Baker v. Sterling

• Decision Date: 08 April 1976
• Citation: 348 N.E.2d 584,39 N.Y.2d 397,384 N.Y.S.2d 128
• Parties: , 348 N.E.2d 584 Arthur T. BAKER et al., Respondents, v. Jacques STERLING et al., Defendants, Department of Social Services of the City of New York, Appellant. Jack W. GRIFFIN, an infant, by Ruby Griffin, his mother and natural guardian, et al., Respondents, v. Dudley COX, Defendant, Department of Social Services of the City of New York, Appellant. Anthony MARSH, an infant, by Anita Marsh, as mother and natural guardian, et al., Respondents, v. Margaret LA MARCO et al., Defendants, Department of Social Services of the County of Suffolk, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 128

384 N.Y.S.2d 128

39 N.Y.2d 397, 348 N.E.2d 584

Arthur T. BAKER et al., Respondents, v. Jacques STERLING et al., Defendants, Department of Social Services of the City of New York, Appellant.

Jack W. GRIFFIN, an infant, by Ruby Griffin, his mother and natural guardian, et al., Respondents, v. Dudley COX, Defendant, Department of Social Services of the City of New York, Appellant.

Anthony MARSH, an infant, by Anita Marsh, as mother and natural guardian, et al., Respondents, v. Margaret LA MARCO et al., Defendants, Department of Social Services of the County of Suffolk, Appellant.

Court of Appeals of New York.

April 8, 1976.

W. Bernard Richland, Corp. Counsel (Mark D. Lefkowitz and L. Kevin Sheridan, New York City, of counsel), for appellants in the first and second above-entitled actions.

Robert A. Ross, Rockville Center, and Alvin Dorfman, Freeport, for respondents in the first above-entitled action.

Emanuel Bloom and Sol Mintz, New York City, for respondents in the second above-entitled action.

Howard E. Pachman, County Atty. (Patrick A. Sweeney, Northport, of counsel), for appellant in the third above-entitled action.

Morris Zweibel, New York City, for respondents in the third above-entitled action.

WACHTLER, Judge.

In 1969 the plaintiff Shirley Baker, then 16 years old, was hit by an automobile and, as a result, lost her right leg and suffered internal injuries. At the time of the accident she was the beneficiary of public assistance and her hospital expenses, totaling $10,579, were paid by the Department of Social Services of the City of New York (hereafter the Department). Plaintiff subsequently commenced an action for personal injuries and, in a verified bill of particulars, asserted a claim for hospital expenses as part of her special damages. The Department then served and filed a notice of lien in the plaintiff's action pursuant to section 104--b of the Social Services Law to recover the amount of the hospital expenses paid on her behalf. ¹ Plaintiff moved to vacate the lien and the court, conceding that 'there are conflicting decisions on this issue', granted the motion. Thereafter the plaintiff settled her suit against the defendants for a lump sum of $175,000.

On appeal by the Department the Appellate Division reversed the order vacating the lien and remanded 'for further proceedings, including a determination as to whether the settlement of the infant's cause of action included reimbursement for the medical and hospital expenses incurred and, if appropriate, the reasonableness of the asserted lien based upon such assistance.' The Appellate Division also granted the Department's motion for leave to appeal and certified the following question for our review: 'Was the order of this Court, which reversed the order of the Supreme Court, properly made?'

The order of the Appellate Division should be affirmed and the certified question answered in the affirmative.

At common law the recipient of public assistance was not obliged to repay, and no action could be brought to recover sums expended for his care and maintenance (City of Albany v. McNamara, 117 N.Y. 168, 22 N.E. 931; see, also, Graham, Public Assistance: The Right to Receive; The Obligation to Repay, 43 N.Y.U.L.Rev. 451, 478). In 1901 the Legislature altered the common-law rule by enacting section 57 of the Poor Law (L.1901, ch. 664), the first statute in this State empowering welfare agencies to recover amounts paid for public assistance. Section 104 of the Social Services Law, the current version of the original statute, provides in part: '1. A public welfare official may bring action or proceeding against a person discovered to have real or personal property, or against the estate or the executors, administrators and successors in interest of a person who dies leaving real or personal property, if such person, or any one for whose support he is or was liable, received assistance and care during the preceding ten years, and shall be entitled to recover up to the value of such property the cost of such assistance or care.'

Subdivision 2 of this statute--originally enacted in 1936 (L.1936, ch. 463)--imposes certain limitations on the agency's right to recover from infants, public assistance paid on their behalf. Prior to 1974 subdivisi 2 read as follows: '2. No right of action shall accrue against an infant by reason of the assistance or care granted to him unless at the time it was granted the infant was possessed of money and property in excess of his reasonable requirements as described in section one hundred one.' ²

In 1964 the Legislature added a new section which empowered the agencies to establish a lien in personal injury actions when the injured party had received public assistance after the injury (L.1964, ch. 382). Section 104--b of the Social Services Law states, in pertinent part: '1. If a recipient of public assistance and care shall have a right of action, suit, claim, counterclaim or demand against another on account of any personal injuries suffered by such recipient, then the public welfare official for the public welfare district providing such assistance and care shall have a lien for such amount as may be fixed by the public welfare official not exceeding, however, the total amount of such assistance and care furnished by such public welfare official on and after the date when such injuries were incurred.' Once the notice and filing requirements are satisfied the lien attaches to the proceeds of any judgment or settlement, including a settlement obtained prior to commencement of the suit (Social Services Law, § 104--b, subd. 3). This statute contains no exceptions or other special provisions relating to infants' judgments or settlements.

The plaintiff urges that the two statutes must be read together. The limitation on recovery against infants' funds should apply whenever the Department seeks reimbursement, whether by direct action or proceeding pursuant to section 104 or by enforcement of the lien under section 104--b. Thus the Department may only recover 'excess' funds, and since hospital expenditures are 'necessaries' they may never be recovered from an infant. Followed to its logical conclusion then, an infant who obtains a judgment for the full amount demanded in a personal injury action would be entitled to retain not only the sums attributable to his personal loss, but also amounts intended to 'reimburse' him for hospital expenses paid on his behalf by the Department.

The Department on the other hand urges that the two statutes create 'independent and distinct actions' so that the restrictions imposed in one have no bearing on the other. Its right to enforce the lien is governed solely by section 104--b which contains no special rules exempting an infant's judgment or settlement from the operation of the lien. The right is subject only to the general limitation that the lien shall not exceed the total amount of public assistance and care furnished on or after the date the injuries were incurred. Here the Department has complied with the requirements of the statute and it claims a lien against the plaintiff's settlement for the full amount of the hospital expenses. The statute says that the lien attaches to the 'proceeds', and that includes the general proceeds; not just the amount of the settlement which represents reimbursement for hospital expenses.

Thus according to the Department, if the lien is large and the settlement relatively small because of insurance policy limitations, an infant seriously and permanently injured may well recover nothing. The lien would consume all the proceeds even though the claim for hospital expenses actually represents a small portion of the final settlement. The Department concedes that this approach 'may well work a hardship' in particular cases. However it urges that this should rarely occur because the agency can generally be expected to exercise restraint in such a case by agreeing to reduce its lien.

Initially we note that section 369 of the Social Services Law prohibits the Department from recovering for medical assistance 'correctly paid' except against the estate of a recipient who was over 65, and then only under certain limited circumstances (Social Services Law, § 369, subd. 1, par. (b)). The statute also provides, in paragraph (a) of subdivision 1 that: '(a) no lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under this title, except pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual'.

This statute went into effect on April 30, 1966. Several months later the Legislature amended subdivision 1 by adding the following caveat: 'nothing contained in this subdivision shall be construed to alter or affect the right of a public welfare official to recover the cost of medical assistance provided to an injured person in accordance with the provisions of section one hundred four--a (now 104--b) of this chapter.'

The Federal Government has similar statutes generally prohibiting recovery for medical assistance from the property of a recipient (U.S.Code, tit. 42, § 1396a, subd. (a), par. (18); Social Security Act, tit. XIX, § 1902), but permitting recovery in tort cases when a third party is liable 'to pay for care and services (available under the plan) arising out of the injury' (U.S.Code, tit. 42, § 1396a, subd. (a), par. (25)). Apparently in section 369 of the Social Services Law the State has adopted the restrictions imposed by Federal law in order to qualify for Federal grants. Reading the general provisions together with the caveat it appears that although a recipient's property is generally immune from recovery for medical assistance, a recipient's cause of action for personal injuries is not the type of 'property' which was intended to be protected by this particular statute or its Federal...