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
2
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
1 Initially, State Farm included two other hospitals as defendants in the interpleader action. Those hospitals later withdrew their lien claims and were dismissed from the action, leaving only the District's lien claim for resolution.
3
"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 admitted he had no personal knowledge about the actual services the District
furnished Huff.
(4) An attorney who represented Huff in his negligence action against the
Wilkinses testified that at the trial of that action he introduced evidence of all of the
medical expenses Huff incurred during his hospitalization at the District's hospital. The
attorney also authenticated a copy of the judgment on special verdict in Huff's negligence
action against the Wilkinses, which the court admitted into evidence.
After hearing argument from counsel and taking the matter under submission, the
trial court ruled the District "met its burden to establish a valid and enforceable claim of
lien for emergency medical care and services under the [Hospital Lien Act]."
Specifically, the court found: (1) the testimony of the District's patient financial
counselor established that Huff had received medical services at the District for injuries
caused by a third party; (2) the testimony of the District's director of patient accounting
established that the District has not been paid for those services; and (3) the testimony of
the District's director of patient accounting and the general manager of the collection
agency retained by the District established that the District gave State Farm valid notice
4
of its lien. The trial court also ruled the District was "not required under the [Act] to
present expert testimony or otherwise affirmatively prove that the amounts it claims in
the lien are for 'reasonable and necessary charges.' " According to the court:
"[T]he authenticated hospital statement of charges serves as prima facie evidence that services were rendered and billed for. . . . [The Act] does not require a detailed description of the services, much less an expert declaration of reasonableness and necessity. That would gravely impair the utility of the statutory lien as a low[-]cost, simpler, and speedier alternative to litigation. In addition, the requirement that medical services be proven to have been 'reasonable and necessary' traditionally only applies for the purpose of proving causation and damages in contested tort cases. It need not be proved in collections cases on 'common counts' and should have no application to the alternative statutory enforcement of a lien on a debt. Had the legislature intended to impose such additional requirement, it would have so specified in the statutory language."
Based on these rulings, the trial court entered judgment in favor of the District for
$34,320.86, less its pro rata share of the costs and attorney fees incurred by State Farm.
(See Code Civ. Proc., § 386.6, subd. (a).)
DISCUSSION
Huff contends the judgment must be reversed because the trial court erroneously
relieved the District of its burden under the Hospital Lien Act to prove the charges for the
services it provided Huff were reasonable and necessary, and the District submitted no
evidence to establish the reasonableness or necessity of those charges. The District
counters that the judgment must be affirmed because sufficient circumstantial evidence
established the charges were reasonable and necessary, and Huff did not prove otherwise.
As we shall explain, we agree with Huff.
5
A. Standard of Review
We review the trial court's construction of the Hospital Lien Act de novo. (Weston
Reid, LLC v. American Ins. Group, Inc. (2009) 174 Cal.App.4th 940, 946.) In
considering a challenge to the sufficiency of the evidence to sustain a judgment, we
examine the record to determine whether it contains substantial evidence (i.e., evidence
that is reasonable, credible, and of solid value), resolving all conflicts and drawing all
reasonable inferences in favor of the party who prevailed at trial. (Wilson v. County of
Facilities, Inc. v. Ehsanipour (1999) 70 Cal.App.4th 1480, 1485 [mechanic's lien];
People v. One 1952 Ford Sedan (1956) 146 Cal.App.2d 183, 184, 187 [lender's lien on
forfeited automobile].) We thus hold the District, as a party asserting a right to the
interpleaded funds under the Hospital Lien Act, had the burden to prove by a
preponderance of the evidence the amount of its lien, i.e., "the amount of the reasonable
and necessary charges" for the "emergency and ongoing medical or other services" it
furnished Huff. (Civ. Code, § 3045.1.)
We do not believe that imposing this burden on a hospital will, as the trial court
feared, impair the utility of the statutory lien remedy. The Hospital Lien Act "was
originally enacted in 1961 to allow hospitals to recoup losses suffered when a patient
'failed to discharge any portion of the hospital bill' even though that patient had 'collected
upon a cause of action against another.' " (Parnell, supra, 35 Cal.4th at pp. 603-604.) At
the same time, the Act was intended to "ensur[e] that the patient retained sufficient funds
to address other losses resulting from the tortious injury." (Mercy Hospital, supra, 15
Cal.4th at p. 217.) In balancing these competing interests, the Legislature limited the
amount of a hospital's lien on the settlement or judgment proceeds that a tortfeasor pays
an injured person to "the reasonable and necessary charges of the hospital" for treating
the injury (Civ. Code, § 3045.1) — the same amount of medical expenses the injured
person may recover as damages from the tortfeasor (see Melone v. Sierra Railway Co.
9
(1907) 151 Cal. 113, 115 [in personal injury case, plaintiff may recover the "reasonable
sum . . . as has been necessarily expended or incurred in treating the injury"]; accord,
Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 555 (Howell)). To
maintain that balance, a hospital seeking to enforce a lien under the Act must prove "the
amount of the reasonable and necessary charges" for treating the injured person. (Civ.
Code, § 3045.1.) With ready access to the injured person's medical records and to health
care professionals and others competent to assess the need for and cost of medical
treatment (and in some cases to evidence on these matters introduced in a related personal
injury action), the hospital should have little difficulty meeting that burden.
Here, however, the District failed to sustain its burden of proof at trial. The only
evidence concerning the amount of its lien the District introduced was an authenticated
copy of Huff's hospital bill, which totaled $34,320.86, and related testimony that the bill
remains unpaid and was based on the District's standard charges for the services itemized
in the bill. But "the full amount billed by medical providers is not an accurate measure of
the value of medical services" (Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308,
1326 (Corenbaum)) because "many patients . . . pay discounted rates," and standard rates
"for a given service can vary tremendously, sometimes by a factor of five or more, from
hospital to hospital in California" (Howell, supra, 52 Cal.4th at p. 561). Thus, just as "the
cost alone of medical treatment and hospitalization does not govern the recovery of such
expenses" by an injured person from a tortfeasor (Gimbel v. Laramie (1960) 181
Cal.App.2d 77, 81), that cost alone does not govern the recovery by a hospital asserting a
lien under the Hospital Lien Act on the settlement or judgment proceeds the injured
10
person receives from the tortfeasor (Civ. Code, § 3045.1 [limiting lien to amount of
"reasonable and necessary charges" for treatment of person injured by tortfeasor]). "It
must be shown additionally that the services were attributable to the accident, that they
were necessary and that the charges for such services were reasonable." (Gimbel, at
p. 81; accord, Howell, at pp. 551, 555; McAllister v. George (1977) 73 Cal.App.3d 258,
264 (McAllister); Calhoun v. Hildebrandt (1964) 230 Cal.App.2d 70, 73 (Calhoun).) The
District, however, did not make this required additional showing.
At trial, the District introduced no evidence the charges in Huff's hospital bill were
reasonable or were for necessary treatment attributable to the motor vehicle collision. To
be sure, the testimony of the District's former patient financial counselor that Huff told
her he was in an accident, the testimony of the attorney who represented Huff in his
negligence action against the Wilkinses that he introduced evidence of the expenses Huff
incurred at the District's hospital, and the judgment in that action awarding him past
medical expenses, constituted circumstantial evidence that Huff needed some medical
treatment as a result of the motor vehicle collision. But there was no testimony or other
evidence that any of the specific services itemized in Huff's bill were reasonably required
as a result of the collision. (See Civ. Code, § 3045.1 [limiting lien to amount of
"necessary" charges for treatment of person injured by tortfeasor]; McAllister, supra, 73
Cal.App.3d at pp. 264, 264-265 [when "plaintiff introduced no medical testimony that the
dental work was reasonably required as a result of the battery," "no dental costs were
recoverable"].) The District also introduced no evidence of the reasonable value of any
of the services itemized in Huff's bill. (See Civ. Code, § 3045.1 [limiting lien to amount
11
of "reasonable" charges for treatment of person injured by tortfeasor]; Guerra v.
Balestrieri (1954) 127 Cal.App.2d 511, 520 ["There should be some evidence concerning
the value of professional services of a physician and surgeon."].) The bill itself was
based on the District's standard charges and thus "is not an accurate measure of the value
of medical services." (Corenbaum, supra, 215 Cal.App.4th at p. 1326.) The only other
evidence regarding the value of Huff's medical care was the special verdict of
$232,708.80 for past medical expenses in his negligence action against the Wilkinses.
Although Huff's attorney in that action introduced evidence of all of the District's charges
($34,320.86), the special verdict obviously includes the charges of other providers, and
the record does not indicate what portion, if any, of the District's charges the jury
considered reasonable and included in that verdict. Finally, the District's witnesses did
not establish that they had the personal knowledge or the professional qualifications
needed to testify regarding either the necessity or the reasonable value of any of the
services for which Huff was billed. Without evidence of these essential matters, the
District was not entitled to enforce a lien under the Hospital Lien Act to recover the
charges it claimed in Huff's bill. (See Civ. Code, § 3045.1; McAllister, at pp. 264-265;
Calhoun, supra, 230 Cal.App.2d at p. 73; Guerra, at p. 520.)
In sum, we conclude the judgment must be reversed because the District did not
present sufficient evidence of the amount of its lien, as it was required to do to recover
under the Hospital Lien Act. We also conclude that because the District had a full and
fair opportunity at trial to prove it was entitled to the interpleaded funds but did not do so,
and because Huff's judgment against the Wilkinses shows he is entitled to those funds,
12
Huff is entitled to judgment in his favor. (See Cassista v. Community Foods, Inc. (1993)
5 Cal.4th 1050, 1066; Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 289;
California Maryland Funding, Inc. v. Lowe (1995) 37 Cal.App.4th 1798, 1810.)
DISPOSITION
The judgment is reversed and the matter is remanded to the superior court with
directions to enter judgment in favor of Huff. In the interests of justice, the parties are to
bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
IRION, J.
WE CONCUR:
BENKE, Acting P. J.
O'ROURKE, J.
13
AI Brief
AI-generated · verify before citing
Holding. A hospital asserting a lien under the Hospital Lien Act must prove by a preponderance of the evidence that its claimed charges are reasonable and necessary, and a hospital bill alone is insufficient to meet this burden.
Issues
Must a hospital prove its charges are reasonable and necessary to enforce a lien under the Hospital Lien Act?
Did the District meet its burden of proof to establish the reasonableness and necessity of its charges?
Disposition. Reversed and remanded
Quotations verified verbatim against the opinion
“the full amount billed by medical providers is not an accurate measure of the value of medical services”
“the District did not present sufficient evidence of the amount of its lien, as it was required to do to recover under the Hospital Lien Act.”