Iretta Morgan vs. Saint Luke's Hospital of Kansas City, Missouri
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IN THE MISSOURI COURT OF APPEALS
SAINT LUKE'S HOSPITAL OF
Opinion filed: June 28, 2013
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI
The Honorable Peggy S. McGraw, Judge
Before Division Three: Alok Ahuja, Presiding Judge,
Victor C. Howard, Judge and Cynthia L. Martin, Judge
Iretta Morgan, appeals the ruling of the trial court granting judgment on the pleadings to
St. Lukeâs Hospital of Kansas City (âSt. Lukeâsâ). She contends that the trial court erroneously
found that her pleading against St. Lukeâs for violation of the Missouri Merchandising Practices
Act (âMMPAâ), tortious interference with contract/business relationship, and unjust enrichment
failed to state claims upon which relief could be granted. The judgment is reversed and the case
remanded for further proceedings in accordance with this opinion.
First, Ms. Morgan contends that the pleading alleged that St. Lukeâs refusal to submit her
bills to health insurance constituted an unfair business practice in violation of the MMPA. Ms.
Morgan asserts that St. Lukeâs refusal to submit Morganâs bills to her health insurance ignored
its contractual obligations with her insurer to accept a discounted amount and thereby denied Ms.
Morgan the benefits of her health insurance, also resulting in a financial windfall to St. Lukeâs.
Second, Ms. Morgan argues that the pleading alleged each element of tortious interference,
including an absence of justification for St. Lukeâs actions. She contends that St. Lukeâs action
was not justified because it had no unqualified legal right to ignore contractual obligations with
Ms. Morganâs insurer that are designed to benefit the insured. Third, Ms. Morgan asserts that the
pleading alleged each element of unjust enrichment, including that St. Lukeâs received a benefit
to which it was not entitled. She argues that St. Lukeâs violated the terms of its contract with her
health insurer that was in place for the benefit of the insured, and in doing so procured a financial
benefit to the financial detriment of the insured.
On March 18, 2009, Ms. Morgan sought treatment at St. Lukeâs for injuries sustained in a
motor vehicle accident with a third party. Her total bill for such treatment was $11,452.75. St.
Lukeâs first submitted its bill to Ms. Morganâs health insurance and received payment from that
insurance for such bill, all pursuant to the agreement between Ms. Morganâs health insurance and
St. Lukeâs. This same agreement entitled Ms. Morgan to a contractual reduction in the amount
of her medical bills incurred with St. Lukeâs. Then St. Lukeâs returned the funds received from
the health insurance company and instead filed a lien against any recovery in Ms. Morganâs third
party tort claim against the other driver in the accident. The lien was for the total amount of
services rendered, without a reduction.
Ms. Morgan filed a class action on behalf of herself and those similarly situated, the
petition alleging in three counts that the above-described actions of St. Lukeâs violated the
MMPA, tortiously interfered with her contract with her health insurance provider, and unjustly
enriched St. Lukeâs. St. Lukeâs subsequently filed a motion for judgment on the pleadings,
alleging that Ms. Morganâs petition should be dismissed based on issue preclusion or failure to
plead claims upon which relief could be granted.
The trial court ruled that the doctrine of issue preclusion did not apply, but granted
judgment to St. Lukeâs on all three counts of Ms. Morganâs petition based on failure to state
claims upon which relief could be granted. The trial courtâs conclusion was based on its findings
that (1) the actions of St. Lukeâs did not constitute an unfair practice in violation of the MMPA
because section 430.2301 allowed St. Lukeâs to file a lien on patientsâ claims for personal injury,
(2) there was no absence of justification for the actions of St. Lukeâs because such actions were
within its legal right under section 430.230, and (3) Ms. Morgan did not plead facts sufficient to
show it would be unjust for St. Lukeâs to retain the benefit of the full amount billed for medical
services rendered. This appeal by Ms. Morgan followed.
At issue in this appeal is whether section 430.230 allows a healthcare provider to file a
lien on a patientâs claim against a third-party tortfeasor despite (1) the existence of a health
insurance contract between the provider and the patientâs health insurance company providing
for a discount in the amount of the patientâs medical bills, and (2) the payment of the discounted
amount from the insurer to the provider.
Standard of Review
Review of a grant of a motion for judgment on the pleadings requires this Court to decide
âwhether the moving party is entitled to judgment as a matter of law on the face of the
pleadings.â Emerson Electric Co. v. Marsh & McLennan Companies, 362 S.W.3d 7, 12 (Mo.
All statutory references herein are to RSMo Cum. Supp. 2011 unless otherwise noted.
banc 2012) (internal quotations omitted). For purposes of the motion, the well-pleaded facts
pleaded by the nonmoving party are treated as admitted. Id. The trial courtâs grant of judgment
on the pleadings will be affirmed only if review of the totality of the facts pleaded by the
petitioner and the benefit of all reasonable inferences drawn therefrom reveals that petitioner
could not prevail under any legal theory. Id.
Hospital Lien Statute and Hospital Billing Practices For Insured Patients Injured By Third
The significance of Missouriâs hospital lien statute, section 430.230, is of foremost
importance in resolving the issues in this appeal. The trial courtâs dismissal of Ms. Morganâs
claims on the pleadings for her first two causes of action, violation of the MMPA and tortious
interference with a contract/business relationship, hinged on its interpretation of section 430.230.
Specifically, the trial court found that section gave St. Lukeâs the unlimited right to file a lien for
the full cost of services rendered to insured patients upon those patientsâ claims against thirdparty tortfeasors who caused their injuries treated by St. Lukeâs.
Additionally, while the courtâs dismissal of Ms. Morganâs unjust enrichment claim does
not explicitly refer to section 430.230, it is implicit that the court found it was not unjust to allow
St. Lukeâs to retain the benefit of the lien for the full cost of services because something excused
St. Lukeâs from charging only the contractually obligated discounted amount alleged in Ms.
Morganâs petition. No other justification for disregarding its contractual obligations besides the
right to assert a lien provided by section 430.230 was raised by St. Lukeâs or the trial court.
Section 430.230 provides, in relevant part, that
[e]very public hospital or clinic, and every privately maintained hospital, clinic or
other institution for the care of the sick, which is supported in whole or in part by
charity, located within the state of Missouri, or any such hospital duly
incorporated under the laws of Missouri providing for the incorporation of
eleemosynary institutions, shall have a lien upon any and all claims,
counterclaims, demands, suits, or rights of action of any person admitted to any
hospital, clinic or other institution and receiving treatment, care or maintenance
therein for any cause including any personal injury sustained by such person as
the result of the negligence or wrongful act of another, which such injured person
may have, assert or maintain against the person or persons causing such injury for
damages on account of such injury, for the cost of such services, computed at
reasonable rates not to exceed twenty-five dollars per day and the reasonable cost
of necessary X-ray, laboratory, operating room and medication service, as such
hospital, clinic, or other institution shall render such injured person on account of
Section 430.230 is designed with the dual purpose of ensuring that injured patients are
promptly treated without consideration of their ability to pay and financially protecting health
care providers to enable them to continue to provide care.
Kelly v. Marvinâs Midtown
Chiropractic, LLC, 351 S.W.3d 833, 835 (Mo. App. W.D. 2011).
This question is one of first impression in Missouri. Courts in other states with hospital
lien statutes have considered this issue under various factual circumstances, and most courts
generally hold that a healthcare provider covered under the hospital lien statute may not assert a
lien against the claim of a patient with health insurance for an amount beyond what the contract
between the provider and the health insurance company dictates.3 The focus of courts so holding
The parties and the court refer variously to section 430.230 and section 430.235; however, for the purposes of this
opinion, the relevant language of each section is the same.
See Dorr v. Sacred Heart Hosp., 597 N.W.2d 462, 467 (Wis. App. 1999) (holding that because the contract
between the hospital and the health insurance company had a hold harmless provision which stated the hospital
would not bill or hold insurance subscribers liable for any hospital expenses covered by the subscriber's insurance
contract, and all expenses from the patientâs treatment for the automobile accident were covered in such contract,
there was no debt upon which the hospital could assert a lien pursuant to the stateâs hospital lien statute); Midwest
Neurosurgery, P.C. v. State Farm Ins. Cos., 686 N.W.2d 572, 577, 579 (Neb. 2004) (holding that under Nebraska's
physician's lien statute a physician's lien could not âexceed the amount the health care provider agreed to accept for
the services rendered to a patient, even if the usual and customary charge for such services is greater than that sum,â
because the statute extends such lien only to the âamount due,â or debt of the patient to the hospital); Parnell v.
Adventist Health System/West, 109 P.3d 69, 71 (Cal. 2005) (holding that, where hospital used âbalance billing,â that
since the hospital had already received payments from the patient and his health insurer, and had agreed to accept
that amount as âpayment in fullâ for its services, there was no longer any amount owing to the hospital, and thus it
could not assert a statutory hospital lien for the difference between its charges and the amount received, in light of
the negotiated network agreements); Statsky v. U.S., 993 F.Supp. 1027, 1028-29 (S.D. Tex. 1998) (holding that
where hospital used âbalance billing,â its lien was unenforceable because the hospital had been paid in full for the
services it provided to patient, and there was consequently no debt to secure by the existence of the lien); Wright v.
First Nat'l Bank in Albuquerque, 941 P.2d 498, 500-01 (N.M. 1997) (holding that a hospital may not assert a
statutory lien in an amount exceeding the amount it agreed to accept from the patient's insurer); Lopez v. Morley,
is on the existence of an underlying debt being necessary to support a lien, leading them to
reason that a provider is not entitled to file a lien under the hospital lien statute when the
patientâs obligation to the provider has been satisfied by the payment made by her health insurer.
E.g., Wright, 941 P.2d at 500. The court in Dorr, for example, focused on the plain meaning of
the word âlienâ itself, reasoning that it indicates that the existence of a debt is required for a lien
to exist. Dorr, 597 N.W.2d at 469-70.
In West v. Shelby County Healthcare Corp., the Tennessee Court of Appeals concluded
that, under Tennesseeâs healthcare lien act, âthe underlying debt to which the lien attaches is an
obligation owed by the person receiving medical services from the hospital[,]â rather than an
obligation owed by the tortfeasor or the tortfeasorâs insurer. 2013 WL 500777, 13 (Tenn. Ct.
App. 2013). The West courtâs stance was that language in the agreement between the provider
and insurer that attempted to reserve the provider a right to collect âappropriate amount(s) dueâ¦
from a third party that might have legal responsibility for the services rendered[,]â in spite of the
same agreementâs hold harmless provision, was ineffective because the healthcare lien act â[did]
not give the hospital an independent cause of action against the third party tortfeasor.â Id. at 6,
One court considering situations similar to those before this court has come to the
opposite conclusion. Rogalla v. Christie Clinic, P.C. relied on language in the agreement
between the provider and the insurer to conclude that the clinic âreserve[d] [its] statutory right to
seek relief from third-party tortfeasorsâ by âsubrogat[ing] the claims of plaintiff.â 794 N.E.2d
384, 392 (Ill. App. 4 Dist. 2003). The court then held that a hospital's statutory lien was not
817 N.E.2d 592, 599 (Ill. App. 2 Dist. 2004) (holding that the hospital's âlien cover[ed] only the amounts of the debt
based on the patient's debt to the healthcare provider, but rather on the debt of the third-party
tortfeasor to the patient and the provider. Id. We decline to adopt this approach.
Ms. Morganâs claims were dismissed in a judgment on the pleadings, before she had an
opportunity to conduct discovery and examine the terms of the agreement between St. Lukeâs
and her health insurance company. The trial court concluded that because section 430.230
allows St. Lukeâs, âwithout limitation,â to file a lien on claims for personal injury treated at St.
Lukeâs and caused by third-party tortfeasors, Ms. Morgan could not possibly prevail as a matter
of law on any of the claims alleged in her petition. First, however, although this right is not
expressly limited within the language of the statute, it is axiomatic that âa lien cannot exist in the
absence of [a] debt, the payment of which it secures.â Dean Realty Co. v. City of Kansas City,
85 S.W.3d 83, 89 (Mo. App. W.D. 2002) (citing Jackson v. Engert, 453 S.W.2d 615, 617 (Mo.
App. 1970)). Secondly, even if section 430.230 gives St. Lukeâs the right to a lien on such
claims, its right, like any other legal right, can be modified or waived by contract. See Coffer v.
Wasson-Hunt, 281 S.W.3d 308, 312 (Mo. banc 2009) (âAs with any other statutory right, an
officer can waive his or her right to appear before the board.â) (internal citations omitted).
Treating Ms. Morganâs well-pleaded facts as admitted,4 there is a contract between St.
Lukeâs and her health insurance provider that operates to compel the participation of St. Lukeâs
in accepting discounted payments from Ms. Morganâs health insurance provider that serve to
extinguish the underlying patient account, i.e. the debt. As such, we simply hold that, according
The brief of St. Lukeâs gives great importance to the inadequacy of Ms. Morganâs pleadings regarding the
particular terms of its provider agreement with her health insurer. Clearly, however, Ms. Morgan has had no access
to such agreement, so this importance is unwarranted. Ms. Morganâs petition does allege that she was entitled to
have her claims submitted to her health insurance for payment and that St. Lukeâs had a contract with her insurer
under which it was entitled to a reduced compensation for the healthcare services it provided to her. A reasonable
implication of these allegations is that St. Lukeâs was required to submit Ms. Morganâs claim to her health insurance
and was required to accept the reduced compensation in full satisfaction of the costs of the services provided to her.
Thus, Ms. Morganâs essential claim is sufficient to constitute well-pleaded allegations that the existing contract
between St. Lukeâs and her health insurance prohibit St. Lukeâs from doing what it has done, and thus is sufficient to
overcome dismissal on all three of the theories she pled.
to the pleadings here, Ms. Morganâs debt has been extinguished.5 A lien cannot exist in the
absence of a debt, and thus Ms. Morganâs pleadings have stated a cause of action so as to survive
a motion for judgment on the pleadings. Therefore, the case is remanded for further proceedings
as the trial court deems appropriate in light of this opinion.
VICTOR C. HOWARD, JUDGE
Although Ms. Morgan pled this case as a putative class action, the trial court did not rule on any issue concerning
the certification of a class. Similarly, this Court does not express any views on class treatment of Ms. Morganâs