Court rejects settlement claim; allows hospital to intervene to collect medical bills

Anthony Johnson was an occupant of a motor vehicle involved in a collision.  He was forced to sue to secure PIP coverage (medical and limited wages and services) because there was no insurance in his household.  As the case proceeded, Southeast Michigan Surgical Hospital claimed a lien on his PIP recovery for $56,000.00 worth of services it provided (uninfluenced by insurer discounts, this probably represents a bed and aspirin for a day--and probably surgery on a toenail). Johnson's counsel and the hospital's attorney disagreed about the content of their communications, with Johnson believing the hospital was suing directly and the hospital relying on Johnson's case (and thereby saving any fees or expenses).  At a mediation, Johnson attempted to settle his claim for $50,000.00, without accounting for the hospital's lien.

The hospital objected and sought to intervene in the action to invalidate the settlement.  The insurer argued that the settlement was a "done deal" and that the hospital should not be allowed to intervene:  it expected to be "out" for payment of the original 50K.  The trial judge agreed, even though the parties never signed the mediated settlement agreement or presented it to the court as a completed agreement.  The Court of Appeals overturned the lower court, noting that counsel for the insurer had conceded that the settlement fell apart when the lien issue surfaced. The hospital enjoyed a property right in the transaction and a right to intervene.