Hospital contract bars lien on patient

The California Supreme Court Blog is reporting on a new case in which California hospitals have been bit by their own contracts. In Parnell v. Adventist Health System (decision here) the hospital tried to get a lien on a tort recovery by a patient whose insurance hadn’t paid the “actual charges” it incurred for treatment, but only the lesser “negotiated amount” it charged to insurers.  The court noted that since, in the contract, the hospital had agreed to accept the negotiated amount as “full payment,” the patient owed the hospital nothing. Since he owed nothing, the hospital could not get a lien.

The court suggested that hospitals in the future could revise their contracts to protect their rights to such proceeds.