Rathbun v. Health Net of the Ne., Inc.

• Decision Date: 10 March 2015
• Docket Number: No. 18928.,18928.
• Citation: 315 Conn. 674,110 A.3d 304
• Court: Connecticut Supreme Court
• Parties: Amy RATHBUN et al. v. HEALTH NET OF THE NORTHEAST, INC.

315 Conn. 674

110 A.3d 304

Amy RATHBUN et al.

v.HEALTH NET OF THE NORTHEAST, INC.

No. 18928.

Supreme Court of Connecticut.

Argued Sept. 25, 2014.

Decided March 10, 2015.

Eric P. Smith, with whom, on the brief, were John P. D'Ambrosio and Joel T. Faxon, New Haven, for the appellants (plaintiffs).

Linda L. Morkan, with whom, on the brief, was Theodore J. Tucci, Hartford, for the appellee (defendant).

PALMER, ZARELLA, McDONALD, ESPINOSA and VERTEFEUILLE, Js.

Opinion

PALMER, J.

The issue that we must resolve in this certified appeal is whether General Statutes § 17b–265 (a),¹ which provides in relevant part that the Department of Social Services (department) “shall be subrogated to any right of recovery ... that an applicant or recipient of medical assistance ... has against an insurer or other legally liable third party ... that is ... legally responsible for payment of a claim for a health care item or service,” authorizes the department or its designated assignee to seek reimbursement from a Medicaid recipient for medical costs that the recipient has recovered from a liable third party. After the named plaintiff, Amy Rathbun, and the daughter of the plaintiff Tanequa Brayboy were injured in separate motor vehicle accidents, the defendant, Health Net of the Northeast, Inc. (Health Net), which administered the Medicaid program for the state of Connecticut and was the designated assignee of the department's rights under § 17b–265, paid for medical care that Brayboy's daughter and Rathbun received as a result of their injuries. Both plaintiffs brought civil actions against the persons who had caused the injuries. Thereafter, pursuant to § 17b–265, Health Net, acting through its agent, The Rawlings Company, LLC (Rawlings), sought to recover from the plaintiffs amounts that the plaintiffs had recovered from the respective tortfeasors as reimbursement for the payments made by Health Net for the medical care provided to Brayboy's daughter and Rathbun. The plaintiffs then brought this action seeking, among other things, a declaratory judgment that § 17b–265 (a) does not authorize Health Net to seek reimbursement from them but requires it to seek recovery directly from the liable third parties. Both the plaintiffs and Health Net filed motions for summary judgment as to the declaratory judgment count, and the trial court granted Health Net's motion and denied the plaintiffs' motion. After the plaintiffs withdrew the remaining counts of their complaint, and the trial court rendered judgment for Health Net, the plaintiffs appealed to the Appellate Court, which affirmed the trial court's judgment. Rathbun v. Health Net of the Northeast, Inc., 133 Conn.App. 202, 215, 35 A.3d 320 (2012). We then granted the plaintiffs' petition for certification to appeal, limited to the following issue: “Did the Appellate Court properly conclude that ... § 17b–265 permitted [Health Net] to bring an action against the plaintiffs to recover its collateral source payments?” Rathbun v. Health Net of the Northeast, Inc., 304 Conn. 905, 38 A.3d 1201 (2012). We answer the certified question in the affirmative and, therefore, affirm the judgment of the Appellate Court.

The opinion of the Appellate Court sets forth the following procedural history and facts, which were stipulated to by the parties and accepted by the trial court. “Under the Medicaid Act (Medicaid); 42 U.S.C. § 1396 et seq. [2012] ; federal financial assistance is provided to states that choose to reimburse the costs of medical care to the economically disadvantaged. States may choose contractors to provide or to arrange for services under the state Medicaid plan, which is known as Medicaid managed care. The state of Connecticut participates in the Medicaid program and has authorized the department ... to administer the program within the state. The department is authorized to award ‘contracts for Medicaid managed care health plans' under General Statutes § 17b–28b.

“The department contracted with [Health Net] directly and through its predecessors from 1995 through 2008 regarding the administration of the Medicaid managed care program. The contract provided that ‘[t]he [d]epartment hereby assigns to [Health Net] all rights to third party recoveries from Medicare, health insurance, casualty insurance, workers' compensation, tortfeasors, or any other third parties who may be responsible for payment of medical costs for [Health Net's] members.’ The contract limited [Health Net's] right to recovery to the amount that [it] paid toward the cost of its member's care. The contract required [Health Net] to make efforts to determine the legal liability of third parties for health care services provided to Medicaid enrollees, and to ‘pursue, collect, and retain any [money] from [third-party] payers for services to [Health Net's] members under this contract....’ The contract further provided that [Health Net] could assign ‘the right of recovery to [its] subcontractors and/or network providers.’

“[Health Net] contracted with [Rawlings] ... to pursue recoveries for medical treatment provided to [Health Net's] members in instances [in which] there was potential for [third-party] liability. When Rawlings became aware that a member was injured by a third party, it typically notified the injured member and the third party that [Health Net] had a right to recover medical expenses paid on the member's behalf.

“Rathbun was a member of [Health Net's] Medicaid managed care plan. [Health Net] paid $2982.93 for medical treatment [rendered in connection with] Rathbun's injuries stemming from a motor vehicle accident that occurred on July 24, 2006. Rathbun retained legal counsel to pursue potential tort claims against the driver of the other vehicle involved in the accident. Rawlings notified Rathbun's counsel, as well as the [driver's] insurer, that [Health Net] had a claim for repayment of the medical benefits it [had] paid on Rathbun's behalf for injuries sustained in the motor vehicle accident. Rathbun's counsel sent a check in the amount of $2982.93 to [Health Net] in satisfaction of [Health Net's] claim.

“Kay' Anah Brayboy, the daughter of Tanequa Brayboy, was a member of [Health Net's] Medicaid managed care plan. On July 4, 2007, Kay' Anah [Brayboy] was struck by a motor vehicle and subsequently died as a result of her injuries. [Health Net] paid $13,541.45 for medical treatment [rendered in connection with] Kay' Anah Brayboy's injuries from the accident. Tanequa Brayboy retained legal counsel to pursue possible tort claims against the driver of the motor vehicle that struck her daughter. Rawlings notified Tanequa Brayboy's counsel that [Health Net] had a claim for repayment for medical benefits paid on behalf of Kay' Anah Brayboy in connection with the motor vehicle accident. [Tanequa] Brayboy subsequently retained new counsel, and Rawlings reissued its notice of claim letter to the attention of [Tanequa] Brayboy's new counsel. To date, [Health Net] has not been reimbursed for the cost of medical care provided to Kay' Anah Brayboy.

“The plaintiffs brought a putative class action against [Health Net] on November 26, 2008. The plaintiffs filed a second amended complaint, dated May 7, 2009, which [included] four counts, a putative class action, breach of the duty of good faith and fair dealing, conversion and a count seeking a declaratory judgment. The declaratory judgment count sought a declaration of the plaintiffs' rights and obligations to reimburse [Health Net] pursuant to Connecticut statutes, regulations and contract. Both [the plaintiffs and Health Net] filed motions for summary judgment on the declaratory judgment count on June 15, 2009. On August 21, 2009, the court granted [Health Net's] motion for summary judgment and denied the plaintiffs' motion for summary judgment.²

“In its memorandum of decision, the [trial] court concluded that the department had assigned its statutory recovery right to [Health Net]. The court noted that under ... § 17b–265 (a), the department has the right to be subrogated to any right of recovery that the Medicaid [recipient] may have against a third party. Relying on § 17b–265 (b), which provides that the department may assign its right to subrogation to a designee or health care provider participating in the Medicaid program, the court concluded that the department properly assigned its statutory rights to [Health Net]. The court also concluded that, under Connecticut law, [Health Net], as the assignee of the department, was not required to bring a separate action against [a third-party] tortfeasor to recover the medical expenses expended on behalf of the Medicaid [recipient]. Further, the court found that [Health Net's right to] reimbursement was limited to the amount of Medicaid funds expended by [Health Net] and identified as part of any settlement or judgment.” (Footnote altered.) Rathbun v. Health Net of the Northeast, Inc., supra, 133 Conn.App. at 204–207, 35 A.3d 320.

The plaintiffs then appealed to the Appellate Court, claiming that Health Net was prohibited by General Statutes § 52–225c, the antisubrogation statute, from recovering from the plaintiffs the costs of medical care that the plaintiffs had recovered from responsible third parties. Section 52–225c provides in relevant part: “Unless otherwise provided by law, no insurer or any other person providing collateral source benefits as defined in section 52–225b shall be entitled to recover the amount of any such benefits from the defendant or any other person or entity as a result of any claim or action for damages for personal injury or wrongful death regardless of whether such claim or action is resolved by settlement or judgment....” Specifically, the plaintiffs claimed that Health Net's recovery of these amounts was not “otherwise provided by law” within the meaning of § 52–225c because § 17b–265 allowed Health Net to recover only directly from the liable third parties, not from them, and the only other provision...