Discovery in Statutory Hospital-Lien Class Actions Is Limited to Billing-and-Lien Elements: Garcia v. Centura Health (Colo. 2025)

Discovery in Statutory Hospital-Lien Class Actions Is Limited to Billing-and-Lien Elements: Garcia v. Centura Health (Colo. 2025)

Introduction

In a significant clarification of the discovery rules governing statutory hospital-lien litigation, the Colorado Supreme Court in In re: Garcia v. Centura Health Corporation, 2025 CO 15, 566 P.3d 999, held that discovery in wrongful hospital lien actions seeking statutory damages under section 38-27-101(7), C.R.S., must be limited to the narrow billing-and-lien issues that define the claim. The Court concluded that tort-style discovery into the underlying accident, fault, settlement amounts, attorney-client communications, and a plaintiff’s private medical and financial information is irrelevant and disproportionate to the needs of such a case.

The litigation arises from Centura Health’s practice of filing hospital liens before billing Medicare for accident-related treatment—conduct that the Court previously held unlawful in Harvey v. Catholic Health Initiatives, 2021 CO 65. Plaintiff Jina Garcia brought a putative class action seeking statutory damages of twice the amount of liens asserted under section 38-27-101(7). The district court twice ordered broad discovery at Centura’s behest; twice the Supreme Court exercised original jurisdiction under C.A.R. 21; and, in this second visit, the Court made its rule to show cause absolute, finding an abuse of discretion and sharply curtailing the permissible scope of discovery.

The opinion speaks directly to three recurring pressure points in hospital-lien litigation and other statutory-damages class actions: (1) the proper yardstick for relevance and proportionality under C.R.C.P. 26; (2) the limited role of class certification issues as a lever for otherwise irrelevant discovery; and (3) the inapplicability of tort and damages discovery when the statute fixes liability and damages by reference to the face amount of the lien.

Summary of the Opinion

The Colorado Supreme Court held that the district court abused its discretion by ordering Garcia to respond to extensive discovery requests that sought:

  • Her medical records and private financial information;
  • Attorney-client communications, work product, and litigation files related to the underlying car accident;
  • Settlement agreements, insurer communications, and documents concerning fault and liability in the accident; and
  • Information about her “actual damages” or “net amount payable.”

Emphasizing that wrongful lien actions under section 38-27-101(7) seek statutory damages pegged to “two times the amount of the lien attempted to be asserted,” the Court found the contested discovery irrelevant and non-proportional. The legally relevant facts are narrow: whether Centura asserted a lien, its amount, whether Medicare was the primary payer, and whether Centura billed Medicare before filing the lien.

The Court rejected Centura’s arguments that the discovery was justified to:

  • Support a motion to decertify the class (superiority, typicality, predominance);
  • Address purported retroactivity concerns with Harvey;
  • Test whether Garcia qualified as an “injured person” caused by another’s negligence; or
  • Calculate “net amount payable” or total recovery.

Because the discovery failed at the threshold relevance stage, the Court did not reach privacy balancing under In re District Court, 256 P.3d 687 (Colo. 2011). The Court again exercised original jurisdiction under C.A.R. 21 to prevent non-remediable disclosure of privileged and private materials and to forestall further delay in this long-pending action.

Detailed Analysis

Precedents Cited and Their Influence

The Court situated its ruling within a carefully marshaled body of rule-based and case law authorities:

  • C.R.C.P. 26(b)(1) and 2015 comments: The Court invoked the proportionality mandate that discovery must be “relevant to the claim or defense of any party and proportional to the needs of the case,” highlighting the 2015 comments—discovery should provide what a party needs to prove its case, not what it merely wants to know. This framing drove the opinion’s narrow, element-focused view of permissible discovery.
  • DCP Midstream, LP v. Anadarko Petroleum Corp., 2013 CO 36: The Court reiterated that trial courts must actively manage discovery and tailor its scope to the reasonable needs of the case, a directive that counseled against sprawling tort-style discovery in a statutory damages action with confined factual issues.
  • In re District Court, 256 P.3d 687 (Colo. 2011): The opinion acknowledged the privacy balancing test (relevance, confidentiality, compelling need, alternative sources, least intrusive means), but emphasized that courts must reach that test only if the materials are first found relevant. Here, the Court stopped at relevance.
  • Ortega v. Colorado Permanente Medical Group, P.C., 265 P.3d 444 (Colo. 2011) and Fox v. Alfini, 2018 CO 94: These cases justified C.A.R. 21 intervention for discovery orders that threaten disclosure of privileged or confidential information and impose undue litigation burdens that cannot be cured on appeal—conditions present in Garcia.
  • Harvey v. Catholic Health Initiatives, 2021 CO 65: Crucial to the merits, Harvey held that when Medicare is a patient’s primary insurer, hospitals must bill Medicare before asserting a lien. This interpretive rule anchors Garcia’s liability theory and renders irrelevant most of the “underlying tort” discovery Centura sought.
  • Garcia v. Centura Health Corp., 2020 COA 38: The Court of Appeals’ description of the legislature’s intent—to protect insured accident victims, including Medicare recipients, from hospital liens—was cited to underscore the statute’s consumer-protection function and alignment with Harvey.
  • Wal-Mart Stores, Inc. v. Crossgrove, 2012 CO 31: Reaffirming Colorado’s pre-verdict collateral source rule, the Court rejected discovery attempts premised on litigating “amounts paid” versus “amounts billed”; such disputes are off-limits, and, in any event, have nothing to do with statutory damages keyed to the face amount of the lien.
  • Califano v. Yamasaki, 442 U.S. 682 (1979) and Reiter v. Sonotone Corp., 442 U.S. 330 (1979): The Court relied on these decisions to discount policy-based objections to class certification premised on the cumulative effect of statutory damages. Absent a legislative directive, federal precedent disfavors using certification as a valve to relieve perceived punitive exposure.
  • Wilcox v. Commerce Bank of Kansas City, 474 F.2d 336 (10th Cir. 1973): Cited by Centura, Wilcox argued that massive statutory penalties can defeat superiority. The Court questioned its vitality and found it inapposite—Garcia’s statutory damages are not a “penalty,” and the amounts at stake are not comparable to Wilcox’s billion-dollar exposure, especially given class actions’ role in aggregating small-value claims.
  • McDonald v. People, 2024 CO 75 and People v. Cooper, 2023 COA 113: The Court referenced these cases for the principle that retroactivity is a legal question. This undercut Centura’s bid for fact discovery to litigate whether Harvey applies to this case.

The Court’s Legal Reasoning

1) Original Jurisdiction under C.A.R. 21

The Court exercised original jurisdiction because the district court’s orders compelled disclosure of privileged and private materials—an injury not fixable on appeal—and because the breadth and burden of the requested discovery imposed a significant litigation disadvantage, warranting immediate correction. The Court also noted the procedural posture: the case had already been in litigation for over seven years, and this was the second time the Supreme Court had to intervene on the same discovery issues.

2) Relevance and Proportionality Under C.R.C.P. 26

The core of the opinion is a disciplined application of Rule 26. The Court emphasized that wrongful lien cases under section 38-27-101 turn on a handful of tightly defined facts:

  • Did the hospital assert a lien against the plaintiff?
  • What was the face amount of that lien?
  • Was Medicare (or another insurer) the primary medical payer?
  • Did the hospital bill the primary payer before asserting the lien?

Questions about fault in the underlying accident, the plaintiff’s broader damages, settlement amounts, the “net amount payable,” and how the plaintiff litigated her tort claim are not part of the statutory-liability or statutory-damages calculus. Because section 38-27-101(7) sets damages at twice the amount of the attempted lien, the measure of recovery does not depend on what the plaintiff recovered from a tortfeasor or what would have been the lienable share of that recovery. Thus, discovery aimed at such topics is not relevant and is certainly not proportional to the needs of the case.

3) Class Certification Does Not Expand Substantive Relevance

Centura argued that the contested discovery was necessary to test class certification prerequisites—superiority, typicality, and predominance—under C.R.C.P. 23. The Court disagreed:

  • Superiority: The Court rejected reliance on Wilcox to argue that the class device is inferior because cumulative statutory damages might be large. Citing Califano and Reiter, the Court explained that such policy concerns belong to the legislature. The paradigm of numerous small claims (e.g., twice $2,170.35) amplifies the need for class aggregation, not the reverse.
  • Typicality/Predominance: The statute authorizes liens only where a patient is injured by another’s negligence and the hospital has satisfied preconditions, including billing the primary payer. By filing the lien, Centura effectively anchored its premise that Garcia fit those statutory predicates. Whether Garcia was injured by another’s negligence is thus not a live issue in this wrongful lien action, and fishing for variance among class members on tort causation and fault is beside the point.

4) Retroactivity of Harvey Is a Legal Question That Does Not Justify Fact Discovery

The Court was unpersuaded that discovery was necessary to test the retroactive application of Harvey. First, Harvey interpreted the statute and did not announce a new rule; applying it to a pending case is simply the application of current law. Second, even if retroactivity principles applied, that question is legal, not fact-dependent, and discovery about a plaintiff’s “actual damages” or litigation strategy in her tort case would shed no light on the retroactivity analysis.

5) “Net Amount Payable” and Total Recovery Are Irrelevant to Statutory Damages

Centura’s reliance on section 38-27-101(4)’s “net amount payable” language was misplaced in the damages phase of a wrongful lien claim. The statute fixes damages in section 38-27-101(7) at “two times the amount of the lien attempted to be asserted.” Thus, any discovery into tort recoveries, attorney’s fees arrangements, or net-payable calculations is irrelevant to the statutory doubling remedy.

6) No Need to Reach Privacy Balancing

Having found the requests irrelevant and non-proportional, the Court did not reach the privacy balancing test under In re District Court. This confirms a sequencing principle: courts must first decide whether the information is relevant to claims or defenses; only then do privacy and privilege balancing considerations come into play.

Impact and Implications

Immediate Effects on Hospital-Lien Litigation

  • Tight discovery boundaries: In wrongful lien actions seeking statutory damages, discovery should be confined to whether the hospital complied with the statute’s preconditions (including billing Medicare where applicable) and the face amount of the lien. Tort merits, fault, and settlement details are off-limits.
  • Reduced litigation costs and delay: By foreclosing wide-ranging accident and damages discovery, the decision promotes efficient resolution consistent with C.R.C.P. 1(a)’s mandate for just, speedy, and inexpensive determinations.
  • Privacy protection: Plaintiffs are less likely to face requests for sensitive medical and financial records unless and until a threshold showing of relevance is made—which, in this context, will rarely be possible.

Class Action Practice

  • Certification not a discovery backdoor: Defendants cannot justify unrelated, individualized discovery under the guise of testing superiority, typicality, or predominance when the merits turn on uniform, statutory elements.
  • Small-dollar statutory claims are class-suitable: The Court’s reasoning aligns with the core rationale of class actions—aggregating small claims that would otherwise go unredressed—without entertaining penalty-based arguments absent statutory direction.

Statutory Damages Framework

  • Face-of-lien measure: Where the statute specifies damages as a multiple of the attempted lien, defendants cannot re-open discovery into tort recoveries or net-payable computations to dilute or complicate that measure.
  • Collateral source issues off the table: Crossgrove continues to bar pre-verdict evidence of insurer payments, and the Garcia opinion further clarifies that such issues are immaterial in statutory wrongful lien damages disputes.

Judicial Management and Original Jurisdiction

  • Active gatekeeping: Trial courts are reminded to enforce Rule 26’s proportionality limits and to make specific findings on relevance, proportionality, and, where applicable, privacy balancing.
  • Availability of C.A.R. 21 relief: The Supreme Court signaled its willingness to police discovery abuse—especially where privileged or confidential information is at stake and appellate remedies are inadequate.

Complex Concepts Simplified

  • Hospital lien statute (section 38-27-101): Allows a hospital to place a lien on a patient’s tort recovery for reasonable and necessary charges, but only after it first bills the “primary medical payer” (which can be Medicare) and satisfies statutory prerequisites. If a hospital violates the statute by filing a lien prematurely, the patient may recover twice the amount of the attempted lien.
  • Wrongful lien statutory damages: A fixed, formulaic remedy—two times the lien amount—without regard to the patient’s total tort recovery or net payable after fees.
  • Relevance and proportionality (C.R.C.P. 26): Discovery must be tied to issues that matter to the claims or defenses and must be proportional in scope and burden to the case’s needs. Fishing expeditions into tangential issues are not allowed.
  • Class certification basics: “Superiority” asks whether a class action is better than individual suits; “typicality” asks whether the named plaintiff’s claims are typical of the class; “predominance” asks whether common issues outweigh individual ones. Certification questions cannot override what is substantively relevant to the merits.
  • Collateral source rule: Generally prevents evidence that a third party (like an insurer) paid some of the plaintiff’s losses from being introduced before the verdict. In Colorado, amounts paid by insurers are inadmissible pre-verdict—Crossgrove.
  • C.A.R. 21 original jurisdiction: The Colorado Supreme Court can step in before a final judgment to correct discovery orders that threaten irreparable harm, such as compelled disclosure of privileged or private information.
  • Retroactivity: Whether a judicial decision applies to past conduct is a legal question. Here, Harvey interpreted existing statutory text; applying it in Garcia’s pending case does not require factual development about the plaintiff’s real-world losses.

Conclusion

Garcia v. Centura Health sets a clear, administrable rule for statutory wrongful lien litigation: when plaintiffs seek the statutory doubling remedy under section 38-27-101(7), discovery must be tightly confined to the statute’s billing-and-lien elements. Underlying tort liability, causation, fault, settlement amounts, net payable calculations, and collateral source issues are not part of the merits and are not discoverable. Class certification concerns do not expand the substantive scope of relevance, and retroactivity arguments about Harvey are legal, not factual.

The decision strengthens privacy protections, streamlines statutory-liability litigation, and reinforces courts’ obligations to actively manage discovery under Rule 26’s proportionality regime. It also underscores the Court’s readiness to use C.A.R. 21 to prevent irreparable discovery harms and to ensure that long-pending cases are not derailed by unnecessary and burdensome discovery disputes.

In the broader legal landscape, Garcia offers a model for analyzing discovery in statutory-damages class actions: begin with the statutory elements and remedies, confine discovery to facts that truly matter to those elements, and resist attempts to import tort litigation’s expansive discovery norms into targeted statutory regimes.

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