Kearny County Hospital v. Allstate Insurance

170 P.3d 900, 38 Kan. App. 2d 641, 2007 Kan. App. LEXIS 1101
CourtCourt of Appeals of Kansas
DecidedNovember 9, 2007
DocketNo. 96,953
StatusPublished
Cited by3 cases

This text of 170 P.3d 900 (Kearny County Hospital v. Allstate Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kearny County Hospital v. Allstate Insurance, 170 P.3d 900, 38 Kan. App. 2d 641, 2007 Kan. App. LEXIS 1101 (kanctapp 2007).

Opinion

Green, J.;

Kearny County Hospital and St. Catherine Hospital (collectively appellees) filed this case against Allstate Insurance Co. (Allstate) under K.S.A. 65-408 after learning that Allstate, in an interpleader action, compensated the appellees’ patients for their injuries without paying the appellees’ hospital hens. The appellees’ two patients each settled for $13,967.21 of Allstate’s $50,000 policy proceeds, while six other claimants divided the remainder of the proceeds. The appellees argued that under K.S.A. 65-408, Allstate was hable to them in the amount of $50,000. The trial court granted summary judgment to the appellees and awarded them $50,000.

First, Allstate contends that it cannot be held liable to the appellees when the trial court in the interpleader action had notice of the appellees’ hens and distributed the funds to the injured parties. Nevertheless, K.S.A. 65-408 imposes a duty upon insurance carriers to ensure that hospital hens are paid when compensating a hospital’s patients for injuries sustained in an accident. [643]*643Because nothing in the record shows that Allstate ever notified the trial court that die appellees’ hospital liens needed to be paid out of the insurance policy proceeds, Allstate’s argument fails. Next, Allstate argues that K.S.A. 65-408 does not impose liability in this case. We disagree. K.S.A. 65-408 imposes liability upon an insurance company that has failed to pay a hospital hen when compensating the hospital’s patient. Here, because Allstate compensated the appellees’ patients for their injuries without paying the appellees’ hospital hens, the trial court properly found that K.S.A. 65-408 apphes to this case.

Next, Allstate argues that even if K.S.A. 65-408 is applicable to this case, the trial court erred in awarding a $50,000 judgment to appehees. We agree. Under K.S.A. 65-406, the maximum amount the appehees could recover was the amount “going [to] or belonging to” the appehees’ patients, that is, the $13,967.21 going to each patient. Moreover, under K.S.A. 65-406(c), Kearny County Hospital was entided to receive the entire amount of its hospital hens, $1,355. Nevertheless, in order to decide the amount that St. Catherine Hospital was entitied to recover out of each patient’s settlement, the trial court needs to determine what an equitable distribution would have been under K.S.A. 65-406(c). Accordingly, we affirm in part, reverse in part, and remand for a determination in accordance with this decision.

The appehees are two separate hospitals that provided medical care to both Rosa Salazar and Cesar Castillo after an automobile accident in November 2002. The party at fault in the accident had a $50,000 automobile insurance policy with Allstate. Kearny County Hospital filed hospital hens of $870 for Salazar and $485 for Castillo with the Kearny County District Court. St. Catherine Hospital filed two hospital hens totaling $63,670.74 for Salazar and two hospital hens totaling $42,864.93 for Castillo with the Finney County District Court. The hospital liens were filed between February 2003 and December 2003. Notices of the hospital hens were sent to Allstate.

On January 26, 2004, Allstate brought an interpleader action in the Kearny County District Court. Eight people involved in the automobile accident had made claims against the Allstate pohcy. [644]*644Allstate requested that it be allowed to pay the amount of its $50,000 policy into the court and that the court determine the distribution to the eight claimants named as defendants in the interpleader action. The appellees were not named in the petition, nor did they ever receive notice of the interpleader action.

In January 2005, the defendants answered the interpleader petition. Attached to the answer was an agreed distribution of the $50,000 Allstate policy that was signed by all of the adult defendants. The defendants agreed that Allstate should pay its $50,000 policy limit into the court for distribution. The trial court found that the defendants had agreed to an equitable division of Allstate’s insurance policy proceeds and ordered Allstate to pay the $50,000 policy limits into the court for distribution. Based on the distribution agreement, Salazar and Castillo were each awarded $13,967.21, which was net of attorney fees.

In September 2005, the appellees sued Allstate. Arguing that Allstate had violated K.S.A. 65-408 by making payments to the injured parties without first paying the hospitals their lien amounts, the appellees sought a judgment of $50,000 plus interest against Allstate. A default judgment was entered against Allstate for fading to answer the appellees’ petition. Nevertheless, the trial court later set aside the default judgment. Allstate moved to dismiss the appellees’ petition on the ground that K.S.A. 65-408 did not apply to the present case. Finding that K.S.A. 65-408 did apply to the present case, the trial court denied Allstate’s motion to dismiss.

The appellees moved for summary judgment, arguing that they were entitled to $50,000 damages under K.S.A. 65-408. The trial court granted the appellees’ motion for summary judgment and entered a judgment of $50,000 for the appellees.

Standards of Review

On appeal, Allstate raises a variety of arguments as to why the trial court erred in granting summary judgment to the appellees and in entering a judgment for $50,000 in favor of the appellees. First, Allstate argues that it is not hable for the hospital hens because the trial court had notice of the hospital hens and because it paid the settlement proceeds to the trial court for equitable distri[645]*645button. Alternatively, Allstate argues that the trial court erred in ordering it to pay the appellees more than the patients received. Finally, Allstate maintains that the district court should have held an evidentiary hearing to determine the proper apportionment of settlement funds.

In summary judgment cases, this court’s standard of review is well established:

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Bluebook (online)
170 P.3d 900, 38 Kan. App. 2d 641, 2007 Kan. App. LEXIS 1101, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kearny-county-hospital-v-allstate-insurance-kanctapp-2007.