Pain Control
Institute, Inc. v. GEICO General Insurance Co.
Dallas Court of Appeals, No. 05-13-01418-CV (October 29, 2014)
Justices FitzGerald, Fillmore (Opinion),
and Stoddart
Another lesson learned the hard way: A healthcare provider cannot effectively secure a right to recover its charges for treating the victim of an auto accident by taking an assignment of the victim’s claim against the other guy’s insurer—mostly because that victim has no such claim herself. The Dallas Court of Appeals affirmed summary judgment for GEICO, dismissing claims brought by PCI based on an assignment from PCI’s patient who had been injured in a wreck with GEICO’s insured. “Texas is not a direct action state,” the Court explained; so neither the patient nor her assignee, PCI, could sue GEICO directly for costs or injuries caused by the wreck unless and until the liability of GEICO’s insured had been “established by judgment or agreement.”
Jeanette Hooper was injured in a wreck with David Cluck, who was insured by GEICO. Hooper was treated by PCI for injuries she sustained in the accident. Before commencing treatment, PCI had Hooper sign a “Partial Assignment of the Causes of Action, Assignment of Proceeds Contractual Lien & Authorization.” That agreement purported to assign to PCI Hooper’s claims against Cluck and his insurer, up to the amount of all charges for services rendered to Hooper by PCI. It also contained language designed to create a contractual lien and UCC security interest in such claims and any proceeds from them. PCI filed a UCC Financing Statement in an effort to perfect that security interest in, among other things, insurance and settlement proceeds. PCI contacted GEICO directly and advised it of the Assignment and the Financing Statement.
A couple years later, Hooper settled directly with Cluck and GEICO, without involving PCI, and gave them a release of all claims. In the release Cluck expressly disclaimed wrongdoing or liability for the accident, and Hooper agreed the release and settlement were not to be construed as evidence of liability by Cluck or GEICO. GEICO paid the settlement proceeds directly to Hooper’s attorney. When PCI later learned of the settlement—and after it had unsuccessfully attempted to collect its charges from Hooper and her attorney—PCI notified GEICO that its actions in paying Hooper and her attorney “constituted a breach of an assignment and lien under the UCC”; it demanded payment from GEICO for its unpaid charges for treating Hooper. GEICO was unmoved; so PCI sued. Both sides moved for summary judgment. The trial court granted judgment to GEICO and denied PCI’s motion without delineating the grounds for its decision. PCI appealed.
PCI advanced a number of arguments, but leading the pack was its contention that GEICO’s payment to Hooper’s attorney violated § 9.406(a) of the UCC, which prohibits an account debtor from satisfying its obligation by paying the original principal after it has notice that the debt or claim has been assigned. The Court of Appeals rejected this argument for a number of reasons.
First, PCI’s rights as assignee could be no greater than those of Hooper, its assignor. And, absent an adjudication or agreement by Cluck that he was liable for Hooper’s injuries, Hooper herself had no right under Texas law to assert a claim directly against GEICO, Cluck’s insurer. Because the release agreement between Hooper and Cluck expressly disclaimed any admission of liability by Cluck, the Assignment did not effectively convey any claim against GEICO to PCI.
In addition, the Court explained, PCI’s reliance on the UCC was misplaced. Section 9.109(d)(12) expressly provides that the UCC does not apply to the “assignment of a claim in tort, other than a commercial tort claim”—and any claim by Hooper or PCI was not for a “commercial tort.” Further, § 9.109(d)(8) explains that the Code also does not apply to “the assignment of a claim under a policy of insurance, other than an assignment … of a health-care insurance receivable ….” Again, the Hooper–PCI Assignment did not deal with a healthcare insurance receivable or with healthcare insurance at all.
So, the Court held, the trial court correctly in granted summary judgment to GEICO.
