Opinion
NO. 7:00-CV-0116-R
November 12, 2002
MEMORANDUM AND ORDER
On this 12th day of November, 2002, pursuant to the District Court's Order of Reference entered October 21, 2002, the undersigned Magistrate Judge took under consideration Hendrick Medical Center's MOTION TO RELEASE FUNDS HELD TN TRUST (the "Motion") and the Opposition thereto filed by Plaintiffs.
By its Motion, Hendrick Medical Center (hereinafter "Hospital"), a non-party, seeks the Court's intervention to enforce its claimed hospital lien against proceeds of the settlement in this personal injury case. This is a personal injury case brought by the parents of a minor child injured in a vehicle accident. Hospital provided health care services to the injured minor child for which Hospital seeks payment and to press and enforce its hospital lien against the settlement proceeds pursuant to Chapter 55 of the Texas Property Code. The Motion is vigorously opposed by Plaintiffs on multiple grounds.
Final Judgment was entered in this cause March 22, 2001, pursuant to a settlement agreement among the parties then before the court, to-wit:
1. Doug Younger and Mary Lynn Younger, individually and as next friends of Ann Renae Younger, the minor;
2. Coyt Randal Johnston, guardian ad litem for Ann Renae Younger, the minor;
3. Stacy Wayne James and La Mejor Livestock Co., Inc., the defendants.
Hospital was not a party to the Settlement Agreement or the Judgment.
The Final Judgment incorporated by reference a full and final Release and Settlement Agreement providing for disposition of settlement funds totalling $825,000.00. The Settlement Agreement and the final judgment allocated the funds to three payecs, to-wit:
(a) Aegon Assignment Corporation for the funding of periodic payments to:
(i) Ann Renae Younger (ii) Maryl. Younger (iii) Plaintiffs' attorneys;
(b) funds to Plaintiffs and their attorneys "for the payment of medical liens, medical expenses, damages and attorneys' fees";
(c) to Southwest Guarantee Court Trust as trustee for the use and benefit of the minor.
This Court does not currently have care, custody or control over the funds which constitute the proceeds from the settlement. The funds were not deposited into the registry of the Court or otherwise placed subject to the direct supervision and control of the Court.
The source of the settlement funds was either the individually named defendants or their insurance carrier(s). The Movant, Hendrick Medical Center, was not a party to the suit, did not intervene prior to judgment and was not a party to the settlement or judgment.
Chapter 55 of the Texas Property Code establishes the terms and provisions of a hospital lien. If the lien is perfected in the manner prescribed by Sec. 55.02, then the lien attaches to: (i) the cause of action for damages; (ii) the judgment; and (iii) the proceeds of settlement. The statutorily proscribed effect of the attachment of the lien is to render invalid a release of a cause of action or a release of judgment unless the indebtedness out of which the lien arises has been paid or otherwise discharged. Apart from this proscribed effect, the lien is not self-executing. The statute does not expressly create any derivative payment obligations on the injured person, a responsible payor, an injured person's insurance company, the tortfeasor or the tortfeasor's insurance company. If the indebtedness is owed by such third parties, it has not been discharged and the releases recited in the settlement agreement may be ineffective. Be that as it may, this Court has no current care, custody or control over the proceeds. Although the above referenced Trust, the #3 distributee of the settlement funds, was established by decree of this Court and the Court has some residual authority over the Trust (i.e., approval of Trustees' fees, appointment of successor Trustee, direction and review of accountings), the Trust is fully funded; the Trustee is in place; and the operation of the Trust is outside the general supervision of the Court. Indeed, relieving the Court of a continuing supervisory role is one of the salient benefits of a Section 142.005 Trust.
The Movant Hospital may have its claim and cause of action for payment of the unpaid medical expenses against one or more of the parties to this suit and may be able to enforce its claimed lien rights against one or more of the parties by separate action. The validity, vel non, of the releases incorporated in the settlement agreement and/or the Judgment in this case may be litigated and determined in a separate action brought for that purpose.
Hospital has stated no grounds for modification of the judgment under Rule 60(a) or under the first five clauses of Rule 60(b). Although clause 6 of Rule 60(b) affords the Court ample power to vacate, change or modify its judgment whenever that action is appropriate to accomplish justice, the Court declines to modify the Judgment since Movant Hospital may pursue its relief by separate action. Defendant's Motion is hereby OVERRULED.