Title: Joiner v. Medical Center East, Inc.
Citation: 709 So. 2d 1209
Docket Number: 1961838
State: Alabama
Issuer: Alabama Supreme Court
Date: January 30, 1998

709 So. 2d 1209 (1998)
Frank D. JOINER and Avis C. Joiner,
v.
MEDICAL CENTER EAST, INC.
1961838.

Supreme Court of Alabama.
January 30, 1998.
M. Clay Ragsdale and E. Ansel Strickland of Law Offices of M. Clay Ragsdale, Birmingham, for appellants
Sid J. Trant and Richard L. Sharff, Jr., of Bradley, Arant, Rose &amp; White, L.L.P., Birmingham, for appellee.
HOUSTON, Justice.
The plaintiffs, Frank D. Joiner and his wife, Avis C. Joiner, appeal from a summary judgment for the defendant, Medical Center East, Inc., in this action seeking equitable relief and damages based on allegations of negligence, wantonness, breach of contract, fraudulent suppression, and slander of title, arising out of a hospital lien filed by Medical Center East against the proceeds of a liability insurance settlement. We hold that the lien filed by Medical Center East against the settlement proceeds was valid and enforceable because Medical Center East had the right under applicable federal law to obtain full payment of its charges from those proceeds; therefore, because each of the plaintiffs' claims presupposes the invalidity of the lien, we affirm the summary judgment.
The pertinent facts are undisputed: The Joiners were injured in an automobile accident on May 31, 1994. The driver of the other automobile involved in the accident had liability insurance coverage. Frank Joiner was admitted to Medical Center East for treatment on the day of the accident; he was discharged on June 4, 1994. Medical Center East is an approved Medicare health services provider and Frank Joiner was, at the time of his admission and treatment, Medicare eligible. Although Frank Joiner was eligible *1210 to have his $14,778.76 hospital bill paid by Medicare, Medical Center East elected to forgo billing Medicare and, instead, filed a lien on June 29, 1994, pursuant to Ala.Code 1975, § 35-11-370 et seq., against the proceeds of any settlement that Joiner might enter into with the liability insurer of the driver of the other automobile. The amount that Medical Center East sought to recover by virtue of its lien ($14,778.76) was in excess of the amount it had agreed to accept as payment from Medicare under its provider agreement. On or about February 28, 1995, 269 days after he had been discharged from the hospital, Frank Joiner settled with the other driver's liability insurer for $50,000. Joiner requested that Medical Center East withdraw its lien and that it accept payment in full from Medicare. Medical Center East refused this request. The Joiners then filed this action and later paid into the court the liability insurance proceeds that were the subject of the lien.
The trial court stated in its judgment that it considered the dispositive issue to be whether Medical Center East had a valid lien against $14,778.76 of the proceeds recovered by Frank Joiner pursuant to his settlement with the other driver's liability insurer. Without addressing any of the other arguments made by Medical Center East in support of the summary judgment motion, the trial court, concluding that Medical Center East had a legal right to receive payment in full from the proceeds of Frank Joiner's settlement, held the lien to be valid. Thus, the trial court entered a summary judgment for Medical Center East and ordered disbursement of the $14,778.76 that had been paid into the court. The Joiners appealed.[1]
Our decision in this case hinges upon our resolution of a pure question of law whether Medical Center East had the right under federal law to obtain full payment for Frank Joiner's medical treatment from the proceeds of his settlement with the liability insurer. If Medical Center East had that right, then the lien that it filed against the proceeds of Joiner's liability insurance settlement was valid and the summary judgment was proper. See Rule 56, Ala.R.Civ.P. If, on the other hand, Medical Center East did not have the right to obtain full payment for Frank Joiner's medical treatment from the proceeds of his settlement, then the lien was not valid and the summary judgment is due to be reversed.
In support of its judgment, Medical Center East contends, and the trial court held, that Congress has made Medicare a secondary payer when proceeds covering a beneficiary's medical bill are due from a thirdparty tortfeasor's liability insurer. Relying primarily on Oregon Ass'n of Hospitals v. Bowen, 708 F. Supp. 1135 (D.Or.1989), and American Hospital Ass'n v. Sullivan (D.D.C., May 24, 1990, No. Civ.88-2027) (not reported in F.Supp.), 1990 WL 274639, Medical Center East argues that a Medicareapproved health services provider has the right under federal law to elect to file a lien under state law against liability insurance proceeds owing to the beneficiary for medical services provided to the beneficiary. According to Medical Center East, Congress changed Medicare from a primary payer to a secondary payer when liability insurance is available, in an attempt to shift financial responsibility for a beneficiary's medical treatment from Medicare to the party responsible for the beneficiary's injuries. This change in the law, according to Medical Center East, was intended to reduce Medicare's costs.
The Joiners concede that Congress changed the law so as to make Medicare a secondary payer. They argue, however, that that change provided only for Medicare to become a secondary payer under certain limited circumstances. Relying, in part, on what they characterize as the clear language of 42 U.S.C. § 1395y(b)(2)(A) and 42 C.F.R. § 411.50(b), as well as on Bowen and Sullivan, *1211 supra, the Joiners argue that Medical Center East lost its statutory authorization to obtain payment from Mr. Joiner's settlement because, the Joiners argue, that settlement was not made "promptly" (i.e., within 120 days of Frank Joiner's discharge from the hospital), as a matter of federal law. After carefully examining the record and after considering the arguments of the parties, we conclude that Medical Center East has correctly interpreted federal law.
In Sullivan, supra, one of the two cases primarily relied on by both sides here, the United States District Court for the District of Columbia was concerned with the validity of a regulation promulgated by the Secretary of the United States Department of Health and Human Services, the federal agency charged with administering the Medicare program established by Congress, and the administrator of the Health Care Financing Administration, which administers aspects of the Medicare program relevant to this case. The question presented in Sullivan was whether that regulation, which prohibited health-care providers from accepting payment from a liability insurer for a beneficiary's medical treatment, conflicted with congressional intent. The Sullivan court struck down the regulation. Because we find that case to be both informative and instructive, we quote from it extensively:
(Emphasis in original.)
As Sullivan illustrates, Congress originally intended for Medicare to be the primary payer for hospital and medical services provided to a Medicare beneficiary. The statutory framework even today envisions that when a health services provider bills Medicare, it agrees to accept the amount that Medicare will pay, and that once Medicare is billed a Medicare beneficiary will not be charged, either directly or indirectly, for items or services that the beneficiary is entitled to have paid. Of course, when Medicare pays, it becomes subrogated to the rights of the beneficiary and it may seek reimbursement from a beneficiary's settlement with a liability insurer. 42 U.S.C. § 1395y(b)(2)(B). However, as the Sullivan court recognized, a statutory exception to Medicare's primary payer status is found in the "secondary payer" provision, set out in 42 U.S.C. § 1395y(b)(2)(A). That provision provides, in pertinent part, that payment for a beneficiary's medical treatment cannot be made by Medicare "with respect to any item or service to the extent that ... payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) ... under an automobile or liability insurance policy or plan (including a self insurance plan) or under no fault insurance." Thus, by virtue of the "secondary payer" exception, Congress has provided the statutory means by which a health services provider, which has provided medical treatment to a Medicare beneficiary, may obtain payment from a beneficiary's liability insurance proceeds, instead of from Medicare. The effect of the "secondary payer" provision is to force a health services provider to look to a liability insurer for payment, instead of to Medicare, when payment from a liability insurer "has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations)." 42 C.F.R. § 411.50, defines "prompt or promptly" as follows:
The Sullivan court made it very clear that the Department of Health and Human Services and the Health Care and Financing Administration could not, by regulation, effectively write the "secondary payer" exception out of the statute and thereby prohibit recovery from a beneficiary's liability insurance proceeds. The Joiners do not take issue with Sullivan on this point; they argue, instead, that if the definition set out in 42 C.F.R. § 411.50 is plugged into the statute (§ 1395y(b)(2)(A)), and applied under the facts of the present case, then the "secondary payer" exception is not available to Medical Center East because payment from the liability insurer was not made "promptly." In this respect, the Joiners argue, it makes no difference that Medical Center East promptly filed its lien on June 29, 1994, against any potential liability insurance payment. According to the Joiners, the statute required that the liability insurance payment either be made within 120 days from June 4, 1994 (the day of Joiner's discharge) or that the payment be reasonably expected to be made within 120 days from the day of discharge. Therefore, under the Joiners' interpretation of the statute, once the 120-day deadline for payment from the liability insurer had *1218 passed, any payment thereafter could not have been prompt, and could not reasonably have been expected to be prompt, as a matter of federal law. Therefore, the Joiners argue, after the 120-day period had passed, Frank Joiner was once again "covered" by Medicare and "entitled" to have Medicare pay his bill in accordance with its provider agreement with Medical Center East.
As was noted in Sullivan, courts must give great deference to a federal agency's interpretation of its controlling statute. If the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute, that is, whether the agency's construction is natural and consistent with the statute. Although the "secondary payer" provision clearly prohibits a health services provider from billing Medicare when "payment has been made or can reasonably be expected to be made promptly" by a liability insurer, as "promptly" is defined in 42 C.F.R. § 411.50, the statute is not as clear as to whether a health services provider can continue to pursue full payment for its charges from a liability insurance settlement after the expiration of the 120-day period set out in § 411.50. We note that the Department of Health and Human Services at one point interpreted the statute as the Joiners contendto prohibit a health services provider from pursuing liability insurance proceeds after the expiration of the 120-day period. See 42 C.F.R. § 411.54, which, in pertinent part, provides:
(Emphasis added.) See, also, 42 C.F.R. § 489.20, which provides in part:
(Emphasis added.) The emphasized portions of these regulations were apparently promulgated in response to the Bowen decision in Oregon. Although these regulations presently appear in the Code of Federal Regulations, the Department of Health and Human Services changed its interpretation of the statute after Sullivan. On November 13, 1991, Medicare's Associate Regional Administrator, Richard L. Warren, sent a letter to all "Part A &amp; B Medicare Contractors" that stated, in pertinent part, as follows:
(Emphasis in original.)
On March 12, 1996, the Health Care Financing Administration, through Thomas E. Hoyer, its director of the Office of Chronic Care and Insurance Policy, sent an interdepartmental memorandum to all of its associate regional Medicare administrators, explaining the proper procedure to be followed when liability insurance is available to pay for a beneficiary's medical treatment. That memorandum, which was distributed on April 23, 1996, to all "Region IV Medicare Contractors" by Medicare's associate regional administrator, George F. Jacobs, read in pertinent part as follows:
(Emphasis in original.) The August 21, 1995, memorandum referred to in the March 12, 1996, memorandum stated:
The interpretation that has now been placed on the statute by the Health Care Financing Administration, on behalf of the Department of Health and Human Services, is entirely permissible and is consistent with congressional intentto cut Medicare's costsand, we conclude, it is due to be followed in this instance. For this reason, we hold that Medical Center East had the right under federal law to obtain full payment of its charges from the proceeds of Frank Joiner's settlement, even though that settlement was reached more than 120 days after Joiner's discharge from the hospital. Therefore, the trial court did not err in holding that Medical Center East had a valid and enforceable lien.
We further note the Joiners' argument that Medical Center East did not file a proper request to have the trial court disburse the $14,778.76, and that it did not prove that those charges were reasonable, as required under § 35-11-370. However, the record indicates that Medical Center East made a request for disbursement in its brief in support of its summary judgment motion and that it made a prima facie showing that its charges were reasonable by submitting its "Notice of Hospital Lien," wherein Paul Burchfield, the director of patient accounts for Medical Center East, stated under oath that the claimed charges were reasonable. Because the Joiners presented no evidence to rebut that prima facie showing, we see no *1222 error on the part of the trial court in disbursing the funds.
For the foregoing reasons, the summary judgment is affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, KENNEDY, COOK, BUTTS, and SEE, JJ., concur.
[1]  Avis Joiner was apparently not treated by Medical Center East. Medical Center East argues that "[b]ecause there is no allegation that [it] treated Ms. Joiner, or had any express or implied agreement with her, she has no claim, direct or indirect, against [it], regardless of the validity of the Joiners' arguments about Medicare's rules." In light of our holding, we pretermit consideration of any other grounds upon which a summary judgment might be proper with respect to Avis Joiner.