Justia Contracts Opinion Summaries

The health care service plan in this case, Kaiser Permanente, covered three patients who received care at an emergency room operated by Dameron Hospital Association. The patients were injured due to the negligence of third party tortfeasors who had automobile liability insurance with California Automobile Association Inter-insurance Bureau (AAA) and Allstate Insurance Company. Unlike Kaiser, neither AAA nor Allstate had contracts with Dameron. In the absence of an agreement for negotiated billing rates, Dameron sought to collect from AAA and Allstate its customary billing rates by asserting liens filed under the Hospital Lien Act (HLA). AAA and Allstate, however, ignored Dameron’s HLA liens when paying settlements to the three Kaiser patients. Upon learning of the settlements, Dameron sued AAA and Allstate to recover on its HLA liens. The trial court granted insurers’ motions for summary judgment on grounds the patients’ debts had already been fully satisfied by their health care service plans. Reasoning the HLA liens were extinguished for lack of any underlying debt, the trial court dismissed the case. The trial court further found dismissal was warranted because Dameron failed to timely file some of its HLA liens against AAA. The question this case presented to the Court of Appeal was whether the health care service plan’s payment of a previously negotiated rate for emergency room services insulated the tortfeasor’s automobile liability insurer from having to pay the customary rate for medical care rendered. AAA and Allstate argued they were not responsible for any amount after Kaiser paid in full the bill for the emergency room services provided by Dameron. Dameron argued that it contracted with Kaiser to preserve its rights to recover the customary billing rates from tortfeasors and their automobile liability insurers, and that the tortfeasors and their liability insurers were responsible for the entire bill for medical services at the customary rate - not just the difference between the reimbursement received from Kaiser and the customary billing rate. The Court of Appeal concluded that the Dameron/Kaiser contract did not contain the term described by case law as sufficient to preserve the right to recover the customary billing rate for emergency room services from third party tortfeasors. Consequently, the trial court properly granted summary judgment in favor of AAA and Allstate. View "Dameron Hosp. Assn. v. AAA Nor. Cal., Nev. & Utah Ins. Exc." on Justia Law