On April 5, Division One of the Arizona Court of Appeals decided an issue of first impression relating to whether an insurer’s medical payment benefits are subject to Arizona’s health care provider lien statute.
They are.
In summary, the Court stated,
“The dispositive issue in this appeal is whether payments under optional medical payments coverage included in an automobile insurance policy (which the parties call “medpay coverage”) is ‘health insurance’ and, therefore, not subject to a health care provider lien under Arizona Revised Statutes section 33-931. As discussed below, because this medpay coverage is not health insurance, those payments are subject to the health care provider lien.”
Background . Ms. Elliott was injured in a car accident and treated at Gilbert Medical Center. The medical center timely perfected a lien under Arizona’s provider lien statute. Notwithstanding the lien, Farmers directly paid Elliott $99,000 under her auto med pay coverage. The medical center sought to enforce its lien against Farmers. In this enforcement action, the trial court granted Farmers’ motion to dismiss and the Arizona Court of Appeals vacated the dismissal, stating that the lien statute unambiguously exempted from its reach, “only health insurance and underinsured and uninsured motorist coverage as defined in § 20-259.01.”
Farmers asserted on appeal that the lien statute “excepts from the lien health insurance … motorist coverage” and that med pay coverage is “the only term that meets the definition of ‘health insurance motorist coverage.’” The court rejected that argument and also held, addressing a more direct issue of statutory interpretation, that medical payments coverage does not qualify for the “health insurance” exception to the statute.
Although this is an issue of first impression, litigation over the reach of Arizona’s lien statutes, and the order of priority of payments, is not. Insurance claim departments should consider maintaining a current list of lien statutes and cases interpreting those statutes.
DIGNITY HEALTH, Plaintiff/Appellant, v. FARMERS INSURANCE COMPANY OF ARIZONA, Defendant/Appellee., No. 1 CA-CV 18-0292, 2019 WL 1499855, at *2 (Ariz. Ct. App. Apr. 4, 2019)
