Gammage & Burnham partners Cameron Artigue and Chris Hering won an important victory in the Arizona court of appeals on April 5, when the court clarified that hospital lien rights extend to and include “medpay” policies issued by auto insurance companies. Under Arizona law, hospitals have liens on the personal injury claims of their patients, as well as related claims on all types of insurance except for “health insurance.” An insurance company that pays out benefits without first satisfying the lien claim is liable to pay the hospital to satisfy its lien. Farmers Insurance issued a large medpay policy, which it paid to its insured policyholder without first satisfying the lien claim of G&B’s hospital client.
After G&B filed suit against Farmers on behalf of the hospital, Farmers persuaded the trial court that medpay policies qualify as “health insurance” and are therefore exempt from the lien. It is true that medpay policies are triggered by, and arguably designed to cover, the expenses of hospital and related heath care coverage. But, as G&B argued on appeal, medpay policies are actually issued as part of auto liability insurance policies, and thus are not health insurance. The court of appeals agreed. While this issue may seem esoteric, whether medpay policies are, or are not, “health insurance” is a persistent question that has remained unresolved for many years. This victory will both clarify the law and ensure increased lien recoveries for our hospital and health care clients.