Title: Ex parte Alfa Mutual Insurance Company.
Citation: N/A
Docket Number: 1141343
State: Alabama
Issuer: Alabama Supreme Court
Date: April 28, 2017

REL: 04/28/2017
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
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the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2016-2017
____________________
1141343
____________________
Ex parte Alfa Mutual Insurance Company
PETITION FOR WRIT OF CERTIORARI
TO THE COURT OF CIVIL APPEALS
(In re: Alfa Mutual Insurance Company
v.
University of South Alabama d/b/a University of South
Alabama Medical Center Hospital)
(Mobile Circuit Court, CV-14-901532;
Court of Civil Appeals, 2140366)
MURDOCK, Justice.
1141343
Alfa Mutual Insurance Company ("Alfa") appealed to the
Alabama Court of Civil Appeals from a summary judgment in
favor of University of South Alabama d/b/a/ University of
South Alabama Medical Center Hospital ("USA").  The Court of
Civil Appeals affirmed in part, reversed in part, and remanded
with instructions.  Alfa Mut. Ins. Co. v. University of
S. Alabama, [Ms. 2140366, July 17, 2015] ___ So. 3d ___ (Ala.
Civ. App. 2015) ("Alfa").  We granted Alfa's petition for a
writ of certiorari with respect to the issue whether USA's
hospital lien was impaired and the amount of damages
recoverable by USA from Alfa for that impairment.  For the
reasons set forth below, we reverse the judgment of the Court
of Civil Appeals insofar as it affirmed the circuit court's
ruling that the amount of damages recoverable from Alfa was an
amount equal to the entirety of USA's reasonable charges,
irrespective of the amount that was otherwise owed by Alfa
under the terms of its policy, and we remand the case for
further proceedings.
I.  Facts and Procedural History
USA filed a complaint against Alfa alleging impairment of
its hospital lien imposed pursuant to Ala. Code 1975,
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§§ 35-11-370 through -372, with respect to expenses incurred
by USA in its treatment of Abaney T. Wright, who was injured
in an automobile accident less than one week before her
admission to USA's hospital and later died as a result of her
injuries.  USA alleged that Alfa impaired its lien by making
a $2,000 payment to Wright's parents for funeral expenses
under a medical-payment-benefit provision in the parents'
automobile-insurance policy.1  Approximately one month later,
Alfa issued a draft to USA's counsel in the amount of $2,000;
USA did not negotiate the draft. 
The case was tried on stipulated facts, briefs, and
arguments of counsel.  The circuit court entered a summary
judgment in favor of USA in the amount of its amended lien,
$36,438.50, plus attorney fees in the amount of $5,166.69. 
That is, the circuit court awarded damages based on the
entirety of the hospital's charges, without respect to the
amount otherwise owed by Alfa under its policy.  Alfa appealed
to the Court of Civil Appeals.
1The insurance policy provided for a medical-payment
benefit of $2,000 for necessary medical and/or funeral
expenses because of bodily injury to a covered person caused
by an automobile accident.
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On appeal, Alfa argued (1) that the hospital lien
attached only to tort claims and not to the contract claim at
issue here,2 (2) that USA's lien was not impaired because
there had been no release, satisfaction, or settlement of any
covered claim, and (3) that the damages awarded against Alfa
are not owed by it under a proper reading of the lien-
impairment statute.  Alfa did not challenge the perfection of
the lien, the reasonableness of USA's charges, or the amount
of the attorney-fee award (assuming that attorney fees were
payable at all). 
The Court of Civil Appeals issued an opinion affirming
the judgment in part, specifically concluding that, under the
rationale of University of South Alabama v. Progressive
Insurance Co., 904 So. 2d 1242 (Ala. 2004), the circuit court
correctly ruled that the amount of damages awarded against
Alfa should be based on the entirety of USA's reasonable
charges secured by its perfected lien.3  Presiding Judge
2We did not grant certiorari review as to this first
issue.  See Progressive Specialty Ins. Co. v. University of
Alabama Hosp., 953 So. 2d 413 (Ala. Civ. App. 2006).
3The Court of Civil Appeals reversed the judgment insofar
as it increased those damages to include additional amounts
charged by USA in a subsequent lien perfected before the
alleged impairment.  The Court of Civil Appeals held that USA
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Thompson concurred specially, noting that the result was
inequitable and not intended by the legislature when it
enacted §§ 35-11-370 through -372 but concluding that he was
"compelled" by caselaw to agree with the disposition of the
case.  Alfa, ___ So. 3d at ___ (Thompson, P.J., concurring
specially).
Alfa petitioned this Court for a writ of certiorari.  We
granted the petition for a writ of certiorari with respect to
the issue whether USA's lien was impaired and the proper
measure of damages.
II.  Standard of Review
Our standard of review on an appeal of a summary judgment
is well settled.
"'"We review a summary judgment de novo. We
apply the same standard of review as the trial court
in determining whether the evidence presented to the
trial court demonstrated the existence of a genuine
issue of material fact. A summary judgment is proper
where 'the pleadings, depositions, answers to
interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the
was entitled to recover only the amount of its original lien
($30,900.50), which was the only lien perfected at the time
Alfa made the payment to Wright's parents.  USA did not seek
certiorari review as to the amount of the lien; the difference
between the two lien amounts is not material to the analysis
in this opinion.
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moving party is entitled to a judgment as a matter
of law.'"'"
Tanner v. State Farm Fire & Cas. Co., 874 So. 2d 1058, 1063
(Ala. 2003) (quoting Slay v. Keller Indus., Inc., 823 So. 2d
623, 624–25 (Ala. 2001) (citations omitted), quoting in turn
Northwest Florida Truss, Inc. v. Baldwin Cty. Comm'n, 782
So. 2d 274, 276 (Ala. 2000)).
III. Analysis
The pertinent statutes are Ala. Code 1975, §§ 35-11-370
through -372.  Section 35-11-370 governs the creation of a
hospital lien and provides:
"Any person, firm, hospital authority, or
corporation operating a hospital in this state shall
have a lien for all reasonable charges for hospital
care, treatment, and maintenance of an injured
person who entered such hospital within one week
after receiving such injuries, upon any and all
actions, claims, counterclaims, and demands accruing
to the person to whom such care, treatment, or
maintenance was furnished, or accruing to the legal
representatives of such person, and upon all
judgments, settlements, and settlement agreements
entered into by virtue thereof on account of
injuries giving rise to such actions, claims,
counterclaims, demands, judgments, settlements, or
settlement agreements and which necessitated such
hospital care, subject, however, to any attorney's
lien."
(Emphasis added.)
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Section 35-11-372 addresses the impairment of a hospital
lien and provides:
"During the period of time allowed by Section
35-11-371 for perfecting the lien provided for by
this division and also after the lien provided for
by this division has been perfected, as provided in
this division, by any lienholder entitled thereto,
no release or satisfaction of any action, claim,
counterclaim, demand, judgment, settlement, or
settlement agreement, or of any of them, shall be
valid or effectual as against such lien unless such
lienholder shall join therein or execute a release
of such lien.
"Any acceptance of a release or satisfaction of
any such action, claim, counterclaim, demand or
judgment and any settlement of any of the foregoing
in the absence of a release or satisfaction of the
lien referred to in this division shall prima facie
constitute an impairment of such lien, and the
lienholder shall be entitled to a civil action 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.  Satisfaction of any judgment
rendered in favor of the lienholder in any such
action shall operate as a satisfaction of the lien.
Any action by the lienholder shall be brought in any
court having jurisdiction thereof and may be brought
and maintained in the county wherein the lienholder
has his, its, or their residence or place of
business.  If the lienholder shall prevail in such
action, the lienholder shall be entitled to recover
from the defendant, costs and reasonable attorney's
fees.  Such action shall be commenced against the
person liable for such damages within one year after
the date such liability shall be finally determined
by a settlement release covenant not to sue or by
the judgment of a court of competent jurisdiction."
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(Emphasis added.)
Section 35-11-370 grants hospitals a lien on certain
actions, claims, counterclaims, demands, judgments, and
settlements for the reasonable expenses of treating certain
patients injured in accidents.  Section 35-11-372 entitles a
hospital lienholder "to a civil action for damages on account
of" an impairment of a lien.
Like the circuit court, the Court of Civil Appeals
considered itself bound by Progressive, and it held that USA
was entitled to damages in the amount of its lien, plus
attorney fees.  We take this opportunity to revisit the
holding of Progressive.
In Progressive, a hospital claimed that its lien was
impaired by a settlement between the patient and a tortfeasor,
in which the patient was paid $6,000 in exchange for a full
release of the claims against the tortfeasor.  After
concluding that the tortfeasor's liability insurer did not
adequately present its argument that the hospital lien had not
been impaired, this Court rejected the argument that the
amount of damages for impairment of a hospital lien is limited
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to the payment made by the insurer to obtain the release of
the tortfeasor.  This Court stated:
"To answer this question [as to the amount of
damages], we need look no farther than the plain
language of § 35–11–372.  There, the Legislature
plainly and unambiguously stated that a lienholder,
such as [the hospital], in a case such as this, 'may
recover from the one accepting [the] release [i.e.,
the insurer] ... the reasonable cost of [the]
hospital care, treatment and maintenance [of the
injured person].'  The statute clearly does not
limit the damages to the amount of the consideration
paid for the release.  Indeed, such a limitation
would 
be 
contrary 
to 
the 
purpose 
of 
the
hospital-lien statute, that is, 'to give hospitals
... an automatic lien for the reasonable value of
their services.'  Ex parte Infinity Southern Ins.
Co., 737 So. 2d 463, 464 (Ala. 1999).  Thus, we
agree with [the hospital] that the trial court erred
in 
interpreting 
the 
hospital-lien 
statute 
as
limiting [its] damages to the amount of the
settlement between Progressive and [the patient].
Having determined that Progressive had impaired [the
hospital's] lien, the trial court was required to
enter a judgment for [the hospital] against
Progressive 'for all reasonable charges,' which, in
this case, the trial court found totaled $57,097.
"Although § 35–11–372 deals specifically with
the damages recoverable in an action for the
impairment of a hospital lien, Progressive argues
that '[t]he plain language of § 35–11–370, [which
gives the hospital the lien,] dictates that ...
Progressive is only liable to [the hospital] for the
amount of its settlement agreement.'  Progressive's
brief, at 17.  However, § 35–11–370 contains no such
'plain language.'  Instead, it gives the hospital an
automatic lien 'for all reasonable charges for
hospital care, treatment and maintenance of an
injured person,' which, in this case, totaled
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$57,097. By its plain language, which this Court
cannot ignore, § 35–11–372 provides that a party,
such as Progressive, that is found to have impaired
a lien, is responsible for those reasonable charges,
not 
for 
some 
lesser 
amount. 
 
Any 
other
interpretation would be contrary to 'this Court's
recognition that the statute is to be construed
broadly to accomplish its purpose.'  Ex parte
University of South Alabama, 761 So. 2d [240] at 245
[(Ala. 1999)] (emphasis added)."
904 So. 2d at 1248-49.
Chief Justice Nabers dissented as to the amount of
damages, concluding that the hospital was entitled to be made
whole and to seek the fair value of the claim against the
wrongly released tortfeasor, but was not automatically
entitled to the full amount of its lien.  Chief Justice Nabers
stated:
"I 
dissent 
... 
from 
the 
main 
opinion's
conclusion that [the hospital] is entitled to
recover from Progressive the reasonable value of all
services rendered by the hospital to Clarence Bell
as a result of the May 14, 2002, accident -- $57,097
-- without any regard to the amount of Progressive's
obligation to indemnify its insured.
"Section 35–11–372, Ala. Code 1975, provides
that, in a case such as this, a hospital 'may
recover from the one accepting such [a] release ...
the reasonable cost of [the] hospital care,
treatment and maintenance the hospital provided the
injured party.  (Emphasis added.)  Importantly, the
Legislature did not state that a hospital 'shall be
entitled to recover' such damages.  The Legislature
did say, however, in that same statute, that '[i]f
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the lienholder shall prevail in [a civil] action
[for damages], the lienholder shall be entitled to
recover from the defendant, costs and reasonable
attorney's fees.'  (Emphasis added.)  I think it
only reasonable to conclude that the Legislature
intended a difference when it used 'may recover'
with 
respect 
to 
the 
recovery 
by 
the
lienholder-hospital of costs for services and 'shall
be entitled to recover' with respect to litigation
costs and attorney fees.  The majority opinion, in
effect, concludes that the Legislature intended no
such difference.
"However, while I think this difference is
clear, I acknowledge that the Legislature did not
clarify under what circumstances a hospital 'may
recover' all reasonable costs.  When interpreting a
statute that is ambiguous on its face, this Court
seeks a result that is 'workable and fair' and one
that considers 'the intent of the legislature,' 'the
results that flow from assigning one meaning over
another,' and 'related statutory provisions.'  John
Deere Co. v. Gamble, 523 So. 2d 95, 100 (Ala. 1988).
My consideration of all of these factors leads me to
conclude 
that 
a 
hospital 
'may 
recover' 
the
reasonable cost of all services only if the lien
that was impaired had a value equal to or greater
than such reasonable cost."
Progressive, 904 So. 2d at 1249-50 (Nabers, C.J., concurring
in part and dissenting in part).
We agree with Chief Justice Nabers that a hospital is not
entitled to recover automatically the full amount of its lien
whenever there has been an impairment of any magnitude.  As
Chief Justice Nabers noted in Progressive:  "[I]t is
appropriate that [the hospital] be restored to the position it
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would have been in had its lien not been impaired."  904
So. 2d at 1250.  That conclusion is consistent with § 35-11-
372, which provides for "a civil action for damages on account
of such impairment."  Damages on account of an impairment
means damages caused by or resulting from the impairment.  See
Shands Teaching Hosp. & Clinics, Inc. v. Mercury Ins. Co. of
Florida, 97 So. 3d 204, 213 (Fla. 2012) (noting that "damages
on account of such impairment" means damages "by reason of" or
"because of" an impairment).  That is to say that damages on
account of an impairment are measured by the difference
between the amount the hospital actually recovered and the
amount it could have recovered absent the impairment.  That
result is equitable and comports with the purpose of the lien
statute.  Awarding a hospital a windfall for a minor
impairment is not equitable and does not comport with the
purpose of the statute.  
In the present case, the value of the claim to which the
lien attached was the policy limit of the medical-payment
benefit at issue, or $2,000.  Logically, in a case such as
this, the value of the lien could not be more than the value
of the claim to which it attaches.  In contrast, Progressive
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involved a release of a tortfeasor, which, unlike an insurer
whose potential liability is limited pursuant to a pre-injury
contract, could potentially be liable for an amount that
equals or exceeds the full amount of the hospital's lien
(assuming that liability for at least that amount can be
shown).  Compare Shands Teaching Hosp. & Clinics, Inc., 97
So. 3d at 213 (holding that hospital's damages for impairment
of its lien were limited to the policy limits of the
applicable liability insurance).  See also 41 
C.J.S. Hospitals
§ 25 (2015) (damages for impairment of hospital lien are
limited 
to 
the 
policy 
limits 
of 
liability-insurance coverage). 
Accordingly, we conclude that the amount of damages
recoverable in this case (assuming there was an impairment),
is the amount of the claim against Alfa -- $2,000.
The purpose of the lien statute is to induce hospitals to
"receive a patient injured in an accident, without first
considering whether the patient will be able to pay the
medical bills incurred."  Ex parte University of South
Alabama, 761 So. 2d 240, 244 (Ala. 1999).  The purpose of the
statute is not to precipitate additional litigation, provide
a 
windfall 
for 
hospitals, 
or 
saddle 
insurers 
with
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uncontracted-for liability in the event they pay a policy
benefit that happens to be subject to a hospital lien. 
IV.  Conclusion
Based on the foregoing, we reverse the judgment of the
Court of Civil Appeals insofar as it affirmed an award of
damages against Alfa based on the full amount of USA's lien. 
We remand the case for further proceedings consistent with
this opinion.  In light of our holding that the measure of
impairment of a hospital's lien under circumstances such as
those presented here does not exceed the amount that would be
recoverable against an insurer under the terms of its policy,
we pretermit discussion of the issue whether Alfa's actions
(including its making a payment to Wright's parents of its
policy limits and its subsequent tender of the same amount to
USA) amounted to an impairment of USA's lien within the
meaning of the statute (an issue that was not considered by
the circuit court, given its understanding of the measure of
damages for which Alfa was responsible).
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REVERSED AND REMANDED.
Parker, Main, and Wise, JJ., concur.
Bolin and Shaw, JJ., concur in the result.
Stuart, C.J., recuses herself.
15