Indiana Court of Appeals Issues Second Opinion in Dispute Between Automobile Insurer and Hospital Concerning Hospital’s Lien Under Indiana’s Hospital Lien Act

Over a year and a half ago we wrote about the Indiana Court of Appeals decision in Parkview Hosp. Inc. v. Am. Family Ins. Co. (“Parkview I”) in which the Court held that Parkview Hospital (“Parkview”) was entitled to summary judgment on its hospital lien claim against American Family Insurance Company (“American Family”) after American Family violated the Indiana Hospital Lien Act, Ind. Code § 32-33-4-4, by paying settlement funds directly to Ohio plaintiffs in a car accident personal injury matter pursuant to an Ohio court order without having obtained a release of Parkview’s hospital lien. Recently, the Indiana Court of Appeals issued another opinion in Parkview Hosp. Inc. v. Am. Family Ins. Co. (“Parkview II”) in a second appeal of the matter.

On remand after the first appeal the trial court ordered American Family to pay Parkview the full amount of Parkview’s hospital lien, $95,541.88, and Parkview’s attorney’s fees. After American Family filed a motion to correct error, the trial court ordered that Parkview was not entitled to its attorney’s fees; however, the trial court ordered that Parkview was entitled to the full amount of its hospital lien despite American Family’s request that its liability be limited to $50,000.00, which was the Ohio plaintiffs’ underinsured policy limits. Parkview appealed raising three issues: (1) whether Parkview I required the trial court to enter judgment for Parkview on its original request for damages and attorney’s fees; (2) whether American Family forfeited its challenges to Parkview’s damages by raising those challenges under Indiana Trial Rule 59 on remand; and (3) whether Parkview was entitled to its attorney’s fees under the Hospital Lien Act. American Family cross-appealed raising just one issue, whether it was required to pay Parkview the full amount of Parkview’s lien, $95,541.88, or the $50,000.00 limit of its underinsured policy with its insured.

In Parkview II the Indiana Court of Appeals ultimately concluded that the amount of Parkview’s damages and whether it was entitled to attorney’s fees was not decided in Parkview I, American Family did not forfeit its right to challenge the trial court’s award of damages and attorney’s fees under Indiana Trial Rule 59, Parkview was not entitled to attorney’s fees under Indiana’s Hospital Lien Act, and American Family’s responsibility for damages was limited to $50,000.00.

First, Parkview argued on appeal when the Court in Parkview I found Parkview was “entitled to judgment as a matter of law” on its motion for summary judgment that meant Parkview was entitled to all the relief it requested in its motion for summary judgment. However, the Court noted Parkview’s motion for summary judgment raised two issues, one, whether Parkview had a valid lien, and two, the amount of Parkview’s damages. Reviewing its decision in Parkview I, the Court in Parkview II found that Parkview I only addressed the first issue. While Parkview argued alternatively that the doctrines of res judicata and law of the case applied, the Court disagreed. The Court also noted that the trial court had not made any findings as to damages, and therefore the Court could not have, in the first instance, made those findings on appeal in Parkview I.

Second, the Court disagreed with Parkview’s claim that American Family had forfeited its right to challenge the trial court’s award of damages and Parkview’s entitlement to attorney’s fees by raising those issues under Indiana Trial Rule 59 on remand. Indiana Trial Rule 59(A) provides two mandatory circumstances in which a motion to correct error is a prerequisite for appeal: (1) newly discovered material evidence, and (2) a claim that a jury verdict is excessive or inadequate. However, as noted by the Court, while providing mandatory situations in which a motion to correct error must be filed, Indiana Trial Rule 59 does not foreclose parties from raising other issues by way of a motion to correct error. Therefore, the trial court did not err in allowing American Family to raise its challenges to the trial court’s order by way of a motion to correct error.

Third, the Court found Parkview was not entitled to an award of attorney’s fees. The Court noted that Indiana follows the “American Rule” as to attorney’s fees under which parties are responsible for their own attorney’s fees absent a contrary agreement between the parties, a statute, or another rule providing for the payment of attorney’s fees by another party. The Court noted that Parkview had not really argued, and there was no evidence that, American Family had pursued any claim or defense that was frivolous, unreasonable, or groundless, or that American Family had otherwise litigated in bad faith, so as to support an award of attorney’s fees under Indiana Code § 34-52-1-1. The Court also found that Indiana’s Hospital Lien Act does not provide for attorney’s fees, and therefore, the trial court did not err in denying Parkview’s claim for attorney’s fees.

Lastly, on American Family’s cross appeal, the Court found that American Family’s responsibility to Parkview was limited to its underinsured exposure of $50,000.00. The Court determined that the Hospital Lien Act’s provision that “[t]he release or settlement of a claim with a patient by a person claimed to be liable for the damages incurred by the patient… without obtaining a release of the lien… entitles the lienholder to damages for the reasonable cost of the hospital care,” Ind. Code § 32-33-4-6(b), did not apply to American Family as the underinsured carrier. Rather, that provision only applies to a third-party tortfeasor or the tortfeasor’s insurance carrier. Since American Family insured the patient, and not “a person claimed to be liable for the damages incurred by the patient,” American Family’s exposure was limited to its insured’s policy limits. The Court reasoned that American Family’s failure to comply with the Act did not place Parkview in a better position than it would have been in had American Family complied with the Act.

Accordingly, the Court affirmed the trial court as to the trial court’s consideration of damages and attorney’s fees and its denial of Parkview’s request for attorney’s fees, reversed the trial court as to American Family’s responsibility for damages under the Act, and remanded the case with instructions for the trial court to award Parkview $50,000.00 plus prejudgment interest.

You can read the full opinion here.