Opinion ID: 1057576
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Heading Rank: 4

Heading: The Hospital Lien Act

Text: Hospital lien statutes have been adopted in over forty states, with the oldest such statute having been enacted in Nebraska in 1927. Bergan Mercy Health Sys. v. Haven, 260 Neb. 846, 620 N.W.2d 339, 345 (2000). Tennessee's Hospital Lien Act (the HLA), ch. 527, 1970 Tenn. Pub. Acts 529 (codified as amended, Tenn.Code Ann. §§ 29-22-101 to -107 (2000)), was adopted in 1970 and captioned AN ACT to create for hospitals a lien upon all causes of action for damages accruing to persons having received care and treatment for illness or injuries and to provide the procedure for the perfecting, recording, enforcement and release of such lien. Id. at 529. In the ensuing decades, the HLA has been amended a handful of times, but has not been substantially altered. [1] As a result, the version of the HLA in effect at all times pertinent to this litigation is largely the same as the original enactment. In a 1994 opinion, the Attorney General surveyed the legislative debate accompanying the enactment of the HLA in an effort to discern its purpose: In enacting this legislation, the legislature indicated that the purpose of this Act is to create liens for hospitals to ensure that hospital bills are paid. The legislature recognized that hospitals were losing funds from providing care to individuals who later collected a settlement or judgment for their injuries but failed to pay their hospital bills. The legislature noted that this Act would help keep hospital costs down by setting up an orderly method for the establishment of liens on such settlements or judgments. Tenn. Att'y Gen. Op. No. 94-067 (May 13, 1994) (citations omitted); see also Martino v. Dyer, No. M1999-02397-COA-R3-CV, 2000 WL 1727778, at  (Tenn.Ct. App. Nov. 22, 2000) (quoting Tenn. Att'y Gen. Op. No. 94-067). Other sources have identified policies warranting hospital lien statutes. For example, the Arkansas Supreme Court observed that its statute was enacted for the very humane purpose of encouraging physicians, hospitals and nurses to extend their services and facilities to indigent persons who suffer personal injuries through the negligence of another, by providing the best security available to assure compensation for services and facilities. Buchanan v. Beirne Lumber Co., 197 Ark. 635, 124 S.W.2d 813, 815 (1939); see also Bashara v. Baptist Mem'l Hosp. Sys., 685 S.W.2d 307, 309 (Tex.1985) (observing that a hospital lien statute is to provide an additional method of securing payment for medical services, thus ensuring the prompt and adequate treatment for accident victims); Cmty. Hosp. v. Carlisle, 648 N.E.2d 363, 365 (Ind.Ct.App.1995) (By allowing health care providers direct interests in funds collected by personal injury patients, the statute furthers the important policy of reducing the amount of litigation ... otherwise... necessary to secure repayment of the health care debts.). Because this rationale had been attributed to hospital lien statutes that preceded our 1970 enactment and is widely accepted as a reasonable basis for similar statutes, see 40A Am.Jur.2d Hospitals and Asylums § 9 (2008), we are persuaded that our General Assembly also embraced a humane purpose by adopting the HLA. First, Tennessee Code Annotated section 29-22-101(a) sets forth who may file a lien and what a lien may be filed against: [2] Every person, firm, association, corporation, institution, or any governmental unit, including the state of Tennessee, any county or municipalities operating and maintaining a hospital in this state, shall have a lien for all reasonable and necessary charges for hospital care, treatment and maintenance of ill or injured persons upon any and all causes of action, suits, claims, counterclaims or demands accruing to the person to whom such care, treatment or maintenance was furnished, or accruing to the legal representatives of such person in the case of such person's death, on account of illness or injuries giving rise to such causes of action or claims and which necessitated such hospital care, treatment and maintenance. (Emphasis added.) Secondly, section 29-22-101(b) sets a cap on a lien holder's recovery: The hospital lien, however, shall not apply to any amount in excess of one third (1/3) of the damages obtained or recovered by such person by judgment, settlement or compromise rendered or entered into by such person or such person's legal representative by virtue of the cause of action accruing thereto. (Emphasis added.) Finally, section 29-22-104 recognizes the right of recovery for an impairment of the lien: (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 unless the 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 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. (Emphasis added.)