A prerequisite to the recovery of fees: How "reasonable and necessary" are your charges?


In State Farm Mutual Automobile Insurance Co. v. Huff, 2013 DJDAR 7379 (2013), the California Court of Appeal for the Fourth Appellate District decided a novel fee case in the medical context, referencing standards used to recover attorney fees under California law.

An individual suffered injuries in an automobile accident. The injured party was treated at the hospital. At the time of his discharge, the patient owed the hospital significant sums for medical services. The hospital was never paid. Later, in a personal injury lawsuit arising from the same automobile accident, a jury awarded the injured person $356,588 against the parties who allegedly caused the accident. The hospital informed the responsible parties’ insurer, State Farm Mutual Automobile Insurance Co. (“State Farm”), that it was claiming a $34,321 lien on the judgment.

The plaintiff demanded that the insurer ignore the lien and pay the entire judgment amount to him without offset. State Farm filed an interpleader action requesting the trial court for instructions on how to allocate the money. The trial court awarded the hospital $34,320.

The court of appeal reversed the decision of the lower court. The court of appeal noted that when a hospital provides medical services to a person injured by a third party’s negligence, that hospital is entitled to a lien on damages recovered by the person “to the extent of the amount of the reasonable and necessary charges of the hospital.” Such a lien is authorized by Civil Code Sections 3045.1-3045.6, referenced as the Hospital Lien Act.

The court noted that the hospital, as the party asserting a right to the recovery, has the burden of proving the amount of its lien and that the charges were “reasonable and necessary.” The court of appeal found the trial court’s reasoning flawed and it reversed the decision on that basis.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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