Wilson v. State
| Decision Date | 19 October 2000 |
| Docket Number | No. 68297-6.,68297-6. |
| Parties | David WILSON, individually and through his Guardian ad Litem Elaine Wilson Dunmore, and as representative of a class, Respondent, v. The STATE of Washington; The Washington State Department of Social and Health Services; The Washington State Department of Social and Health Services Division of Provider Services, and the Division of Provider Services Third Party Resource Program (the "State Defendants"), Petitioners, and Lyle Quasim, Secretary of the Department of Social and Health Services, in his official capacity, and Tom Bedell, Acting Director of the State of Washington Division of Provider Services, in his official capacity and Jane Doe and John Doe Defendants (the "Individual Defendants"), Defendants. |
| Court | Washington Supreme Court |
Christine O. Gregoire, Attorney General, Andrew F. Scott, Asst., Bruce L. Turcott, Asst., Olympia, for Petitioners.
Roblin John Williamson, Kathryn A. Williams, Seattle, for Respondent.
This case is an appeal from a partial summary judgment and is before this court on transfer from of the Court of Appeals. The original case was a class action brought by David Wilson, through his guardian ad litem, as class representative for a proposed class of persons who had third party liability injury claims and received medical assistance from the Department of Social and Health Services (DSHS) for injury related medical expenses. This class of people has been compelled by state law to pay a portion of their settlements or judgments to the state as reimbursement for medical assistance.
We are asked to decide whether the state law, which attempts to lien a Medicaid recipient's third party recovery beyond that portion specifically allocated to medical expenses, conflicts with the federal law and is thus preempted. We hold the state statute does not conflict with the federal law because the federal statutory scheme allows for the state to be reimbursed from the third party recovery for all medical expenses paid by the state.
Respondent David Wilson was born prematurely and suffered complications as a result. At the time he was born, his mother was a welfare recipient and therefore eligible to receive Medicaid. Wilson developed staphylococcal aureus meningitis, allegedly caused by the care he received at the hospital. Several brain surgeries were performed on Wilson but, due to the illness, he is permanently and severely disabled. Clerk's Papers at 54-55. The total amount the state provided for Wilson's medical expenses was $184,555. Clerk's Papers at 55, 145.
Two years later, in 1994, Wilson's attorney guardian ad litem brought a medical negligence suit against the hospital and physicians who had treated Wilson during his initial hospitalization. Before settlement, DSHS filed a statutory lien and asserted a claim in the amount of $184,555 against any recovery made on behalf of Wilson. Wilson recovered a settlement totaling $750,000. DSHS deducted its pro rata share of attorney fees and costs and asserted a right of reimbursement for $108,303. Clerk's Papers at 57. Wilson reimbursed DSHS the $108,303 under protest and filed the lawsuit that is the subject now before this court.
Wilson's complaint against DSHS alleged that federal Medicaid law prohibits the imposition of any lien whatsoever against his third party recovery. Wilson argued federal law prohibits states from seeking reimbursement from settlements or judgments obtained by Medicaid recipients on their own effort; states must pursue third parties directly. Wilson also alleged that in pursuing its rights of subrogation, assignment, and lien for reimbursement of Medicaid assistance, DSHS committed the torts of fraud and negligent misrepresentation and also violated Wilson's due process rights by not providing Wilson a hearing prior to asserting the reimbursement claim. Clerk's Papers at 7-15.
After stipulating there were no issues of material fact and only issues of law, both parties moved for summary judgment. The order granting partial summary judgment stated that RCW 74.09.185 acts as an assignment as a matter of law by declaring that the state is considered to have acquired rights to payment by any other party for health care items or services. The court stated that this assignment is not of the total right to recover, but only the right to recover from the portion of the settlement specifically allocated to medical expenses. The court reasoned that the federal statute allows for assignment; therefore, the Washington assignment law is consistent with the federal law. The order stated that Washington law is inconsistent where the law attempts to put a lien on property that is not recovery for medical payments. The court concluded that the Washington law, which attempts to lien property that is not a recovery of medical payments, is in conflict with federal law and is thus preempted. Clerk's Papers at 405-06.
DSHS submitted a motion for discretionary review of the trial court decision to Division One of the Court of Appeals. After the Court of Appeals granted review, Wilson argued the case be transferred to this court. We granted review and now decide the issue presented in this case.
Whether federal law prohibits the imposition of a state statutory recovery lien against the proceeds of a Medicaid recipient's third party recovery beyond that portion of the recovery allocated specifically to medical expenses.
Medicaid is a publicly funded medical assistance program for poor and disabled persons. The state and federal government jointly fund this program. Medicaid is available in two different circumstances. The first is to aid individuals who do not have the resources to obtain insurance or otherwise pay their medical bills. The other is as a resource for the elderly and disabled who need institutional care but have insufficient funds to finance it. Medicaid is to be the payment source of last resort; all other available resources must be used before Medicaid funds are made available to eligible recipients. S.REP. No. 146, 99th Cong., 1st Sess. 459 (1985), reprinted in 1986 U.S.C.C.A.N. 42. In order for the system to function it must be replenished so as to provide a source of support for subsequent Medicaid recipients.
The initial determination is whether the state acquired the right to reimbursement for the funds it paid out. A valid assignment of recovery for medical expenses paid occurred as a matter of law. Under the federal scheme the agency must require individuals to assign to the state third party payments for medical care. 42 C.F.R. § 433.146 (1998) (). Moreover, assignment of this right is required for the recipient to be eligible to receive assistance. 42 U.S.C. § 1396k (1994). States are required to enact laws under which "the State is considered to have acquired the rights of such individual [medical assistance recipient] to payment by any other party for such health care items or services." 42 U.S.C. § 1396a(a)(25)(H) (Supp.1998). RCW 74.09.180, .185, and RCW 43.20B.060 fulfill this requirement. The first statute provides: "[T]he department shall thereby be subrogated to the recipient's rights against the recovery had from any tort feasor or the tort feasor's insurer, or both, and shall have a lien thereupon to the extent of the value of the assistance furnished by the department." RCW 74.09.180. RCW 74.09.185 outlines the rights "to payment by any other party for those health care items or services" the state is considered to have acquired. RCW 43.20B.060(2) states that to secure this reimbursement "[t]he department shall have a lien upon any recovery by or on behalf of the recipient from such tort feasor or the tort feasor's insurer, or both to the extent of the value of the assistance paid."
A statutory assignment is allowed in this setting. The federal regulation states "[i]f assignment of rights to benefits is automatic because of State law, the agency may substitute such an assignment for an individual executed assignment, as long as the agency informs the individual of the terms and consequences of the State law." 42 C.F.R. § 433.146(c)(1998) Thus the federal law permits a statutory assignment in this setting.1 Because RCW 74.09.180, 74.09.185, and RCW 43.20B.060 act as a statutory assignment, Wilson's rights to payment from third parties to the state were assigned when benefits were applied for and received.
The issue remains whether the lien is against the entire amount of the settlement or if it is only against that portion of the settlement allocated to medical expenses. The trial court concluded that the state law is preempted to the extent it attempts to lien property that is not a recovery of Medicaid because it allows the state to lien what the trial court viewed as the Medicaid recipient's property. This court has stated that "[f]ederal law preempts state law when Congress intends to occupy a given field, when state law directly conflicts with federal law, or when state law would hinder accomplishment of the full purposes and objectives of the federal law." Berger v. Personal Prods. Inc., 115 Wash.2d 267, 270, 797 P.2d 1148 (1990), cert. denied, 499 U.S. 961, 111 S.Ct. 1584, 113 L.Ed.2d 649 (1991) (citing Alverado v. WPPSS, 111 Wash.2d 424, 431, 759 P.2d 427 (1988), cert. denied, 490 U.S. 1004, 109 S.Ct. 1637, 104 L.Ed.2d 153 (1989)). There is a presumption against preemption unless the state law frustrates the clear and manifest purpose of the federal law. Goodwin v. Bacon, 127 Wash.2d 50, 57, 896 P.2d 673 (1995).
The federal law does not preempt the state law here because there is no conflict that causes major damage to a clear federal interest. 42 U.S.C. § 1396a(a)(25)(H) (Supp.1998) expressly instructs the state to have in effect laws under which "the State is...
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