On January 24, 2011, the Georgia Supreme Court ruled against MCG Health Inc. (MCG) and dismissed their complaint to recover charges under Georgia’s hospital lien law (O.C.G.A. § 44-14-470).1 The hospital treated a patient injured in an automobile accident caused by a liable third party who was insured by Owners Insurance Company (Owners). MCG filed a hospital lien for services provided against the patient who was covered by TRICARE. MCG also filed an action against Owners to collect on the lien.

At the time the patient was treated, MCG had a contract with Humana Military Healthcare Services Inc. (HMHS), a TRICARE contractor, to provide services to TRICARE beneficiaries. The contract provided that nothing in the agreement limited MCG’s rights under Georgia’s lien law. Specifically, MCG could seek to recover its charges, but the amount of the lien could not include the amount of payment by TRICARE on behalf of the beneficiary/patient. Furthermore, the contract did not preclude MCG from seeking recovery of its billed charges directly from the liable third party or their insurer; however, MCG could not bill the patient without filing a TRICARE claim.

Relying on the contract with HMHS, MCG filed a hospital lien for the full cost of services provided to the patient. MCG did not, however, file a claim with TRICARE for the patient’s treatment at any time before or after filing the lien. After the hospital lien was filed, the patient entered into a release and settlement agreement with Owners. MCG then filed an action against Owners to collect on the lien.

The Supreme Court reasoned that MCG could not collect against Owners because federal law that governs TRICARE does not provide any basis for a contracting provider to collect its treatment costs from a liable third party or their insurer. The Court indicated that it is the federal government alone that has the right of collection against liable third parties and their insurers pursuant to the Federal Medical Care Recovery Act. The Court ultimately held that any “state law which interferes with the financing of healthcare claims for TRICARE beneficiaries is preempted as a matter of federal statutory and regulatory law.” To emphasize, the Court mentioned that federal law actually requires providers like MCG to identify possible third-party payers to TRICARE claims officials.

This decision raises concerns with respect to using Georgia’s lien law to recover from liable third parties when patients are covered by other governmental programs, such as Medicare and Medicaid.