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State Farm Mutual Automobile Insurance Co. v. Huff

California Court of Appeals, Fourth District, First Division

June 11, 2013

STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Plaintiff,
v.
MICHAEL HUFF, Defendant and Appellant PIONEERS MEMORIAL HEALTHCARE DISTRICT, Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Imperial County, Super. Ct. No. ECU06448 Donal B. Donnelly, Judge. Reversed and remanded with directions.

Nordstrom, Steele, Nicolette and Blythe, Alan K. Nicolette; Guizot & Mouser, Damon Guizot and Marlena J. Mouser for Defendant and Appellant.

Franklin J. Love for Defendant and Respondent.

IRION, J.

In this interpleader action, Michael Huff appeals the judgment awarding Pioneers Memorial Healthcare District (the District) a portion of the damages he recovered in a personal injury action against third parties arising out of a motor vehicle collision. The District provided collision-related medical services to Huff at one of its hospitals for which he did not pay. When Huff later obtained a judgment for damages against the third parties who caused his injuries, the District asserted a lien on Huff's damages recovery pursuant to the Hospital Lien Act (Civ. Code, §§ 3045.1-3045.6). Huff contends the District was not entitled to any of the damages because it did not prove the charges for its services were "reasonable and necessary." (Id., § 3045.1.) We agree and reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Huff sustained serious injuries in a motor vehicle collision involving Steven and Matthew Wilkins. (Huff v. Wilkins (2006) 138 Cal.App.4th 732, 736-737 (Huff).) Huff was taken to Pioneers Memorial Hospital, a facility operated by the District, where he received treatment for his injuries over the course of seven days. At the time of discharge, Huff owed the District $34, 320.86 for medical services. The District never received payment for these services.

Huff subsequently sued the Wilkinses for negligence. (Huff, supra, 138 Cal.App.4th at p. 737.) After a jury trial, he obtained a judgment on special verdict against them for $356, 587.92 in damages. The jury found that Huff's past medical expenses totaled $232, 708.80.

Shortly after entry of judgment, a collection agency acting on behalf of the District sent the Wilkinses' insurer, State Farm Mutual Automobile Insurance Company (State Farm), a written notice pursuant to the Hospital Lien Act that the District was claiming a lien in the amount of $34, 320.86 on any damages State Farm might pay Huff. Huff disputed the amount of the lien and demanded that State Farm pay the entire judgment amount to him and his attorneys.

Faced with conflicting claims to a portion of the funds to be paid to satisfy Huff's judgment against the Wilkinses, State Farm filed an interpleader action against Huff and the District, and deposited the amount of the District's claimed lien with the trial court. (See Code Civ. Proc., § 386, subd. (b).)[1] The conflicting claims of Huff and the District then proceeded to a bench trial.

At the trial, four witnesses testified and several documents were introduced as evidence:

(1) The District's director of patient accounting authenticated a copy of Huff's hospital bill, which the court admitted into evidence. He testified the bill remains unpaid and the itemized charges listed on the bill were based on standard rates applicable to all patients. The director admitted he is not a doctor or a nurse and never met or talked to Huff.

(2) The District's former patient financial counselor testified she spoke to Huff while he was in the hospital to discuss why he was there, whether he had insurance, and what programs might be available for payment of his medical expenses. Huff told her "he didn't have any insurance and [she] should be billing the person responsible for the accident."

(3) The general manager of the collection agency acting on behalf of the District testified that he served State Farm by certified mail with a notice of hospital lien concerning Huff's unpaid bill. The court admitted a copy of the notice into evidence. The general manager also testified the current balance due on Huff's bill was $34, 320.86. He ...


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