Case Law Update: Georgia Supreme Court Examines the Status of Issues Related to Medical Liens and Collection Thereof

A recent decision by the Georgia Supreme Court sheds light on the law imposing suit limitations on lien collection actions, and suggests that the statute in question may need to be revised by the legislature. Hospital Authority of Clarke County v. Geico Insurance Co., 294 Ga. 477, 754 S.E.2d 358 (2014) concerns an action to collect on a lien for medical bills for an injured driver who received treatment at Athens Regional Medical Center. The injured driver sued the at-fault driver, represented by Geico, and on September 10, 2010, the injured driver’s attorney accepted a settlement offer from Geico. The settlement documents, including a general release of claims, were signed on October 8, 2010. The settlement agreement required the injured driver to satisfy the hospital liens out of the settlement fund, but instead she defaulted on the lien and declared bankruptcy.

On October 6, 2011, the hospital authority sued Geico to collect the unpaid lien sum. Geico moved for summary judgment, arguing that the hospital’s action was subject to a one year statute of limitations, citing O.C.G.A. 44-14-473(a), which states that lawsuits to enforce a lien must be filed “against the person liable for the damages or such person’s insurer within one year after the date the liability is finally determined by settlement, by a release, by a covenant not to bring an action, or by judgment of a court.” Geico’s motion was denied by the trial court judge, but reversed on appeal. The matter was then appealed to the Georgia Supreme Court.

The Georgia Supreme Court unanimously found in favor of the hospital authority, stating that “because the settlement agreement progressed into a final release, as explicitly contemplated by the parties, we find that the statute of limitations began to run on the date that the release was executed”. However, in a separate concurrence, Justice David Nahmias noted that the four events listed by the statute as potential triggers for the one-year time limit are “not clearly distinct” and more than one event may occur in any given matter (as occurred here). Moreover, the statute provides no mechanism to notify lienholders of the event which begins the one year recovery period. Consequently, Nahmias concluded, O.C.G.A. 44-14-473(a) is unclear, deficient and needs to be amended.

The Court’s decision in this case is important, as it both clarifies the current state of Georgia lien law and serves notice that the law may soon be subject to change.

Nick Hinson