Hospitals’ Refusal to Release Insurance Checks in the Philippines

A comprehensive legal guide for patients, hospitals, insurers, and counsel

1. How insurance proceeds reach a Philippine hospital

Typical route	Key documents	Ownership of funds
“Cashless” HMO / corporate health plan. Hospital is directly listed as payee by the HMO or insurer.	Letter of Authorization (LOA), charge slips, Statement of Account (SOA).	Hospital owns the check once issued in its name.
Reimbursement mode. Patient settles the bill, then receives a check payable only to the patient/beneficiary.	Paid official receipts, medical abstract, insurer’s Claim Settlement Advice.	Patient/beneficiary owns the check the moment it is issued.
Split-payee arrangement. Check is issued to “Patient and XYZ Hospital.”	Discharge instruction sheet, Disbursement Voucher, endorsement form.	Joint ownership; deposit or encashment requires both signatures or a written assignment.

A hospital that receives a check belonging solely to the patient acts merely as a bailee or conduit. Philippine civil law (Arts. 1933–1934 & 1972, Civil Code) obliges a bailee to return the specific thing upon demand; failure triggers liability for loss and damages.

2. Statutory framework

Law / issuance	Core provision relevant to check withholding
Insurance Code (PD 612 as amended by RA 10607)	Secs. 248–252: An insurer must pay directly to the “insured or the beneficiary” unless there is a written assignment. A hospital not named in the policy is a stranger to the contract.
National Health Insurance Act (RA 7875, RA 10606)	Sec. 44(d): Health-care providers may not demand additional payment once PhilHealth has settled the case rate, except in pay-as-you-go or upgrade situations expressly chosen by the patient.
Anti-Hospital Detention Law (RA 9439)	Prohibits “detaining or otherwise causing to be detained” recovered patients or the dead body for non-payment. Withholding an insurance check is often paired with threats of detention and can constitute a mode of evasion penalized by fines and imprisonment.
Revised Penal Code (Art. 315 §1-b, Estafa)	Misappropriation or conversion of money received in trust; applied when a hospital encashes or deposits a check payable to the patient without authority.
DOH Licensing & Administrative Orders (e.g., AO 2012-0007, AO 2023-0001)	Hospitals must adopt a No Balance Billing (NBB) policy for certain classes of patients and must observe the Patient’s Bill of Rights, including the right to prompt billing explanation and release of financial documents.

3. When may a hospital legally keep or deposit the check?

Named payee – The check is written to “St. Luke’s Medical Center, Inc.” or “Patient X and St. Luke’s.”
Written assignment / special power of attorney (SPA) – The patient signs, after full disclosure, an SPA or endorsement in favor of the hospital.
Statutory lien – Limited to PhilHealth refunds explicitly assigned to government hospitals to replenish Medicines Revolving Funds (Sec. 48, RA 10606).

Outside these scenarios, refusal to surrender the check is prima facie unlawful.

4. Liability exposure of non-compliant hospitals

Branch	Grounds	Consequences
Civil	Breach of bailment (Arts. 1972, 1980), quasi-delict (Art. 2176), moral/exemplary damages (Art. 2219).	Actual and moral damages; attorney’s fees; interest; possible writ of replevin for the check.
Criminal	Estafa by conversion; violation of RA 9439 if detention elements are present.	Imprisonment of 2–20 years (prision mayor) in Estafa; RA 9439 fines ₱20 000–₱50 000 plus 1–6 years jail.
Administrative	DOH Investigating Committee findings of “financial exploitation” or “patient harassment.”	Suspension or revocation of hospital license; publication of violations; mandatory corrective action plan.

5. Key jurisprudence

SG-Philippine Life v. Intermediate Appellate Court, G.R. L-71511 (22 Jan 1990) – Insurance proceeds belong to the beneficiary, not the health-care provider, unless expressly assigned.
People v. Gozo, G.R. 207205 (17 Feb 2016) – Hospital administrator convicted of Estafa for encashing a patient’s reimbursement check without authority.
Spouses Tan v. St. Paul Hospital, CA-G.R. CV 107345 (29 Mar 2019) – Appellate court held that withholding checks payable only to the patient is an unlawful retention of personal property, separate from the Anti-Hospital Detention Law.
People v. Dizon, G.R. 190738 (11 Jan 2018) – Even implied threats to hold a patient’s remains violate RA 9439.

6. Remedies for patients & beneficiaries

Demand Letter – Cite the Insurance Code and RA 9439; give 3–5 days to release the check.
Complaint before the DOH-HFERC – For violations of licensing standards (no filing fee).
Insurance Commission mediation – If the insurer colluded with the hospital or refuses to re-issue a lost/encashed check.
Civil suit for Replevin / Damages – File in the RTC if >₱2 000 000, otherwise in the MeTC; seek a writ of replevin for immediate possession plus damages.
Criminal complaint for Estafa – File with the Office of the City/Provincial Prosecutor.
Barangay conciliation (if parties reside in same city/municipality and amount ≤ ₱400 000) – A compulsory step unless an exception applies.

Tip: Attach the insurer’s Claim Settlement Advice showing that the payee is the patient; bring a government-issued ID and the policy contract during conciliation or filing.

7. Defenses commonly raised by hospitals (and why they usually fail)

Hospital argument	Why it is weak
“We have a hospital lien over the proceeds.”	Philippine law recognizes no hospital lien absent a written assignment; liens cited in U.S. cases are inapplicable.
“The patient still has an unpaid balance.”	Balances must be pursued through civil action; RA 9439 rejects detention or property retention as collection tools.
“We are protecting the insurer against double payment.”	The insurer can always interplead or re-issue the check; the hospital has no legal standing to withhold property it does not own.
“The patient orally promised to endorse.”	Art. 1625, Civil Code: endorsement of negotiable instruments must be in writing. Oral consent is unenforceable.

8. Best-practice checklist for hospitals

Use a standard written SPA when a patient voluntarily assigns benefits; ensure the form is bilingual (English-Filipino) and countersigned by a relative.
Release a provisional statement of account within 24 hours of demand; this transparency tends to reduce disputes.
Adopt a no-withholding policy in the hospital manual; designate a cashier window for check pickup with logbook acknowledgment.
Train billing staff on the Anti-Hospital Detention Law and Estafa risks.
Coordinate with insurers to switch to provider-pay arrangements if the hospital wants direct settlement.

9. Practical tips for patients / policyholders

Before admission: Ask whether your policy is on a reimbursement or cashless basis; request that the insurer write the check directly to the hospital if you prefer.
Upon discharge: Photograph the Statement of Account and secure all official receipts.
If a check arrives at the hospital: Follow up in writing within five (5) days and copy the insurer.
Always keep copies of all correspondence; Estafa cases hinge on proof of demand and refusal.

10. Conclusion

In the Philippines, a hospital’s refusal to release an insurance check that is not legally payable to it violates both civil and criminal law and exposes the institution to administrative sanctions. The governing principles are straightforward:

Insurance proceeds follow the payee’s name.
Hospitals have no automatic lien absent written assignment.
Detaining money can be as illegal as detaining a patient.

Armed with the statutes, jurisprudence, and remedies outlined above, patients and practitioners can respond decisively whenever a hospital crosses the line from legitimate creditor to unlawful custodian of another’s property.