The Holding
In Dignity Health v. Farmers Ins. Co. of Ariz., 1 CA-CV-18-0292, 2019 WL1499855 (Ariz. App. June 11, 2019), the Arizona Court of Appeals recently held MedPay benefits are subject to health care provider liens because MedPay coverage does not qualify as “health Insurance” exempt from medical provider liens under A.R.S. § 33-931.
The Takeaways
- An insurer’s payment of MedPay benefits to an insured is subject to health care provider liens under A.R.S. § 33-391.
- Although this is an issue of first impression in Arizona, the Court’s ruling is consistent with statutory schemes and case law that distinguish health insurance from MedPay coverage.
The Facts
The Defendant Insurer issued an auto policy that included MedPay coverage. The Insured was in an accident and was treated by the Plaintiff Hospital. The Insured incurred medical expenses exceeding $160,000, and the Hospital perfected a $140,000 heath care provider lien. Notwithstanding the lien, the Insurer paid $99,000 in MedPay benefits to the Insured. The Hospital sued the Insurer to enforce its health care provider lien. The Insurer argued its payment of MedPay benefits was exempt from the lien because MedPay coverage is “health Insurance” exempt from health care provider liens, pursuant to A.R.S. § 33-931. The trial court dismissed the Hospital’s complaint, holding MedPay coverage qualifies as exempt “health insurance. The Arizona Court of Appeals vacated the trial court’s ruling and held MedPay coverage is not “health insurance.” Thus, MedPay benefits are subject to health care provider liens.
The Rationale
- Under A.R.S. § 33-931 “health insurance and underinsured and uninsured motorist coverage as defined in § 20-259.01” are exempt from health care provider liens.
- The Court of Appeals rejected the argument that MedPay benefits are exempt as “health insurance . . . motorist coverage as defined in § 20-259.01” because:
- The phrase “motorist coverage as defined in § 20-259.01” only modifies the phrase “underinsured and uninsured,” and does not modify “health insurance.”
- And, if the Legislature wanted to exempt “health insurance motorist coverage as defined in A.R.S. § 20-591.01” from health care provider liens, then it could have done so by explicitly amending A.R.S. § 33-931 to that effect or by defining “health insurance” in A.R.S § 20-591.01. It did neither.
- Although A.R.S. § 33-931 does not define “health insurance,” the A.R.S. Insurance Title (Title 20) excludes MedPay coverage from the definition of “health insurance.” The Insurer failed to show the Legislature intended “health insurance” to have an irreconcilably different definition in A.R.S. § 33-931.
- There is a separate statutory scheme applying to MedPay coverage, demonstrating the Legislature treats “health insurance” and MedPay coverage as legally separate.
- Arizona courts have distinguished “health insurance” from MedPay coverage in other contexts. See Haisch v. Allstate Insurance Co., 197 Ariz. 606, 607 ¶ 2 (App. 2000).
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