Summary
In N.C. Baptist Hosps. Inc. v. Crowson, 155 N.C.App. 746, 748, 573 S.E.2d 922, 923 (2003), this Court held that " sections 44-49 and 44-50 do not require a pro rata disbursement of funds" to valid medical lienholders when there was insufficient funds to compensate all the lienholders.
Summary of this case from Nash Hosps., Inc. v. State Farm Mut. Auto. Ins. Co.Opinion
No. COA01-1542
Filed 7 January 2003
Liens — medical services — personal injury recovery — pro rata disbursement not required
The trial court did not err by granting summary judgment in favor of defendant attorney in an action alleging that defendant violated N.C.G.S. §§ 44-49 and 44-50 by failing to disburse to plaintiff hospital certain funds being held by defendant in his capacity as an attorney recovered from the settlement of a personal injury lawsuit and by disbursing the settlement funds in favor of two other lien holders even though plaintiff provided defendant with written notice of a lien on any funds that defendant's client received in the personal injury action in order to cover the value of those medical services provided to defendant's client as a result of the accident, because: (1) N.C.G.S. §§ 44-49 and 44-50 do not require a pro rata disbursement of funds when there are multiple lien holders and insufficient funds to fully compensate such lien holders; and (2) it is within the province of the legislature, and not the Court of Appeals, to place any new or additional restrictions on the distribution of funds to medical service provider lien holders.
Judge CAMPBELL dissenting.
Appeal by plaintiff from order entered 4 September 2001 by Judge Chester Davis in Forsyth County District Court. Heard in the Court of Appeals 12 September 2002.
Turner Enochs Lloyd, P.A., by Melanie M. Hamilton, Laurie S. Truesdell, and Wendell H. Ott, for plaintiff appellant. Crowson Nagle, L.L.P., by James W. Crowson, for defendant appellee.
North Carolina Baptist Hospitals, Incorporated ("plaintiff") appeals from an order of the trial court granting summary judgment in favor of James W. Crowson ("defendant"). For the reasons stated herein, we affirm the order of the trial court.
The pertinent facts of this appeal are as follows: On 21 July 2000, plaintiff filed a complaint in Forsyth County District Court alleging that defendant had violated sections 44-49 and 44-50 of the North Carolina General Statutes by failing to disburse to plaintiff certain funds being held by defendant in his capacity as an attorney. Defendant timely filed an answer denying such allegations, and both parties moved for summary judgment.
The matter came before the trial court on 3 September 2001, at which time plaintiff presented evidence tending to show the following: In September of 1997, plaintiff provided medical services to Christopher Reid ("Reid"), who had been injured in an automobile accident. The total cost of plaintiff's medical services to Reid was $38,234.85. Reid later retained defendant to represent him in a personal injury suit to recover damages for the injuries he incurred as a result of the automobile accident. In November of 1997, plaintiff provided defendant with written notice of a lien pursuant to section 44-49 of the North Carolina General Statutes upon "any sums recovered as damages for personal injury in any civil action." N.C. Gen. Stat. § 44-49(a) (2001). The lien covered the value of those medical services provided to Reid as a result of the accident.
On 15 February 1999, defendant informed plaintiff that, although Reid had reached a settlement of his personal injury suit, the funds were insufficient to compensate plaintiff. This was due to the fact that, in addition to the monies owed to plaintiff, Reid owed money to two other creditors with valid medical service provider liens, namely Wake Forest University Physicians and the Forsyth County Ambulance Service. Upon receipt of the settlement proceeds, defendant paid the Forsyth County Ambulance Service its balance in full and paid Wake Forest University Physicians its balance almost in its entirety. Upon payment of these debts, no other monies remained to compensate plaintiff. Plaintiff thereafter filed an action against Reid and obtained a default judgment against him in October of 1999. Upon considering the evidence and arguments by counsel, the trial court determined that there were no genuine issues of material fact and that defendant was entitled to summary judgment as a matter of law. The trial court therefore entered an order granting summary judgment to defendant. From this order, plaintiff appeals.
The dispositive issue on appeal is whether sections 44-49 and 44-50 of the North Carolina General Statutes prohibit an attorney from disbursing funds recovered from the settlement of a personal injury lawsuit in a non-proportional manner where there are multiple medical service providers holding equally valid liens upon such settlement funds and insufficient funds to compensate all lien holders. Because we conclude that sections 44-49 and 44-50 do not require a pro rata disbursement of funds, we affirm the order of the trial court granting summary judgment in favor of defendant.
Summary judgment is properly granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2001); Von Viczay v. Thoms, 140 N.C. App. 737, 738, 538 S.E.2d 629, 630 (2000), affirmed per curiam, 353 N.C. 445, 545 S.E.2d 210 (2001). In the instant case, the essential facts are uncontroverted. We therefore examine the applicable law to determine whether or not either party was entitled to summary judgment.
Section 44-49 of the North Carolina General Statutes creates a lien
upon any sums recovered as damages for personal injury in any civil action in this State. This lien is in favor of any person, corporation, State entity, municipal corporation or county to whom the person so recovering . . . may be indebted for any drugs, medical supplies, ambulance services, services rendered by any . . . hospital, or hospital attention or services rendered in connection with the injury in compensation for which the damages have been recovered.
N.C. Gen. Stat. § 44-49(a). At the time of the institution of this suit, section 44-50 of the General Statutes provided, in pertinent part, that:
Such a lien as provided for in G.S. 44-49 shall also attach upon all funds paid to any person in compensation for or settlement of the said injuries, whether in litigation or otherwise; and it shall be the duty of any person receiving the same before disbursement thereof to retain out of any recovery or any compensation so received a sufficient amount to pay the just and bona fide claims for such drugs, medical supplies, ambulance service and medical attention and/or hospital service, after having received and accepted notice thereof . . . [p]rovided . . . that the lien hereinbefore provided for shall in no case, exclusive of attorneys' fees, exceed fifty percent (50%) of the amount of damages recovered.
N.C. Gen. Stat. § 44-50 (1999). As this was the statute in effect at the time that the disputed events occurred, this is the controlling version of the statute in this case. Although section 44-50 provides that it is "the duty of any person receiving [settlement funds] before disbursement thereof to retain out of any recovery or any compensation so received a sufficient amount to pay the just and bona fide claims" of valid lien holders, neither section 44-49 nor section 44-50 provide any directive as to the manner of dispensation of such funds where there are multiple lien holders and insufficient funds to fully compensate such lien holders.
Section 44-50 has since been amended, effective October 1, 2001, to provide that "a client's instructions for the disbursement of settlement or judgment proceeds are not binding on the disbursing attorney to the extent that the instructions conflict with the requirements of this Article." N.C. Gen. Stat. § 44-50 (2001).
In the instant case, fifty percent of the client's settlement proceeds, less attorneys' fees and expenses, were delivered to Reid and are not in dispute. The disputed funds comprise the remaining fifty percent of Reid's settlement proceeds. There is no question that plaintiff held a valid lien interest on the settlement proceeds, along with two other medical service providers. Plaintiff argues that defendant violated section 44-50 when he disbursed the settlement funds in favor of the two other lien holders, rather than in a pro rata fashion. We disagree.
Plaintiff concedes that sections 44-49 and 44-50 are completely silent on the issue of distribution of funds among valid medical service provider lien holders. Because sections 44-49 and 44-50 "provide rather extraordinary remedies in derogation of the common law . . . they must be strictly construed." Ellington v. Bradford, 242 N.C. 159, 162, 86 S.E.2d 925, 927 (1955). Strict construction of statutes requires that "their application be limited to their express terms, as those terms are naturally and ordinarily defined." Turlington v. McLeod, 323 N.C. 591, 594, 374 S.E.2d 394, 397 (1988). Thus, "`everything [should] be excluded from [the statute's] operation which does not clearly come within the scope of the language used.'" In re Appeal of Worley, 93 N.C. App. 191, 195, 377 S.E.2d 270, 273 (1989) (quoting Harrison v. Guilford County, 218 N.C. 718, 722, 12 S.E.2d 269, 272 (1940)) (alteration in original). Further, "`where the language of a statute is clear and unambiguous, there is no room for judicial construction and the courts must give it its plain and definite meaning, and are without power to interpolate, or superimpose, provisions and limitations not contained therein.'" Hlasnick v. Federated Mut. Ins. Co., 353 N.C. 240, 244, 539 S.E.2d 274, 277 (2000) (quoting State v. Camp, 286 N.C. 148, 152, 209 S.E.2d 754, 756 (1974)) (alteration in original).
In the instant case, sections 44-49 and 44-50 place no restrictions on the method of distribution among valid lien holders. As such, we are unable to conclude that defendant violated either of these sections by distributing all of the funds to one lien holder rather than distributing the funds on a pro rata basis. Put simply, it is within the province of the legislature, and not this Court, to place any new or additional restrictions on the distribution of funds to medical service provider lien holders not mandated by sections 44-49 and 44-50. See id.
Because sections 44-49 and 44-50 did not require defendant to distribute the funds at issue in a pro rata manner, the trial court properly concluded that defendant was not liable to plaintiff for the monies owed. We hold that the trial court did not err in granting summary judgment in favor of defendant. The order of the trial court is hereby affirmed.
Affirmed.
Judge Hudson concurs.
Judge Campbell dissented from the majority opinion prior to 31 December 2002.