the

district court’s orders granting summary judgment and remand for further

proceedings. Given this holding, the basis for the district court’s awards of attorney’s

fees no longer exists, so we also vacate those orders. 

 

III.

For these reasons, we vacate the district court’s orders granting summary

judgment and attorney’s fees to Ford, Southern, and Medford. We remand the case

to the district court for further proceedings not inconsistent with this opinion. 

 ______________________________

-7-

Appellate Case: 14-2884 Page: 7 Date Filed: 08/14/2015 Entry ID: 4305942