NC Baptist Hospitals, Inc. v. Mitchell

Annotate this Case

362 S.E.2d 841 (1987)


No. 8721DC539.

Court of Appeals of North Carolina.

December 22, 1987.

*842 Turner, Enochs, Sparrow, Boone & Falk by Wendell H. Ott and Thomas E. Cone, Greensboro, for plaintiff-appellant.

Henson, Henson, Bayliss & Coates by Paul D. Coates and Perry C. Henson, Greensboro, for defendant-appellee.

ARNOLD, Judge.

It has long been the rule that a purported assignment of rights arising out *843 of a cause of action for personal injury is invalid as contrary to public policy. Southern Railway Co. v. O'Boyle Tank Lines, 70 N.C.App. 1, 318 S.E.2d 872 (1984). The specific question involved here is whether there is a difference between the assignment of a claim and the assignment of its proceeds. We believe that the more reasoned view is that such proceeds are not assignable before judgment.

The only value of a claim for personal injury is the possible conversion of it into a collectible money judgment. See, Southern Farm Bureau Casualty Ins. v. Wright Oil Co., 248 Ark. 803, 454 S.W.2d 69 (1970). Any distinction drawn between the assignment of a claim and the assignment of its proceeds is a mere fiction and we will not circumvent public policy by adopting such a fiction. See Town & Country Bank v. Country Mut. Ins., 121 Ill.App.3d 216, 76 Ill.Dec. 724, 459 N.E.2d 639 (1984); see also, Karp v. Speizer, 132 Ariz. 599, 647 P.2d 1197 (App.1982). We hold that the assignment of proceeds in a cause of action for personal injury is in violation of public policy and thus invalid.

Having determined the assignment in the present case to be invalid, we turn to whether the trial court correctly concluded that defendant complied with the provisions of G.S. 44-50. G.S. 44-50 attaches a lien upon any funds paid to any person in compensation for or settlement of personal injuries whether in litigation or otherwise, and it directs that person to retain out of those funds a sufficient amount to pay the bona fide claims for medical supplies and services after receiving and accepting notice of such claims. The statute further states that in no case shall the lien, exclusive of attorney's fees, exceed 50% of the damages recovered. G.S. 44-50.

In the present case, defendant received the $25,000.00 in settlement proceeds, deducted her fee of 25%, then divided the balance equally between Mr. Clark and the medical providers. Such action was in direct accord with G.S. 44-50. The trial court was correct to deny plaintiff any recovery.


JOHNSON and ORR, JJ., concur.