Opinion ID: 1632186
Heading Depth: 2
Heading Rank: 2

Heading: Perfection of a Hospital Lien

Text: Although a hospital lien may be automatic, perfection of the lien is not. Section 35-11-371(a), Ala.Code 1975, provides:  In order to perfect such lien the operator of such hospital, before or within 10 days after such person shall have been discharged therefrom shall file in the office of the judge of probate of the county or counties in which such cause of action arose a verified statement setting forth the name and address of such patient, ... the name and location of such hospital and the name and address of the operator thereof, the dates of admission and discharge of such patient therefrom, the amount claimed to be due for such hospital care, and to the best of claimant's knowledge, the names and addresses of all persons, firms or corporations claimed by such injured person, or the legal representative of such person, to be liable for damages arising from such injuries; such claimant shall also within one day after the filing of such claim or lien, mail a copy thereof by registered or certified mail, postage prepaid, for each person, firm or corporation so claimed to be liable on account of such injuries, at the addresses so given in such statement, and to the patient, his guardian or his personal representative at the address given at the time of admission. The filing of such claim or lien shall be notice thereof to all persons, firms or corporations liable for such damages whether or not they are named in such claim or lien. (Emphasis added.) A hospital perfects its lien under XX-XX-XXX(a) if it files within 10 days of the patient's discharge from the hospital a verified statement (containing the required information) in the office of the judge of probate of the county in which the cause of action arose and, within one day of filing the lien, mails a copy of the lien to the parties alleged to be liable for the injuries. [9] It is worth noting, however, that in Alabama, a hospital's failure to perfect a hospital lien does not affect the validity of the lien. Guin, 583 So.2d at 1319. The record indicates that Patricia was injured on May 22, 2004, in Etowah County. That same day she was taken to Gadsden Regional; she was then transferred to UAB Hospital, where she died on June 18, 2004. Gadsden Regional filed its lien in the Etowah Probate Court on June 23, 2004, some 31 days after Patricia was transferred to UAB Hospital. UAB Hospital filed its lien in the St. Clair Probate Court on June 30, 2004, 12 days after Patricia's death, [10] and later, in February 2005, it filed a lien in Etowah County. The hospitals acknowledge that they did not strictly comply with the requirements of § 35-11-371(a); however, they argue that the statute should be broadly construed so that the technical requirements of the statute do not defeat a hospital's claim, especially in this instance, where it is undisputed that the Gann parties had actual knowledge of the liens at the time of the settlement. Hospitals' brief at 35. On the other hand, the Gann parties argue that under the plain language of the statute neither hospital's respective statutory lien was perfected, because, they argue, the liens were untimely and improperly filed. Gann parties' brief at 34. We disagree. We begin by noting that [t]he purpose of Alabama's hospital-lien statute is, by giving a hospital an automatic lien for the reasonable value of its services, to induce it 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). This Court has not yet addressed [t]he issue whether such actual notice [of a hospital lien] can serve in place of the constructive notice [required by the statute]. Ex parte Infinity Southern Ins. Co., 737 So.2d at 466. However, this Court has had the opportunity to construe Alabama's hospital-lien statutes in the past and, in Guin v. Carraway Methodist Medical Center, we noted: `[I]t has generally been held or recognized that [the hospitallien statutes] should not be technically applied so as to defeat just hospital claims, and that such statutes are to be liberally construed in this respect.' 583 So.2d at 1319 (quoting Annot., 25 A.L.R.3d 874, § 5(b) (1969)). The hospitals cite Macon-Bibb County Hospital Authority v. National Union Fire Insurance Co., 793 F.Supp. 321 (M.D.Ga.1992), and Rolla Community Hospital, Inc. v. Dunseith Community Nursing Home, Inc., 354 N.W.2d 643 (N.D.1984), in support of their position that actual notice may serve in the place of the constructive-notice requirement of § 35-11-371(a). Hospitals' brief at 32-33. Although these authorities are not binding on this Court, we find them persuasive. The federal district court in Macon-Bibb County Hospital Authority noted that the purpose of Georgia's hospital-lien-perfection statute [11] was to provide notice [of the hospital's lien] to all potentially liable parties. 793 F. Supp. at 325. The court concluded that because the settling parties had actual notice of the hospital lien on [the injured party's] causes of action against [the settling parties] several months before they agreed to settle [the] claims the settling parties cannot now rely upon a technical filing requirement to escape this liability. 793 F.Supp. at 325. [12] Similarly, the Supreme Court of North Dakota concluded in Rolla Community Hospital that if the enforcement of the [hospital] lien depends upon constructive notice[,] the timely filing requirements . . . must first be met; but, if actual knowledge existed or actual notice was given[,] the need for constructive notice is eliminated. 354 N.W.2d at 650-51. In its decision, the Supreme Court of North Dakota noted: `The object of the recording (filing) statutes is the constructive notice which is given to all the world as to the rights of the parties thereto. Actual notice to third parties, where it can be shown, is as effective as recordation.' 354 N.W.2d at 650 (quoting Bank of Ringgold v. West Publ'g Co., 61 Ga.App. 426, 6 S.E.2d 598, 599 (1939)). The Gann parties argue that this Court should narrowly construe § 35-11-371(a), Ala.Code 1975, but they do not address this Court's recognition that § 35-11-371(a) is to be broadly construed. See Guin, supra . The Gann parties instead direct our attention to three decisions in which courts have narrowly construed hospital-lien-perfection statutes: Duke University Medical Center v. Hardy, 89 N.C.App. 719, 367 S.E.2d 6 (1988), In re Harris, 50 B.R. 157 (Bankr.E.D.Wis.1985), and Melichar v. Michelson, 281 N.Y. 671, 22 N.E.2d 868 (1939). [13] The first two decisions are inapposite because they address the validity of the lien itself, rather than the perfection of an otherwise valid lien. See Duke University Med. Ctr., 89 N.C.App. at 720, 367 S.E.2d at 7 (Since the action for the child's damages was instituted in the Edgecombe County Superior Court and plaintiffs did not file a claim for their lien with the Clerk of that court within the time designated by the statute, they are not entitled to a lien under its provisions, as the trial court correctly ruled.); In re Harris, 50 B.R. at 161 (Consequently, because Family Hospital failed to present evidence that it complied with the requirements of WIS. STAT. § 779.80 for obtaining a hospital lien, the court finds that Family Hospital does not have a valid hospital lien.). In Melichar, the third case cited by the Gann parties, a New York intermediate appellate court affirmed the decision of the trial court without an opinion, 256 A.D. 962, 9 N.Y.S.2d 1016 (1939), and New York's highest appellate court dismissed a subsequent appeal of that decision. 281 N.Y. 665, 22 N.E.2d 488; see also 281 N.Y. 671, 22 N.E.2d 868. [14] The dissent to the decision of the intermediate appellate court suggests that the trial court entered a summary judgment against the hospital in that case because the hospital had failed to timely perfect its lien. 256 A.D. 962, 9 N.Y.S.2d 1016 (Dore, J., dissenting). Although the affirmance by the intermediate appellate court in Melichar may provide marginal support for the Gann parties' argument that there are states that have narrowly construed their hospital-lien-perfection statutes, the decision of the intermediate appellate court in Melichar is without an opinion and does not provide any reasoning for its decision; therefore, we do not find it persuasive. We also note that this Court has held that actual notice can satisfy the requirement of constructive notice in the area of recordation of a conveyance. See Alexander v. Fountain, 195 Ala. 3, 5, 70 So. 669, 669-70 (1916) (From the earliest decisions of this court construing unrecorded conveyances void as to `purchasers without notice,' etc., it has been held that actual notice is equivalent to the constructive notice afforded by the registration of the conveyance. The whole object and design of the statute is said to be to give notice of the existence of the conveyance. (citing Ohio Life Ins. Co. v. Ledyard, 8 Ala. 866 (1846); Gamble v. Black Warrior Coal Co., 172 Ala. 669, 55 So. 190 (1911))). Given the purpose of the hospital-lien statutes, this Court's precedent of broadly interpreting Alabama's hospital-lien statutes, and the decisions of other jurisdictions on this issue, we hold that where there is actual knowledge or where actual notice is given, constructive notice is not required. [15] Here it is undisputed that at the time the Gann parties attended mediation and subsequently entered into the settlement, all parties were aware of the hospitals' liens. Because the Gann parties had actual knowledge of the hospitals' liens, the hospitals' failure to provide constructive notice under XX-XX-XXX(a), Ala.Code 1975, is immaterial to the validity and enforceability of the liens.