Irma Rabun, Individually and on Behalf of All Others Similarly Situated v. St. Francis Medical Center, Inc.

• Court: Louisiana Court of Appeal
• Decided: August 11, 2021
• Docket: 54,086-CA
• Status: Published

Opinion

Judgment rendered August 11, 2021. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.

No. 54,086-CA

COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA

*****

IRMA RABUN, INDIVIDUALLY Plaintiff-Appellant AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED

versus

ST. FRANCIS MEDICAL Defendant-Appellee CENTER, INC.

Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 2014-1389

Honorable Daniel J. Ellender, Judge

HOFFOSS DEVALL, LLC Counsel for Appellants By: J. Lee Hoffoss, Jr. Claude P. Devall Donald W. McKnight

MARTZELL, BICKFORD & CENTOLA, PC By: Scott R. Bickford Lawrence J. Centola, III

PARKER ALEXANDER, LLC By: Kevin D. Alexander

LABORDE EARLES LAW FIRM By: Derrick Earles BREAZEALE, SACHSE & WILSON, LLP Counsel for Appellee By: David R. Kelly Thomas R. Temple, Jr. Chris D. Billings Joseph J. Cefalu, III

Before PITMAN, STEPHENS, and ROBINSON, JJ. STEPHENS, J.

This case has been before this Court two previous times.1 The instant

appeal is from the trial court’s judgment that sustained an exception of

prescription filed by defendant St. Francis Medical Center and dismissed

with prejudice the claim filed by the named class representative, Irma

Rabun. For the reasons set forth below, we affirm the judgment of the trial

court.

FACTS/PROCEDURAL BACKGROUND

On February 1, 2013, Irma Rabun sustained injuries in an automobile

accident caused by a third party. She sought medical treatment at St. Francis

Medical Center, Inc. (“St. Francis”), on the same day.

Ms. Rabun had health insurance with United Healthcare Insurance

Company (“United Health”), and St. Francis was a contracted health care

provider, which would have allowed for a discounted rate on medical

services. However, St. Francis chose not to file a claim with United Health,

but instead, on March 21, 2013, filed a medical provider’s lien pursuant to

La. R.S. 9:4751-4755 against any settlement proceeds Ms. Rabun received

from the insurer of the at-fault driver. This lien was for the full,

undiscounted amount of the hospital charges, which amounted to $9,452.00.

On November 7, 2013, State Farm Fire and Casualty Company sent a

check to Ms. Rabun’s attorney payable to St. Francis in the amount of

$9,452.00. Because of the medical lien, Ms. Rabun’s attorney placed the

1 See, Rabun v. St. Francis Medical Center, Inc., 50,849 (La. App. 2 Cir. 8/10/16), 206 So. 3d 323 (Rabun I); on subsequent appeal, Rabun v. St. Francis Medical Center, Inc., 52,658 (La. App. 2 Cir. 6/26/19), 277 So. 3d 455, writ denied, 2019-1426 (La. 11/5/19), 281 So. 3d 674 (Rabun II). check in escrow, where it remains. Allegedly, the lien issued by St. Francis

is still in effect, preventing the disbursement of the funds.

A class action petition for damages, breach of contract, declaratory

relief, and injunctive relief was filed on May 9, 2014, against St. Francis by

Ms. Rabun, individually and as representative of a class “on behalf of all

others similarly situated.” According to Ms. Rabun, inter alia, St. Francis

violated the Health Care Consumer Billing Disclosure Protection Act (the

“Balance Billing Act” or “BBA”) by:

• failing to file claims with health insurance issuers, failing to accept payments from health insurers, and, attempting to collect and collecting from patients amounts in excess of those legally owed by those patients, contrary to its contractual obligation to provide medical care and treatment to subscribers and to accept the contracted reimbursement rate provided for by the member provider agreements and/or health insurance provider contracts as payment in full;

• hiring third party collection agencies to refuse the health insurance of petitioner and class members and/or payment by petitioner and class members as full payment, and to collect directly or indirectly from petitioner and class members by filing liens and maintaining actions at law against petition and class members; and

• breaching contracts entered into by the hospital with petitioner and class members for the provision of medical services by attempting to collect and/or collecting from petitioner and other members of the class more than petitioner and other class members were legally obligated to pay.

In response, St. Francis filed a motion for summary judgment in

which it raised a number of issues. Summary judgment was granted by the

trial court on November 13, 2015. This adverse ruling was appealed by Ms.

Rabun, and on April 10, 2016, this Court issued its opinion in Rabun I,

2 reversing summary judgment and remanding the matter for further

proceedings.

Upon remand, the matter was certified as a class action, with Ms.

Rabun being appointed as class representative. St. Francis appealed the

class certification, which was affirmed by this Court in Rabun II.

Thereafter, on October 16, 2020, St. Francis filed an exception of

prescription as to the claim of the named plaintiff, Irma Rabun.

St. Francis pointed out that, in her petition, Ms. Rabun alleged the

notice of lien was sent to her attorney on March 21, 2013. The class action

petition alleging violations of the Balance Billing Act by St. Francis,

including “maintaining an action at law” against Ms. Rabun by asserting a

lien for the undiscounted cost of the medical expenses charged by the

hospital, was not filed until May 9, 2014. As recently held by the Louisiana

Supreme Court in DePhillips v. Hospital Service District No. 1 of

Tangipahoa Parish, 2019-01496 (La. 7/9/20), ___ So. 3d ___, 2020 WL

3867212, Balance Billing Act claims brought by insured patients against

contracted healthcare providers are delictual in nature and, as such, are

subject to a one-year prescriptive period. Therefore, argued St. Francis,

because Ms. Rabun filed suit more than one year after the issuance of the

lien, her claims have prescribed.

Ms. Rabun urged that her claims were not prescribed. She

acknowledged the supreme court’s recent DePhillips opinion, but pointed

out that, despite finding that claims under the Balance Billing Act are subject

to a one-year prescriptive period, the court did not reach the issue of when

prescription begins to run under the Act. According to Ms. Rabun,

prescription does not begin to run until there is a recovery (payment) from 3 the third party—in other words, an amount to which the lien can be attached.

Until that time, whether the lien will ultimately have any effect or cause any

recoverable damages is merely speculative. Ms. Rabun did not settle her

third-party action and recover damages until November 2013. Her action

was filed on May 9, 2014, well within one year of the lien attaching to any

settlement funds. Therefore, her claims had not prescribed.

A hearing was held on December 9, 2020. The trial court granted the

exception filed by St. Francis and dismissed Ms. Rabun’s individual claims

with prejudice, based on its finding that her claims were untimely since they

had not been filed within one year of the issuance of the medical lien. It is

from this judgment that Ms. Rabun has appealed.

DISCUSSION

On appeal, Ms. Rabun contends that her Balance Billing Act claims

have not yet prescribed since the lien filed by St. Francis has been neither

paid nor withdrawn. Because the lien is still in effect, St. Francis is

continuing to maintain the “action at law” of the lien by still attempting to

collect from her in contravention of the Balance Billing Act.

Ms. Rabun cites several cases involving continuing torts, Bustamento

v. Tucker, 607 So. 2d 532 (La. 1992); and, South Central Bell Telephone Co.

v. Texaco, Inc., 418 So. 2d 531 (La. 1982), in support of her argument that

the wrongful conduct (the attempt to collect) of a contracted provider who

has filed a medical lien begins when the lien letter is sent and continues until

the lien is either withdrawn or paid. According to Ms. Rabun, as long as the

medical lien is pending, the contracted provider is “attempting to collect,”

something specifically prohibited by La. R.S. 22:1874(A)(1).

4 Ms. Rabun also reiterates the argument she made before the trial

court, i.e., that her action was timely because it was filed within one year of

the settlement of her claim against the at-fault third party and insurer.

On the other hand, St. Francis urges this Court to affirm the trial

court’s judgment. Since Ms. Rabun’s individual claims were prescribed on

the face of the petition, she had the burden of presenting evidence that

showed a suspension or interruption of the prescriptive period. Because Ms.

Rabun failed to do so, the trial court properly granted the exception of

prescription and dismissed her claims with prejudice.

In support of its argument that the one-year prescriptive period

applicable to Ms. Rabun’s claims began to run when the hospital sent the

medical lien letter to her attorney on March 21, 2013, St. Francis relies upon

DePhillips, supra (in which the Louisiana Supreme Court held that the

prescriptive period for a Balance Billing Act claim brought by an insured

patient against a contracted health care provider is one year); Anderson v.

Ochsner Health System, 2013-2970 (La. 7/1/14), 172 So. 3d 579 (in which

the Louisiana Supreme Court held that an individual consumer has a private

right of action for a violation of the Balance Billing Act); and, Stewart v.

Ruston Louisiana Hospital Co., LLC, Civ. No. 3:14-0083, 2016 WL

1715192 (W.D. La. Apr. 27, 2016) (in which the federal district court held

that the one-year prescriptive period in such a case began when the hospital

filed a lien on a potential tort recovery).

The Balance Billing Act, La. R.S. 22:1871, et seq., prohibits a

contracted health care provider from collecting or attempting to collect

amounts from an insured patient in excess of the contracted reimbursement

5 rate, a practice referred to as “balance billing.” La. R.S. 22:1874 provides,

in pertinent part:

A.(1) A contracted health care provider shall be prohibited from discount billing, dual billing, attempting to collect from, or collecting from an enrollee or insured a health insurance issuer liability or any amount in excess of the contracted reimbursement rate for covered health care services.

(2) No contracted health care provider shall bill, attempt to collect from, or collect from an enrollee or insured any amounts other than those representing coinsurance, copayments, deductibles, noncovered or noncontracted health care services, or other amounts identified by the health insurance issuer or an explanation of benefits as an amount for which the enrollee or insured is liable. …

B. No contracted health care provider may maintain any action at law against an enrollee or insured for a health insurance issuer liability or for payment of any amount in excess of the contracted reimbursement rate for such services. In the event of such an action, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney fees and court costs. However, nothing in this Subsection shall be construed to prohibit a contracted health care provider from maintaining any action at law against an enrollee or insured after a health insurance issuer determines that the health insurance issuer is not liable for the health care services rendered.

In DePhillips, supra at *3-4, the Louisiana Supreme Court recognized

that the Balance Billing Act failed to set forth an applicable prescriptive

period, thus requiring the Court to properly characterize the nature of the

plaintiff’s cause of action in order to determine the correct prescriptive

period applicable to the claims. In classifying the nature of the duty

breached by a contracted health care provider under the Balanced Billing

Act as delictual in nature, the Court analyzed the statute in question, as well

as the law in effect at the time of the enactment of the Balance Billing Act;

Anderson, supra at 583-85 (in which the Court held that: an insured has an

implied right of action under the Balance Billing Act grounded in individual

restitution where a health care provider collects or attempts to collect 6 amounts from the insured patient in excess of the contracted reimbursement

rate; and, where a health care provider asserts a lien pursuant to La. R.S.

9:4751-4755 for the full amount of undiscounted charges, that practice is an

“action at law” prohibited by La. R.S. 22:1874(B), entitling the insured

patient to a private right of action under the express language of La. R.S.

22:1874(B)); and, Emigh v. West Calcasieu Cameron Hospital, 2013-2985

(La. 7/1/14), 145 So. 3d 369 (cited not for its holding, but for its underlying

reasoning that negates the plaintiff’s claim to be a third-party beneficiary to

any contract such that his claim sounded in contract).

Speaking for the majority, Justice Crichton wrote:

Pursuant to the Act, a contracted health care provider is prohibited from taking certain actions to collect amounts owed to the provider, including discount billing or dual billing a patient to collect amounts allegedly owed to the provider. La. R.S. 22:1874(A)(1)-(4). These duties are owed to “an enrollee or insured,” a defined term that means “a person who is enrolled in or insured by a health insurance issuer for health insurance coverage.” La. R.S. 22:1872(A)(11). In other words, by the plain language of the Act, this is a duty owed by all “contracted health care providers” to all “enrollees or insureds,” and is not specific to any individual. It is a general duty imposed by statute and, thus, does not arise from any special obligation owed by [defendant health care provider] to [the plaintiff in this case]. See, Smith [v. Citadel Ins. Co.], 19-0052, p. 6, 285 So. 3d at 167. We therefore find the nature of the duty breached is delictual in nature, and the claims are subject to a one-year prescriptive period.

DePhillips, supra at *4. Because the plaintiff’s petition was silent as to the

date of the alleged violation of the Balance Billing Act by the defendant

health care provider, the supreme court’s holding was limited to its

determination that one year is the proper prescriptive period for Balance

Billing Act claims brought by insured patients against contracted health care

providers. Id. at *7.

7 As to when the one-year prescriptive period for a Balance Billing Act

claim begins to run, there are no Louisiana state court cases on point.

However, a Louisiana federal district court has ruled on this issue, finding

that claims identical to those asserted by Ms. Rabun are subject to a one-year

prescriptive period that begins upon the issuance of the medical lien.

Stewart, supra, at *7. The trial court in the instant case relied upon the

rationale set forth in Stewart in granting the exception of prescription filed

by St. Francis.

The plaintiffs in Stewart, supra urged the court to find that the health

care provider’s lien on their potential tort recoveries constituted a continuing

tort. Relying on Louisiana jurisprudence distinguishing a continuing tort,

which is where the operating cause of injury is a continuous one giving rise

to successive damages, Crump v. Sabine River Authority, 1998-2326 (La.

6/29/99), 737 So. 2d 720, 726, from a continuation of the ill effects of the

original, wrongful act, which does not create a continuing tort, Id. at 728, the

court in Stewart held:

[I]t is clear that the prescriptive period in this case began when NLMC filed a lien on a potential tort recovery. The lien was filed one time, and although the ill effects may be continually felt, the act at issue occurred but once. See Lejeune Bros., Inc. v. Goodrich Petroleum Co., L.L.C., 2006-1557 (La. App. 3 Cir. 11/28/07), 981 So. 2d 23, 34 (citations omitted). Thus, the continuing tort doctrine is inapplicable. Because Plaintiffs had notice of the lien more than one year prior to filing suit, their cause of action under the Balance Billing Act has prescribed.

Id. at *7.

As argued by the plaintiffs in Stewart, Ms. Rabun argues that her

claims are not prescribed because of the continued existence of the medical

lien. The violation of the Balance Billing Act as alleged in her petition—St.

Francis’s attempt to collect amounts in excess of the contracted 8 reimbursement rate—occurred when the hospital issued the lien letter dated

March 21, 2013, to Ms. Rabun’s attorney. No allegations were made and no

evidence was introduced that St. Francis has done anything other than the

filing of the lien, which, as found by the court in Stewart, supra, does not

constitute a continuous cause of injury giving rise to successive damages,

but instead, is one original, wrongful act that has ill effects continuing

therefrom.2

2 As noted by this Court in Howard v. Willis-Knighton Medical Center, 40,634 (La. App. 2 Cir. 3/8/06),924 So. 2d 1245, 1253, writs denied, 2006-0850, 1064 (La. 6/14/06), 929 So. 2d 1268, 1271, a pre-Balance Billing Act class action lawsuit filed by patients alleging to be victims of the hospital’s “unreasonable charges and collection processes” utilizing Louisiana’s hospital lien statute:

La. R.S. 9:4752 itself does not create a cause of action in favor of the hospital directly. . . The hospital is a creditor of the patient who incurs the bill; the patient is a creditor of the tortfeasor or his insurer that owes benefits to him. Richland Parish Hospital Service District #2 v. Hanover Insurance Companies, 486 So. 2d 1079 (La. App. 2 Cir. 1986). The privilege afforded by the statute is simply an accessory right to the primary obligation—a form of security for ultimate payment. Richland, supra at 1083. An accessory right or obligation may not exist without the coexistence of a primary obligation to which it lends support. Louis Werner Saw Mill Co. v. White, 16 So. 2d 666 (La. App. 2 Cir 1942), rev’d on other grounds, 205 La. 242, 17 So. 2d 264 (1944). Stated simply, the obligation of the patient to pay reasonable treatment charges is not incurred as a result of the lien, but arises out of the underlying contractual relationship between the hospital and the patient. Hence, although the statute affords a health care provider a privilege on the settlement proceeds for reasonable charges or fees by the health care provider, the charges or fees themselves do not arise from the privilege, but from the primary obligations between a health care provider and the patient. . . . Spencer v. West, 126 So. 2d 423 (La. App. 2 Cir. 1961).

Privileges become extinct: (1) by the extinction of the thing subject to the privilege; (2) by the creditor acquiring the thing subject to it; (3) by the extinction of debt which gave birth to it; and (4) by prescription. La. C.C. art. 3277. The debt “giving birth” to a medical lien privilege is a debt on open account. Dauzart v. Financial Indemnity Insurance Company, 2010-28 (La. App. 3 Cir. 6/2/10), 39 So. 3d 802, 805. The prescriptive period for a suit on an open account is three years. La. C.C. art. 3494; Dauzart, supra. A lien or privilege is only an accessory right to the claim or debt, providing security and payment by preference. Howard, supra; Dauzart, supra; Toomer v. City of Lake Charles, 392 So. 2d 74 (La. App. 3 Cir. 1980), writ denied, 396 So. 2d 931 (La. 1981). The lien has a life coextensive with that of the debt it is intended to secure. Id. When the debt or claim is extinguished by prescription, the privilege becomes extinct also, even if timely filed. Dauzart, supra; Toomer, supra.

9 Ms. Rabun had until March 21, 2014, to assert her claims under the

Balance Billing Act. Because her petition was not filed until May 9, 2014,

more than one year after March 21, 2013, her individual claims under the

Balance Billing Act have prescribed. The trial court did not err in granting

the exception of prescription filed by St. Francis.

CONCLUSION

For the reasons set forth above, the judgment of the trial court is

affirmed. Costs are assessed to plaintiff, Irma Rabun, Individually and On

Behalf of All Others Similarly Situated.

AFFIRMED.