Diane West v. Shelby County Healthcare Corporation d/b/a Reginal Medical Center at Memphis
459 S.W.3d 33
| Tenn. | 2014Background
- Med, a nonprofit hospital, perfects a nonpossessory lien for unadjusted charges under the Tennessee Hospital Lien Act after treating patients allegedly injured by third parties.
- The Med pursues full unadjusted costs from third-party tortfeasors while also billing insurers for adjusted costs; insurer payments generally discharge patient and insurer debt but liens are not released.
- Two patients (Diane West and Jammie Heags-Johnson) had liens for unadjusted charges; insurance paid adjusted amounts, yet liens were not released at the outset.
- West and Heags-Johnson filed suit to quash liens and recover damages; the trial court denied relief, Court of Appeals reversed in part, and Supreme Court granted review.
- The Court adopts a statutory-construction and contract-interpretation framework to decide whether the liens survive insurer payments and whether the debts were extinguished, affirming in part and reversing in part and remanding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HLA permits a hospital to maintain a lien after insurer pays adjusted charges. | West: insurer payment extinguishes the debt; lien should be released. | Med: lien remains to secure full unadjusted costs; contracts permit collection. | Lien不能在保险支付后持续，除非有未支付的共同责任部分（如共付额/扣除额） |
| Whether insurer-contracts define ‘reasonable charges’ for purposes of §29-22-101(a). | Insurer payments set the reasonable charge; debt extinguished. | Contracts with insurers set the reasonable charges; liens reflect unadjusted costs. | For insured patients, reasonable charges are those under insurer-hospital contract; unadjusted charges not reasonable when paid. |
| Whether West’s debt was extinguished, requiring quash of the lien held against West. | Debt extinguished by insurer payment of adjusted amount. | Debt remains for unadjusted amount; lien valid. | West’s debt extinguished; lien quashed against West. |
| Whether Heags-Johnson’s debt was extinguished; lien may remain. | Her debt extinguished by insurer payment of adjusted charges. | Some amounts unpaid (co-pays) keep debt alive; lien valid. | Heags-Johnson’s debt not fully extinguished; lien remains; remand for further proceedings. |
Key Cases Cited
- Shelby Cnty. Health Care Corp. v. Nationwide Ins. Co., 325 S.W.3d 88 (Tenn. 2010) (lien purpose and debt basis; health care lien statutes must be applied to recover reasonable charges)
- Benton v. Vanderbilt Univ., 137 S.W.3d 614 (Tenn. 2004) (insureds are intended third‑party beneficiaries of hospital-insurer contracts)
- McDonnell v. Amo, 162 Tenn. 36, 34 S.W.2d 212 (1931) (lien statutes construed strictly; statutory duties defined by legislature)
- Vulcan Materials Co. v. Gamble Constr. Co., 56 S.W.3d 571 (Tenn. Ct. App. 2001) (lien statutes strict construction principles)
- Guiliano v. Cleo, Inc., 995 S.W.2d 88 (Tenn. 1999) (contract interpretation focus on plain language and intent)
- Bob Pearsall Motors v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578 (Tenn. 1975) (contracts interpreted by plain meaning; language controls)