Kittle v. Icard, 19718
| Court | Supreme Court of West Virginia |
| Citation | 405 S.E.2d 456,185 W.Va. 126 |
| Decision Date | 23 May 1991 |
| Docket Number | No. 19718,19718 |
| Parties | , 34 Soc.Sec.Rep.Ser. 87, Medicare & Medicaid Guide P 39,584 Annette M. KITTLE and Wheeling Dollar Savings & Trust Co., Guardians of Jeffrey Wayne Van Dyne a.k.a. Jeffrey W. Kittle, an Infant Under the Age of Eighteen Years, Petitioners Below, Appellees, v. Reva June ICARD and Taunja Willis Miller, Commissioner of the West Virginia Department of Human Services, Respondent Below, Appellant. |
Syllabus by the Court
1. Syllabus point 3, Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986).
2. Syllabus point 6, Fuller v. Stonewall Cas. Co. of W.Va. 172 W.Va. 193, 304 S.E.2d 347 (1983).
3. West Virginia Code § 9-5-11 (1990), provides, in part, that after making payments on behalf of a recipient of medical assistance as a result of sickness, injury, disease or disability, the Department of Human Services "shall be legally subrogated to the rights of the recipient against the person so liable...." We find no ambiguity in this provision. However, when the term "subrogation" is given its usual and ordinary meaning, equitable principles must be considered.
4. Reimbursement of State agencies through subrogation is envisioned by the federal Medicaid statute, 42 U.S.C.A. § 1396a(a)(25) (1985), and W.Va.Code § 9-5-11 (1990). However, because equitable principles must be considered, a total recoupment of expenses by the Department of Human Services is not mandated.
John Shank, Deputy Atty. Gen., Charleston, for appellant.
Robert P. Fitzsimmons, William E. Parsons, II, Fitzsimmons & Parsons, Wheeling, and David R. Gold, Gold, Khourey & Turak, Moundsville, for appellees.
The primary issue in this case is whether the West Virginia Department of Human Services (DHS) is entitled to be fully reimbursed for the medical expenses it paid on behalf of the appellees from the amount the appellees eventually received as a settlement from the legally liable party.
The appellees are the guardians of Jeffrey Wayne Van Dyne, a.k.a. Jeffrey W. Kittle, who, at the age of twenty-three months, was seriously injured when he was struck by a car and dragged approximately 65 to 70 feet on a concrete road. The child sustained multiple injuries in the July 8, 1988, accident which resulted in severe scarring to his right leg and buttocks and a permanent disability caused by fractures to the right leg and foot.
At the time of the accident, Jeffrey's mother, Annette M. Kittle, was receiving public assistance from the DHS. As one of the conditions of eligibility for assistance with Jeffrey's medical expenses, Ms. Kittle executed an assignment of benefits form in favor of the DHS. Jeffrey's initial medical expenses were $27,317.41.
Reva June Icard, the driver of the car which struck Jeffrey, had an automobile liability insurance policy with a $100,000 limit. Following an investigation, she was deemed judgment proof by the court below. A settlement offer was made by Ms. Icard's insurer, the Erie Insurance Group, for the full liability coverage of $100,000. B. Michael Whorton, an attorney who was appointed Jeffrey's guardian ad litem, testified that the value of the child's claim was between $200,000.00 and $250,000.00.
On May 15, 1989, Annette M. Kittle filed a petition for infant settlement and declaratory judgment and a petition for a writ of mandamus in the Circuit Court of Marshall County. The petitioner requested that the court approve the settlement offered by the Erie Insurance Group and find that Jeffrey had not been "made whole" by the settlement and that, as a result, the DHS was not entitled to subrogation for the medical expenses it had paid. Further, the petitioner asked the court to find that the DHS was obligated to pay all outstanding medical bills and future medical bills incurred by Jeffrey. The petitioner claimed that the DHS had paid approximately $10,000.00 of the total $27,317.41 in medical bills but refused to pay the remaining bills. 1
In an order dated August 1, 1989, the circuit court granted the relief requested by the petitioner in her declaratory judgment action. Among its findings, the court stated that "[t]he damages which would make Jeffrey Wayne Van Dyne, a.k.a. Jeffrey W. Kittle, whole for all his injuries in this action greatly exceed One Hundred Thirty Thousand Dollars ($130,000.00)." Therefore, the court prohibited the DHS from "seeking to collect subrogation for any expenses paid by its department on behalf of Jeffrey...." The court also found that the DHS had paid approximately $3,500.00 of Jeffrey's outstanding medical bills 2 and that approximately $3,500.00 in additional claims were pending. In this August 1, 1989, order, the court stated that the DHS was "obligated to pay all outstanding bills incurred by Jeffrey ... as a result of the July 8, 1988 collision, including future medical bills and expenses."
The circuit court approved the Erie Insurance Group's settlement offer in an order dated August 3, 1989. The court noted that the child's guardian ad litem had investigated the facts and circumstances surrounding the accident and recommended that it would be in the best interests of the child for the offer to settle to be accepted, "... in view of the circumstances and more particularly in view of the questionable liability of Respondent Reva June Icard and the lack of any meaningful assets above and beyond the insurance policy." 3
In the memorandum opinion of this case which was issued on September 11, 1989, the court discussed Wisconsin's adoption of the "made-whole rule" in Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis.2d 263, 316 N.W.2d 348 (1982). In Rimes, which involved insurer subrogation, the Wisconsin court stated that "[o]ne who claims subrogation rights, whether under the aegis of either legal or conventional subrogation, is barred from any recovery unless the insured is made whole." Id. 316 N.W.2d at 353. Basing its decision in part upon the reasoning of the Wisconsin court in Rimes, the Circuit Court of Marshall County granted Ms. Kittle's petitions for declaratory judgment and a writ of mandamus. In this opinion, the court stated that the DHS "should be ordered to pay all outstanding medical bills incurred by Jeffrey Van Dyne, as well as future medical expenses, provided he continues to qualify for the State medical assistance program."
The DHS now appeals from the circuit court's October 25, 1989, final order, which prohibited the DHS from seeking reimbursement for any expenses it paid for the appellees from the proceeds of the settlement the appellees reached with the third-party tortfeasor, Reva June Icard. First, the DHS argues that the lower court erred when it applied the "made-whole rule" because the court inappropriately applied common law subrogation principles instead of W.Va.Code § 9-5-11 (1990). Further, the DHS contends that it was error for the lower court to order the DHS to pay all outstanding medical bills, past and future, which related to the accident because such an order compels the DHS to make payments without regard to the federal regulations which govern payments to Medicaid providers.
Medicaid is a joint program between federal and state governments. In order to receive federal funds to administer the program, 42 U.S.C.A. § 1396a(a)(25) requires that states seek reimbursement from legally liable third parties in appropriate circumstances. Specifically, the statute provides, in relevant part, that a state plan for medical assistance must:
"(25) provide (A) that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties to pay for care and services (available under the plan) arising out of injury, disease, or disability, (B) that where the State or local agency knows that a third party has such a legal liability such agency will treat such legal liability as a resource of the individual on whose behalf the care and services are made available for purposes of paragraph (17)(B), and (C) that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual and where the amount of reimbursement the State can reasonably expect to recover exceeds the cost of such recovery, the State or local agency will seek reimbursement for such assistance to the extent of such legal liability[.]" (Emphasis added.)
Consistent with this directive, W.Va.Code § 9-5-11(a) (1990) provides, in relevant part, that:
(a) If medical assistance is paid on behalf of a recipient of medical assistance because of any sickness, injury, disease or disability, and another person is legally liable for such expense, the department [division] may recover reimbursement for such medical assistance from such other person, or from the recipient of such assistance if he has been reimbursed by the other person. The department shall be legally subrogated to the rights of the recipient against the person so liable, but only to the extent of the reasonable value of the medical assistance paid and attributable to such sickness, injury, disease or disability; and the commissioner may compromise, settle and execute a release of any such claim.... (Emphasis added.)
The DHS maintains that its right to subrogation exists "directly and exclusively" as a result of W.Va.Code § 9-5-11. We agree that pursuant to both 42 U.S.C.A. § 1396a(a)(25) and W.Va.Code § 9-5-11, the DHS is legally subrogated to...
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