Eaton, Martinez & Hart, P.C. v. University of New Mexico Hospital

1997 NMSC 015, 934 P.2d 270, 123 N.M. 76
CourtNew Mexico Supreme Court
DecidedFebruary 7, 1997
Docket23374
StatusPublished
Cited by5 cases

This text of 1997 NMSC 015 (Eaton, Martinez & Hart, P.C. v. University of New Mexico Hospital) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eaton, Martinez & Hart, P.C. v. University of New Mexico Hospital, 1997 NMSC 015, 934 P.2d 270, 123 N.M. 76 (N.M. 1997).

Opinion

OPINION

FRANCHINI, Chief Justice.

1. We address whether a public hospital is liable for attorney’s fees and costs incurred by a patient in pursuing personal injury claims, where a hospital holds a lien to be paid from proceeds of a patient’s claim, and where the claim proceeds are sufficient to pay attorney’s fees and costs and the hospital lien in full. We hold that the plaintiffs in these cases are not entitled to deduct from a lien filed by a public hospital a proportionate share of attorney’s fees and costs incurred in obtaining a personal injury recovery to which the lien attaches.

2. Facts and proceedings. Jose Padilla was injured when he fell off an unfenced wall on a basketball court at a City of Albuquerque park in May 1993. Padilla was treated at the University of New Mexico Hospital (University Hospital), a public hospital. His hospital bill was $6,024.03. In June 1993, University Hospital recorded a Notice of Hospital Lien, in the amount of $5,457.53, pursuant to the Hospital Lien Act. NMSA 1978, §§ 48-8-1 to -7 (Repl.Pamp.1995). An addendum to that lien in the amount of $566.50 was filed in November 1993. Eaton Martinez & Hart, P.C., represented Jose on a one-third contingency-fee basis in connection with his claims against the City of Albuquerque. Padilla received a settlement from the City of Albuquerque in the amount of $25,000. The settlement proceeds were sufficient to pay attorney’s fees and costs and the hospital lien. However, in concluding the case against the City and distributing the proceeds to Padilla, the Eaton firm agreed with Padilla to seek attorney’s fees from University Hospital amounting to one-third of the amount of University Hospital’s lien. The Hospital was paid $4,015.98 and the amount of $2,008.05 was deposited in an interest bearing account. The Eaton firm filed a Complaint for Declaratory Judgment against University Hospital and the Regents of the University of New Mexico for a proportionate share of attorney’s fees and costs incurred in obtaining a personal injury recovery from the lien. Thereafter Josh Gibson, who recovered a judgment in another case also subject to a University Hospital lien, was allowed to intervene in the declaratory judgment action as a party plaintiff. The Second Judicial District Court awarded summary judgment for both Eaton and Gibson. University Hospital appealed the summary judgment with respect to Eaton to the Court of Appeals, but did not appeal with respect to Gibson.

3. In the consolidated case, Crawford v. Scully, Plaintiff Wright was injured while crossing the street when she was hit by a car driven by Scully. She was treated at Memorial Medical Center, which is a public hospital, and billed $14,144.92. Wright sued Scully and, following a jury trial, was awarded $120,000. This amount was reduced by fifty percent due to Wright’s contributory negligence. Like Padilla’s recovery, the amount recovered by Wright was sufficient to pay legal fees and costs and to satisfy the hospital lien. Wright paid the hospital lien in full, and then commenced suit against the hospital for a proportionate share of attorney’s fees and costs. The Third Judicial District Court held that Plaintiff could not deduct attorney’s fees and costs from a lien filed by Memorial Medical Center, and Wright appealed to the Court of Appeals.

4. The Court of Appeals consolidated these two cases and certified them to this Court because they raise a common issue of substantial public interest. NMSA 1978, § 34-5-14(0(2) (Repl.Pamp.1996); Rule 12-606 NMRA1997. We granted the New Mexico Trial Lawyers Association leave to file an amicus brief.

5. Gutierrez distinguished. The Hospital Lien Act allows a hospital to “assert a lien upon that part of the judgment, settlement or compromise going, or belonging to such patient, less the amount paid for attorneys’ fees, court costs and other expenses necessary thereto in obtaining the judgment----” Section 48-8-1. Where, a lien is asserted by a public hospital, the Hospital Lien Act must be read together with the New Mexico Constitution Article IV, Section 32 which provides that

[n]o obligation or liability of any person ... owing to the state ... shall ever be exchanged, transferred, remitted, released, [or] postponed ... nor shall any such obligation or liability be extinguished except by the payment thereof into the proper treasury, or by proper proceeding in court.

Gutierrez v. Gutierrez, 99 N.M. 333, 334, 657 P.2d 1182, 1183 (1983). Because both University Hospital and Memorial Medical Center are public hospitals, we will consider the liens in these cases together with Article IV, Section 32.

6. We have said that Article IV, Section 32 forbids a public hospital from accepting “less than the full amount of an undisputed legal obligation.” Gutierrez, 99 N.M. at 335, 657 P.2d at 1184. In Gutierrez plaintiffs sought to void or reduce hospital liens, asking the district court to equitably allocate the proceeds of their recovery. We affirmed the district court’s finding that it “lacks equitable or discretionary power to void or reduce the amount” of a hospital’s lien, holding that “the State cannot compromise the amount owed to it unless a good faith dispute exists as to the amount of indebtedness or liability.” Id. at 334-35, 657 P.2d at 1183-84.

7. Wright and Amicus argue that Gutierrez involved a wholly different and much more general theory of recovery against the hospital. They distinguish the facts in Gutierrez from those in this case on the basis that the district court had been asked in that case to void or make an equitable reallocation of plaintiffs recovery.

8. We agree that the primary issue in Gutierrez was whether the district court had the power to require the University of New Mexico Hospital to accept less than the full amount it was owed. In Gutierrez we held that the district court lacked that power, because our state constitution precluded the hospital from “accepting payment of less than the full amount of an undisputed legal obligation.” Id. at 335, 657 P.2d at 1184. However, we did not address other related questions, such as the hospital’s liability for legal expenses incurred as a result of a written contract or as a consequence of theories of implied contract or quantum meruit or by application of the common-fund doctrine. We address those questions next.

9. Application of the common-fund doctrine to a public hospital. Eaton and Wright argue that any hospital should pay its proportionate share of legal expenses under the common-fund doctrine. See, e.g., Amica Mut. Ins. Co. v. Maloney, 120 N.M. 523, 903 P.2d 834 (1995) (holding the common-fund doctrine applicable to insurance cases where insured incurred attorney’s fees to recover judgment benefitting subrogated insurer). They both contend that'a hospital, whether public or private, should pay its proportionate share of legal expenses as a matter of fundamental fairness. We are sympathetic to the view that the principle of fundamental fairness ought to apply notwithstanding the status of a hospital as public or private. However, Eaton and Wright in effect ask us to apply equitable principles to a case for which the Legislature has provided by statute.

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Cite This Page — Counsel Stack

Bluebook (online)
1997 NMSC 015, 934 P.2d 270, 123 N.M. 76, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eaton-martinez-hart-pc-v-university-of-new-mexico-hospital-nm-1997.