Pivonka v. Sears

• Decision Date: 06 December 2018
• Docket Number: No. 106749,106749
• Citation: 2018 Ohio 4866,125 N.E.3d 343
• Parties: Michael A. PIVONKA, et al., Plaintiffs-Appellees v. Barbara SEARS, Director of Ohio Department of Medicaid, et al., Defendants-Appellants
• Court: Ohio Court of Appeals

125 N.E.3d 343

2018 Ohio 4866

Michael A. PIVONKA, et al., Plaintiffs-Appellees

v.Barbara SEARS, Director of Ohio Department of Medicaid, et al., Defendants-Appellants

No. 106749

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: December 6, 2018

Michael DeWine, Ohio Attorney General, BY: Henry G. Appel, Principal Assistant Attorney General, 30 East Broad Street, 26th Floor, Columbus, Ohio 43215, ATTORNEYS FOR APPELLANTS

David H. Krause, Reminger Co., L.P.A., 200 Civic Center Drive, Suite 800, Columbus, Ohio 43215, James A. Deroche, Garson Johnson, L.L.C., 1600 Midland Building, 101 West Prospect Avenue, Cleveland, Ohio 44115, Christian R. Patno, McCarthy Lebit Crystal & Liffman Co., 101 Prospect Avenue, West, 1800 Midland Building, Cleveland, Ohio 44115, Patrick J. Perotti, Dworken & Bernstein Co., L.P.A., 60 South Park Place, Painesville, Ohio 44077, ATTORNEYS FOR APPELLEES

BEFORE: Boyle, P.J., Blackmon, J., and Jones, J.

JOURNAL ENTRY AND OPINION

MARY J. BOYLE, P.J.:

{¶ 1} Defendant-appellant, Barbara Sears, the director of Ohio's Department of Medicaid ("the Department"), appeals the trial court's order granting the plaintiffs' motion to certify a class. The Department raises five assignments of error for review:

1. R.C. 5160.37(P) deprived the court of subject matter jurisdiction to proceed or certify a class.

2. The court erred by including individuals in the class who repaid money before April 6, 2009.

3. The court erred by finding that Civ.R. 23(B)(2) applied despite the fact that Plaintiffs' primary goal was monetary relief.

4. The court erred by failing, while reviewing Civ.R. 23(B)(2) and (3), to examine whether any damage calculations would be made class-wide or would require mini-trials.

5. The court erred by failing to determine whether class certification was clearly superior to the administrative proceedings under R.C. 5160.37(L).

{¶ 2} Finding no merit to the Department's assignments of error, we affirm.

I. Procedural History and Factual Background

{¶ 3} On April 5, 2013, Michael Pivonka and Lisa Rijos, plaintiffs-appellees, filed a class action complaint for equitable relief in the court of common pleas against the Department. Prior to the instant litigation, plaintiffs separately recovered money from tort litigation against third parties, and the Department received a portion of plaintiffs' recoveries due to the fact that plaintiffs received Medicaid benefits in the form of payments for medical expenses.

{¶ 4} Specifically, in September 2005, Pivonka reached a settlement agreement with a third party whose negligence injured him. Pivonka received Medicaid benefits for his injuries. The Department collected $7,108.74 from Pivonka's settlement. In 2013, Rijos received a jury verdict based on injuries she suffered as the result of a negligent third party. She received Medicaid benefits that paid for her medical expenses. The Department collected $703.16 from that judgment.

{¶ 5} Plaintiffs' complaint alleged that they "were forced to forfeit a portion of their tort recover[ies] to [the Department] pursuant to a demand by [the Department] of a right of subrogation pursuant to Section 5101.58 of the Ohio Revised Code." Plaintiffs' complaint alleged that the Department was unjustly enriched because the Department "wrongfully collected" monies from them as well as "a class of similarly situated tort victims" under R.C. 5101.58, which they argued was invalid according to two United States Supreme Court cases, Arkansas Dept. of Health & Human Servs. v. Ahlborn , 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), and Wos v. E.M.A. , 568 U.S. 627, 133 S.Ct. 1391, 185 L.Ed.2d 471 (2013). In those cases, the court held that states may only recover the portion of a Medicaid recipient's settlement or judgment that is actually attributable to medical expenses. Ahlborn at 282, 126 S.Ct. 1752 ; Wos at 628-629, 133 S.Ct. 1391.

{¶ 6} Plaintiffs further alleged that the Department's "collection of monies pursuant to [ R.C. 5101.28 ] was and is wrongful and all monies [the Department] collected must be disgorged." Plaintiffs asked the court to declare a class action under Civ.R. 23, declare R.C. 5101.28 as preempted by the federal Medicaid statute's anti-lien provision as unconstitutional, and to "issue a restitution Order in equity requiring [the Department] to repay all amounts collected * * * pursuant to the invalid and unconstitutional Subrogation Statute[.]" Plaintiffs also requested post-judgment interest and "further relief in equity as this Court deems necessary and proper." Plaintiffs moved for class certification shortly after.

{¶ 7} The Department moved to dismiss the complaint, arguing that the cases upon which plaintiffs relied, Wos and Ahlborn , were distinguishable and that "even if R.C. 5101.58 is inconsistent with [or preempted by] federal law (which it is not), federal law required Plaintiffs to repay [the Department] the portions of their tort recoveries that included damages for medical expenses."

{¶ 8} Plaintiffs opposed the Department's motion, and the trial court denied the motion to dismiss. As a result, the Department subsequently filed an answer, denying the allegations and asserting affirmative defenses.

{¶ 9} In August 2013, the Department moved for summary judgment and opposed plaintiffs' motion for class certification. The Department argued that (1) plaintiffs did not meet the "need requirement," (2) "the proposed class does not distinguish between various types of potential class members[,]" (3) plaintiffs failed to attach evidence to their motion, (4) plaintiffs "will not be adequate class representatives because they do not have meritorious claims[,]" and (5) "the class is improperly defined because there is only a four year statute of limitations." The Department also argued that Wos and Ahlborn were distinguishable, pointed to statutory interpretation rules related to R.C. 5101.58 that supported its position, and argued that R.C. 5101.58 is constitutional and that plaintiffs were not entitled to restitution. It additionally argued that Pivonka was barred from recovery because he settled his claim with the Department.

{¶ 10} The plaintiffs filed a reply brief in support of their motion for class certification and filed a separate motion opposing the Department's motion for summary judgment.

{¶ 11} In September 2015, the Department moved for a judgment on the pleadings. Plaintiffs opposed this motion as well.

{¶ 12} The trial court denied the Department's motion for summary judgment and motion for judgment on the pleadings.

{¶ 13} The Department then filed a supplemental brief in opposition to class certification based on "two significant developments that impact class certification: (1) the General Assembly has added an administrative process that permits individuals to request a hearing to challenge the default allocation in R.C. 5160.37 and former R.C. 5101.58," and (2) the Ohio Supreme Court's decision in Cullen v. State Farm Mut. Auto Ins. Co. , 137 Ohio St.3d 373, 2013-Ohio-4733, 999 N.E.2d 614.

{¶ 14} In December 2017, the trial court granted plaintiffs' motion for class certification. As to the Department's argument that plaintiffs' motion for class certification should be denied for lack of evidence, the trial court stated, " Civil Rule 23 does not explicitly require evidence on a motion to certify a class." The trial court continued,

Here, there appear to be no material issues of fact about the course of the named plaintiffs' dealings with the [Department] and the dispute turns on the purely legal question of whether the department had any legal right to put a lien on tort recoveries of the named plaintiffs and the rest of the class. Other than the numerosity requirement of Civil Rule 23(A)(1), it is hard to see what evidence would make a difference to a determination of the other threshold class requirements.

{¶ 15} Turning to the Department's argument that the validity of the subrogation statute must be decided before class certification, the trial court stated,

[T]he essence of this lawsuit — the claim that the subrogation statute is invalid and thus anything collected under it must be restituted — is exactly what makes it suitable for class action status because it will settle the issue once in one case for all class members. If anything, a determination on the merits is best made only after a class is certified, not before.

{¶ 16} The trial court then analyzed the requirements for maintaining a class action under Civ.R. 23(C) and the Department's arguments in opposition. The trial court found that plaintiffs' proposed class satisfied the identifiability, numerosity, commonality, and typicality requirements, that Pivonka and Rijos were adequate class representatives, and that there was adequacy of representation.

{¶ 17} The trial court also rejected the Department's argument that plaintiffs' proposed class failed to distinguish between members who settled their claims and who paid upon request, stating, "[I]f the money was collected under the authority of an illegal law then those distinctions do not matter because no payment was truly voluntary even if it was less than the department demanded." It also stated that if discovery revealed a reason to separate class members based on those factors, then it would create a subclass.

{¶ 18} The trial court also addressed the Department's argument that plaintiffs' proposed class was ill-defined because it included members whose claims were barred by the four-year statute of limitations. The trial court rejected that argument, saying,

[T]he statute of limitations is an affirmative defense. If the defendant proves that the correct statute of limitations is four years, and not the six-year statute of limitations for the claim of unjust enrichment[,] then the class definition can be appropriately modified. * * * It would be unjust to exclude one-third of the class before the statute of limitations defense is proved.

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