(Published in Claims Management Magazine, September 2014)

A special law applicable only to Lee County, Florida, was enacted in 2000 by the Florida State Legislature allowing the public health care system in Lee County to be named Lee Memorial Health System (LMHS) and providing for the execution and enforcement of liens on their patient’s private causes of action and settlements for injuries that allegedly necessitated the hospital treatment. Chapter 2000-439 not only entitled LMHS to a lien on its patient’s claims and settlements but permitted the enforcement of the lien against a third party liability insurer who pays to settle the patient’s injury claim without having satisfied the hospital lien. The Lien Law further allowed LMHS to seek recovery of all reasonable charges for services, irrespective of the amount of payment made in settlement by the liability insurer. Lee County has been flooded with suits filed by LMHS seeking to enforce Chapter 2000-439 against various insurers for impairment of the hospital’s claim of lien. Several insurers have defended enforcement of this Lien Law by alleging it is unconstitutional under Article III, Section 11(a)(9) of the Florida Constitution, which provides: “[t]here shall be no special law or general law of local application pertaining to the creation, enforcement, extension or impairment of liens based on private contracts, or fixing of interest rates on private contracts”. Insurers cited to Shands Teaching Hospital and Clinics, Inc. v. Mercury Ins. Co., 97 So.3d 204 (Fla. 2012), wherein Florida’s Supreme Court struck down an Alachua County Lien Law on the same constitutional grounds. Despite several prior rulings in Lee County refusing to find the LMHS Lien Statute unconstitutional, a recent Circuit Court decision in LMHS v. Progressive Select Insurance Company, Case No: 11-CA-003312, receded from that finding and held the LMHS Lien Law was, in fact, unconstitutional under Article III, Section 11(a)(9). The Lee County Court, citing to the Shands decision, indicated that the contract between the hospital and its patient was private in nature and because the lien purported to attach to a patient’s private assets, it fell within the prohibition under Article III, Section 11(a)(9). Although LMHS argued that it was a “public hospital” and thus, entered into “public” rather than private contracts with its patients, the Court found the statutory language allowing the lien to attach to the patient’s private rights determinative of the issue. An Appeal is expected.