Walker v. ORS (In re A.B.W.)

Walker v. ORS (In re A.B.W.)

IN THE UTAH COURT OF APPEALS

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In the matter of A.B.W., a minor.

______________________________

Judith and Richard Walker,

Petitioners and Appellants,

v.

Office of Recovery Services,

Respondent and Appellee.

MEMORANDUM DECISION
(Not For Official Publication)
 

Case No. 20030202-CA
 

F I L E D
(April 8, 2004)
 

2004 UT App 101

 

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Third District, Salt Lake Department

The Honorable Anthony B. Quinn

Attorneys: John F. Fay, Lehi, for Appellants

Mark L. Shurtleff and Stephanie M. Saperstein, Salt Lake City, for Appellee

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Before Judges Bench, Davis, and Orme.

BENCH, Associate Presiding Judge:

Petitioners argue that the Office of Recovery Services (ORS) should share in their attorney fees because their attorney recovered the funds that fully satisfied the State's Medicaid lien. ORS counters that it should not pay any of Petitioners' attorney fees because it expended its own efforts to collect on the lien, and did not consent to Petitioners' representation.

When seeking to recover medical costs paid to a Medicaid recipient,

the State may (1) take action directly against the third party, for which the State pays its own expenses; (2) grant consent to recipients seeking to pursue the State's claim, whereby the State's recovery will be reduced by reasonable attorney fees . . . ; or (3) refuse consent and proceed against the recipient after the recipient recovers from the third party, in which case the State's recovery shall be reduced by reasonable attorney fees.

State v. McCoy, 2000 UT 39,¶19, 999 P.2d 572. Petitioners argue that the trial court erred in concluding that the present case fits under the first collection approach described in McCoy. We disagree.

Petitioners' granddaughter, A.B.W., was injured in an accident and treated by Intermountain Health Care (IHC). ORS was notified by IHC of the accident and of a third party who was potentially liable for A.B.W.'s expenses. ORS immediately contacted A.B.W.'s mother and inquired about the facts and circumstances of the accident. Later that day, ORS identified State Farm as the third party, and proceeded to speak with an adjuster for State Farm. The adjuster admitted that State Farm accepted responsibility for the accident. The following day, ORS sent a Notice of Lien to State Farm and Petitioners' counsel. The Notice of Lien included a cover page stating that the State was working to recover the full amount of the lien from State Farm and that ORS would not pay any attorney fees for efforts by Petitioners' counsel without a prior written collection agreement. Nearly eleven months after the accident, or six months after ORS had filed its claim, Petitioners' counsel requested ORS's consent to enter into a collection agreement to pursue the Medicaid claim. ORS denied the request, stating that ORS had already investigated the case and State Farm had accepted liability. After denying consent, ORS advised State Farm that Petitioners' counsel did not represent the State's claim and demanded direct payment from State Farm. We conclude that, on its own initiative, ORS discovered the identity of the third party, filed a Notice of Lien, and obtained State Farm's admission of liability. ORS spent its own resources to investigate and seek reimbursement before any request was made by Petitioners' counsel.

The third option identified in McCoy is inapplicable to this case. See 2000 UT 39 at ¶19. The Medical Benefits Recovery Act provides that "a recipient may not file a claim, . . . or settle . . . a claim against a third party for recovery of medical costs . . . for which the department has provided

. . . medical assistance, without the department's written consent." Utah Code Ann. § 26-19-7(1)(a) (1998). A Medicaid recipient must therefore "seek the State's consent before attempting to recover from a third party for any medical costs paid by the State." McCoy, 2000 UT 39 at ¶14. Here, while it is true that Petitioners' counsel sought consent from ORS before trying to recover from State Farm, such consent was not forthcoming.

We therefore affirm.(1)

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Russell W. Bench,

Associate Presiding Judge

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WE CONCUR:

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James Z. Davis, Judge

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Gregory K. Orme, Judge

1. Petitioners also argue that it would be unfair to them not to require ORS to pay their attorney fees because ORS benefitted from Petitioners' actions. While a court has inherent equitable power to award reasonable attorney fees when it deems it appropriate in the interest of justice and equity, it can do so only "in the absence of a statutory or contractual authorization." Stewart v. Utah Pub. Serv. Comm'n, 885 P.2d 759, 782 (Utah 1994). Here, the Medical Benefits Recovery Act clearly applies.