Shelby County Health Care Corporation v. Southern Farm Bureau Casualty Insurance Company et al

Filing 155

ORDER: 102 is granted as it pertains to the Cross-Claim and denied as to the other requests. Ford's Cross-Motion is denied. Accordingly, Ford must provide indemnity to the Farm for any amount recovered by the Med. The Farm's prayers for dismissal of the Med's Complaint, that the lien to be declared invalid, and that the lien did not attach to the settlement proceeds are denied. Ford's 121 Motion for Summary Judgment is denied. Signed by Judge Billy Roy Wilson on 12/21/2018. (jak)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
JONESBORO DIVISION
SHELBY COUNTY HEALTH CARE
CORPORATION d/b/a REGIONAL
MEDICAL CENTER
VS.

PLAINTIFF

3:13-cv-00194 BRW

SOUTHERN FARM BUREAU
CASUALTY INSURANCE COMPANY, ET AL.

ORDER

DEFENDANTS

Pending is Defendant’s Southern Farm Bureau Casualty Insurance Company, Medford
Farm Partnership, and Aaron Medford (“the Farm”) Motion for Summary Judgment on CrossClaim (Doc. No. 102).1 Defendant Barbara Ford, as Special Administratrix of the Estate of John
Smiley, (“Ford”) and Shelby County Health Care Corporation d/b/a Regional Medical Center
(“the Med”) filed Responses.2 The Farm filed a Reply.3 For the reasons set out below, the
Farm’s Motion is GRANTED as it pertains to the Cross-Claim and DENIED as to the other
requests. Ford’s Cross-Motion is DENIED.
Also pending is Ford’s Motion for Summary Judgment (Doc. No. 121). The Med filed a
response, and Ford replied.4 F or the reasons set out below, Defendant’s Motion is DENIED.
I.

BACKGROUND
John D. Smiley and Aaron Medford were involved in an automobile accident in Monroe

County, Arkansas, on February 18, 2009. Shortly after the accident, Mr. Smiley was admitted to
the Med, where he remained until his death on March 6, 2009. Based on the Tennessee

1

Doc. No. 102.
Doc. No. 105, 108.
3
Doc. No. 110.
4
 Doc. No. 124, 127. 
2

1 

Hospitals’ Lien Act (“HLA”), the Med filed a statutory hospital lien in the Circuit Court of
Tennessee for the Thirteenth Judicial Circuit in Memphis for the unpaid balance owed on
Smiley’s hospital bill. The Med mailed copies of the lien to the attorneys for Smiley’s estate.
Barbara Ford was appointed as special administratrix for Smiley’s estate by the Circuit
Court of Monroe County, Arkansas, Probate Division to pursue claims resulting from Smiley’s
death. After negotiating with Medford’s insurer, the Farm, Ford petitioned the probate court to
authorize a settlement. The probate court noted that Ford had asserted a wrongful death claim
against Medford and wanted to accept the Farm’s offer to pay $700,000 in exchange for a release
of any and all claims. The probate court found that no medical liens had been filed against
Smiley’s estate in Monroe County and that the Med’s hospital lien was void and unenforceable
in Arkansas as the Med did not follow the requirements of the Arkansas Medical, Nursing,
Hospital, and Ambulance Service Lien Act. None of the settlement proceeds went to the Med.
The Med filed a lawsuit in this Court against the Farm and Ford claiming a lien
impairment in violation of Tennessee law. The Eighth Circuit has found that Tennessee law
controls this action for the impairment of a hospital lien.5
II.

STANDARD
Summary judgment is appropriate only when there is no genuine issue of material fact, so

that the dispute may be decided on purely legal grounds.6 The Supreme Court has established
guidelines to assist trial courts in determining whether this standard has been met:
The inquiry performed is the threshold inquiry of determining whether there is the
need for a trial -- whether, in other words, there are any genuine factual issues that
properly can be resolved only by a finder of fact because they may reasonably be
resolved in favor of either party.7

5

Shelby County Healthcare Corporation v. S. Farm Bureau Cas. Is. Co.855 F.3d 836, 844 (8th Cir. 2017).
Holloway v. Lockhart, 813 F.2d 874 (8th Cir. 1987); Fed. R. Civ. P. 56.
7
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

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2 

The Court of Appeals for the Eighth Circuit has cautioned that summary judgment is an
extreme remedy that should be granted only when the movant has established a right to the
judgment beyond controversy.8 Nevertheless, summary judgment promotes judicial economy by
preventing trial when no genuine issue of fact remains.9 A court must view the facts in the light
most favorable to the party opposing the motion.10 The Eighth Circuit has also set out the burden
of the parties in connection with a summary judgment motion:
[T]he burden on the party moving for summary judgment is only to demonstrate,
i.e.,“[to point] out to the District Court,” that the record does not disclose a genuine
dispute on a material fact. It is enough for the movant to bring up the fact that the
record does not contain such an issue and to identify that part of the record which
bears out his assertion. Once this is done, his burden is discharged, and, if the
record in fact bears out the claim that no genuine dispute exists on any material
fact, it is then the respondent’s burden to set forth affirmative evidence, specific
facts, showing that there is a genuine dispute on that issue. If the respondent fails
to carry that burden, summary judgment should be granted.11
Only disputes over facts that may affect the outcome of the suit under governing law will
properly preclude the entry of summary judgment.12
III.

DISCUSSION
A.

Indemnity

The Farm denies any liability to the Med, and asserts that the Settlement Agreement and
Release created a contractual duty for Ford to defend and indemnify the Farm. It claims that Ford
agreed, in writing, that she would defend, indemnify, and hold the Farm harmless for any and all
claims. Ford agrees the language is clear, but conversely maintains that the agreement fails to
include any language triggering a duty to defend, indemnify, or hold harmless. Thus, Ford claims

8

Inland Oil & Transport Co. v. United States, 600 F.2d 725, 727 (8th Cir. 1979).
Id. at 728.
10
Id. at 727-28.
11
Counts v. MK-Ferguson Co., 862 F.2d 1338, 1339 (8th Cir. 1988) (quoting City of Mt. Pleasant v. Associated
Elec. Coop., 838 F.2d 268, 273-74 (8th Cir. 1988) (citations omitted)).
12
Anderson, 477 U.S. at 248.

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that summary judgment should be granted in her favor and if not, the contract language should
be found to be ambiguous and resolved against the Farm.
The allegations of a complaint determine the scope of the duty to defend and indemnify.13
An agreement to indemnify is a contract to be construed in accordance with the general rules of
construction of contracts.14 When contracting parties express their intention in a written
instrument in clear and unambiguous language, it is the court’s duty to construe the writing in
accordance with the plain meaning of the language employed.15 Here, the Release reads,
The undersigned represents and warrants that all bills, costs, or liens resulting from
or arising out of any and all alleged injuries, the lawsuit, or the incident herein
described are the undersigned’s responsibility to pay. The undersigned agrees to
assume responsibility for satisfaction of any and all rights to payment, claims or
liens, of any kind, that arise from or are related to payments made or services
provided to the undersigned or on her behalf, and expenses, costs, or fees incurred
in connection with the claims asserted by her related to such alleged injuries, the
lawsuit, or the incident including, without limitation, all subrogation claims, liens,
or other rights to payment relating to medical treatment or lost wages that have been
or may be asserted by any health care provider, insurer, governmental entity,
employer, or other person or entity. The undersigned will indemnify, defend, and
hold any released party harmless from any and all such claims, liens, and rights to
payment, known or unknown.16
The Release clearly provides that any and all such claims, known and unknown, would be
covered. At the time it was signed Ford’s lawyer agreed, “If we are wrong and the lien holder has
a judicial determination that the lien is valid, then of course, we are responsible, since the
Release specifically provides that the attorneys represent that the liens are fully satisfied and
indemnify all parties released.”17 I agree with Mr. Henry that the language contained in the
Release is not ambiguous and clearly provides that Ford agreed to and must indemnify the Farm.

13

See Watkins v. S. Farm Bureau Cas. Co., 370 S.W.3d 848, 853 (2009).
See generally Chevron U.S.A., Inc. v. Murphy Exploration, 151. S.W.3d 306 (2004).
15
See Holytrent Properties, Inc. v. Valley Park Limited Partnership, 32 S.W.3d 27 (2000).
16
Doc. No. 102-1, p.2. (emphasis added).  
17
Doc. No. 110-1. p.1.
14

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B.

Service

Ford asserts that the Estate had been closed before the lawsuit was filed, and the Estate
was not properly served with sufficient process. First, Ford claims that she was named as a
Defendant in her capacity as the Special Administratrix of the Estate of John Smiley and that no
Estate existed because the Estate had been closed, thus nullifying the Complaint. Plaintiff argues
that the Med does not seek liability against a defunct estate, but against the Estate’s
representative, Ford.
The HLA provides that legal representatives are subject to the Act’s provisions.18 It
places liability on persons “accepting such release… or making such settlement.”19 Clearly, Ford
was the representative of the Estate, and under Tennessee law, the Med had a valid lien. The
Med filed the lien in Tennessee and based on the Eighth Circuit’s previous ruling,20 the Med did
not need to interject in the probate proceedings.
Ford also claims that she was not properly served, so she should be dismissed from the
lawsuit. The Complaint was filed on August 12, 2013, and Ford was served on January 3, 2014,
one hundred and twenty-six days later. The Med contends that the Court should grant a
retroactive extension of time for service of process.
An extension of time for service of process is allowed under the Federal Rules if the
plaintiff can show good cause.21 This determination may be made retroactively.22 The Med tried
to serve For at two different locations -- one listed on the probate forms and one on Smiley’s
death certificate. A third address in which service was attempted, was correct. I believe this

18

 Tenn. Code Ann. §29‐22‐101(a). 
 Tenn. Code Ann. § 29‐22‐104(b)(1). 
20
 Shelby County Healthcare Corporation v. S. Farm Bureau Cas. Is. Co.855 F.3d 836, 844 (8th Cir. 2017).
21
 Fed. R. Civ. P. 4(m). 
22
 Habib v. General Motors Corp., 15 F.3d. 72,73 (6th Cir. 1994).  
19

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constitutes good cause to extend the service process and notably this case has been pending for
five years. Additionally, had this issue been addressed when it was first brought up, I likely
would have granted the extension. Even if I hadn’t, the case would have been dismissed without
prejudice and would have been refiled by Plaintiff.
CONCLUSION
The Farm’s Motion is GRANTED as it pertains to the Cross-Claim and DENIED as to
the other requests. Ford’s Cross-Motion is DENIED. Accordingly, Ford must provide
indemnity to the Farm for any amount recovered by the Med. The Farm’s prayers for dismissal
of the Med’s Complaint, that the lien to be declared invalid, and that the lien did not attach to the
settlement proceeds are DENIED.
Ford’s Motion for Summary Judgment (Doc. No. 121) is DENIED.
I cannot resist the desire to say that I fully agree with the dissent in the Eighth Circuit
decision; but the big dog having barked, the little dog must run back under the porch.
IT IS SO ORDERED this 21st day of December 2018.

/s/ Billy Roy Wilson ____________ 
UNITED STATES DISTRICT JUDGE

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