Houghton v. Department of Health

• Citation: 206 P.3d 287,2008 UT 86
• Decision Date: 16 December 2008
• Docket Number: No. 20070197.,20070197.
• Parties: Paul HOUGHTON and Billie Henderson, individually and each as representative of a class; and Damian Henderson, Wayne Rubens, Ron Roes, and Susan Roes, who are other members of these classes, similarly situated, Plaintiffs and Appellants, v. DEPARTMENT OF HEALTH; The Office of Recovery Services; The Department of Human Services; The State of Utah; Rod L. Betit, Director of the Department of Health and Director of Department of Human Services; Emma Chacone, Executive Director of the Office of Recovery Services; and John Does 1-50 and Jane Does 1-50, Defendants and Appellees.
• Court: Utah Supreme Court

206 P.3d 287

2008 UT 86

Paul HOUGHTON and Billie Henderson, individually and each as representative of a class; and Damian Henderson, Wayne Rubens, Ron Roes, and Susan Roes, who are other members of these classes, similarly situated, Plaintiffs and Appellants, v. DEPARTMENT OF HEALTH; The Office of Recovery Services; The Department of Human Services; The State of Utah; Rod L. Betit, Director of the Department of Health and Director of Department of Human Services; Emma Chacone, Executive Director of the Office of Recovery Services; and John Does 1-50 and Jane Does 1-50, Defendants and Appellees.

No. 20070197.

Supreme Court of Utah.

December 16, 2008.

Rehearing Denied April 23, 2009.

Robert B. Sykes, Alyson E. Carter, Salt Lake City, for appellants.

Mark L. Shurtleff, Att'y Gen., Philip S. Lott, Peggy E. Stone, Debra J. Moore, Asst. Att'ys Gen., Salt Lake City, for appellees.

PARRISH, Justice:

INTRODUCTION

¶ 1 This interlocutory appeal presents two issues. The first concerns the timeliness of the petition for interlocutory review. We hold that the petition was timely. The second concerns the district court's decertification of a class of plaintiffs suing the State to recover attorney fees pursuant to State v. McCoy.¹ We hold that the district court erroneously interpreted the law when it concluded that no common issues of fact predominated because calculating reasonable attorney fees involved a fact-intensive inquiry. In the context of a McCoy claim, reasonable attorney fees are calculated according to the plaintiff's attorney fee agreement, subject to the statutorily mandated thirty-three percent cap.

BACKGROUND

¶ 2 This is the fourth time this case has arrived at our court on an interlocutory appeal during its thirteen years of litigation,² and the parties have yet to finish discovery. Because we have set out the facts in our prior opinions, we will limit our factual recitation to what is necessary to provide context and to address the issues in this interlocutory appeal.

¶ 3 The Medicaid Benefits Recovery Act³ authorizes the State to place a priority lien on settlements or awards received by Medicaid recipients from third parties.⁴ This provides a means for the State to reimburse itself for medical services provided to the recipient when the recipient later receives compensation from a third party. In State v. McCoy, we held that if the State satisfies its lien from an award or settlement obtained through the efforts of a private attorney, "the State must pay the attorney fees incurred in procuring the State's share of the settlement proceeds."⁵

¶ 4 The plaintiffs in this case are Medicaid recipients who obtained recoveries through the efforts of private attorneys and later had those recoveries reduced by the State's priority lien. The plaintiffs are seeking reimbursement from the State for "reasonable attorney fees"⁶ under McCoy ("McCoy claims").

¶ 5 In our most recent interlocutory review of this case, we clarified that McCoy was not limited to its facts.⁷ We held that the State must pay its "proportionate share of attorney fees" in "all cases where the State satisfie[d] its lien" through a recovery obtained by a private attorney and where the attorney requested consent from the State pursuant to Utah Code section 26-19-7(1)(a).⁸ We then remanded the case to the district court.⁹

¶ 6 On remand, the district court first considered a motion to decertify filed by the State before the Houghton III interlocutory appeal. Finding "no common issue that would justify the case continuing as a class action," the district court ordered limited discovery on fifty claims and additional briefing on whether the class should be decertified. On December 22, 2006, the district court issued an order decertifying the class (the "Decertification Order"). The district court concluded that no common issues of fact predominated because the plaintiffs could only prevail under McCoy by proving that the State did not pay reasonable attorney fees and the reasonableness of the attorney fees paid by the State was a fact-specific inquiry based on the totality of the circumstances. For cases in which the plaintiffs alleged that the State underpaid attorney fees, the district court concluded that issues of waiver, estoppel, or accord also precluded class certification.

¶ 7 Recognizing that its decision to decertify the class would impact other pending motions, the district court requested additional briefs from the parties addressing the impact of the Decertification Order. On January 9, 2007, the plaintiffs sent the district judge a letter expressing uncertainty regarding the correct time to appeal, in response to which the district court issued a minute entry on January 12, 2007, indicating that the Decertification Order was "provisional." On January 23, 2007, the parties argued the remaining motions to the district court. Following oral argument, the district court directed the State's counsel to prepare the court's order on the motions. The district court signed the prepared order on February 15, 2007. The new order did not substantively change or modify the December 22 order other than stating that it was now "final." The plaintiffs filed a petition for interlocutory review on March 7, 2007.

¶ 8 We provisionally granted permission for this interlocutory appeal on May 29, 2007. Our grant of review was limited to two questions:

1. Whether this Court has jurisdiction, pursuant to rule 5 of the Rules of Appellate Procedure, to review the December 22, 2006 "order on motion for decertification", in light of the district court's subsequent minute entry, dated January 12, 2007, designating the December 22 order "provisional", and its February 15, 2007 order designating the December 22 order as "final" without making any modifications to it.

2. If so, whether the district court's December 22, 2006 decision and order decertifying the class was erroneous.

¶ 9 We have jurisdiction to hear interlocutory appeals pursuant to Utah Code section 78A-3-102(3)(j) (Supp.2008).

ANALYSIS

I. WE HAVE JURISDICTION TO HEAR THIS INTERLOCUTORY APPEAL BECAUSE THE PLAINTIFFS APPEALED WITHIN TWENTY DAYS OF THE DATE THAT THE COURT'S ORDER WAS SUBMITTED AND SIGNED IN COMPLIANCE WITH RULE 7(f)(2)

¶ 10 The State argues that we do not have jurisdiction over this appeal because the petition for interlocutory review was untimely. Specifically, the State argues that the Decertification Order constituted the entry of an order under rule 58A(c) of the Utah Rules of Civil Procedure and that the opportunity to file for interlocutory review expired twenty days after December 22, 2006, the date when the Decertification Order was issued.¹⁰

¶ 11 The State's argument fails because rule 58A(c) addresses the entry of a judgment, not the entry of an order.¹¹ Rule 7(f) governs court orders. "An order includes every direction of the court, including a minute order entered in writing, not included in a judgment."¹² Unlike judgments, orders are not automatically final. According to the plain language of rule 7(f)(2), following the entry of an order, "the prevailing party shall, within fifteen days after the court's decision, serve upon the other parties a proposed order in conformity with the court's decision."¹³ In Code v. Utah Department of Health, we addressed when the time for appeal from a final order begins to run.¹⁴ We held that "no finality will be ascribed to a memorandum decision or minute entry for purposes of triggering the running of the time for appeal" until the prevailing party prepares and submits a proposed order, unless the court explicitly directs that no order needs to be submitted.¹⁵ Moreover, "if the court does not explicitly direct that there is no need to submit an order and the prevailing party fails to submit an order, the appeal rights of the nonprevailing party will extend indefinitely."¹⁶ Although Code addressed an appeal from a final order, not an interlocutory appeal, the same rule applies for ascribing finality to an interlocutory decision. To hold otherwise would require the parties to "engage in a guessing game to divine the court's intentions,"¹⁷ as happened in this case. According to the plain language of rule 7(f)(2), unless the court specifically directs otherwise, the prevailing party must submit an order to the court before the time for appeal will begin running.¹⁸

¶ 12 In this case, the Decertification Order was a memorandum decision that Judge Quinn did not intend to be final for the purposes of interlocutory appeal. It was not a judgment. Judge Quinn did not request the State to prepare an order, nor did he explicitly state that no order was required. Furthermore, the memorandum decision itself contemplated further action by requesting additional briefing from the parties regarding the remaining motions. The minute entry on January 12, 2007, in response to the plaintiffs' confusion regarding the time for appeal, further clarified Judge Quinn's intent by stating that the Decertification Order was "not intended as a final order" because the additional motions before the court "may result in modification of the Order." Furthermore, following oral argument on the remaining issues, Judge Quinn directed the State to submit an order, and the final order explicitly stated that "the December 22, 2006 Order was not intended to be a final order until after consideration of the additional motions addressed herein." If the State intended that the time for an interlocutory appeal begin to run on December 22, the State should have submitted an order in compliance with rule 7(f)(2). Otherwise, as we noted in Code, "the appeal rights of the nonprevailing party will extend indefinitely."¹⁹

¶ 13 Because the plaintiffs submitted their petition within twenty days of February 15, 2007, the date that Judge Quinn signed the order prepared and submitted by the State, the plaintiffs' petition for interlocutory review is timely.

¶ 14 Having...