Colorado Supreme Court Holds that Hospitals Required to Bill Medicare Under Hospital Lien Statute

In Harvey v. Catholic Health Initiatives, No. 20SC261, 2021 Colo. LEXIS 823 (Colo. Sept. 13, 2021), the Colorado Supreme Court addressed separate cases brought by plaintiffs arguing that a hospital had violated Colorado’s Hospital Lien Statute by not billing Medicare and filing hospital liens. Under Colorado’s Hospital Lien Statute, Colo. Rev. Stat. § 38-27-101, hospitals must bill the “property and casualty insurer and the primary medical payer of benefits” before filing a lien.

The hospital argued that Medicare should not be billed because Medicare is a secondary payer under the Medicare Secondary Payer Statute. The court, however, explained that the MSP Statute does not provide for the creation or filing of hospital liens and leaves the issue to the states. As used in the hospital lien statute, the court found that the term “primary payer of benefits” was ambiguous and looked to the legislative history of the hospital lien statute. The court observed that the purpose of the hospital lien statute was to prevent hospitals from filing liens against patients without billing patients’ insurers and concluded that a hospital was required to bill Medicare when Medicare is a patient’s primary health insurer. The court also observed that the hospital lien statute does not require hospitals to bill Medicare if payment will be made or can reasonably be expected to be made by a property and casualty insurer. Rather, a hospital must bill any property and casualty insurers first and then bill Medicare if the property and casualty insurers do not promptly issue payment.

In addressing the hospital’s argument that the MSP Statute preempted the hospital lien statute, the court found that a “primary payer” under the MSP Statute was not the same as a “primary medical payer of benefits” under the hospital lien statute. The court recognized that its construction of the hospital lien statute may result in some plaintiffs receiving a windfall since the amount of their claimed damages may exceed the amount paid by Medicare, but the court stated its belief that the hospital lien statute mandated such a result and that the legislature could clarify its intent through further legislation if the legislature did not intend for plaintiffs to receive a windfall.

The court’s analysis, of course, turned on the text of the hospital lien statute and its legislative history. Other courts may reach different conclusions about hospital lien statutes in other states.