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Brown v. Gadsden Region Medical Center

United States District Court, N.D. Alabama, Middle Division

September 18, 2017

MARILYN BROWN, et al. Plaintiffs,



         Plaintiffs Marilyn Brown and Aaron Grindstaff brought suit in Etowah County Circuit Court against Gadsden Regional Medical Center (GRMC); Triad Holdings V, LLC; Triad of Alabama, LLC; and Professional Account Services, Inc. (PAS), for breach of contract, conversion, and breach of fiduciary duty. Each count is paired with a conspiracy claim.

         PAS removed the action to this court, and then all the Defendants jointly filed a motion to dismiss, or in the alternative, a motion for summary judgment on all claims. (Doc. 14). As discussed in this opinion, the court will grant the motion. Specifically, the court will dismiss the breach of express contract count because the Plaintiffs lack standing to enforce a contract to which they are not an intended party; dismiss the breach of implied contract and conversion counts for failure to state a med-pay claim; and will enter judgment for the Defendants on the breach of fiduciary duty count.

         I. BACKGROUND

         This case centers on two patients' claims that Gadsden Region Medical Center improperly placed liens on their automobile insurance med-pay benefits rather than seeking payment from Blue Cross Blue Shield, their personal healthcare insurance provider.

         Blue Cross and GRMC have a provider agreement in which the hospital agrees to submit bills of member patients directly to Blue Cross for reimbursement. The agreement says that the hospital should not file liens against Blue Cross members and that nothing in the contract is intended to confer a right, benefit, or cause of action on a third party, including a Blue Cross member.

         On March 23, 2012, Marilyn Brown was injured in a car wreck and taken to GRMC for treatment. During the intake process, GRMC says it did not receive any indication Ms. Brown had private health insurance. Ms. Brown says she cannot remember if she told the hospital she was insured by Blue Cross. GRMC filed a hospital lien[1] against any claims, judgments, causes of action, or settlements received or entitled to be received by Ms. Brown for the costs of Ms. Brown's care.

         In September 2012, Ms. Brown returned to GRMC for a pre-operation examination. At that time, Ms. Brown informed GRMC that she had private health insurance through Blue Cross, but that the other driver's auto insurance would cover her medical bills related to the accident. GRMC submitted her September surgery to Blue Cross, who paid the bill.

         Ms. Brown's automobile insurer refused to issue a check solely to her for her med-pay benefits, instead insisting on issuing a two-party check including GRMC as a payee. Even though Ms. Brown told the insurer that GRMC had withdrawn the lien, the insurer still refused to issue a check payable only to Ms. Brown.

         Ms. Brown filed suit in state court against the other driver in her accident, claiming that he was liable for her injuries. The other driver moved for two continuances prior to trial. First, he moved the court to continue the trial based on a settlement offer made to Ms. Brown. Ms. Brown opposed the motion, stating she would not accept a settlement for less than the policy's limit.

         The defendant driver also requested a stay of the case prior to trial, arguing that the existence of GRMC's lien permitted Ms. Brown to argue inconsistent positions and permitted a potential double recovery. Ms. Brown opposed that motion, stating that GRMC had withdrawn the lien and so it would have no effect on the case. In October 2015, the case was tried by a jury, who returned a verdict finding the other driver not liable to Ms. Brown.

         Similarly, on May 14, 2014, Aaron Grindstaff was injured in a car accident and treated at GRMC. Mr. Grindstatff had private health insurance through Blue Cross, and informed GRMC of that fact on his admission paperwork. Less than a month later, GRMC filed a hospital lien against Mr. Grindstaff, seeking payment from his car insurance med-pay.

         When Mr. Grindstaff made a claim against his auto policy for the med-pay benefits, his auto insurer wrote a check payable to him and GRMC. Mr. Grindstaff s attorney informed his auto insurer that Blue Cross had already paid the GRMC bill and requested a check made payable only to Mr. Grindstaff. However, his auto insurer refused to do so.


         The Defendants argue the Plaintiffs lack standing to bring their claims, that the complaint fails to state a claim, and that they are entitled to summary judgment. Accordingly, three different legal standards are at issue: Federal Rules of Civil procedure 12(b)(1), 12(b)(6), and 56. The court will set out the standard for each in turn.

         A. Motion to Dismiss ...

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