Diaz v. State
| Decision Date | 25 October 2016 |
| Docket Number | DA 16-0023 |
| Citation | 385 Mont. 220,383 P.3d 206,2016 MT 270 |
| Parties | Jeanette Diaz, Leah Hoffmann–Bernhardt, Individually and on Behalf of Others Similarly Situated, Plaintiffs and Appellants, v. State of Montana, Defendant and Appellee. |
| Court | Montana Supreme Court |
For Appellants: Erik B. Thueson, Thueson Law Office, Helena, Montana, James G. Hunt, Jonathan McDonald, Hunt Law Firm, Helena, Montana.
For Appellee: Robert Lukes, Garlington, Lohn & Robinson, PLLP, Missoula, Montana.
delivered the Opinion of the Court.
¶ 1 Jeanette Diaz, Leah Hoffmann–Bernhardt, and others similarly situated, collectively (Diaz), appeal from an order entered in the First Judicial District Court determining the manner in which prejudgment interest on payments due to class members was to be calculated. The underlying payments arose from the Defendant's application of its policy's Coordination of Benefits Provision to avoid payment of medical expenses already paid by a third-party liability carrier without Defendant first undertaking a made whole analysis. The District Court found that, except for claims “arising after December 24, 2009,” interest for all such payments is to commence 30 days following our decision in Blue Cross & Blue Shield of Mont. v. Mont. State Auditor , 2009 MT 318, 352 Mont. 423, 218 P.3d 475 (BC B S ).
For claims arising after December 24, 2009, the District Court required that the State pay interest commencing on the day the underlying medical expenses were incurred. We affirm the District Court order, but remand for correction of the date to be applied for determining the calculation of prejudgment interest.1
¶ 2 Diaz presents the following issue for review:
Whether the District Court correctly determined the date upon which interest should first accrue on claims for members of the State of Montana Health Benefit Plan.
¶ 3 This case has been appealed on three previous occasions on various questions. The underlying claim in these proceedings concerns an exclusion in the State's health benefit insurance plan which allowed the State to coordinate benefits in violation of Montana's made whole laws. The State offers a State Employee Health Benefits Plan (Plan) paid to its employees, retired employees, and dependents of both. The Plan enrolls approximately 32,000 members and provides for coverage of health care costs to health care providers. Significantly, it does not provide for any payments to be made directly to a Plan member.
¶ 4 The Plan had a coordination of benefits provision, in conjunction with payments from third parties, which excludes:
5. Expenses that a member is entitled to have covered, or that are paid under an automobile insurance policy, a premise liability policy, or other liability insurance policy. This includes but is not limited to, a homeowner's policy or business liability policy, or expenses that a member would be entitled to have covered under such policies if not covered by the State Plan.
Both Diaz and Hoffmann–Bernhardt's original medical bills were paid timely and in full by third-party insurers and the State. Diaz filed suit alleging that defendants, third-party administrators and the State, had violated the employees' made whole rights under Montana law.
¶ 5 Our first consideration of coordination of benefits language, such as here, was in 2009 when we decided BCBS
. In BCBS, coordination of benefits language in a Blue Cross & Blue Shield policy excluded coverage for any health care costs incurred by its insured if they received or were entitled to receive payment for those costs from a third-party's automobile or premises liability policy. The issue in BCBS
was whether the coordination of benefits provision violated the made whole requirement in § 33–30–1102, MCA. We held that the legal effect of the coordination provision was to allow Blue Cross & Blue Shield to exercise subrogation before paying anything to its insured. BCBS was the first time this Court examined a coordination of benefits provision in the context of our made whole laws and determined that its utilization violated the made whole requirement of § 33–30–1102, MCA. BCBS , ¶ 19.
¶ 6 The Diaz trilogy is premised upon our decision in BCBS
. The first appeal dealt with Rule 23 class certification. We concluded that the District Court had properly certified a class which addressed issues of the Plan's coordination of benefits language. Diaz v. Blue Cross & Blue Shield , 2011 MT 322, ¶ 50, 363 Mont. 151, 267 P.3d 756 (Diaz I ). The second appeal addressed the definition of the class by the court which included those claims with an “eight-year statute of limitations suggested by the Plaintiffs, but also adopting the one-year filing limitation proposed by the State....” Diaz , ¶ 14. We affirmed the court's class definition, observing that class action orders “are not frozen once made” and that a “District Court maintains discretion to alter the class definition as the case proceeds.” Diaz v. State , 2013 MT 219, ¶ 28, 371 Mont. 214, 308 P.3d 38 (Diaz II ). The third appeal affirmed the district court's award of summary judgment finding the policy's coordination of benefits provision to be de facto subrogation and that the State, which operates as an insurer, is subject to the Insurance Code and Montana's made whole laws. Diaz v. State , 2013 MT 331, ¶¶ 14–16, 372 Mont. 393, 313 P.3d 124 (Diaz III ).
¶ 7 In the current appeal, which is the fourth, Diaz asks us to determine when interest should begin to accrue on the class members' claims. Some of the claims, given the court's broad class definition which we affirmed in Diaz II
, predate our decision in BCBS, while other claims arose following our decision in BCBS
. The District Court addressed both categories of claims and ordered that for pre-BCBS claims, interest commences 30 days following the date of our BCBS decision. For all claims arising subsequent to BCBS, the District Court required the State to pay interest commencing on the day the underlying medical expense was incurred.
¶ 8 “We review a district court's grant or denial of prejudgment interest to determine if the district court's interpretation of the law is correct.” Fitterer Sales Mont., Inc. v. Mullin , 2015 MT 272, ¶ 16, 381 Mont. 107, 358 P.3d 885
.
¶ 9 Whether the District Court correctly determined the date upon which interest should first accrue on claims for members of the State of Montana Health Benefit Plan.
¶ 10 Diaz argues that §§ 18–1–404(1)
and 17–8–242(2), MCA, provide interest should commence 30 days after the date on which payment was due and that the District Court erred in commencing interest on the date BCBS was decided, rather than the date the bills were incurred. The statutory sections to which Diaz refers do, in fact, provide that interest is to commence from “the date on which the payment on the contract became due” and that “[t]his liability is retroactive ... and applies to any contract in effect or an action pending on a contract on or after May 1, 1997.” Section 18–1–404(1)(b), MCA. Further, Diaz argues that, pursuant to § 18–1–404(1)(a), MCA, the State is liable with respect to any contract in the same manner as an individual and that the provision for interest is retroactive whether “due before or after a decision by the government agency or court.” Section 18–1–404(1)(b), MCA. Section 17–8–242(2), MCA, provides that payment is timely if made within 30 days of when the bill is due.
¶ 11 The State does not dispute that it is held to the same standard as an individual when it enters into a contract. Section 18–1–404(1)(a), MCA
. The State contends that interest only accrues when an individual has a right to a monetary recovery and the right has fully vested. As the Plan provides no right of monetary recovery or for direct payment to Plan members, the State argues there is no interest liability until after a monetary right exists and has fully vested. Here, the State maintains the right of recovery was not created and could not vest until this Court determined in BCBS
that the Plan's coordination of benefits provision violated Montana's made whole laws. Additionally, the State maintains that § 18–1–404, MCA
, provides a good faith exception to the rule that interest commences when payment on the contract is due which allows for interest to be assessed following a court's resolution of the good faith dispute.
¶ 12 We have previously stated that “prejudgment interest is to be awarded unless either the law or the creditor prevents the payment of principal.” Byrne v. Terry , 228 Mont. 387, 391, 741 P.2d 1341, 1343 (1987)
(citing Price Building Services, Inc. v. Holms , 214 Mont. 456, 468–69, 693 P.2d 553, 559–60 (1985) ). Section 27–1–211, MCA, sets forth the criteria for an award of prejudgment interest as follows:
Each person who is entitled to recover damages certain or capable of being made certain by calculation and the right to recover that is vested in the person upon a particular day is entitled also to recover interest on the damages from that day except during the time that the debtor is prevented by law or by the act of the creditor from paying the debt.
¶ 13 We have interpreted this statute as having three requirements a party must satisfy to be eligible for an award of prejudgment interest under § 27–1–211, MCA
: (1) an underlying monetary obligation; (2) the amount of recovery must be certain or capable of being made certain by calculation; and (3) the right to recover must vest on a particular day. Kraft v. High Country Motors, Inc. , 2012 MT 83, ¶ 70, 364 Mont. 465, 480–81, 276 P.3d 908 ; see also
New Hope Lutheran Ministry v. Faith Lutheran Church of Great Falls, Inc. , 2014 MT 69, ¶ 70, 374 Mont. 229, 328 P.3d 586 ; Byrne , 228 Mont. at 390, 741 P.2d at 1343 ; Stafford v. Fockaert , 2016 MT 28, ¶ 24, 382 Mont. 178, 366 P.3d 673. The main purpose of prejudgment...
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...or because the change in the law created a new right to maintain an action rather than a new right to seek a specific remedy. See Diaz v. State, 2016 MT 270, ¶ 12 (the applicable statute provided that interest was recoverable from the day that the "right to recover . . . is vested in the pe......