Office of Recovery Services v. McCoy, 970340.

• Decision Date: 14 April 2000
• Docket Number: No. 970340.,970340.
• Citation: 999 P.2d 572,2000 UT 39
• Parties: STATE of Utah, By and Through the OFFICE OF RECOVERY SERVICES, Plaintiff and Appellee, v. John L. McCOY, Defendant and Appellant.
• Court: Utah Supreme Court

999 P.2d 572

2000 UT 39

STATE of Utah, By and Through the OFFICE OF RECOVERY SERVICES, Plaintiff and Appellee, v. John L. McCOY, Defendant and Appellant.

No. 970340.

Supreme Court of Utah.

April 14, 2000.

Jan Graham, Att'y Gen., Stephanie M. Saperstein, Karma Dixon, Asst. Att'ys Gen., Salt Lake City, for plaintiff.

John L. McCoy, pro se.

RUSSON, Associate Chief Justice:

¶1 Defendant John L. McCoy appeals from the trial court's grant of summary judgment in favor of the State requiring McCoy to reimburse the State for medical assistance received by McCoy's client, David Sevey.

BACKGROUND

¶2 On July 10, 1993, David Sevey was injured when he slipped and fell on a sidewalk in front of a K-Mart store. The property was owned by G. Walter Gasser & Associates ("Gasser").¹ Lacking adequate funds to pay his medical bills, which exceeded $16,000, Sevey requested medical assistance from the State of Utah. The State paid $8,846.92 toward Sevey's medical bills.

¶3 Thereafter, Sevey retained an attorney, John L. McCoy, to seek recovery of damages from Gasser. Before proceeding against any potentially liable parties, McCoy contacted the Office of Recovery Services ("ORS") requesting consent to bring an action on the State's behalf against Gasser's insurer. On July 19, 1994, ORS wrote a letter to McCoy declining McCoy's request to represent ORS and stating that ORS would seek full recovery directly from any liable third parties. Additionally, ORS requested that McCoy "discuss particulars of this case with [ORS] prior to any settlement negotiations." McCoy wrote a letter responding to ORS, explaining, "Your letter of July 19, 1994 leaves me no other choice but not to include your claim for medical expenses in any action that I take." On July 21, 1994, ORS sent notices to Sevey, McCoy, and K-Mart explaining that the State has a lien against any money payable to Sevey up to $8,846.92

¶4 On July 20, 1995, McCoy sent a demand letter to Gasser's insurer, Great American Insurance Company ("Great American"),² demanding payment on behalf of Sevey. Specifically, McCoy requested to settle with Great American "for the sum of $35,000.00, plus medical bills of $8,000.00." Explaining his demand for medical costs, McCoy noted in his letter to Great American:

[Sevey's] medical bills from the tibia and fibula fracture are $7,297.66, copies of which are attached. These do not include the first bills for the removal of the patella which amounted to roughly $8,000.00, which the State of Utah paid. The State of Utah will not allow me to pursue their claim, therefore, I do not make any demand for any medical bills that the State has paid or will pay.

McCoy added that Sevey's total medical bills "even excluding the medical bills that the State has advanced are $8,000.00."

¶5 McCoy eventually settled Sevey's dispute with Great American, and on October 9, 1995, Great American issued two checks to McCoy, both listing McCoy and Sevey as co-payees. One check for $22,800 was labeled as payment for "BODILY INJURY"; the other check for $5,000 was labeled as "MEDICAL PAYMENT." Upon receipt of the settlement proceeds, McCoy placed $8,846.92 in his client trust account. On October 13, 1995, Sevey signed a document releasing both K-Mart and Gasser from "any and all claims" resulting from the slip-and-fall incident.

¶6 Shortly thereafter, the State commenced this action against McCoy pursuant to the Utah Medical Benefits Recovery Act (the "Act"), alleging that the State was entitled to recover $8,846.92 from the settlement proceeds. The State moved for summary judgment on its claim, arguing that the Act required McCoy to reimburse the State in full.

¶7 In response, McCoy contended first that the State's claim under the Act was preempted by a federal anti-lien statute. Second, McCoy claimed that the State was not entitled to reimbursement from the settlement proceeds because he specifically excluded the $8,846.92 from his settlement negotiations. Third, in the alternative, McCoy contended that if the State was entitled to reimbursement from the settlement proceeds, the State's recovery was limited to the $5,000 designated as medical payment. Fourth, McCoy argued that in the event he must reimburse the State, he is entitled to attorney fees for procuring the settlement.

¶8 The trial court granted the State's motion for summary judgment, ordering McCoy to pay the full amount of $8,846.92 to the State with no reduction for attorney fees. McCoy, now appeals.

STANDARD OF REVIEW

¶9 Summary judgment is proper when there are no issues of material fact and the moving party is entitled to judgment as a matter of law. See Utah R. Civ. P. 56(e); Thompson v. Jess, 1999 UT 22, ¶ 12, 979 P.2d 322. We review a trial court's grant or denial of summary judgment for correctness and accord no deference to the trial court's legal conclusions. See Malibu Inv. Co. v. Sparks, 2000 UT 30, ¶ 12, 996 P.2d 1043. We also note that when interpreting a legislative enactment, our primary role is to give effect to the legislature's intent as set forth in the statute's plain language. See Evans v. State, 963 P.2d 177, 184 (Utah 1998).

ANALYSIS

I. PREEMPTION UNDER THE FEDERAL ANTI-LIEN STATUTE

¶10 McCoy's first argument is that the State's claim for reimbursement under the Act is preempted by the federal anti-lien statute, which reads:

No lien may be imposed against the property of any individual prior to his death on account of medical assistance paid ... on his behalf under the State plan.

42 U.S.C.A. § 1396p(a)(1) (Supp.1999). This issue was resolved by two cases decided after this appeal was filed, S.S. v. State, 972 P.2d 439 (Utah 1998), and Wallace v. Estate of Jackson, 972 P.2d 446 (Utah 1998). S.S. and Wallace held that under the Act, any third-party recovery does not become the "property" of the recipient until the recipient has reimbursed the State for all medical assistance the State provided. See S.S., 972 P.2d at 442; Wallace, 972 P.2d at 448. As a result, the State's attempt to recover from the settlement proceeds does not amount to a lien upon the recipient's "property." See S.S., 972 P.2d at 442; Wallace, 972 P.2d at 448. Therefore, the Act does not conflict with the federal statute.

II. THE STATE'S RIGHT TO REIMBURSEMENT

¶11 McCoy next argues that the State is not entitled to any reimbursement from the settlement proceeds because McCoy specifically excluded the State's claim for $8,846.92 from his settlement negotiations. Alternatively, McCoy contends that, if the State is entitled to reimbursement from the proceeds, the State's recovery is limited to the $5,000 specifically designated as medical payment.

¶12 Three provisions of the Act are determinative of McCoy's arguments. First, the Act provides:

(1) (a) To the extent that medical assistance is actually provided to a recipient, all benefits for medical services or payments from a third party otherwise payable to or on behalf of a recipient are assigned by operation of law to the department if the department provides, or becomes obligated to provide, medical assistance, regardless of who made application for the benefits on behalf of the recipient.

Utah Code Ann. § 26-19-4.5(1)(a) (1998) (emphasis added).³ Second, the Act provides in pertinent part:

(b) The department's claim to recover medical assistance provided as a result of the injury ... is a lien against any proceeds payable to or on behalf of the recipient by that third party.

Id. § 26-19-5(1)(b) (emphasis added). Third, the Act states:

(b) The department may recover in full from the recipient or any party to which the proceeds were made payable all medical assistance which it has provided and retains its right to commence an independent action against the third party....

Id. § 26-19-7(2)(b) (emphasis added). Thus, under section 26-19-4.5, the settlement proceeds are assigned by operation of law to the State to the extent that the State has provided benefits to Sevey, i.e., $8,846.92. Additionally, under section 26-19-5, the State possesses a lien against the entire settlement proceeds, including both the amount designated as medical payment and the amount designated as bodily injury payment. Finally, under section 26-19-7, the State is entitled to recover in full from the settlement proceeds all of the medical assistance the State provided to Sevey. Therefore, under these provisions of the Act, the State is entitled to recover $8,846.92 from the settlement proceeds.

III. MCCOY'S ENTITLEMENT TO ATTORNEY FEES

¶13 Finally, McCoy argues that if the State is entitled to recover from the settlement proceeds, he is entitled to recover attorney fees from the State for procuring the settlement. The State contends that McCoy is not entitled to attorney fees under the Act because he lacked consent to bring an action on the State's behalf.

¶14 Before determining whether the Act requires the State to pay attorney fees, we must examine the provision of the Act that requires consent to bring a claim on the State's behalf. This provision states:

(1) (a) A recipient may not file a claim, commence an action, or settle, compromise, release, or waive a claim against a third party for recovery of medical costs for an injury, disease, or disability for which the department has provided or has become obligated to provide medical assistance, without the department's written consent.

Utah Code Ann. § 26-19-7(1)(a) (1998). Thus, under this statute, a recipient must seek the State's consent before attempting to recover from a third party for any medical costs paid by the State. We explained in S.S. v. State that "[t]his provision protects both the liable third party and the State from ill-informed or devious action by the recipient." 972 P.2d 439, 441 (Utah 1998).

¶15 In the instant case, it is undisputed that McCoy lacked the State's consent to pursue the State's claim against Great American. McCoy requested, and the State denied, consent to pursue the State...