Arizona Court of Appeals Division One Holds That Releasing a Statutory Lien Does Not Automatically Waive the Lienholder’s Right to Demand Payment on the Underlying Debt.

In 2004, Cheri Preese (“Preese”) obtained medical services from Pain Management Clinic (“Pain Management”) for injuries she sustained in a motor vehicle accident. The following year, Preese filed a lawsuit against the individuals involved in the accident.  Pain Management subsequently recorded a health care provider lien against any potential judgment or settlement entered in favor of Preese arising out of the lawsuit.  After the jury returned a verdict against Preese, Pain Management voluntarily recorded a release of the lien, indicating that the lien had been “compromised or paid.” 

In 2009, Pain Management filed a breach of contract lawsuit against Preese, claiming that it had not been paid for the medical services it rendered. Thereafter, Preese filed a motion for summary judgment, claiming that Pain Management waived its right to seek payment for the services when it released its lien.  The superior court accepted Preese’s argument and entered summary judgment in her favor.  Pain Management appealed. 

On appeal, the Arizona Court of Appeals reversed, holding that the release of lien did not act to waive Pain Management’s right to demand payment on the debt.  In Arizona, health care providers may record a lien for the “customary charges for care and treatment or transportation of an injured person” against a claim by the injured person arising out of the injury.  A.R.S. § 33-931(A).  The provider can always proceed, however, against the patient for the value of the services rendered, even in the absence of a lien.  Blackenbaker v. Janovich, 205 Ariz. 383, 388 ¶ 19, 71 P.3d 910, 915 (2003) (citations omitted).   The Court of Appeals thus held that the superior court erred in finding that the release waived Pain Management’s independent right to demand payment on the underlying debt. 

Judge Orozco authored the opinion; Judges Johnsen and Portley concurred.