NUMBER 13-11-00330-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
MCALLEN HOSPITALS, L.P. D/B/A Appellants,
MCALLEN MEDICAL CENTER AND
D/B/A EDINBURG REGIONAL
MEDICAL CENTER,
v.
STATE FARM COUNTY MUTUAL INSURANCE
COMPANY OF TEXAS, Appellee.
On appeal from the 139th District Court
of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Justices Rodriguez, Benavides and Perkes
Memorandum Opinion by Justice Benavides
In this appeal, we are asked to interpret the Texas Hospital and Emergency
Medical Services Lien statutes. See TEX. PROP. CODE ANN. §§ 55.001–.007 (West
Supp. 2011). By one issue, appellant, McAllen Hospitals, L.P. d/b/a McAllen Medical
Center and d/b/a Edinburg Regional Medical Center (“MMC”), contends that the trial
court erred in granting appellee’s, State Farm County Mutual Insurance Company of
Texas (“State Farm”), motion for summary judgment. We affirm.
I. BACKGROUND
The underlying facts of this appeal involve the recovery of costs for medical
services MMC rendered to Melinda Hernandez and Jose Gil related to injuries sustained
following a car wreck in Hidalgo County. The cost of treatment provided totaled
$1,281.00 and $53,564.00 for Hernandez and Gil, respectively. MMC secured liens
over these hospital bills by filing written notice of the liens with the Hidalgo County
Clerk’s Office to attach the proceeds of any possible settlement obtained by Hernandez
and Gil for personal injuries related to the car crash that caused their hospitalizations.
See TEX. PROP. CODE ANN. § 55.005 (West Supp. 2011).
Following their respective treatments at MMC, Hernandez and Gil filed bodily
injury claims with the responsible third-party’s insurance carrier, State Farm, and
eventually reached mutually agreeable settlements. The settlement amounts totaled
$2,100.00 and $5,200.00 for Hernandez and Gil, respectively. State Farm does not
dispute that it had notice of MMC’s liens at the time of the settlements. As a result,
State Farm issued the relevant settlement drafts in the following manner: (1) payable to
Hernandez and MMC, jointly, for the sum of $1,281.00; and (2) payable to Gil, Gil’s wife
Rafaela Balderas, and MMC, jointly, for the sum of $5,200.00.
Hernandez endorsed her check and deposited it at Texas State Bank without
MMC’s endorsement. Gil and Balderas endorsed his check and deposited it at Lone
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Star National Bank without MMC’s endorsement. Despite the missing endorsements
from MMC on both checks, both banks negotiated the instruments and cashed them.
MMC subsequently filed suit against a number of defendants, including State Farm, and
alleged that State Farm violated the Texas Hospital and Emergency Medical Services
Lien statutes for settling Hernandez and Gil’s claims without resolving MMC’s liens.
State Farm filed a motion for summary judgment which sought a declaration as a
matter of law from the trial court that State Farm fulfilled its obligations under the
hospital lien statute by issuing and delivering co-payable settlement drafts to Hernandez
and MMC, as joint payees, and to Gil, Balderas and MMC, as joint payees. MMC filed a
cross-motion for summary judgment which sought a ruling from the trial court as a
matter of law finding that State Farm violated the Hospital and Emergency Medical
Services Lien statutes and should therefore pay MMC. The trial court granted State
Farm’s motion for summary judgment and found no genuine issue of material fact as to
whether State Farm fully discharged its obligation to protect MMC’s liens. Additionally,
the trial court denied MMC’s motion for summary judgment. MMC appealed.
II. STANDARD OF REVIEW
We review a trial court’s summary judgment de novo. See Provident Life & Acc.
Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When reviewing a summary
judgment, we take as true all evidence favorable to the nonmovant, and we indulge
every reasonable inference and resolve any doubts in the nonmovant's favor. Sw. Elec.
Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). When both sides move for
summary judgment and the trial court grants one motion and denies the other, the
reviewing court should review both sides’ summary judgment evidence and determine
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all questions presented. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 874
(Tex. 2000). The reviewing court should then render the judgment the trial court should
have rendered. Id. When a trial court does not specify the grounds relied upon, the
reviewing court must affirm summary judgment if any theories presented to the trial
court and preserved for appellate review are meritorious. See Provident Life & Acc. Ins.
Co., 128 S.W.3d at 215.
III. DISCUSSION
In its sole issue, MMC contends that the trial court erred when it determined that
naming MMC as a joint payee on a settlement draft issued and delivered to Hernandez
and Gil was sufficient to satisfy the hospital lien statutes. See TEX. PROP. CODE ANN. §
55.007 (West Supp. 2011).
A. Texas Hospital and Emergency Medical Service Liens Statutes
Under Chapter 55 of the Texas Property Code, a hospital may hold a lien on a
cause of action or claim of an individual who receives hospital services for injuries
caused by an accident that is attributed to the negligence of another so long as the
services were rendered no later than seventy-two hours after the accident. See id. §
55.002(a) (West Supp. 2011). A lien under this chapter may attach to, among other
things, “the proceeds of a settlement of a cause of action or a claim by the injured
individual or another person entitled to make the claim, arising from an injury for which
the injured individual is admitted to the hospital or receives emergency medical
services.” Id. § 55.003(a)(3). To perfect its lien, a hospital must: (1) provide necessary
statutory notice to the injured individual; and (2) file written notice of the lien with the
county clerk of the county in which the services were provided before any money is paid
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to the entitled individual for the injuries. See id. § 55.005(a). Finally, a release of a
cause of action or judgment to which a lien may attach is not valid unless: (1) the
charges of the hospital or emergency medical services provider claiming the lien were
paid in full before the execution and delivery of the release; (2) the charges of the
hospital or emergency medical services provider claiming the lien were paid before the
execution and delivery of the release to the extent of any full and true consideration paid
to the injured individual by or on behalf of the other parties to the release; or (3) the
hospital or emergency medical services provider claiming the lien is a party to the
release. Id. § 55.007.
B. Motions for Summary Judgment
As a preliminary matter, it is undisputed that MMC held a valid hospital lien over
Hernandez and Gil’s respective personal injury claims. See id. § 55.005(a). Therefore,
the key inquiry in this case turns upon whether State Farm’s action of naming MMC as
co-payee on the Hernandez and Gil settlement drafts sufficiently complied with the
pertinent statutes.
1. MMC’s Argument
MMC argues that naming a hospital co-payee with an injured individual will
defeat the purpose of Chapter 55 and would make it unlikely that the hospital would
receive the payment as entitled. MMC further asserts that section 55.007(a) does not
permit an insurance company to include a hospital’s name on a settlement check after a
settlement is reached because payment was not made to the hospital prior to the
release of a cause of action or judgment being signed and delivered, as required. MMC
contends that sections 55.008(a)(1) and (3) require payment in full to the hospital prior
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to the execution and delivery of the release of a cause of action or judgment in order for
it to be valid and effective. MMC argues that to recognize State Farm’s actions as
compliant with Chapter 55 would render the statutory scheme “meaningless.”
2. State Farm
State Farm contends that its duties under Chapter 55 were satisfied by naming
MMC and Hernandez and MMC and Gil as joint payees in the settlement check. In
support of its motion for summary judgment, State Farm directs this Court to two cases
which we find useful. The most recent case comes from our sister court in Beaumont,
which held that an insurance company’s action of naming a hospital lienholder as a
payee on a settlement check for injuries sustained from an automobile accident was not
a breach by the insurance company of its release with the injured party, but rather “an
effort to comply with [chapter 55 of the property code] and obtain a valid release.”
Richards v. Am. Nat. Prop. & Cas. Co., 195 S.W.3d 758, 761 (Tex. App.—Beaumont
2006, no pet.). The Richards Court further held that even if the settlement check was
made payable solely to the injured party, the injured party could not cash the check
without first paying the lien because the lien attaches to the settlement proceeds. Id.
State Farm also cites Benchmark Bank v. State Farm Lloyds, which involved a
property loss settlement from a homeowner’s insurance policy made jointly payable to
the homeowner and Benchmark Bank as mortgagee. 893 S.W.2d 649, 649–50 (Tex.
App.—Dallas 1994, no writ). In Benchmark, the question was whether Benchmark
Bank’s failure to endorse the settlement check, despite being cashed by the
homeowner, discharged State Farm’s obligations under the policy to pay Benchmark
Bank as mortgagee. Id. at 650. The Dallas Court held that State Farm discharged its
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duties, despite the fact that Benchmark Bank never received payment from the loss
pursuant to the policy. Id. at 651. The Court held that “payment to and possession of a
draft by one joint payee is constructive possession by the other joint payee,” and that
State Farm’s obligations under the insurance policy were not affected. Id. We agree
with MMC’s argument that Benchmark Bank is distinguishable because this case
involves statutory duties rather than contractual ones. We do not agree, however, that
the case is not instructive to our analysis. To the contrary, we find it helpful.
3. Analysis
In this case, State Farm acknowledges that the automobile liability policy which
Hernandez and Gil asserted claims against was a $20,000 per person/$40,000 per
occurrence policy. As a result, after State Farm’s investigations and settlements with
other parties, mutually agreeable settlements were reached with Hernandez and Gil.
Hernandez’s settlement amount of $2,100.00 was within her MMC lien amount of
$1,281.00, while Gil’s settlement amount of $5,200.00 fell well below his MMC lien
amount of $53,564.00. Therefore, State Farm included MMC as a co-payee in an effort
to comply with the statutes and obtain a valid release.
At that point, State Farm’s statutory duty was discharged and the duty shifted to
Hernandez and Gil to obtain MMC’s endorsement on the settlement checks and then
satisfy the lien amounts, given that MMC was a listed co-payee on the settlement
checks and MMC’s lien had attached to the settlement proceeds. See TEX. PROP. CODE
ANN. § 55.003(a)(3); Richards, 195 S.W.3d at 761. We are not directed to—nor can we
find—any authority which expressly prohibits State Farm from naming MMC, as a joint
payee and hospital lienholder, on a settlement check with the injured claimants, or that
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doing so did not comply with the hospital lien statutes. Furthermore, our interpretation
today does not render the hospital lien statutes “meaningless” as MMC contends
because obligations to hospital lienholders still exist and injured patients would still be
required to satisfy the outstanding liens by seeking out the hospital’s endorsement on
the settlement drafts. See TEX. PROP. CODE ANN. § 55.007(a)(2).
Accordingly, after reviewing both parties’ motions for summary judgment, we
conclude that the trial court did not err in finding that State Farm established its right to
summary judgment as a matter of law and denying MMC’s motion for summary
judgment. See FM Props., 22 S.W.3d at 874. MMC’s sole issue is overruled.1
IV. CONCLUSION
We affirm the trial court’s judgment.
GINA BENAVIDES
Justice
Delivered and filed the
25th day of October, 2012.
1
We express no opinion about MMC’s potential cause(s) of action, if any, against Texas State
Bank, Lone Star National Bank, Hernandez, or Gil.
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