Summary
The Florida Supreme Court held that a special law granting Lee Memorial Health System hospital liens violated Article III, § 11(a)(9) of the Florida Constitution because it pertained to the creation, enforcement, or impairment of liens "based on private contracts." The court determined that the contract between a public hospital and a patient for medical services is a private contract based on its subject matter, not the identity of the parties. The court reversed the lower court's ruling on contract impairment under Article I, § 10 due to improper notice to the Attorney General under Rule 1.071, and declined to address statutory damages as moot.
Topics
Practice areas
Questions Presented
- Whether the Second District erred in addressing the contract impairment issue when Progressive did not properly serve notice on the Attorney General under Florida Rule of Civil Procedure 1.071.
- Whether the LMHS Lien Law violates Article III, § 11(a)(9) of the Florida Constitution as a special law pertaining to the creation, enforcement, extension or impairment of liens based on private contracts.
Holdings
- The Second District should not have addressed the contract impairment issue because Progressive's notice was not prompt as required by Rule 1.071, and the trial court correctly declined to rule on that issue.
- The LMHS Lien Law violates Article III, § 11(a)(9) because the liens are based on private contracts, as the contract between Lee Memorial and the patient for medical services is a private contract.
Key quotations
“Lee Memorial Health System shall be entitled to a lien for all reasonable charges for hospital, physician, or other health care services provided by the Lee Memorial Health System to ill or injured persons, upon the proceeds of all causes of action, suits, claims, counterclaims, and demands accruing to said persons or to their legal representatives, and upon all judgments, settlements, and settlement agreements rendered or entered into by virtue thereof, on account of injuries giving rise to such causes of action, suits, claims, counterclaims, demands, judgments, settlements, or settlement agreements, which injuries shall have necessitated such hospital, physician, and other services provided to such ill or injured persons. . . . No release or satisfaction of any cause of action, suit, claim, counterclaim, demand, judgment, settlement, or settlement agreement shall be valid or effectual as against the lien of Lee Memorial Health System unless the lienholder shall join therein or execute a release of its lien prior to the payment of any proceeds thereof. Any acceptance of a release or satisfaction of any cause of action, suit, claim, counterclaim, demand, judgment, settlement, or settlement agreement in the absence of a release or satisfaction of the lien of Lee Memorial Health System shall prima facie constitute an impairment of such lien and the lienholder shall be entitled to a cause of action for damages against any and all persons, firms, or corporations giving or accepting such release or satisfaction, or paying or accepting the proceeds from the same. In such action, Lee Memorial Health System may recover the full amount of its charges for such hospital, physician, or other health care services; regardless of the amount of proceeds paid or received in impairment of its lien.” (at 2-3)
“Thus, the LMHS Lien Law violates article III, section 11(a)(9) of the Florida Constitution.” (at 15)
“[T]he concept of a 'public contract' seems to exist solely within the framework of government procurement and almost always has to do with procurement of materials, supplies, and services.” (at 12-13)
Factual background
Lee Memorial Health System, a public hospital created by a special act, provided medical services to a patient and filed liens under the LMHS Lien Law. Progressive, the patient's insurer, settled the claim without satisfying Lee Memorial's liens. Lee Memorial sued Progressive for lien impairment. The trial court granted summary judgment for Progressive, declaring the LMHS Lien Law unconstitutional.
Procedural history
Progressive moved for summary judgment in the trial court, arguing the LMHS Lien Law violated Article III, § 11(a)(9) and Article I, § 10 of the Florida Constitution, and that damages should be limited. The trial court granted summary judgment on the first ground only. The Second District affirmed, also reaching the contract impairment and damages issues. The Florida Supreme Court accepted jurisdiction.