Grayam v. Dept. of Health and Human Ser.
Annotate this Case IN THE SUPREME COURT OF APPEALS OF WEST
VIRGINIA
September 1997 Term
_____________
No. 24036
_____________
AMANDA GRAYAM,
Appellee
v.
DEPARTMENT OF HEALTH AND HUMAN RESOURCES,
A PUBLIC AGENCY OF THE STATE OF WEST VIRGINIA,
Appellant
_________________________________________________________________
Appeal from the Circuit Court of Kanawha County
Honorable Charles E. King, Jr., Judge
Civil Action No. 96-C-853
REVERSED AND REMANDED
_________________________________________________________________
Submitted: September 16, 1997
Filed: November 21, 1997
Darrell V. McGraw,
Jr. Scott
S. Segal, Esq.
Attorney
General Mark
R. Staun, Esq.
Stephen J. Small,
Esq. Lori
A. Simpson, Esq.
Senior Assistant Attorney
General Charleston,
West Virginia
Barry L. Koerber,
Esq. Attorneys
for Appellee
Assistant Attorney General
Charleston, West Virginia
Attorneys for Appellant
_____________
No. 24129
_____________
NATIONWIDE MUTUAL INSURANCE COMPANY,
Appellee
v.
JAMES F. HATFIELD, ET AL.,
Appellees
WEST VIRGINIA DEPARTMENT OF HEALTH
AND HUMAN RESOURCES,
Appellant
_________________________________________________________________
Appeal from the Circuit Court of McDowell
County
Honorable Kendrick King, Judge
Civil Action No. 95-C-130-K
REVERSED AND REMANDED
_________________________________________________________________
Submitted: September 16, 1997
Filed: November 21, 1997
H. F. Salsbery,
Esq. Darrell
V. McGraw, Jr.
Madonna C. Estep,
Esq. Attorney
General
Salsbery &
Druckman Stephen
J. Small, Esq.
Charleston, West
Virginia Senior
Assistant Attorney General
Attorneys for Appellee
Hatfield Harold
Chambers, Esq.
Assistant
Attorney General
Charleston,
West Virginia
Attorneys
for Appellant
CHIEF JUSTICE WORKMAN delivered the Opinion of
the Court.
JUSTICE DAVIS, deeming herself disqualified, did not participate
in the decisions of these cases.
SYLLABUS BY THE COURT
1. "'The
doctrine of subrogation is that one who has the right to pay, and
does pay, a debt which ought to have been paid by another is
entitled to exercise all the remedies which the creditor
possessed against that other.' Syl. Pt. 1, Bassett v. Streight,
78 W. Va. 262, 88 S.E. 848 (1916)." Syl. Pt. 4, Ray v.
Donohew, 177 W. Va. 441, 352 S.E.2d 729 (1986).
2. In both the 1993 and 1995 amendments to West Virginia Code § 9-5- 11 (Supp. 1993 & Supp. 1995), the legislature rendered the made-whole rule inapplicable by clearly and unambiguously modifying the usual and ordinary meaning of subrogation as it is used in that statute. Pursuant to these amendments, if another person is legally liable to pay for medical assistance provided by the Department of Health and Human Resources, the Department possesses a priority right to recover full reimbursement from any settlement, compromise, judgment, or award obtained from such other person or from the recipient of such assistance if he or she has been reimbursed by the other person.
Workman, Chief Justice:
This
Court consolidated these two appeals because they involve a
common issue regarding the legal effect of statutory amendments
made to West Virginia Code § 9- 5-11. Appellant in both cases,
the Department of Health and Human Resources
("Appellant"), argues that the 1993 and 1995 amendments
to West Virginia Code § 9-5-11 alter the traditional meaning of
the term "subrogation," as was applied by this Court in
Kittle v. Icard, 185 W. Va. 126, 405 S.E.2d 456 (1991). To the
contrary, Appellees, Amanda Grayam and James F. Hatfield, by
Ricky Kennedy, his guardian and next friend (hereinafter
collectively referred to as the Appellees), assert that the
amendments to West Virginia Code § 9-5-11 do not abrogate the
traditional meaning of subrogation and, therefore, the made-whole
rule as expressed in Kittle continues to apply under the statute.
Upon careful review of the statutory language and the arguments
made by the parties on appeal, we hold that the 1993 and the 1995
amendments manifest an intent by the legislature to change the
usual and ordinary meaning of subrogation and thus, the circuit
courts erred by applying the made-whole rule.
I.
FACTUAL AND PROCEDURAL HISTORY
A.
The Grayam Case
On
November 12, 1994, Amanda Grayam was riding as a passenger in her
husband's truck when her husband failed to negotiate a curve and
wrecked the truck into a tree. As a result of the accident, Ms.
Grayam sustained serious injuries and spent several weeks in a
hospital. Ms. Grayam's nominal medical bills for her care
exceeded $72,000, of which approximately $61,000 was discharged
when Medicaid paid $42,991.21 of her medical bills.See footnote 1 1 Ms.
Grayam remained personally liable for over $11,000 in medical
bills; however, Ms. Grayam's attorney was able to settle these
claims for slightly over $5,000. Ms. Grayam also authorized her
attorney to investigate the accident and the potential of a
product liability suit over a possible defect with the truck. The
cost of this investigation exceeded $8,000. Ultimately, the suit
was not pursued because no experts would testify that the alleged
defect caused or contributed to the accident. The Grayam's
insurance company agreed to pay them $35,000, the limit under
their policy.
In February of 1996, Appellant advised Ms. Grayam of its lien of $42,991.21 for the medical benefits it paid on Ms. Grayam's behalf. In response, on April 15, 1996, Ms. Grayam filed a declaratory judgment action in the Circuit Court of Kanawha County
against Appellant to determine the rights and
obligations of the parties. After holding a hearing, the circuit
court entered an order on October 4, 1996, finding the value of
Ms. Grayam's "economic and non-economic damages far exceed
the $35,000.00 in available coverage in this case." The
circuit court further determined that, despite the amendments to
West Virginia Code § 9-5-11, the made-whole doctrine as
announced in Kittle still applies and, as a result, Appellant is
not entitled to any reimbursement on its subrogation claim.
Appellant appeals from this decision.
B.
The Hatfield Case
On
February 3, 1994, Jeannie Kennedy was involved in a
single-vehicle accident when the car she was driving struck a
tree stump. As a result of the accident, Mrs. Kennedy, along with
six children who were guest passengers in the car, suffered
injuries. Mrs. Kennedy's son, six-year-old James Hatfield, was
the most seriously injured. To help pay James' medical expenses,
which are in excess of $19,000, Mrs. Kennedy applied for medical
benefits with Appellant. Appellant contributed $6,661.59 towards
James' medical costs.See
footnote 2 2
Unfortunately, the auto insurance policy limit was $50,000. In order to settle all claims arising out of the accident, the auto insurer, Nationwide Mutual Insurance
Company ("Nationwide"), filed an
original interpleader action in the Circuit Court of McDowell
County, requesting the circuit court to distribute the $50,000 in
proceeds among the various injured claimants. By "corrected
order" entered on April 22, 1996, the circuit court
disbursed the money, awarding one-half of the proceeds, $25,000,
to James. In the order, the circuit court specifically found the
$25,000 award to be inadequate to compensate James for his
injuries.
Thereafter, Appellant sought to enforce a lien in the amount of $4,443.28 against the insurance proceeds paid to James.See footnote 3 3 After holding a hearing to determine if Appellant could collect this amount, the circuit court entered an order on November 19, 1996, finding "as a matter of law and of equity" that Appellant was not entitled to subrogation. The circuit court further confirmed and ratified the findings in its prior order entered on April 22, 1996, and ordered the insurance proceeds to be distributed as previously directed by the court. Appellant maintains it has a right to subrogation and appeals the circuit court's decision.
II.
DISCUSSION
A.
Standard of Review
In
both the Grayam and Hatfield cases, Appellant disputes the legal
and factual determinations made by the circuit courts. As
previously mentioned, the Grayam case was brought as a
declaratory judgment action. This Court has recognized that the
purpose of bringing a declaratory judgment action
"is to avoid
the expense and delay which might otherwise result, and in
securing in advance a determination of legal questions which, if
pursued, can be given the force and effect of a judgment or
decree without the long and tedious delay which might accompany
other types of litigation."
Harrison v. Town of Eleanor, 191 W. Va. 611, 615, 447 S.E.2d 546, 550 (1994) (quoting Crank v. McLaughlin, 125 W. Va. 126, 133, 23 S.E.2d 56, 60 (1942). Given that the underlying purpose of a declaratory judgment action is to resolve legal issues, we concluded in syllabus point three of Cox v. Amick, 195 W. Va. 608, 466 S.E.2d 459 (1995), that "[a] circuit court's entry of a declaratory judgment action is reviewed de novo." Id. at 610, 466 S.E.2d at 461. However, we also stated in Cox that this Court will apply the clearly erroneous standard when reviewing any factual findings made by the circuit court in reaching its ultimate resolution of a declaratory judgment action. Id. at 612, 466 S.E.2d at 463. Although the Hatfield case was filed by Nationwide as an
interpleader action,See footnote 4 4 the judgment in
that case was a final order as to all the parties and, thus, we
likewise review the circuit court's resolution of questions of
law de novo and review the circuit court's findings of fact under
the clearly erroneous standard.
B.
Analysis
To understand the
parties' dispute with regard to the 1993 and 1995 amendments to
West Virginia Code § 9-5-11, it is necessary to first examine
the original version of that statute and this Court's
interpretation of that statute in Kittle. In Kittle, the
Department of Human Services (DHS)See footnote 5 5 paid approximately
$10,000 in medical expenses for a child who received serious
injuries when he was struck by an automobile. 185 W. Va. at
128, 405 S.E.2d at 458.See
footnote 6 6 The driver of the automobile was found
to be judgment proof, and the driver's automobile insurer offered
to settle the claim for $100,000, the full amount of available
liability coverage. Id. DHS sought to recover the $10,000 it paid
in medical expenses from the insurance proceeds. However, the
guardian ad litem testified that the claim's actual value was
between $200,000 and $250,000.
Therefore, the child's mother filed an action,See footnote 7 7 requesting
that the circuit court approve the settlement, find the child was
not made whole by the settlement, and, as a result, declare that
DHS was not entitled to subrogation. Id.See footnote 8 8 In its order and
memorandum opinion, the circuit court granted the mother's
requests for relief and prohibited DHS from collecting any of the
medical expenses it paid on behalf of the child. DHS appealed
this decision. Id. at 128-29, 405 S.E.2d at 459.
On appeal, DHS argued, inter alia, that it was "directly and exclusively" entitled to subrogation pursuant to West Virginia Code § 9-5-11 (1990) and that the circuit court erred by applying the made-whole rule. Id. at 129-30, 405 S.E.2d at 460. This Court began its analysis in Kittle by recognizing that the Medicaid program is a joint endeavor between federal and state governments. In order to receive federal assistance, states are required pursuant to 42 U.S.C. § 1396a(a)(25) to seek reimbursement from legally-liable third parties in appropriate circumstances. In Kittle, we recognized that 42 U.S.C. § 1396a(a)(25), in relevant part, provided that a state's medical assistance plan must:
(25)
provide (A) that the State or local agency administering such
plan will take all reasonable measures to ascertain the legal
liability of third parties to pay for care and services
(available under the plan) arising out of injury, disease, or
disability, (B) that where the State or local agency knows that a
third party has such a legal liability such agency will treat
such legal liability as a resource of the individual on whose
behalf the care and services are made available for purposes of
paragraph (17)(B), and (C) that in any case where such a legal
liability is found to exist after medical assistance has been
made available on behalf of the individual and where the amount
of reimbursement the State can reasonably expect to recover
exceeds the cost of such recovery, the State or local agency will
seek reimbursement for such assistance to the extent of such
legal liability[.]
185 W. Va. at 129, 405 S.E.2d at 459
(quoting 42 U.S.C. § 1396a(a)(25)).
In
comparing the federal statute to West Virginia Code § 9-5-11(a)
(1990), this Court found the federal and state requirements
consistent with one another. 185 W. Va. at 129, 405 S.E.2d
at 460. The relevant portion of West Virginia Code § 9-5-11
states:
(a) If medical
assistance is paid on behalf of a recipient of medical assistance
because of any sickness, injury, disease or disability, and
another person is legally liable for such expense, the department
[division] may recover reimbursement for such medical assistance
from such other person, or from the recipient of such assistance
if he has been reimbursed by the other person. The department
shall be legally subrogated to the rights of the recipient
against the person so liable, but only to the extent of the
reasonable value of the medical assistance paid and attributable
to such sickness, injury,
disease or disability; and the commissioner may
compromise, settle and execute a release of any such claim.
W. Va. Code § 9-5-11(a) (1990) (emphasis
added). Although in Kittle we agreed with DHS that, pursuant to
the federal and state statutes, "DHS is legally subrogated
to any right . . . [a medical assistance recipient] may have to
recover against the legally liable party[,]" the question
remained with regard to how the doctrine of subrogation should be
applied under the statute. 185 W. Va. at 130, 405 S.E.2d at
460.
In resolving this
issue, this Court held in Kittle that the usual and ordinary
definition of subrogation should be applied unless the
legislature clearly expresses an intent within the statute to
give subrogation a different meaning. Id.See footnote 9 9 Given its usual and
ordinary meaning, the doctrine of subrogation provides an
equitable remedy to "'one secondarily liable who has paid
the debt of another and to whom in equity and good conscience
should be assigned the rights and remedies of the original
creditor.'" Id. (quoting State Farm Mut. Auto Ins. Co. v.
Foundation R. Ins. Co., 78 N.M. 359, 363, 431 P.2d 737, 741
(1967)). In other words, as stated in syllabus point four of Ray
v. Donohew, 177 W. Va. 441, 352 S.E.2d 729
(1986): "'The doctrine of subrogation
is that
one who has the right to pay, and does pay, a
debt which ought to have been paid by another is entitled to
exercise all the remedies which the creditor possessed against
that other.' Syl. Pt. 1, Bassett v. Streight, 78 W. Va. 262, 88 S.E. 848 (1916)." 177 W. Va. at 443, 352 S.E.2d at 731,
Syl. Pt. 4, Ray; see also Travelers Indem. Co. v. Rader, 152 W.
Va. 699, 703, 166 S.E.2d 157, 160 (1969) ("'subrogation is
an equitable right which arises out of the facts and which
entitles the subrogee to collect that which he has
advanced'" (quoting Busch v. Home Ins. Co., 97 N.J. Super.
54, 56, 234 A.2d 250, 251 (1967)).
Finding no intent by the legislature that the usual and ordinary definition of subrogation should not apply, and in light of the equitable principles underlying the doctrine of subrogation, we held in Kittle that the right to subrogation may be limited by the made-whole rule. 185 W. Va. at 133-34, 405 S.E.2d at 463-64. The made-whole rule has been interpreted in insurance cases to mean that "[u]nder general principles of equity, in the absence of statutory law or valid contractual obligations to the contrary, an insured must be fully compensated for injuries or losses sustained (made whole) before the subrogation rights of an insurance carrier arise." Wine v. Globe American Casualty Co., 917 S.W.2d 558, 562 (Ky. 1996).See footnote 10 10 "The equitable principle underlying the made-whole
rule in insurance subrogation cases is that the
burden of loss should rest on the party paid to assume the risk
(the insurer) and not on the party least able to shoulder the
loss (the inadequately compensated insured)." Porter v.
McPherson, 198 W. Va. 158, 163, 479 S.E.2d 668, 673 (1996)
(citing Wine, 917 S.W.2d at 562).
DHS maintained in Kittle that the made-whole rule did not apply to its right to reimbursement under West Virginia Code § 9-5-11 (1990) because the statute abrogated the usual and ordinary meaning of subrogation. In support of its position, DHS relied, inter alia, upon Waukesha County v. Johnson, 107 Wis.2d 155, 320 N.W.2d 1 (1982). In Waukesha County, the Wisconsin Supreme Court determined that normal subrogation principles and the made-whole rule were rendered inapplicable under a Wisconsin statute. The statute at issue in Waukesha County clearly prioritized the right of a county to be reimbursed for the medical assistance it provided a public assistance recipient with respect
to actions taken and recoveries obtained from liable third parties. Id. at 161, 320 N.W.2d at 4.See footnote 11 11
To the contrary,
however, we found no such prioritization in West Virginia Code §
9-5-11 (1990). 185 W. Va. at 132, 405 S.E.2d at 462. Moreover, we
also found nothing in West Virginia Code § 9-5-11 (1990) to
indicate that the normal principles of subrogation should not
apply. 185 W. Va. at 132, 405 S.E.2d at 462. In fact, we
determined that our statute is more closely related "to
those statutes . . . wherein state courts noted the legislature's
use of the concept of subrogation and held that because the
legislature had not provided that normal subrogation principles
should not be applied, the court would apply those equitable
principles." Id. (citing Coplien v. Department of Health
& Social Serv., 119 Wis.2d 52, ___, 349 N.W.2d 92, 95 (Wis.
App. 1984)). As a result, we concluded in Kittle that the usual
and ordinary principles of subrogation must apply and, thus, that
the lower court did not err by denying DHS's request for
reimbursement upon finding the injured child was not made whole
by the settlement proceeds. Id. at 134, 405 S.E.2d at 464.
Approximately two years after the Kittle decision, the West Virginia Legislature substantially amended West Virginia Code § 9-5-11. As part of the
amendment, the legislature reworded portions of the original language.See footnote 12 12 For instance, the
original language provides that Appellant
"may recover reimbursement . . . ." W. Va. Code §
9-5-11(a) (1990). This language, however, was changed in 1993 to
state that Appellant "shall have a right to recover full
reimbursement from any award or settlement" for medical
assistance provided by Appellant. W. Va. Code § 9-5-11(a) (Supp.
1993) (emphasis added). Unlike its earlier counterpart, the 1993
version of the statute also contains entirely new language making
"any settlement, judgment or award obtained . . .
subject to the claim of . . . [Appellant] for reimbursement of an
amount sufficient to reimburse . . . [Appellant]
the full amount of benefits paid on behalf of the
recipient . . . ." Id. (emphasis added).
In addition, the 1993 statute provides that "[a]ny
settlement, compromise, judgment or award that excludes or limits
the cost of medical services or care shall not preclude
. . . [Appellant] from enforcing its rights under this
section." Id. (emphasis added). Appellant maintains that
these changes to the statute clearly express the legislature's
intent to abolish the made-whole rule and grant Appellant a
priority right in receiving reimbursement from legally liable
third parties. Upon review of these revisions, we agree with
Appellant.
The above-quoted language from the 1993 amendment clearly and unambiguously mandates that Appellant "shall have a right to recover full reimbursement"
without regard to "[a]ny settlement,
compromise, judgment or award that excludes or limits the cost of
medical services or care . . . . " Id. (emphasis added). The
statute further provides that the "[t]he right of
subrogation created in this section includes all portions of the
cause of action . . . notwithstanding any settlement allocation
or apportionment" and that Appellant is entitled to
"the full amount of benefits paid" from "any
settlement, judgment or award obtained . . . ." Id.
(emphasis added). In light of Kittle and the remaining portion of
West Virginia Code § 9-5-11 (Supp. 1993), this language, without
doubt, gives Appellant a superior right to be fully reimbursed
from any settlement, compromise, judgment or award obtained from
a liable third party. Unlike the original version of the statute,
the legislature obviously took action after the Kittle decision
to amend the statute and altered the usual and ordinary
definition of subrogation to give Appellant a priority right to
receive reimbursement from any monies obtained from a liable
third party. The plain meaning to be drawn from these changes is
that, irrespective of the made-whole rule, Appellant shall have a
right to full reimbursement.
With respect to the 1995 amendment, we reach a similar conclusion as we do with the 1993 amendment.See footnote 13 13 The language quoted above abrogating the usual and
ordinary definition of subrogation in the 1993 version was carried over verbatim in the 1995 version of the statute. Cf. W. Va. Code § 9-5-11 (Supp. 1993) to W. Va. Code § 9-5-11 (1995). Although there were some significant changes made to the statute in 1995, none of those changes reinstate implementation of the made-whole rule.See footnote 14 14
On the other
hand, Appellees assert that none of the changes in the statute
evidence any intent on the part of the legislature to prioritize
the rights of Appellant over those of the medical recipient.
Indeed, Ms. Grayam argues that the statutory changes codify this
Court's decision in Kittle. Specifically, Ms. Grayam points to
language contained within both the 1993 and 1995 versions of West
Virginia Code § 9-5-11(a), stating that "[t]he secretary
[of the department of health and human resources] may compromise,
settle and execute a release of any such claim in whole or in
part." W. Va. Code § 9-5-11(a) (Supp. 1993 & Supp.
1995). Ms. Grayam argues that this language evidences "the
legislature's intent to avoid inequitable results where an
injured party is not
'made-whole.'" However, we find Ms.
Grayam's interpretation of this language extends beyond what is
provided therein. It is well established that "[w]here the
language of a statute is clear and without ambiguity, the plain
meaning is to be accepted without resorting to the rules of
interpretation." Syl. Pt. 2, State ex rel. Underwood v.
Silverstein, 167 W. Va. 121, 278 S.E.2d 886 (1981) (quoting
Syl. Pt. 2, State v. Elder, 152 W. Va. 571, 165 S.E.2d 108
(1968)). The language quoted by Ms. Grayam does nothing more than
give Appellant sole discretion to "compromise, settle and
execute a release of any . . . claim . . . ." Id.
Moreover, this language says nothing about the made-whole rule
and does not alter the priority status given to Appellant
elsewhere in the 1993 amendment.See footnote 15 15
Indeed, upon
reviewing the statutory language in its entirety, this Court
finds that in both the 1993 and 1995 amendments to West Virginia
Code § 9-5-11, the legislature rendered the made-whole rule
inapplicable by clearly and unambiguously modifying the usual and
ordinary meaning of subrogation as it is used in that statute.See footnote 16 16 Pursuant
to these amendments, if another person is legally liable to pay
for medical assistance provided by
Appellant, Appellant possesses a priority right to recover full reimbursement from any settlement, compromise, judgment, or award obtained from such other person or from the recipient of such assistance if he or she has been reimbursed by the other person. Although it is unfortunate that there are inadequate insurance proceeds to fully compensate Appellees for the losses they suffered in these cases, this Court must follow the legislative mandates set forth in the statute and reverse the lower courts' decisions applying the made- whole rule to the facts of these cases.See footnote 17 17
III.
CONCLUSION
For
the foregoing reasons, this Court reverses the final orders of
the Circuit Courts of Kanawha and McDowell Counties and remands
these cases for a determination of the amount due Appellant.See footnote 18 18
Reversed and remanded.
Footnote: 1 1 The nominal amount of the medical bills represents the amount Ms. Grayam would have been responsible to pay if she was not covered by Medicaid.
Footnote: 2 2 According to the brief submitted on behalf of James, an additional $4,000 was paid under the medical payment provision of his mother's auto insurance policy.
Footnote: 3 3 This amount was reached by subtracting Appellant's prorated share of James' attorney's fees, which totaled $2,218.31, from the $6,661.59 Appellant paid on behalf of James for his medical care.
Footnote: 4 4 See W. Va.R.Civ.P. 22; W. Va. Code § 56-10-1 (1997).
Footnote: 5 5 The Executive Reorganization Act of 1989 redesignated the Department of Human Services as the Division of Human Services under the Department of Health and Human Resources. See W. Va. Code § 5F-1-1 (1993); W. Va. Code § 5F-2-1(d)(2) (1993 & Supp.); W. Va. Code § 9-2-1a (1990).
Footnote: 6 6 The child's total medical bill was $27,317.41.
Footnote: 7 7 The child's mother filed a petition for infant settlement and declaratory judgment and a petition for a writ of mandamus.
Footnote: 8 8 The child's mother also requested that DHS be ordered to pay all outstanding and future medical expenses.
Footnote: 9 9 See White v. Sutherland, 92 N.M. 187, 190, 585 P.2d 331, 334 (1978) (citing Tafoya v. New Mexico State Police Bd., 81 N.M. 710, 472 P.2d 973 (1970)); see also U.S. v. Greene, 266 F. Supp. 976, 979 (N.D.Ill. 1967) (stating that "'[s]ubrogation' is a term of legal art which we assume would not be employed by the drafters of the statute unless they intended it to be construed in its normal sense").
Footnote: 10 10 See also Hill v. State Farm Auto. Ins. Co., 765 P.2d 864, 868 (Utah 1988) (stating that "[w]here the insured settles with the tortfeasor, the settlement amount goes
to the insured unless the insurer can prove that the insured has already received full compensation"); 16 George J. Couch, Couch on Insurance 2d § 61:64 at 145-46 (Ronald A. Anderson & Mark S. Rhodes eds., rev. ed. 1983 (providing that "in absence of waiver to the contrary, . . . no right of subrogation against the insured exists upon the part of the insurer where the insured's actual loss exceeds the amount recovered from both the insurer and the wrongdoer, after deducting costs and expenses") (footnote omitted).
Footnote:
11 11
As quoted in Waukesha, the statute at issue provided, in relevant
part:
Third party liability. (1) Subrogation. The department, county or
municipality providing any public assistance authorized under
this chapter, including medical assistance, as a result of the
occurrence of an injury, sickness or death which results in a
possible recovery or indemnity from a 3rd party, including an
insurer, may make a claim or maintain an action in tort against
the 3rd party.
(2) Assignment of actions. The department, county or municipality
providing any public assistance authorized under this chapter,
including medical assistance, as a result of the occurrence of
injury, sickness or death which results in a possible recovery of
indemnity from a 3rd party, including an insurer, may require an
assignment from the applicant or recipient of such public
assistance or legally appointed representative of the incompetent
or deceased applicant or recipient giving it the right to make a
claim against the 3rd party.
(3) Control of action. The applicant or recipient or any party
having a right under this section may make a claim against the
3rd party or may commence an action and shall join the other
party as provided under s. 803.03(2). Each shall have an equal
voice in the prosecution of such claim or action.
(4) Recovery; how computed. Reasonable costs of collection including attorney's fees shall be deducted first. The amount of assistance granted as result of the occurrence of the injury, sickness or death shall be deducted next and the remainder shall be paid to the public assistance recipient. The amount of the medical assistance funds recovered shall be
subject to fees and proration as set forth in
sub. (6).
107 Wis.2d at 157-58, 320 N.W.2d at 2 n.1 (quoting Wis. Stat. § 49.65 (1977)).
Footnote:
12 12
In full, the 1993 version of West Virginia Code § 9-5-11
provides:
Right of
subrogation by department of health and human resources to the
rights of recipients of medical assistance; rules as to effect of
subrogation.
(a) If medical assistance is paid or will be paid to a provider of medical care on behalf of a recipient of medical assistance because of any sickness, injury, disease or disability, and another person is legally liable for such expense, either pursuant to contract, negligence or otherwise, the department of health and human resources shall have a right to recover full reimbursement from any award or settlement for such medical assistance from such other person, or from the recipient of such assistance if he has been reimbursed by the other person. The department shall be legally subrogated to the rights of the recipient against the person so liable, but only to the extent of the reasonable value of the medical assistance paid and attributable to the sickness, injury, disease or disability for which the recipient has received damages. When an action or claim is brought by a medical assistance recipient or by someone on his or her behalf against a third party who may be liable for the injury, disease, disability or death of a medical assistance recipient, any settlement, judgment or award obtained is subject to the claim of the department of health and human resources for reimbursement of an amount sufficient to reimburse the department the full amount of benefits paid on behalf of the recipient under the medical assistance program for the injury, disease, disability or death of the medical assistance recipient. The subrogation claim of the department of health and human resources shall not exceed the amount of medical expenses for the injury, disease, disability or death of the recipient paid by the department on behalf of the recipient. The right of subrogation created in this section includes all portions of the cause of action, by either settlement, compromise, judgment
or award, notwithstanding any settlement
allocation or apportionment that purports to dispose of portions
of the cause of action not subject to subrogation. Any
settlement, compromise, judgment or award that excludes or limits
the cost of medical services or care shall not preclude the
department of health and human resources from enforcing its
rights under this section. The secretary may compromise, settle
and execute a release of any such claim in whole or in part.
(b) Nothing in this section shall be construed so as
to prevent the recipient of medical assistance from maintaining
an action for injuries received by him against any other person
and from including therein, as part of the compensatory damages
sought to be recovered, the amount or amounts of his medical
expenses, even though such person received medical assistance in
the payment of such medical expenses, in whole or in part.
If the action be tried by a jury, the jury shall not be informed as to the interest of the department of health and human resources, if any, and such fact shall not be disclosed to the jury at any time. The trial judge shall, upon the entry of judgment on the verdict, direct that an amount equal to the amount of medical assistance given be withheld and paid over to the department of health and human resources. Irrespective of whether the case be terminated by judgment or by settlement without trial, from the amount required to be paid to the department of health and human resources there shall be deducted the attorney fees attributable to such amount in accordance with and in proportion to the fee arrangement made between the recipient and his attorney of record so that the department shall bear the pro rata portion of such attorney fees. Nothing in this section shall preclude any person who has received medical assistance from settling any cause of action which he may have against another person and
delivering to the department of health and human resources, from the proceeds of such settlement, the sums received by him from the department or paid by the department for his medical assistance. Any release given by a person who has received medical assistance to another person releasing such other person of liability with respect to any cause of action shall be binding upon the department of health and human resources if the person for whose benefit the release inures is unaware of, or has not been informed of, the interest of the department therein. If such other person is aware of or has been informed of the interest of the department of health and human resources in the matter, it shall be the duty of the person to whose benefit the release inures to withhold so much of the settlement as may be necessary to reimburse the department to the extent of its interest in the settlement. No judgment, award of or settlement in any action or claim by a medical assistance recipient to recover damages for injuries, disease or disability, in which the department of health and human resources has interest, shall be satisfied without first giving the department notice and reasonable opportunity to establish its interest. If, after being notified in writing of a subrogation claim and possible liability of the recipient, guardian, attorney or personal representative for failure to subrogate the department, a recipient, his or her guardian, attorney or personal representative disposes of the funds representing the judgment, settlement or award, without the written approval of the department, that person shall be liable to the department for any amount that, as a result of the disposition of the funds, is not recoverable by the department. In the event that a controversy arises concerning the subrogation claims by the department, an attorney shall interplead, pursuant to rule twenty-two of the rules of civil procedure, the portion of the recipient's settlement that will satisfy the department exclusive of attorneys fees and costs regardless of any contractual arrangement between the client and the attorney.
W. Va. Code § 9-5-11 (Supp. 1993).
Footnote:
13 13
The 1995 version of West Virginia Code § 9-5-11 states, in full:
Assignment of rights; right of subrogation by department of health and human resources to the rights of recipients of
medical assistance; rules as to effect of
subrogation.
(a) Submission
of an application to the department of health and human resources
for medical assistance is, as a matter of law, an assignment of
the right of the applicant or legal representative thereof, to
recovery from personal insurance or other sources, including, but
not limited to, liable third parties, to the extent of the cost
of medical services paid for by the medicaid program. This
assignment of rights does not extend to medicare benefits.
At the time the application is made, the department shall include
a statement along with such application that explains that the
applicant has assigned all such rights and the legal implications
of making such assignment as provided in this section.
If medical assistance is paid or will be paid to a provider of medical care on behalf of a recipient of medical assistance because of any sickness, injury, disease or disability, and another person is legally liable for such expense, either pursuant to contract, negligence or otherwise, the department of health and human resources shall have a right to recover full reimbursement from any award or settlement for such medical assistance from such other person, or from the recipient of such assistance if he has been reimbursed by the other person. The department shall be legally assigned the rights of the recipient against the person so liable, but only to the extent of the reasonable value of the medical assistance paid and attributable to the sickness, injury, disease or disability for which the recipient has received damages. When an action or claim is brought by a medical assistance recipient or by someone on his or her behalf against a third party who may be liable for the injury, disease, disability or death of a medical assistance recipient, any settlement, judgment or award obtained is subject to the claim of the department of health and
human resources for reimbursement of an
amount sufficient to reimburse the department the full amount of
benefits paid on behalf of the recipient under the medical
assistance program for the injury, disease, disability or death
of the medical assistance recipient. The claim of the department
of health and human resources assigned by such recipient shall
not exceed the amount of medical expenses for the injury,
disease, disability or death of the recipient paid by the
department on behalf of the recipient. The right of subrogation
created in this section includes all portions of the cause of
action, by either settlement, compromise, judgment or award,
notwithstanding any settlement allocation or apportionment that
purports to dispose of portions of the cause of action not
subject to the subrogation. Any settlement, compromise, judgment
or award that excludes or limits the cost of medical services or
care shall not preclude the department of health and human
resources from enforcing its rights under this section. The
secretary may compromise, settle and execute a release of any
such claim in whole or in part.
(b) Nothing in this section shall be construed so as to prevent
the recipient of medical assistance from maintaining an action
for injuries received by him against any other person and from
including therein, as part of the compensatory damages sought to
be recovered, the amount or amounts of his or her medical
expenses, even though such person received medical assistance in
the payment of such medical expenses, in whole or in part.
If the action be
tried by a jury, the jury shall not be informed as to the
interest of the department of health and human resources, if any,
and such fact shall not be disclosed to the jury at any time. The
trial judge shall, upon the entry of judgment on the verdict,
direct that an amount equal to the amount of medical assistance
given be withheld and paid over to the department of health and
human resources. Irrespective of whether the case be terminated
by judgment or by
settlement without trial, from the amount required to be paid to the department of health and human resources there shall be deducted the attorney fees attributable to such amount in accordance with and in proportion to the fee arrangement made between the recipient and his or her attorney of record so that the department shall bear the pro rata portion of such attorney fees. Nothing in this section shall preclude any person who has received medical assistance from settling any cause of action which he may have against another person and delivering to the department of health and human resources, from the proceeds of such settlement, the sums received by him or her from the department or paid by the department for his or her medical assistance. If such other person is aware of or has been informed of the interest of the department of health and human resources in the matter, it shall be the duty of the person to whose benefit the release inures to withhold so much of the settlement as may be necessary to reimburse the department to the extent of its interest in the settlement. No judgment, award of or settlement in any action or claim by a medical assistance recipient to recover damages for injuries, disease or disability, in which the department of health and human resources has interest, shall be satisfied without first giving the department notice and reasonable opportunity to establish its interest. The department shall have sixty days from receipt of such written notice to advise the recipient or his or her representative in writing of the department's desire to establish its interest through the assignment. If no such written intent is received within the sixty-day period, then the recipient may proceed and in the event of full recovery forward to the department the portion of the recovery proceeds less the department's share of attorney's fees and costs expended in the matter. In the event of less than full recovery the recipient and the department shall agree as to the amount to be paid to the department for its claim. If there is no recovery, the department shall under no circumstances be liable for any costs or attorneys fees expended in the matter.
If, after being notified in writing of a
subrogation claim and possible liability of the recipient,
guardian, attorney or personal representative for failure to
subrogate the department, a recipient, his or her guardian,
attorney or personal representative disposes of the funds
representing the judgment, settlement or award, without the
written approval of the department, that person shall be liable
to the department for any amount that, as a result of the
disposition of the funds, is not recoverable by the department.
In the event that a controversy arises concerning the subrogation
claims by the department, an attorney shall interplead, pursuant
to rule twenty-two of the rules of civil procedure, the portion
of the recipient's settlement that will satisfy the department
exclusive of attorneys fees and costs regardless of any
contractual arrangement between the client and the attorney.
(c) Nothing
contained herein shall authorize the department of health and
human resources to institute a class action or multiple plaintiff
action against any manufacturer, distributor or vendor of any
product to recover medical care expenditures paid for by the
medicaid program.
W. Va. Code § 9-5-11 (Supp. 1995).
Footnote: 14 14 This Court is cognizant of the fact that the legislature expressly gives Appellant a right of assignment in the 1995 statute. Appellant maintains its statutory right to assignment clearly demonstrates the legislature's decision to overrule Kittle. On the other hand, James argues the legislature did not intend to give Appellant an actual right to assignment because assignments of tort claims are against public policy. See generally
Syllabus, Traveler's Indemnity Co. v. Rader,
152 W. Va. 699, 166 S.E.2d 157 (1969) (stating that "[a]
provision in an insurance policy providing for subrogation of the
insurer to the rights of the insured to the extent that medical
payments are advanced to such insured by the insurer is distinct
from an assignment of a tort claim and is not invalid as against
the public policy of this State"). As this Court finds
sufficient support in the statute to demonstrate that the
legislature otherwise abrogated the usual and ordinary definition
of subrogation, rendering the made-whole rule inapplicable, we
need not determine what power, if any, the express right of
assignment provides Appellant beyond what previously existed
under the statute.
In addition, it is insignificant that the
manner in which the legislature chose to abrogate the usual and
ordinary meaning of subrogation in the amendments to West
Virginia Code § 9-5-11 is arguably different than the
prioritization found by the Wisconsin court in Waukesha County,
see supra note 11, or the prioritization more recently found by
this Court in Bush v. Richardson, 199 W. Va. 374, 484 S.E.2d 490
(1997), regarding subrogation under a West Virginia's workers'
compensation statute, West Virginia Code § 23-2A-1 (1990). The
legislature was in no way constrained to follow the Wisconsin
statute nor constrained to follow the workers' compensation
statute at issue in Bush. See Robinson v. Charleston Area Med.
Center, Inc., 186 W. Va. 720, 725, 414 S.E.2d 877, 882 (1992)
(providing that "the powers of the legislature are almost
plenary" and the legislature has the power to enact any
statute which is not constitutionally prohibited).
Footnote: 15 15 This language also can be found in the original version of the statute, with the only change being a substitution of the word "secretary" for the word "commissioner." Cf. W. Va. Code § 9-5-11 (1990 & Supp. 1993).
Footnote: 16 16 Although the parties argue over what triggering event gives rise to Appellant's right of reimbursement, this Court finds it is unnecessary to resolve this issue in the present cases because the made-whole rule was abrogated under both amended versions of West Virginia Code § 9-5-11.
Footnote: 17 17 This Court finds absolutely no merit to James' contention that because his mother completed the application for benefits for him, his mother is not a liable "third" party under the statute. Mrs. Kennedy indubitably qualifies as "another person" who is legally liable for the expenses paid by Appellant on behalf of James. W. Va. Code § 9-5- 11 (Supp. 1993 & Supp. 1995).
Footnote:
18 18
In making these determinations, West Virginia Code § 9-5-11(b)
(Supp. 1993 & Supp. 1995) requires the circuit courts to
deduct Appellant's pro rata share of the attorneys' fees.
Specifically, West Virginia Code § 9-5-11(b) (Supp. 1993)
provides, in part, that
from the amount required to be paid to . . . [Appellant] there shall be deducted the attorney fees attributable to such amount in accordance with and in proportion to the fee arrangement made between the recipient and his attorney of record so that . . . [Appellant] shall bear the pro rata portion of such attorney fees.
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