The Construction and Effect of the Wisconsin Hospital Lien Statute

WDC Journal Edition: Spring 2009
By: Kevin L. Ferguson, American Family Mutual Insurance Company

I. Introduction

The Wisconsin state “legislature has enacted very few statutory lien provisions.[1] Many states, including Wisconsin, provide that a hospital that has provided medical treatment and care to a patient for injuries caused by a tortfeasor is entitled to a lien for the reasonable and necessary costs of medical treatment rendered to these patients.[2] The general purpose behind the hospital lien statute is to encourage the treatment of accident victims who may not have any other means by which to pay.[3] In Wisconsin, any legal entity operating as a charitable institution and maintaining a hospital has a lien for services rendered if it complies with the statutory requirements and perfects its lien.[4] This article will address the construction and effect to the hospital lien statute and provide tips on how to ensure that attorneys do not impair these liens to the detriment of their clients.



II. Wisconsin’s Hospital Lien Statute

Wisconsin’s hospital lien statute is found in Chapter 779 of the Wisconsin Statutes. Wis. Stat. § 779.80 provides as follows:

779.80. Hospital liens. (1) Every corporation, association or other organization operating as a charitable institution and maintaining a hospital in this state shall have a lien for services rendered, by way of treatment, care or maintenance, to any person who has sustained personal injuries as a result of the negligence, wrongful act or any tort of any other person.
(2) Such lien shall attach to any and all rights of action, suits, claims, demands and upon any judgment, award or determination, and upon the proceeds of any settlement which such injured person, or legal representatives might have against any such other person for damages on account of such injuries, for the amount of the reasonable and necessary charges of such hospital.
(3) No such lien shall be effective unless a written notice containing the name and address of the injured person, the date and location of the event causing such injuries, the name and location of the hospital, and if ascertainable by reasonable diligence, the names and addresses of the persons alleged to be liable for damages sustained by such injured person, shall be filed in the office of the clerk of circuit court in the county in which such injuries have occurred, or in the county in which such hospital is located, or in the county in which suit for recovery of such damages is pending, prior to the payment of any moneys to such injured person or legal representatives, but in no event later than 60 days after discharge of such injured person from the hospital.
(a) The clerk of circuit court shall enter all hospital liens in the judgment and lien docket, including the name of the injured person, the date of the event causing the injury and the name of the hospital or other institution making the claim. The clerk of circuit court shall receive the fee prescribed in s. 814.61(5) for entering each lien.
(b) Within 10 days after filing of the notice of lien, the hospital shall send by certified mail or registered mail or serve personally a copy of such notice with the date of filing thereof to or upon the injured person and the person alleged to be liable for damages sustained by such injured person, if ascertained by reasonable diligence. If such hospital fails to give notice if the name and address of the person injured or the person allegedly liable for the injury are known or should be known, the lien shall be void.
(c) The hospital shall also serve a copy of such notice, as provided in par. (b), to any insurer which has insured such person alleged to be liable for the injury against such liability, if the name and address may be ascertained by reasonable diligence.
(4) After filing and service of the notice of lien, no release of any judgment, claim or demand by the injured person shall be valid as against such lien, and the person making any payment to such injured person or legal representatives as compensation for the injuries sustained shall, for a period of one year from the date of such payment, remain liable to the hospital for the amount of such lien.
(5) Such lien shall not in any way prejudice or interfere with any lien or contract which may be made by such injured person or legal representatives with any attorney or attorneys for legal services rendered with respect to the claim of the injured person or legal representatives against the person alleged to be liable for such injury. Said lien shall also be subservient to actual taxable court costs, and actual disbursements made by the attorney in prosecuting the court action.
(6) No hospital is entitled to any lien under this section if the person injured is eligible for compensation under ch. 102 or any other worker's compensation act.



III. Creation, Preservation and Perfection of the Hospital Lien


A.
Subsection one provides the granting authority.

This subsection of the statute gives a lien any legal entity in Wisconsin that operates as a charitable institution and maintains a hospital for medical services rendered to patients who sustained personal injuries caused by a tortfeasor.[5] It is important to note that it must be a charitable institution that maintains the hospital.

B. Subsection two provides sweeping language imposing a lien.

This subsection provides that a hospital has a lien upon “any and all rights of action, suits, claims, demands and upon any judgment, award or determination, and upon the proceeds of any settlement . . . against any such other person for damages on account of such injuries, for the amount of the reasonable and necessary charges.”[6] Although there are not cases addressing this in Wisconsin, the language of this subsection appears broad enough to apply not only to third party bodily injury liability coverage, but also to first party coverage such as uninsured motorist coverage and medical payment benefits.


C. Subsection three addresses the notice and perfection requirements.

This subsection addresses the lien notice and perfection requirements. Failure to fulfill the notice requirements of the statute will render the lien void.[7] For a hospital lien to be effective, the written notice must contain the following: the name and address of the injured person; the date and location of the event causing the injury; the name and location of the hospital; and, if ascertainable by exercising reasonable diligence, the names and addresses of the persons alleged to be liable for the damages sustained by the injured patient..[8] Additionally, the hospital must file the lien in the clerk of courts office in at least one of the following counties: the county in which the injuries occurred, the county in which the hospital is located, or in the county in which the lawsuit for recovery of the damages in pending; moreover, for the lien to be effective, the filing must be done before the payment of any money to the injured patient or his or her legal representatives, but not later than 60 days after discharge of the patient from the hospital.[9]

1. Subsection paragraph (a) addresses the entry and docket of the liens.

This paragraph requires the clerk of circuit court to enter all hospital liens in the judgment and lien docket and provides for the collection of a filing fee for entering the lien. The lien should include the name of the patient, the date of the event causing the injury, and the name of the hospital asserting the lien.[10]

2. Subsection paragraph (b) addresses the notice requirements to the injured party and the tortfeasor.

Within 10 days after filing the notice of lien, the hospitals are required to either send a copy of the notice by certified mail or registered mail, or personally serve a copy of the notice upon the patient and potentially responsible party for the damages sustained by the patient if this can ascertained by reasonable diligence. The lien is void if the hospital fails to give notice when the names and addresses are known or should be known.[11]

3. Subsection paragraph (c) addresses notice to insurers of the tortfeasors.

Hospitals are also required to serve their notice of liens to any insurer of a potentially responsible party if the name and address can be attained by reasonable diligence.[12]



D. Subsection (4) addresses liability for payments made to the injured party.

After fulfilling the notice of lien requirements, a release will not be valid against a perfected hospital lien, and the person making the payment to the injured party remains liable to the hospital for its lien amount for a period of one year from the date.[13]



E. Subsection (5) subordinates the hospital lien to the attorney’s fees and actual taxable costs and disbursements.

The hospital lien is subordinate to the injured party’s attorney’s fees, actual taxable court costs, and actual disbursements made by the attorney in prosecuting the court action.[14]

F. Subsection (6) prevents hospital liens from attaching to workers’ compensation claims.

This subsection effectively precludes any hospital lien from attaching to any claim under Chapter 102 or any other workers’ compensation law.[15]



IV. Tips for Dealing Successfully with the Hospital Lien Statute

A. Non-disclosed liens

In cases of non-disclosed liens, attorneys representing the settling insurer and tortfeasor in Wisconsin should take a number of steps to ensure that they have not impaired a perfected hospital lien. It is a better practice to assume that the hospital has filed a lien unless you know otherwise. It is a mistake to assume that because one was not put on notice of the lien that he or she is not bound by it.

Before mailing any settlement check, counsel should at a minimum: (1) check for any liens at the Wisconsin Circuit Court Access website; (2) ask plaintiff’s counsel about any existing liens and have them warrant that no hospital liens exist or that plaintiff’s counsel will satisfy any liens out of the settlement; and (3) obtain indemnification and hold harmless language in the release so that it is unambiguous that the plaintiff is responsible for the satisfaction of any liens that have not been disclosed or discovered by plaintiff’s counsel.

Attorneys should check for liens in the counties where medical services were provided; however, if a hospital lien is filed after settlement with the injured party, then the lien does not attach.


B. Disclosed liens

In cases of disclosed liens, communicate with the lienholders and be sure to include them in settlement negotiations. Once a settlement is reached, payment can be made either directly to the lienholder or to the injured party after obtaining written confirmation that the lien has been paid or otherwise satisfied.



V. Conclusion

Wisconsin, like many other states, provides statutory protection for hospital liens. The Wisconsin hospital lien statute is a powerful tool for hospitals to recover reasonable and necessary charges for medical care and services provided to patients that may not be otherwise collectable. Since these liens are purely statutory, they must be asserted and determined as provided by the hospital lien statute. Attorneys involved with personal injury claims need to become familiar with the requirements of this statute to protect their clients from potential hospital lien liability.


[1] Yorgan v. Dorkin, 2006 WI 60, ¶ 37, 290 Wis. 2d 671, 715 N.W.2d 160.

[2] 16 A.L.R. 5th 262.

[3] Spence v. Regions Hosp., 384 F. Supp.2d 1313, 1319 (W.D. Wis. 2005).

[4] See Wis. Stat. § 779.80(1).

[5] Id.

[6] See Wis. Stat. § 779.80(2).

[7] Matter of Harris, 50 B.R. 157, 160 (1985).

[8] See Wis. Stat. § 779.80(3).

[9] Id.

[10] See Wis. Stat. § 779.80(3)(a).

[11] See Wis. Stat. § 779.80(3)(b).

[12] See Wis. Stat. § 779.80(3)(c).

[13] See Wis. Stat. § 779.80(4).

[14] See Wis. Stat. § 779.80(5).

[15] See Wis. Stat. § 779.80(6).