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Court Decides Validity of Hospital Lien


This is an appeal from an action brought before the Supreme Court, Appellate Division, Second Department, to determine, inter alia, the validity and extent of a hospital lien filed by defendant NYC Health and Hospitals Corporation.

On 7 November 1975, the Supreme Court, Kings County, issued an order which (1) denied plaintiff’s motion to strike defendant A Hospital Services’ affirmative defense that the action against it was barred by the contractual period of limitations contained in the applicable group insurance contract, and (2) granted that defendant’s cross motion for summary judgment.

Plaintiff appealed.

The order was modified, on the law, by deleting the second decretal paragraph thereof and substituting therefor a provision denying the cross motion for summary judgment. As so modified, the order was affirmed, with $50 costs and disbursements to plaintiff.

On 6 May 1968, PB was admitted to Kings County Hospital and remained there as a patient until 16 May 1969, except for the brief period between 11 April 1969 and 5 May 1969 during which he was permitted to return home. The total cost of his care at the hospital amounted to $33,662.28. On 5 October 1971, a lien for that amount was duly filed by the Health and Hospitals Corporation against the proceeds of a malpractice action which he had commenced before against a Dr. LA. Subsequent to the filing of the lien, PB died. He left a last will and testament where he designated the plaintiff as his executrix. On 12 April 1972, PB’s will was admitted to probate in Kings County.

Indisputably, at the time of the hospitalization in question, PB was covered by two group policies issued by defendant A Hospital Services of New York (AHS), each of which contained a contractual period of limitation for the commencement of actions arising thereunder. The first policy covered employees of the City of New York and members of their families, which provided that: “No action at law or in equity shall be brought against AHS for any claim for Hospital Service unless brought within two years from the date of the Subscriber’s admission to the hospital.” The second policy was issued to the JBFLMW Unions for their employees, which provided that: “No action at law or in equity shall be brought to recover on this Contract unless brought within three years from the Subscriber’s discharge from the hospital.”

AHS conceded to the fact that it is the policy with the longer limitation periods that governs.

Based upon AHS’ concession, the court has determined that it shall refer to the periods of limitation in the singular as indicative of the larger or controlling period.

Here, as a result of the claims filed on behalf of its insured, AHS paid $20,539.66 to defendant Health and Hospitals Corporation with reference to the decedent’s hospitalization, and refused to pay more. This left an unpaid balance of $13,122.62, the lien for which amount plaintiff herein seeks either to have canceled or else paid by AHS.

On 10 March 1974, the action was commenced against the Health and Hospitals Corporation, and on 22 April 1974 against AHS.

The action against AHS was commenced almost five years after the date of PB’s discharge from the hospital and more than two years from the date of PB’s death. Thus, pursuant to CPLR 210, subd. (a), AHS asserted the contractual period of limitations as a defense.

On 25 March 1975, by notice of motion, plaintiff moved to strike the affirmative defense pleaded by AHS that the action against it was time-barred.

AHS cross-moved for summary judgment dismissing the complaint.

Special Term denied the motion, granted the cross motion and dismissed the complaint as against AHS.

The instant appeal followed.

Under the circumstances, a question of fact exists as to whether defendant A Hospital Services of New York may be estopped from relying upon the contractual period of limitations contained in its group insurance contract, and, therefore, that the granting of summary judgment dismissing the complaint against it was unwarranted. Here, based on the records, AHS did nothing whatsoever to inform PB that it was rejecting any portion of his hospitalization claim during the contractual period of limitations, and, in fact, made no payments whatsoever with respect to the hospitalization until after that period of limitations had expired. Moreover, it appears that it had already been determined by AHS as early as 18 November 1969 that at least a portion of PB’s hospital bill would not be accorded coverage.

Pursuant to the rulings of the court in Proc v. Home Ins. Co., 17 N.Y.2d 239, 245, 270 N.Y.S.2d 412, 415, 217 N.E.2d 136, 139, cf. French Hosp. v. Stuart, 31 A.D.2d 522, 295 N.Y.S.2d 592, and Bronx Hosp. v. Stella, 203 Misc. 1017, 120 N.Y.S.2d 782, since AHS was both the author of the period of limitations incorporated into the group contract as well as the arbiter of coverage thereunder, a factual issue was indeed raised as to the propriety of its conduct, i. e., whether its silence may have lulled the insured into a false sense of security leading him to believe that the hospital bill had been satisfied in full. The insured, after all, is in no position to know whether a claim has been rejected in the absence of notification by AHS or the hospital, and, pursuant to CPLR 213, the latter has the benefit of a six-year Statute of Limitations within which to sue its patient on the underlying contract claim. Also, the insured likewise has the benefit of the six-year statute as against AHS but for the latter’s insertion of a shorter period of limitations into its group insurance contract.

At this juncture, the question of whether an estoppel might be properly pleaded as against the Health and Hospitals Corporation is not before the court.

The plaintiff’s remaining contentions were considered by the court and was found to be lacking in merit.

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