Monday, April 04, 2005

Two Opinions Today

Parnell v. Adventist Health System (opinion available here)
This case involved the interpretation of CA's Hospital Lien Act (Ca. Civ. Code sections 3045.1-3045.6). The HLA permits a hospital that treats a patient injured by a 3rd party tortfeasor to establish a lien against a judgment received by that patient from the tortfeasor.

Joel Parnell was injured in a car crash and treated at the defendant's hospital. Parnell's health plan had agreed to reimburse preferred providers (like defendant) in the plan's network for services rendered to the plan's beneficiaries. In turn, the providers agreed to accept those amounts as "payments in full."

After Parnell was treated, his health plan reimbursed the hospital in the amount specified by the provider agreement. Parnell also paid his required share of deductibles and co-payments. Nevertheless, when Parnell later sued the driver that struck him in a tort action, the hospital filed a notice of lien. The hospital wanted to use the lien to recover $14,450, which was the difference between the "actual" cost of the medical services and the negotiated amount received under the provider agreement.

Today, the Court unanimously concluded that a lien under the HLA requires the existence of an underlying debt owed by the patient to the hospital. Recognizing that this could have adverse effects on CA hospitals, the Court noted that it was simply giving effect to the hospitals' contracts with health care plans. If hospitals want to preserve a right to recover the difference between "usual" charges and the negotiated discount rate by using a lien under the HLA, they are free to contract for that right.

Burbank v. State Water Board (opinion available here)
The Court's second decision today involved the power of regional water boards to impose pollutant restrictions. Federal law sets national water quality standards but allows states to enforce their own water quality laws so long as they comply with federal standards. In what was largely a supremacy clause issue, this was the Court's conclusion:

"A regional board, when issuing a wastewater discharge permit, may not consider economic factors to justify pollutant restrictions that are less stringent than the applicable federal standards require. When, however, a regional board is considering whether to make the pollutant restrictions . . . more stringent than federal law requires, CA law allows the board to take into account economic factors, including the wastewater discharger's cost of compliance."

Justice Brown filed a concurring opinion, expressing frustration that the federal and state agencies involved "seemed to have worked hard to make this simple question impenetrably obscure."

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