Can you allocate a settlement to your spouse in order to avoid a hospital lien payment?
It appear as though a hospital lien payment may be avoided by allocating the settlement proceeds to a spouse. However, this is a very questionable strategy and one which is not likely to be successful based upon established Georgia case law.
In their first and second enumerations of error, the Hollands contend that the trial court should have awarded the entire proceeds of the policy to Ruby Holland in satisfaction of her loss of consortium claim. The Hollands contend that State Farm did not allocate the proceeds between Ruby Holland and David Holland, and therefore, the liens did not attach. However, the record shows that State Farm did in fact allocate the insurance proceeds to David Holland’s claim. In its complaint for interpleader, State Farm asserted: “State Farm wants to pay out [its] policy limits coverage of $25,000.00 to cover the cost of Holland’s medical treatment. However, State Farm may not do so without exposing itself to liability due to the existence of the hospital lien filed by FMC and possible liens filed by the [DMA].” As State Farm paid its policy limits for the cause of action asserted by David Holland, the liens attached to the insurance proceeds.
The Hollands erroneously contend that the insurance payment is not associated with David Holland’s claim and is not subject to the liens asserted by the DMA and FMC. They argue that since David Holland agreed to forego his cause of action, Ruby Holland’s loss of consortium claim is the only independent claim, and it is not subject to the liens. However, as David Holland’s claim was pending at the time State Farm filed the interpleader and is still pending, this argument has no merit. The trial court did not err in awarding the insurance proceeds to the DMA and FMC.
Holland v. State Farm Mut. Auto. Ins. Co., 236 Ga. App. 832, 833–34, 513 S.E.2d 48, 49–50 (1999).
Under Holland, it appears that even if the injured party never asserted any claim and only the spouse asserted their claim for loss of consortium, the insurer would still likely be responsible for payment of the settlement proceeds to a valid hospital lien holder.
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