Byrnes v. Martinez

• Decision Date: 19 December 2019
• Docket Number: No. 345061,345061
• Parties: Theresa BYRNES, a legally incapacitated individual, by her conservator and guardian, Paul Byrnes, M.D., Plaintiffs-Appellees/Cross-Appellants, and Paul Byrnes, M.D., Plaintiff, and Department of Health and Human Services, Intervening-Plaintiff-Appellant/Cross-Appellee, v. Jacob MARTINEZ, M.D., CRG Lynwood, LLC doing business as Lynwood Manor Healthcare Center, Victoria Vaccaro, FNP, and Promedica Central Corporation of Michigan, Defendants.
• Court: Court of Appeal of Michigan — District of US

331 Mich.App. 342

952 N.W.2d 607

Theresa BYRNES, a legally incapacitated individual, by her conservator and guardian, Paul Byrnes, M.D., Plaintiffs-Appellees/Cross-Appellants,andPaul Byrnes, M.D., Plaintiff,andDepartment of Health and Human Services, Intervening-Plaintiff-Appellant/Cross-Appellee,

v.Jacob MARTINEZ, M.D., CRG Lynwood, LLC doing business as Lynwood Manor Healthcare Center, Victoria Vaccaro, FNP, and Promedica Central Corporation of Michigan, Defendants.

No. 345061

Court of Appeals of Michigan.

Submitted December 11, 2019, at Detroit.

Decided December 19, 2019

Approved for Publication February 4, 2020, 9:15 a.m.

The Law Offices of Courtney Morgan, PLLC (by Courtney E. Morgan, Jr., and Brian T. Keck, Dearborn) for Theresa A. Byrnes.

Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Kelley T. McLean, Assistant Attorney General, for the Department of Health and Human Services.

Before: Riordan, P.J., and Jansen and Stephens, JJ.

Riordan, P.J. Intervening plaintiff, the Department of Health and Human Services (DHHS), appeals as of right the trial court's order approving final distribution of settlement proceeds. Plaintiff Theresa Byrnes cross-appeals that judgment.¹ This Court is asked to decide whether the trial court committed error requiring reversal when it (1) calculated the amount the DHHS could recover from the settlement proceeds under a Medicaid lien; (2) did not require the DHHS to prove the elements of plaintiff's medical malpractice claim before finding that it was entitled to reimbursement; and (3) limited the DHHS's ability to fully participate in the lawsuit. We affirm in part, reverse in part, and remand to the trial court for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

On August 16, 2014, Byrnes went to the hospital with a severe headache. Scans revealed that she had suffered a subarachnoid hemorrhage (brain bleed) that required surgical intervention. She received rehabilitative care at Lynwood Manor Health Care Center (Lynwood), which is where Lynwood's alleged malpractice occurred. In short, her headaches persisted and she was unable to participate in therapy. Eventually, it was discovered that she had suffered another brain bleed, which required additional surgery. As a result of her brain bleeds, Byrnes suffers from left-sided hemiplegia and is dependent on skilled nursing care for her daily needs.

Byrnes received Medicaid benefits while she was treated at Lynwood. On May 6, 2016, Byrnes and her husband filed a medical malpractice lawsuit against Lynwood. On June 2, 2017, the DHHS moved to intervene in the lawsuit; the trial court granted the motion but ordered that the DHHS's intervention be "silent." Specifically, the order provided:

IT IS ORDERED that the [DHHS] is allowed to intervene as Plaintiff to protect its subrogation right under MCL 400.106(1). Although the intervention will be silent, the [DHHS] can participate in settlement negotiations; exercise any interest it may have with respect to the verdict form; and participate post-verdict. The interests or identity of the [DHHS] shall not be disclosed to the jury. The [DHHS] will not participate at trial, and will make no jury presentation.

The DHHS filed its intervening complaint, and the parties submitted the matter to facilitation in March 2018. At the facilitation, plaintiffs settled their claims with defendants for approximately one-third of what they had demanded. The DHHS participated in the facilitation, but it was not a party to the settlement agreement.

Plaintiffs and the DHHS each filed a motion requesting that the trial court apportion the settlement proceeds and address how much the DHHS would receive in Medicaid reimbursement. At the hearing on the motions, plaintiffs argued that pursuant to the federal antilien statute, 42 USC 1396p(a)(1), the Medicaid claim must be reduced pro rata to 32.45% to reflect the reduced amount that plaintiffs had accepted under the settlement agreement and that it should be further reduced by 39.73% to reflect the amount paid for plaintiffs’ attorney fees and costs. The DHHS argued that under Neal v. Detroit Receiving Hosp. , 319 Mich. App. 557, 903 N.W.2d 832 (2017), the trial court must allocate the settlement proceeds into medical and nonmedical expenses or hold an evidentiary hearing to allocate the proceeds before determining the amount of the Medicaid claim.

The trial court ordered that the DHHS be reimbursed for a portion of the Medicaid claim. The trial court explained that it applied the formula from Neal to reduce the DHHS's claimed Medicaid expenditures proportionate to the amount of the entire settlement and then reduced that sum by a proportionate amount for attorney fees.

The DHHS appeals by right, arguing that the trial court committed error requiring reversal when it calculated this amount and when it limited the DHHS's intervention. Plaintiffs cross-appealed, arguing that the DHHS was not entitled to any reimbursement because it did not first prove the elements of a medical malpractice claim against defendants and, in the alternative, that the trial court erred in its calculations. We consider each of the arguments in turn.

II. STANDARD OF REVIEW

This case involves issues of statutory interpretation, which are reviewed de novo as questions of law.

Id. at 564. "All matters of statutory interpretation begin with an examination of the language of the statute." McQueer v. Perfect Fence Co. , 502 Mich. 276, 286, 917 N.W.2d 584 (2018). When the statutory language is clear and unambiguous, the statute must be applied as written. Id. A court may not read anything "into an unambiguous statute that is not within the manifest intent of the Legislature as derived from the words of the statute itself." Id. "A statutory term or phrase cannot be viewed in isolation, but must be construed in accordance with the surrounding text and the statutory scheme." Id. (quotation marks and citation omitted). We review for an abuse of discretion a trial court's decision on a motion to intervene. Auto-Owners Ins. Co. v. Keizer-Morris, Inc. , 284 Mich. App. 610, 612, 773 N.W.2d 267 (2009). "An abuse of discretion occurs when the court's decision falls outside the range of reasonable and principled outcomes...." In re Brosamer Guardianship , 328 Mich. App. 267, 271, 936 N.W.2d 870 (2019) (quotation marks and citation omitted).

III. CALCULATING MEDICAL EXPENSES

The DHHS argues that the trial court erred when it failed to allocate the settlement proceeds attributable to medical expenses before apportioning them. We agree.

42 USC 1396a(a)(25)(A) requires states to take "all reasonable measures to ascertain the legal liability of third parties (including ... parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service) to pay for care and services ...." 42 USC 1396a(a)(25)(B) requires "that in any case where such a legal liability is found to exist ..., the State ... will seek reimbursement for such assistance to the extent of such legal liability[.]" 42 USC 1396a(a)(25)(H) requires "that ... in any case where a third party has a legal liability to make payment for such assistance, the State has in effect laws under which ... [it] is considered to have acquired the rights of such individual to payment by any other party for such health care items or services." Under 42 USC 1396k(a)(1), "as a condition of [Medicaid] eligibility ..., the individual is required ... (A) to assign [to] the State any rights ... to payment for medical care from any third party; (B) to cooperate with the State ... in obtaining ... [such] payments ... and ... (C) to cooperate with the State in identifying, and providing information to assist the State in pursuing, any third party who may be liable to pay for care and services available under the plan[.]" (Paragraph structure omitted.)

42 USC 1396k(b) provides, "[A]ny amount collected by the State under [such] an assignment ... shall be retained by the State ... to reimburse it for [Medicaid] payments made on behalf of" the recipient, and "the remainder of such amount collected shall be paid" to the recipient. 42 USC 1396a(a)(18) requires that states "comply with the provisions of section 1396p [the federal antilien statute]... with respect to liens[.]" In turn, 42 USC 1396p(a)(1)(A) prevents states from seeking reimbursement of medical expenses from a Medicaid recipient during his or her lifetime "except pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual...."

In an effort to comply with these requirements, Michigan enacted MCL 400.106,² which includes the state's rights of subrogation and assignment and gives the state first priority against proceeds from settlements or judgments against third parties. In relevant part, MCL 400.106(1)(b)(ii ) defines the term "medically indigent individual" as a person who has

subrogated [to the DHHS] any right of recovery that a patient may have for the cost of hospitalization, pharmaceutical services, physician services, nursing services, and other medical services not to exceed the amount of funds expended by [the DHHS] for the care and treatment of the patient. The patient or other person acting in the patient's behalf shall execute and deliver an assignment of claim or other authorizations as necessary to secure the right of recovery to [the DHHS]. ... If a payment is made, [the DHHS], to enforce its subrogation right, may do either of the following: (a) intervene or join in an action or proceeding brought by the injured, diseased, or disabled individual, the individual's guardian, personal representative, estate, dependents, or survivors, against a third person who may be liable for the injury, disease, or disability, or against contractors, public or private, who may be liable to pay or provide medical care and services rendered to an injured, diseased, or disabled individual; (b)

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