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An appellate split on the disastrous Harvey v. Centura decision may cue up an opportunity for the Colorado Supreme Court to protect the poor and the elderly from abusive hospital collections practices.

Posted by Raj Chohan | Mar 31, 2020

Back in February, I blogged about a controversial opinion (Harvey v. Centura, 2020COA18) issued by the Colorado Court of Appeals in which a division of the appellate court ruled that hospitals in Colorado could file liens against certain patients rather than billing their Medicare and Medicaid health insurance plans. The opinion impacted accident victims who are elderly and poor by allowing hospitals to go after their patients' injury settlements and personal assets instead of billing their Medicare and Medicaid insurance. At the time, I argued that this stunning opinion could not have been what the legislature intended when it changed the hospital lien statute in 2015 to better protect consumers from the abusive collections practices of some hospitals. I argued that an urgent and immediate legislative fix was necessary to remedy the cruel consequences of Harvey v. Centura.

I am happy to report that earlier this month, a different division of the Colorado Court of Appeals addressed nearly identical issues and took a position that is exactly opposite of the Harvey decision.

On March 5, 2020, the Colorado Court of Appeals issued its opinion in Garcia v. Centura Health Corp., 2020COA38. In no uncertain terms, the appellate panel concluded that Colorado's hospital lien statute, 38-27-101, C.R.S., requires a hospital to bill Medicare before filing a lien. The division further concluded that the legislative history of the hospital lien statute supports this interpretation, and, the interpretation does not conflict with federal law.

The Garcia panel discussed the current version of Colorado's hospital lien statute, which states in part that “[b]efore a lien is created, every hospital … which furnishes services to any person injured as the result of negligence or other wrongful acts of another person … shall submit all reasonable and necessary charges for hospital care … to the property and casualty insurer and the primary payer of medical benefits available ….”   38-27-101, C.R.S. (emphasis added).

The court noted that the legislature in 2015 amended the statute to discourage hospitals from filing liens against patients who could pay their hospital bills using their own health insurance. Id. at ¶ 6.  The language of the statute made it clear that hospitals must bill a patient's primary private insurance, such as Cigna, or Blue Cross Blue Shield, before filing a lien against the patient. Id. at ¶ 7.  However, in cases in which Medicare is the patient's health insurance, hospitals like Centura argued that they are not bound by the requirement to bill health insurance because Medicare is a secondary payer, and not primary, under federal law. This is the argument that won the day for the Harvey court leading to an interpretation of the law that effectively punished the elderly and the poor for having Medicare instead of private health insurance.

Interestingly, the appellate panel in Garcia saw through Centura's attempt to exploit a loophole in the hospital lien statute noting “Centura seeks to dodge the pre-billing requirement as it would apply to Medicare.  Arguing that Medicare is not a “primary” medical payer of benefits because Medicare defines itself as a secondary payer in cases of wrongful injury, Centura seeks to recover the full amount of its hospital bills from the accident victims through filing a lien, rather than the discounted amount that Medicare would pay if it were billed.”  Id. at ¶ 7. The Garcia appellate court soundly rejected the notion that the Colorado legislature intended to create such a loophole when it amended the hospital lien statute. The court concluded “in amending the statute, the General Assembly sought to protect insured patients from unnecessary liens – not to protect maximum payments to hospitals servings insureds.”  Id. at ¶ 1.

Unlike the Harvey decision, the Garcia panel concluded that for purposes of the hospital lien statute, under Colorado law, Medicare is a primary medical payer of benefits. Although the decision does not specifically discuss Medicaid, it seems likely that the reasoning of Garcia would extend to patients receiving Medicaid benefits.

Because two divisions of the Colorado Court of Appeals are now in conflict on the question of whether Medicare is a primary or secondary payer of benefits under the hospital lien statute, the controversy will almost certainly have to be settled by the Colorado Supreme Court. But for now, at least, the little guy has some protection from the harsh results of the Harvey decision.

About the Author

Raj Chohan

Raj Chohan is a personal injury attorney with a passion for helping injured Coloradans seek the compensation they deserve and the justice their cases demand. He is a former prosecutor with extensive jury trial experience in some of the most complex and serious cases that exist under Colorado law...