St. Joseph Hospital v. Quinn

Hammond, J., delivered the opinion of the Court. This appeal was brought to resolve the true meaning of the hospital lien law of Maryland, found in Code (1964 Replacement Vol.), Art. 63, §§46 through SO. The appellant, St. Joseph Hospital, contends, as it did below, that its lien for the reasonable cost of its services to the injured person attaches to the gross amount of the recovery from the tort-feasor, a contention which the trial judge rejected, finding that the lien of the attorney for the claimant-patient for his legal services in the matter came first and the hospital lien covered only the dollars that remained after payment of the fee. Section 46 of Art. 63 gives a hospital which has served: “* * * any patient injured by reason of an accident not covered by the Workmen’s Compensation Act * * * a lien upon fifty per cent, of that part going or belonging to such patient, of any recovery or sum had or collected or to be collected by such patient * * * whether by judgment or by settlement or compromise to the amount of the reasonable and necessary charges of such hospital * * * provided further, that said lien shall be subordinate only to the lien of any attorney or attorneys for his, her or their professional services in collecting or obtaining said damages.” Section 47 provides for the filing in court of the hospital lien and the giving of notice of the lien to interested persons and entities.

Section 48 imposes a second liability for the amount paid upon one who, after the filing and mailing of the notice, makes: * * any payment to such patient or to his attorneys * * * as compensation for the injury sustained * * * without paying to such hospital the amount of its liens * * * or so much thereof as can be satisfied out of the moneys due under any final judgment or compromise or settlement agreement after paying the amount of any prior liens * * ³⁷⁵ Section 49 gives the right to those properly interested to examine the hospital records to ascertain accrued charges and estimate the full amount of a potential lien, and Section 50 prescribes the mechanics of the recording of a hospital lien. St. Joseph Hospital treated an infant for personal injuries which it was claimed had been tortiously inflicted, and duly established its lien in the amount of $763.45. Settlement was agreed on in the amount of $833.45 by the legal representatives of the infant and the tort-feasor and in a friendly suit judgment was entered for that amount. A difference of opinion ensued as to how the recovery was to be divided.

It was agreed that the attorney whose professional efforts had produced the fund was entitled to be paid his contingent fee of $277.00 (approximately one-third of the sum recovered), but the controversy remained as to how the remaining $556.45 was to be split. The hospital claimed that its lien attached to the gross amount of the settlement judgment so that its statutory fifty per cent should be half of $833.45, or $416.73, leaving only $139.72 for the injured infant. The infant’s mother claimed that the hospital lien entitled it to only $278.22, that is, half of $556.45, the net amount remaining after the deduction of the attorney’s fee of $277.00 from the gross settlement of $833.45. Judge Harris agreed with the mother and the hospital appealed.

No brief was filed on behalf of the injured infant, but the Attorney General entered the case as amicus curiae, arguing in his brief on behalf of public hospitals and private hospitals which render aid for which the State often eventually pays in whole or in part, that a hospital is entitled to half of the whole recovery, up to the amount of its reasonable and proper bill, and that the attorney’s fee must come from the remaining half (although conceding that if the attorney’s fee cannot be fully satisfied from the one-half of the award going to the patient then the one-half impressed with the hospital lien may be diminished accordingly, as where, for example, “* * * the award is $500 and the attorney’s fee is $300 [in which case] the hospital lien would be only $200, rather than $250”). The search for the intention of the Legislature must start and end with the words of the statute considered in light of the background of the enactment and its purpose, aided by estab ³⁷⁶ lished presumptions and rules of statutory construction. In the background when the statute was passed was (a) the plight of hospitals which gave aid to those injured by the negligence of another and which, if the patient would not pay voluntarily, could only recover their charges from the recovery by suit and attachment, an unsatisfactory if not often completely useless procedure; (b) the fact that the great majority of recoveries in negligence cases were effectuated for their claimant-clients by lawyers whose fees were contingent on success and payable only from the fund recovered; and (c) the further fact that some ten other states had passed laws giving hospitals a lien in various ways in tort cases. The obvious purpose of the Maryland lien law was to insure that the lawyer, the hospital and the injured person each received some share of the amount recovered from the tort-feasor.

In this setting we turn to the words of the statute and rules of construction to find what these respective shares were intended to be. The hospital lien law of Maryland was enacted as Ch. 491 of the Laws of 1937, not long after New York had adopted a similar statute as Ch. 534 of its Laws of 1936, now codified in N. Y. Lien Law § 189 (1965 Supp.), subdivisions 1 to 11. New York’s law gave each hospital a lien “* * * for the amount of the reasonable charges of such hospital * * *” upon all rights of action, suits and claims of patients receiving care as the result of another’s negligence which the patient may assert against the tort-feasor. It has provisions for filing and giving notice of the lien similar to those of the Maryland statute.

The lien attaches to any verdict, decision, decree, judgment or final order of a court and to the proceeds of a settlement or compromise before or during court proceedings. It provides further that after the filing and mailing of the notice of lien one who makes payment to an injured person or his legal representative shall remain liable for the amount paid “* * * less the amount of any other liens or claims against such moneys superior to such hospital lien * * these provisions being analogous to those of § 48 of Art. 63 of the Maryland Code. It has a provision for inspection of hospital records like those of § 49 of Art. 63. Finally, in subdivision 7 it was provided, as ³⁷⁷ it was the next year, in slightly different words, in § 46 of Maryland’s law that “* * * the lien herein created shall be subject and subordinate to the lien of the amount recovered * * * of any attorney or attorneys retained * * * to prosecute * * * [the] claim * * See 37 Colum.

L. Rev. 1036 (1937) for a discussion of the New York law and references to similar laws of other states. The New York courts have uniformly held that the fee of the claimant’s attorney for his services in producing a fund for his client is payable ahead of the lien of the hospital and that the hospital lien attaches only to what is left of the gross fund after deduction of the fee of the lawyer. “The attorney for the injured person has, of course, by section 189, subdivision 7, of the Lien Law, a priority of lien which cannot be subjected to the lien of the hospital.” Ferguson v. Ruppert, 3 N. Y. S. 2d 9, 14. “These proceeds did not arise until the attorney’s efforts and skill brought about the determination of the liability of the defendant for the accident. It is only the net amount received by the father [of the injured infant] after the payment of expenses incurred to obtain the recovery to which the equitable lien might attach.” Abbondola v. Kamecki, 29 N. Y. S. 2d 530, 532. See also Bey v. Motor Vehicle Accident Indem.

Corp., 236 N. Y. S. 2d 831; Rivera v. Hellman, 258 N. Y. S. 2d 25. The similarities of design and wording between the New York statute and the Maryland statute and the near coincidence in time of their enactments suggest that the Maryland law was patterned after that in New York. The rule that a statute taken from another state will be deemed to have been intended to have the meaning ascribed to it by the courts of the originating state would not be strictly applicable here for two reasons. The statutes are not precisely identical in plan and wording and the construing decisions in New York came after the passage of the Maryland enactment.

Nevertheless we find the New York decisions persuasive as to the meaning of the Maryland act. When the Legislatures of New York and Maryland enacted the hospital lien laws of their respective states there was a significant difference in the law of the two jurisdictions. New York recognized the common law charging lien of an attorney and ³⁷⁸ had declared it by a statute, to be found in N. Y. Judiciary Law § 475. See In Re Heinsheimer (N. Y. 1915, Cardozo, J.), 108 N. E. 636 , which pointed out that at common law there were two liens available to an attorney to secure his fee.

The retaining lien was a general lien on all papers,'securities and money of his client which came into his possession in the course of his professional employment and was dependent on possession. The other was the charging lien which bound a judgment recovered through the attorney’s efforts for the value of the services rendered in the action. The charging lien did not depend upon possession for if the lawyer got possession of the proceeds of the judgment he had the general retaining lien. Judge Cardozo said in Heinsheimer of the common law charging lien at p. 637: “This charging lien still exists under our statutes.

It has been enlarged to the extent that it now attaches to a cause of action even before judgment. ‘From the commencement of an action or special proceeding’ the attorney now has a lien ‘upon his