In its opinion filed on December 20, 2018, the Supreme Court of Florida (“Florida Supreme Court”) held that the LMHS Lien Law is a special law pertaining to creation, enforcement, extension or impairment of liens, and since those liens are based on a private contracts for the receipt of and payment for medical treatment between Lee Memorial and a patient, the LMHS Lien Law is unconstitutional.
The LMHS Lien Law
Lee Memorial Health System (“Lee Memorial”) is a public health care system in Lee County created by chapter 2000-439, § 18, Laws of Florida, and is the beneficiary of certain rights against private citizens and companies under the LMHS Lien Law. Specifically, the LMHS Lien Law entitles Lee Memorial to liens for its charges for healthcare services, defines what actions constitute impairment of those liens, and creates a cause of action to recover damages for impairment of those liens by others—including persons, firms, or corporations who are neither the providers nor the beneficiaries of the healthcare services at issue.
Lee Memorial filed a lawsuit against Progressive Select Insurance Company (“Progressive”) for the impairment of two liens Lee Memorial had filed based on the provision of medical treatment to an injured person. Lee Memorial alleged that Progressive impaired these liens by settling a claim with the injured person on behalf of Progressive’s insured without the knowledge or consent of Lee Memorial and without the satisfaction or release of Lee Memorial’s liens.
Progressive moved for summary judgment, arguing, in part, that the LMHS Lien Law is unconstitutional as a special law pertaining to the creation, enforcement, extension and/or impairment of liens based on private contracts, in violation of Article III, § 11(a)(9) of the Florida Constitution.
Article III, Section 11(a)(9)
Article III, section 11(a)(9) provides, in pertinent part, “There shall be no special law or general law of local application
pertaining to . . . creation, enforcement, extension or impairment of liens based on private contracts . . . . ”
The Florida Supreme Court stated that Lee Memorial’s contention that the contract must be public because Lee Memorial is a public entity fails because the term “private” in this constitutional provision modifies the contract, not the parties who have entered the contract. The subject matter of the contract is the provision of and payment for medical services, not the administrative operation of Lee Memorial.
The Florida Supreme Court stated: “Our conclusion that the contract at issue is private due to the subject matter, rather than the nature of one of the parties, as Lee Memorial would have us decide, is also consistent with the way in which the term “private contract” has been used in case law … public entities can enter into private contracts, which bears on the meaning of this term as used in this state’s foundational governing document.”
The Florida Supreme Court further stated that the definitions of “private” and “public” that are most reasonably applied to a contract, along with common sense, show that the contract at issue in the present case is private: the provision of medical services to the patient in this case and his agreement to pay for those services upon entry to the hospital are matters that are generally intended for or restricted to the use of a particular person and not freely available to the public, and the assets to which the liens attached were not the public’s assets, but rather the assets of the patient. In other words, the contract itself was to be funded by private assets. Thus, the contract at issue is a private contract.
Hence, the Florida Supreme Court held “the LMHS Lien Law is unconstitutional under article III, section 11(a)(9) of the Florida Constitution.”
Source Lee Memorial Health System v. Progressive Select Insurance Company, No. SC17-1993.
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