Shaffer-Doan ex rel. Doan v. Com., Dpw

• Decision Date: 03 November 2008
• Docket Number: No. 231 M.D. 2007,,231 M.D. 2007,
• Citation: 960 A.2d 500
• Parties: Ayden SHAFFER-DOAN, a minor, by his parents and natural guardians, Timothy DOAN and Karen Shaffer, Petitioners v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF PUBLIC WELFARE, Respondent.
• Court: Pennsylvania Commonwealth Court

960 A.2d 500

Ayden SHAFFER-DOAN, a minor, by his parents and natural guardians, Timothy DOAN and Karen Shaffer, Petitioners v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF PUBLIC WELFARE, Respondent.

No. 231 M.D. 2007,

Commonwealth Court of Pennsylvania.

Argued September 8, 2008.

Decided November 3, 2008.

As Amended December 18, 2008.

Charles, L. Becker, Philadelphia, for petitioner.

Jason Manne, Sr. Asst. Counsel, Pittsburgh, for respondent.

BEFORE: LEADBETTER, President Judge, COHN JUBELIRER, Judge, and McCLOSKEY, Senior Judge.

OPINION BY Judge COHN JUBELIRER.

Before this Court in our original jurisdiction is a Motion for Summary Judgment (Motion) filed on behalf of Petitioners, Ayden Shaffer-Doan (ASD), a minor, by his parents and natural guardians, Timothy Doan and Karen Shaffer (Parents) to the Petition for Review in the Nature of a Complaint for Declaratory Judgment (Petition for Review) filed by Petitioners. Petitioners ask this Court to declare that: (1) Sections 1404 and 1409 of the Fraud and Abuse Control Act (FACA),¹ 62 P.S. §§ 1404, 1409, are inapplicable in this case such that the Department of Public Welfare (DPW) may not obtain reimbursement of payments made by it through its Medical Assistance (MA) Program from the settlement proceeds of Shaffer-Doan v. Gout, et. al., (Clearfield County, No. 05-418-D filed March 24, 2005); and (2) Pennsylvania's common law should change so that a plaintiff such as ASD possesses an independent right to recover medical expenses incurred during the period of his minority. DPW asks this Court to order the payment of DPW's lien in the amount of $47,392.01 for monies it expended for ASD's medical care.

FACTUAL BACKGROUND

Litigation Before the Court of Common Pleas

ASD, a minor, by his Parents, and Parents, in their own right, filed a civil action complaint sounding in medical malpractice in the Court of Common Pleas of Clearfield County (trial court). The case arose out of the negligent medical care and treatment provided to ASD by doctors and a medical hospital (Defendants) with regard to the detection and treatment of seizures that ASD was suffering.² Because of the allegedly negligent conduct, ASD suffered cardio-pulmonary arrest resulting in extensive and permanent brain injury. In the complaint, ASD sought compensatory damages for medical expenses, which he anticipates incurring after he reaches the age of majority. Additionally, incorporated in the complaint were claims made by Parents, in their own right, seeking recovery for past, present, and future medical and medically-related expenses they have incurred and are expected to incur during the period before ASD reaches the age of majority. A portion of ASD's medical expenses was paid through DPW's MA Program totaling $47,392.01, which is the amount of money at issue in this case.

On January 20, 2007, DPW asserted a claim for MA reimbursement of monies expended for medical care for ASD in the amount of $47,392.01 pursuant to Section 1409 of FACA.³ Ten days later, the trial court granted the Defendants' motion for partial summary judgment as to all claims brought on behalf of Parents and ordered that all claims filed on behalf of Parents, in their own right, be stricken, based on the parents' failure to bring their claim within the prescribed two-year statute of limitation period.⁴

The trial court did not address whether ASD could pursue the MA reimbursement claim in his own right. On February 8, 2007, after extensive negotiations, a global settlement agreement was reached in the amount of 14.8 million dollars, which called for the establishment of a Special Needs Trust for ASD, funded by all the settlement monies after attorney fees and costs have been deducted. The final settlement agreement does not set out any specific amount to pay DPW, but contains a provision under which Petitioners agreed to pay "any and all valid liens that have been asserted and/or which could be asserted for reimbursement of any medical benefits [provided to ASD]." (Full and Final Release, DPW Summary Judgment Appendix at 88a.)

Counsel for Petitioners advised counsel for DPW that, because Parents did not recover for any past medical care, Petitioners would not repay the lien to DPW for past medical expenses. Although counsel for DPW disagreed with this contention, DPW nonetheless agreed not to object to the establishment of the Special Needs Trust from the settlement proceeds of the case, and permitted Petitioners' counsel to escrow the full amount of DPW's lien, totaling $47,392.01, pending resolution of the disputes concerning repayment of the lien. On April 23, 2007, the trial court approved the settlement and ordered distribution of settlement monies to the Special Needs Trust on behalf of ASD. The trial court also included a provision allowing Petitioners' counsel to escrow the amount of $47,392.01 pending resolution of all claims with DPW.

Litigation in the Commonwealth Court's Original Jurisdiction

On May 2, 2007, Petitioners filed a Petition for Review in this Court, seeking a declaratory judgment that DPW may not assert a lien in the amount of $47,392.01 against the Special Needs Trust. Essentially, Petitioners assert that Parents received no recovery for the monies expended by DPW for past medical care and, therefore, DPW should not receive repayment. Further, Petitioners assert that it is improper for DPW to attempt to enforce a lien for monies not recovered from a third party via settlement of a medical malpractice action because the monies would come out of funds that are to be set aside for ASD's future needs. Accordingly, Petitioners ask this Court to declare Sections 1404 and 1409 of FACA, 62 P.S. §§ 1404, 1409, inapplicable in this case since the Parents' claims were dismissed.⁵ DPW answered Petitioners' Petition for Review and filed a new matter asking this Court to order the payment of DPW's lien in the amount of $47,392.01.

The parties exchanged discovery and, following the close of discovery, Petitioners filed their Motion.⁶ In the Motion, Petitioners requested relief in the form of a declaration that DPW could not recover its lien under current Pennsylvania law. However, Petitioners also raised a new request, and asked that the law be changed so that a plaintiff, such as ASD, may possess an independent right to recover medical expenses incurred during the period of his minority.⁷ DPW filed a brief in opposition to the Motion. DPW notes that it did not file a cross-motion for summary judgment in the interest of getting the case argued before this Court speedily. This Court heard argument from both sides. The issue before the Court is whether DPW is entitled to payment of its lien.⁸

At its essence, the argument before this Court is that, since Parents failed to bring their claim within the two-year statute of limitations, DPW cannot recover the lien. This position is based on the premise that only parents can recover for a minor's medical expenses and that, since DPW's lien is for only a minor's medical expenses, DPW is precluded from recovering. Petitioners argue that because the settlement did not provide compensation "for any past medical care, there should be no re-payment to [DPW] for past medical expenses." (Letter from Petitioners' Counsel Leon Aussprung to Andrew Coates of DPW, (March 7, 2007), Exhibit G to Petitioners' Motion.) In support of this position, Petitioners rely on Bowmaster v. Clair, 933 A.2d 86 (Pa.Super.2007), petition for allowance of appeal granted, ___ Pa. ___, 959 A.2d 900 (2008), in which the Superior Court concluded that parents, and not the injured minor child, were the intended beneficiaries of MA benefits from DPW for the minor child's medical expenses.

In response, DPW argues that Bowmaster was wrongly decided because it was based on the faulty premise that a child cannot recover benefits. Additionally, DPW notes that Bowmaster is not binding on this Court. DPW also argues that the settlement includes the MA expenses paid by DPW and, thus, it should be reimbursed. We also note that DPW, in its New Matter, questions the sufficiency of notice that Petitioners provided it as to both the litigation and the settlement negotiations. (New Matter ¶¶ 9-13.) Petitioners, in their response to these allegations, denied these notice allegations to the extent that they were factual. (Petitioners' Response to DPW's New Matter ¶¶ 9-13.)

Both Bowmaster and the present case involve whether DPW is entitled to reimbursement under Section 1409 of FACA. We begin addressing this argument by reviewing the applicable statutory language.

LEGAL BACKGROUND

The overarching purpose of FACA is to authorize DPW to obtain compensation from third parties for benefits DPW paid on behalf of a person injured by the third parties:

Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396u, allows the states broad discretion in developing Medicaid programs. Under state law DPW is the sole agency charged with administering Medicaid. Section 201 of the Public Welfare Code ... 62 P.S. § 201. As a condition for receipt of continued federal funding, DPW must vigorously seek reimbursement from third parties liable for causing injuries to Medicaid recipients....

Pursuant to this federal mandate, the Pennsylvania General Assembly enacted the Fraud and Abuse Control Act of 1980....

Miller v. Lankenau Hospital, 152 Pa. Cmwlth. 266, 618 A.2d 1197, 1198 (1992). Section 1409's numerous subsections provide detailed provisions as to how DPW can recover monies under a variety of different situations. Under the statutory language of this section, DPW can recover MA payments either by commencing an action against the third party and/or its insurer or by intervening during the pendency of a beneficiary's civil action.⁹ The term "beneficiary" is defined as "any person who has received benefits or will be provided benefits under this act because of an injury for which another person may be liable. It includes...