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Dignity Health v. Farmers Insurance Co. of Arizona

Court of Appeals of Arizona, First Division

June 11, 2019

DIGNITY HEALTH, Plaintiff/Appellant,
v.
FARMERS INSURANCE COMPANY OF ARIZONA, Defendant/Appellee.

          Appeal from the Superior Court in Maricopa County No. CV2017-002466 The Honorable Kerstin G. LeMaire, Judge

          Gammage & Burnham PLC, Phoenix By Richard B. Burnham, Cameron C. Artigue, Christopher L. Hering Counsel for Plaintiff/Appellant

          Jardine, Baker, Hickman & Houston, P.L.L.C., Phoenix By Bradley R. Jardine Counsel for Defendant/Appellee

          Chief Judge Samuel A. Thumma delivered the opinion of the Court, in which Judge Kent E. Cattani and Judge James P. Beene joined.

          OPINION

          THUMMA, CHIEF JUDGE

         ¶1 The dispositive issue in this appeal is whether payments under optional medical payments coverage in an automobile insurance policy (what the parties call "medpay coverage") are "health insurance" and, therefore, not subject to a health care provider lien. As discussed below, because medpay coverage is not health insurance for purposes of the lien statute, those payments are subject to the health care provider lien. Accordingly, the grant of defendant Farmers Insurance Company of Arizona's motion to dismiss is vacated and this matter is remanded.

         FACTS[1] AND PROCEDURAL HISTORY

         ¶2 Farmers issued an automobile insurance policy to Bethanie Elliott that included optional medpay coverage. Plaintiff Dignity Health, doing business as Mercy Gilbert Medical Center, provided Elliott medical services after she was injured in a car accident. The usual and customary charges for those services exceeded $160, 000. Dignity perfected and recorded a health care provider lien for more than $140, 000 to secure payment for those services. See Ariz. Rev. Stat. (A.R.S.) § 33-931 (2019).[2]Notwithstanding that lien, Farmers directly paid Elliott $99, 000 in medpay benefits under her automobile insurance policy.

         ¶3 Dignity timely filed this lien enforcement action, claiming Farmers' payment to Elliott violated the lien. Farmers successfully moved to dismiss for failure to state a claim, arguing its payment was not subject to the lien. Dignity timely appealed from the resulting final judgment. See Ariz. R. Civ. P. 54(c). This court has jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).

         DISCUSSION

         ¶4 Under A.R.S. § 33-931, a health care provider may obtain a lien to secure payment of customary charges for services provided to an injured person, with certain express exceptions to the scope of such a lien:

A lien pursuant to this section extends to all claims of liability or indemnity, except health insurance and underinsured and uninsured motorist coverage as defined in § 20-259.01, for damages accruing to the person to whom the services are rendered . . . on account of the injuries that gave rise to the claims and that required the services.

A.R.S. § 33-931(A) (emphasis added). Thus, if Farmers' payment of medpay benefits to Elliott was a health insurance benefit, it was exempt from Dignity's lien. But if the payment was not a health insurance benefit, it violated the lien.

         ¶5 Determining whether medpay is health insurance is complicated by the record and arguments on appeal. The insurance policy containing the medpay coverage is not included in the record. Moreover, the parties cite no statutory definition of "health insurance" or "medpay coverage," and this court has found no such definitions applicable to Section 33-931(A). Although aspects of medpay coverage have been the subject of litigation in Arizona for decades, ...


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