Florida Supreme Court Rules Hospital’s Lien Law Violates Florida’s Constitution

The Supreme Court has issued a favorable opinion for insurers in the case of Lee Memorial Health System v. Progressive Select Insurance Company, (SC17—1993). In its opinion, the Supreme Court of Florida found that the Lee Memorial Health System Lien Law violates Article III, Section 11(a)(9) and is therefore invalid.

LMHS Lien Law Defined

The Lee Memorial Health System Lien Law (chapter 2000—439, §18, Laws of Fla.) state in pertinent part as follows:

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.

Case Background

In the underlying case, Progressive Insurance argued, amongst other things, that the LMHS Lien Law violated Article III, §11(a)(9) of the Florida Constitution because it pertains to the creation, enforcement, extension and/or impairment of liens based on private contracts. The Florida Constitution states that “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.”

Supreme Court Decision

The Supreme Court ruled that it is undisputed that the LMHS Lien Law is a “special law pertaining to the creation, enforcement, extension or impairment of liens.” It further held that Lee Memorial’s liens were “based on private contracts” between Lee Memorial and its patients. As such, the Supreme Court held that the Lee Memorial Health System Lien Law violated this provision of the Florida Constitution.