MED-CARE SOLUTIONS, LLC v. BEY & ASSOCIATES, LLC ( 2022 )

THIRD DIVISION
DOYLE, P. J.,
REESE and BROWN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
https://www.gaappeals.us/rules
DEADLINES ARE NO LONGER TOLLED IN THIS
COURT. ALL FILINGS MUST BE SUBMITTED WITHIN
THE TIMES SET BY OUR COURT RULES.
March 2, 2022
In the Court of Appeals of Georgia
A21A1610. MED-CARE SOLUTIONS, LLC et al. v. BEY &
ASSOCIATES, LLC.
DOYLE, Presiding Judge.
At issue in this interpleader case is the allocation of excess funds remaining
after the settlement of a personal injury action brought by Arron Chandler. Six
claimants asserted an interest in the interpleader funds. Following a bench trial, the
trial court entered a final order directing disbursement of the excess funds to a
hospital and a revocable trust, which trust provided Chandler with cash advances in
exchange for a security interest in any funds he received as a result of settlement or
judgment on his personal injury claim. Med-Care Solutions, LLC, and Marrick
Medical Finance, LLC, which asserted that they had statutory medical liens and
contractual liens under the Georgia Uniform Commercial Code1 (“the Georgia UCC”)
against the interpleader funds, appeal the final order. The appellants argue that the
trial court erred by finding that they could not enforce their liens under the Georgia
UCC. For the reasons that follow, we affirm.
“We begin by noting that the interpretation of a statute is a question of law,
which we review de novo on appeal. Moreover, because the trial court’s ruling on a
legal question is not due any deference, we apply the ‘plain legal error’ standard of
review.”2
The evidence in this case is undisputed. Bey & Associates, which represented
Chandler in a personal injury suit, filed an interpleader action to determine the
allocation of excess funds remaining after the settlement of his claims. As of the April
2021 bench trial, six claimants had timely asserted an interest in the interpleader
funds. The claimants fall into three categories. Three – Grady Memorial Hospital
Corporation, Orthopaedic & Spine Surgery of Atlanta, LLC, and Atlanta Orthopaedic
Surgery Center LLC/Spine Center Atlanta (collectively, “the medical claimants”) –
1
OCGA § 11-1-101 (a) et seq.
2
(Punctuation omitted.) Patel v. State of Ga., 341 Ga. App. 419 (801 SE2d
551) (2017), quoting State of Ga. v. Howell, 288 Ga. App. 176 (653 SE2d 330)
(2007).
2
are healthcare providers to whom Chandler was indebted for healthcare services
received as a result of his injuries sustained in his personal injury lawsuit. Another
claimant, the Radics Revocable Living Trust, had 14 separate funding agreements
with Chandler, whereby Radics provided him with cash advances in exchange for a
security interest in any funds he received from his personal injury case. Marrick and
MedCare (“the appellants”) are medical funding companies that purchased Chandler’s
medical receivables from healthcare providers that treated him.
The medical claimants asserted that they had statutory medical liens against the
interpleader funds pursuant to OCGA § 44-14-470. Radics asserted a security interest
pursuant to the Georgia UCC. The appellants asserted statutory medical liens and, in
addition to or in the alternative, contractual liens pursuant to the UCC.
After a bench trial, the trial court issued a final judgment, finding that with the
exception of Grady, all of the medical claimants and the appellants had failed to file
timely lien statements as required by OCGA § 44-14-471 (a) and that as a result,
those late-filed medical liens were invalidated pursuant to OCGA § 44-14-471 (b).3
3
The trial court found that Grady had preserved its medical lien through
compliance with the process set forth in OCGA § 44-14-471 (b).
3
Next, the court found that Radics had, through its agreements with Chandler, taken
valid but unperfected UCC security interests in the interpleader funds.4
With regard to the appellants, the trial court found that their purported medical
liens failed because they were untimely and did not meet the statutory definition of
a provider of medical treatment as defined in OCGA § 44-14-471 (a).5 The court
concluded that the appellants’ lien claims under the Georgia UCC failed because (1)
the statute provides that it is inapplicable “to the extent that . . . [a]nother statute of
this state expressly governs the creation, perfection, or priority,”6 and the appellants,
having also filed medical provider liens, could not simultaneously claim a security
interest under the UCC; and (2) the funds owed to the appellants by Chandler are for
healthcare services to which the Georgia UCC lien statute does not apply.
In accordance with those findings, the trial court gave Grady first priority to the
interpleader funds for their claim in the amount of $28,092.30 and granted Radics
4
Radics’s security interest was unperfected because it failed to file a financing
statement as required by OCGA § 11-9-310 (a).
5
The provisions of OCGA § 44-14-471 (a) apply to “the operator of the
hospital, nursing home, physician practice, or provider of traumatic burn care medical
practice,” which are defined in OCGA § 44-14-470 (a).
6
OCGA § 11-9-109 (c) (2).
4
second priority to the entirety of the remaining $225,863.15. The court concluded that
“while the medical claimants [including the appellants] may still be creditors of . . .
Chandler and have valid claims against him, in the absence of a valid and enforceable
security interest in the [e]xcess [f]unds, their claims – with the exception of Grady’s
hospital lien – are subordinate to Radics’s claims in this case.”
On appeal, the appellants do not dispute the invalidity of their respective
medical liens based on their failure to strictly comply with the medical lien statute.
Instead, they argue that the trial court erred by finding that the Georgia UCC did not
apply to their liens. We disagree.
The issue of whether the appellants had contractual liens under the Georgia
UCC against the excess funds is a question of statutory interpretation and application.
As the Supreme Court of Georgia has explained:
A statute draws its meaning from its text. When we read the statutory
text, we must presume that the General Assembly meant what it said and
said what it meant, and so, we must read the statutory text in its most
natural and reasonable way, as an ordinary speaker of the English
language would. The common and customary usages of the words are
important, but so is their context. For context, we may look to other
provisions of the same statute, the structure and history of the whole
statute, and the other law — constitutional, statutory, and common law
5
alike — that forms the legal background of the statutory provision in
question.7
“If the words of a statute, however, are plain and capable of having but one meaning,
and do not produce any absurd, impractical, or contradictory results, then this Court
is bound to follow the meaning of those words.”8 Lien statutes are strictly construed.9
“Except as otherwise provided in [the Georgia UCC], a security agreement is
effective according to its terms between the parties, against purchasers of the
collateral, and against creditors.”10 “The effect of this section is to give the Article [9]
secured party, upon a debtor’s default, priority over anyone, anywhere, anyhow
except as otherwise provided by the remaining Code priority rules.”11
7
(Citations and punctuation omitted.) City of Marietta v. Summerour, 302 Ga.
645, 649 (2) (807 SE2d 324) (2017). See OCGA §§ 1-3-1 (a), (c).
8
(Punctuation and footnotes omitted.) Busch v. State, 271 Ga. 591, 592 (523
SE2d 21) (1999).
9
See DLT List, LLC v. M7VEN Supportive Housing & Dev. Group, 301 Ga.
131, 135 (2) (800 SE2d 362) (2017).
10
OCGA § 11-9-201 (a).
11
(Punctuation omitted.) Continental America Life Ins. Co. v. Griffin, 251 Ga.
412, 414 (2) (306 SE2d 285) (1983).
6
Liens against a plaintiff’s cause of action for the charges of his medical care
are established by OCGA § 44-14-470 et seq., and provide
[a]ny person, firm, hospital authority, or corporation operating a
hospital, nursing home, or physician practice or providing traumatic
burn care medical practice in this state shall have a lien for the
reasonable charges for . . . care and treatment of an injured person, . . .
upon any and all causes of action accruing to the person to whom the
care was furnished . . . subject, however, to any attorney’s lien.12
A medical lien, however, “is only a lien against such causes of action and shall not
be a lien against such injured person.”13 The medical lien statute requires a mandatory
specific procedure for perfecting such a lien.14
In contrast, security interests arising by agreement are governed by Article 9
of the Georgia UCC.15 “Under Georgia law, a security interest properly attaches to
collateral when: (1) there is a written security agreement signed by the debtor and
containing a description of the collateral; (2) the secured party has given value to the
12
OCGA § 44-14-470 (b).
13
(Emphasis added.) Id.
14
See OCGA § 44-14-471.
15
OCGA § 11-9-101 et seq.
7
debtor; and (3) the debtor has ‘rights’ in the collateral.”16 Article 9 does not, however,
“apply to the extent that . . . [a]nother statute of this state expressly governs the
creation, perfection, or priority. . . .”17 Furthermore, Article 9 “does not apply to . . .
[a] lien, other than an agricultural lien, given by statute or other rule of law for
services. . . .”18
Here, the appellants’ liens satisfy the general requirements of OCGA §
11-9-203(a)-(b). The question, however, is whether “[a]nother statute of this state
expressly governs the[ir] creation, perfection, or priority” and whether they constitute
liens “for services” such that Article 9 does not apply.19 This analysis turns on the
substance of the lien and payment agreements between the appellants and Chandler.
First, the “Medical Bill Payment Agreement” between Marrick and Chandler
(“the Marrick Agreement”) states that Chandler has suffered personal injuries as a
result of an accident, that he has or will make a claim against a third party for
16
Toland v. Phoenix Inc. Co., 855 Fed. Appx. 474, 483 (III) (B) (11th Cir.
2021) (unpublished); OCGA § 11-9-203 (a)-(b).
17
OCGA § 11-9-109 (c) (2).
18
OCGA § 11-9-109 (d) (2).
19
OCGA §§ 11-9-109 (c) (2), (d) (2).
8
damages in connection with the incident, that he “is indebted or will hereafter become
indebted for the expense of healthcare services,” and that Marrick has or may
purchase the debt from the healthcare providers “and generally agrees to defer
collection of the [d]ebt until settlement or other final disposition of the [d]amages
[c]laim.” Thus, Chandler’s debt to Marrick are debts for medical services rendered
to him.
Similarly, the “Medical Lien/Letter of Protection/Subrogation Contract” (“the
MedCare Contract”) between MedCare and Chandler states that it is a “Payment
Agreement and Acknowledgment of Assignment of Lien . . . with regard to medical
treatment and services rendered to [Chandler]” by a hospital, a physician, and other
medical service providers. The MedCare Contract further provides that “an
assignment” of the providers “lien rights” to MedCare has or will be made in
exchange for valuable consideration paid by MedCare, which “is assuming financial
costs and risks in doing so.” In addition, the contract contains a directive to
Chandler’s attorneys to pay directly to Medcare the full sums billed by the providers
for services rendered to Chandler “as a result of the personal injuries suffered on
11/12/2014.” The MedCare Contract also contains an assignment provision with an
acknowledgment that Chandler “shall continue to be bound to [MedCare] as if
9
[MedCare] was the original party billing [him]” and that Chandler “agrees to remain
liable to [MedCare] for the full-billed charges of any and all medical treatment,
services, and procedures rendered to [him] by [the p]roviders.” Thus, Chandler’s
debts to MedCare are also debts for medical services.
Although the appellants were not the providers of the medical services, they
were both holders of those debts via assignments of Chandler’s medical debts by his
medical providers; there was no new debt or obligation established by either
agreement. As a result, the effect the agreements had on Chandler’s pre-existing
financial obligations was to temporarily delay his repayment on the debts and to
memorialize his understanding that the appellants are the new debtors and holders of
the associated medical liens.
Next, consistent with medical liens established under OCGA § 44-14-470 (b),
the contractual liens claimed by the appellants are liens against any personal injury
cause of action arising out of Chandler’s accident for which the medical services at
issue were provided. The Marrick Agreement describes the nature of the lien:
[Chandler] hereby assigns, conveys[,] and grants to Marrick a lien upon
any and all proceeds derived, promised, paid[,] or recovered as a result
of or in connection with the [d]amages [c]laim, including but not limited
to liability claims, MedPay or other no-fault claims, uninsured or
10
underinsured motorist claims, and all causes of action hereafter accruing
to [Chandler] on account of the Occurrence . . . subject, however, to any
attorney[] lien. This agreement and Marrick’s lien established hereunder
shall apply without limitation to any and all proceeds from any
settlement, verdict[,] or judgment and any other proceeds disbursed or
disbursable to or for the benefit of [Chandler] in connection of the
[d]amages [c]laim.
Both the plain language of the Marrick Agreement, as well as the fact that it tracks
the medical lien statute, reflects that it was intended as a medical lien.20
The MedCare Contract notes that MedCare is the assignee of Chandler’s
healthcare providers’ lien rights “upon any sums awarded to [Chandler] . . . by
judgment or pursuant to a settlement or compromise to the extent of the [medical
p]roviders’ full-billed charges.” The MedCare Contract states that Chandler’s
attorney “is further directed and authorized to withhold from [Chandler] and pay to
[MedCare]” the full sums billed by Chandler’s medical providers
from any settlement, judgement, or verdict as may be necessary to
satisfy the amounts due and owing under the patient account and to
render full payment to [MedCare] prior to any other disbursement. The
20
OCGA § 44-14-470 (b) grants special priority to statutory medical liens
“subject, however, to any attorney[] lien.”
11
parties acknowledge that this lien, which is entered into for the benefit
of [MedCare], is intended to take the highest priority allowed by law.
The language of the MedCare Contract and the Marrick Agreement shows that
they are medical liens, which the appellants are now presenting as Article 9 security
interests. The obligations secured are Chandler’s medical debts stemming from his
accident, for which he filed a personal injury action, and the debts are secured via
liens on his personal injury action. Liens against a plaintiff’s cause of action for the
charges of his medical care are specifically established in OCGA § 44-14-470 et seq.,
which requires strict compliance with rules for the creation and perfection of such
liens. A medical lien cannot be established by an agreement that satisfies the less-
stringent requirements of an Article 9 security interest, and instead, can only be
established through the specific process set forth in OCGA §§ 44-14-470 and 44-14-
471. Both OCGA §§ 11-9-109 (c) (2) and (d) (2) require a party asserting a medical
lien to proceed under the medical lien statute, and they expressly bar the creation of
a medical lien through the process for creating an Article 9 security interest by
agreement.21
21
We note that the fact that the appellants are not medical providers as required
by the medical lien statute, see OCGA § 44-14-470, does not require a different
result. The appellants chose to characterize and draft their agreements with Chandler
12
Accordingly, we affirm the trial court’s judgment.
Judgment affirmed. Reese and Brown, JJ., concur.
in the manner that they did, and the fact that they are not entitled to medical liens
does not mean that the medical lien statute does not apply to the debt owed by
Chandler such that OCGA § 11-9-109 (c) (2) is not implicated.
13