Opinion ID: 2638534
Heading Depth: 3
Heading Rank: 2

Heading: The Consortium Is Entitled To Enforce Its Health Care Provider Lien.

Text: We must first consider whether federal law allows enforcement of the Consortium's health care provider lien. Warden charges that enforcement of the Consortium's lien would violate federal law. Warden argues that 25 U.S.C. § 1621u entitles him to free medical services and that requir[ing] him to satisfy [the Consortium] claim from the proceeds of his personal injury recovery violates that statute. That statute states, in relevant part, that [a] patient who receives contract health care services that are authorized by the [Indian Health] Service shall not be liable for the payment of any charges or costs associated with the provision of such services. [6] The Consortium maintains that § 1621u concerns payment arrangements for fee-for-service health care providers, such as Providence or Alaska Regional Hospitals, but does not address tribal health contractors like the Consortium who are under contract with the Secretary of Health and Human Services. The Consortium's interpretation is bolstered by 25 U.S.C. § 1621r, which also uses the term contract health services to mean private contract health services providers. [7] We note at numerous points below that Warden as an Alaska Native does have a federal right to free care. [8] This federal right, however, is not violated by enforcement of the Consortium's lien. All of Warden's federal claims, as well as Warden's claim that the Alaska Legislature did not intend (even assuming it could constitutionally do so) to disenfranchise Native Beneficiaries of the advantage to them of obtaining free care and pocketing the money they save, fail because they rest on the same core fallacy, namely that all of the settlement funds are Warden's and that satisfying the lien from the recovery essentially reduces his damages and makes him pay for his medical care. [9] As the Consortium argued below, however, the settlement fund does not belong to Warden because the settlement is not composed entirely of his funds; he negotiated for a separate settlement with Allstate and a separate check for ANMC, so only the funds not subject to the Consortium's lien are Warden's, and thus the Consortium's lien takes nothing from Warden to which he is entitled. [10] Warden also contends that the Consortium's lien diminishes Warden's cause of action and his damages, in violation of 25 U.S.C. § 1621e(d), which states that [n]o action taken by ... a tribal organization to enforce the right of recovery ... shall affect the right of any person to any damages. We agree with the Consortium's argument that § 1621e(d) merely protects a patient's right to sue and prevents a tribal health contractor from giving to the tortfeasor a complete release of all claims. Enforcement of the Consortium's lien does not affect Warden's right to damages, but rather just the amount of damages. We determine that federal law does not prohibit and in fact specifically provides for enforcement of the Consortium's health care provider lien to the same extent a nongovernmental provider is entitled to enforce such a lien under state law. The Consortium correctly argues that in 25 U.S.C. § 1621e(a), Congress federalized the Consortium's state rights to insurance-funded recoveries from tort actions. Under this federal statute, a tribal organization providing health services has the right to recover reimbursement from third parties for reasonable expenses. This right is enforceable to the same extent that the law entitles a nongovernmental provider or an individual to recover from third parties if the individual had been required to pay and did pay for services. Section 1621e(a) provides that a tribal organization shall have the right to recover the reasonable expenses incurred by ... a tribal organization in providing health services ... to any individual to the same extent that such individual, or any nongovernmental provider of such services, would be eligible to receive reimbursement or indemnification for such expenses if (1) such services had been provided by a nongovernmental provider, and (2) such individual had been required to pay such expenses and did pay such expenses. The Consortium correctly contends that § 1621e(a) strips [Warden] of a federal defense to [the Consortium's] state lien foreclosure action. The Consortium's rights to lien foreclosure under federal law should equal the rights that a nongovernmental provider of health services could exercise under state law. We conclude that under 25 U.S.C. § 1621e(a), the Consortium has a federal right to enforce a statutory health care provider lien to the same extent that state law allows a nongovernmental provider to enforce such a lien. The state statute creating the hospital lien here is AS 34.35.450(a). The Consortium asserts that AS 34.35.450 is the state statutory mechanism by which the Consortium's federal rights are actualized in terms of rights in recoveries funded by third-party liability insurance carriers, and indemnity, or health insurance contracts. Alaska Statute 34.35.450(a) provides as follows: An operator of a hospital in the state ... who furnishes service to a person who has a traumatic injury has a lien upon any sum awarded to the injured person or the personal representative of the injured person by judgment or obtained by a settlement or compromise to the extent of the amount due the hospital ... for the reasonable value of the service furnished before the date of judgment, settlement, or compromise, together with costs and reasonable attorney fees that the court allows, incurred in the enforcement of the lien. AS 34.35.45034.35.480 do not apply to a claim, right of action, or money accruing under AS 23.30 (Workers' Compensation Act). Warden argues that state law does not create an enforceable lien where another paid for the medical services and the Native American beneficiary owed the hospital nothing. Warden asserts that a hospital lien cannot exist without an underlying debt, pointing to the language in AS 34.35.450(a) providing for a lien to the extent of the amount due the hospital ... for the reasonable value of the service furnished. (Emphasis added.) This language is in contrast to AS 34.35.450(b), which allows the hospital a lien on the amount that an insurer has contracted to pay for the sum incurred for hospitalization of its insured. [11] Because Warden, as an Alaska Native, owed the Consortium nothing for his medical services, Warden thus claims that the Consortium could not assert a lien under state law. The flaw in Warden's reasoning is that AS 34.35.450(a) does not specify that the amount due the hospital has to be due from the patient personally. The language can also be read as allowing the amount due the hospital ... for the reasonable value of the service furnished to mean that the hospital can recover the amount of expense it incurred from any sum ... obtained by a settlement with a tortfeasor or insurer. The Consortium persuasively argues that federal law makes clear that Warden does not personally have to owe it anything for a debt to arise from his receipt of free medical services, citing the Alaska federal district court opinion in Yukon-Kuskokwim Health Corp. v. Trust Insurance Plan of Southwest Alaska. [12] The Yukon-Kuskokwim Health Corporation (YKHC), like the Consortium, administered health care services to Alaska Natives through operation of a hospital under a contract with the Department of Health and Human Services. [13] YKHC provided health care to Alaska Natives insured by the Trust Insurance Plan of Southwest Alaska (TIPSA), a trust composed of several southwestern Alaska employers with high numbers of Native employees that provides group insurance to those employees. [14] For reasons similar to Warden's arguments here, TIPSA routinely denied claims submitted by YKHC for services provided to those Alaska Natives. That is, TIPSA based these denials on the fact that the Alaska Natives had no legal obligation to pay for health services received from government contractors like YKHC. [15] Yet, when Congress passed the Indian Health Amendments of 1992, it amended the Indian Health Care Improvement Act, 25 U.S.C. § 1621e(a), to expressly provide tribal organizations with a right of recovery to collect the reasonable costs of health care provided to Native Americans and Alaska Natives from third-party insurers. [16] Following passage of the amendments, YKHC filed suit against TIPSA under 25 U.S.C. § 1621e to recover the reasonable cost of health care provided to Alaska Native TIPSA beneficiaries. [17] In upholding the retroactivity of the amendments, the district court noted that the amendments to § 1621e(a) effectively amended TIPSA's insurance policy, which had excluded coverage for medical services where Alaska Natives were not legally required to pay for the services, by requiring assumptions that the health care recipient received care at a nongovernmental hospital, that he was required to pay, and that he had paid for the medical services. [18] The discussion of federal law in Yukon-Kuskokwim thus provides strong support for the Consortium's assertion that Warden did not need to have an actual amount due. Furthermore, the language of 25 U.S.C. § 1621e(a) quoted earlier supports the Consortium's position. Unlike AS 34.35.450(a), but very much like .450(b), that federal statute states that the Consortium, as a tribal organization, has the right to recover the reasonable expenses incurred ... in providing health services ... to any individual to the same extent as that individual or a nongovernmental health provider could receive reimbursement if such individual had been required to pay such expenses and did pay such expenses. (Emphasis added.) Again, this language seems to clearly indicate that Warden did not have to personally owe the Consortium anything for it to have a right of recovery of the expenses it incurred in treating him. [19] We conclude that, given the federal law and decision discussed above, AS 34.35.450(a) does not require Warden to personally owe anything to the Consortium in order for the hospital to assert a lien. Raising another federal argument, Warden attacks the validity of the lien on the ground that the Consortium seeks to be paid twice. Warden charges that the Consortium seeks to be paid once from Warden's recovery and a second time from the Indian Health Funds that paid for Warden's medical services in the first place. Warden points to 25 U.S.C. § 1621f, which provides that any reimbursements that a tribal organization recovers are retained by the organization and do not affect the amount of funding it receives from the Indian Health Service. [20] The Consortium counters that it is not seeking to be paid twice, since it uses the funds it recovers to replace federal grant funds that have diminished in importance as a source of financial support for the institution. The Consortium further notes that this description of its funding and its use of recovered funds, supported by affidavit, was uncontested below and relied on by the superior court in approving the Consortium's lien. We agree with the Consortium's position. We conclude that the Consortium is not seeking to be paid twice; rather it is seeking to recover its costs in caring for Warden. As the Consortium convincingly argued below, the Consortium incurred expenses in treating Warden, in that portions of its federal funding were used to pay the providers who treated Warden's injuries. Furthermore, the Consortium correctly points out that 25 U.S.C. § 1621f supports its argument, as it indicates that the Consortium may seek recoveries via state tort and insurance systems and use these funds to carry out its programs. We will next consider Warden's charge that the Consortium's lien notice was deficient and failed to conform to state law. The Consortium's lien notice contains one clause that is not in the statute, extending its lien to any money or reimbursement due or owing or to be paid or payable under any contract providing for indemnity or compensation for sum(s) incurred for hospitalization ... from any entity or organization including Allstate Insurance Company. While this clause essentially covers circumstances in which AS 34.35.450(b) might apply, Warden alleges that the Consortium's notice erroneously extends the lien not just to a company with a contract to pay for its insured's hospitalization, as envisioned by .450(b), but also to the tortfeasor's insurer. We determine that Warden's claim of deficient notice fails for two reasons. First, this clause is not relevant to the current case because the lien in this case is authorized under AS 34.35.450(a) and the corresponding section in the Consortium's lien notice involving recovery from settlement funds, not under AS 34.35.450(b). Second, as the Consortium argued below, its lien form is substantially similar to the statutory form in AS 34.35.465, which is all that is required by AS 34.35.460. The last challenge by Warden we consider on the issue of the lien's validity is his claim that the Consortium cannot foreclose upon a lien against an unnegotiated settlement check. Warden argues that AS 34.35.450 provides for a lien only against settlement proceeds, whereas Allstate merely tendered a negotiable instrument promising to pay the parties. [21] Warden maintains that Allstate offered to discharge the Consortium's and Warden's demands in exchange for their acceptance of the check. But the Consortium refused to endorse the check, and Warden contends that the Alaska statutes do not provide for a lien against a promise for payment in a conditional negotiable instrument. In other words, Warden argues that [u]ntil the check was paid there can be no lien foreclosure because there has been no payment or release to or from Warden and tortfeasor. The Consortium counters that at the moment of settlement, Allstate was contractually obligated to fund the settlement, so no reason exists why AS 34.35.450 would not operate to attach the Consortium's lien to that obligation. The Consortium argues that it has rights to the liened funds under AS 34.35.450 whether the funds were in Allstate's account after the release was delivered but prior to the check being written, whether the settlement check was drawn but unendorsed, or whether the funds were in Rehbock's trust account. We agree with the Consortium. Warden's argument is overly technical and unpersuasive. The settlement funds exist; they were first placed with the court and then, by stipulation, endorsed and held in Rehbock's trust account pending resolution of the dispute. Allstate and Warden agreed on a settlement and release of all claims, contractually obligating Allstate to pay $24,947.22 and obliging Warden to indemnify Allstate and Copley from any suits or claims brought by holders of liens or subrogated interests to recoup medical expenses. Alaska Statute 34.35.450(a) applies to any sum ... obtained by a settlement; this language would cover the sum that Allstate was contractually obligated to provide in the settlement. Accordingly, we conclude that the Consortium could foreclose on its lien against the settlement.