Case Title: STATE v. DAIRYLAND INSURANCE CO.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-08-29T00:00:00Z

Document:
STATE v. DAIRYLAND INSURANCE CO.2000 WY 17211 P.3d 348Case Number: 99-331Decided: 08/29/2000Supreme Court of Wyoming

STATE 
OF WYOMING, ex rel., DEPARTMENT OF HEALTH, DIVISION OF HEALTH CARE

 

FINANCING, Appellant 
(Plaintiff),

v.

DAIRYLAND INSURANCE COMPANY, a Wisconsin corporation, 
and BILLY JOE WRIGHT, Appellees (Defendants).

 

                                 

 

Appeal from the District Court 
of Laramie County

The Honorable Edward L. Grant, Judge

   

 

     Representing 
Appellant:

 

     Gay Woodhouse, Wyoming 
Attorney General; Michael L. Hubbard, Deputy Attorney General; Gregory A. 
Phillips and Matthew H. Mead, Special Assistant Attorneys 
General.

   
Representing Appellee:

 

     Ann M. Rochelle of 
Williams, Porter, Day & Neville, P.C., Casper, 
Wyoming.

 

     Before LEHMAN, 
C.J., and THOMAS, MACY,* GOLDEN, and HILL, JJ.

    * 
Retired June 2, 2000.

 

     GOLDEN, 
Justice.

  [¶1]       The primary issue in this appeal 
is whether the State is entitled to recover Medicaid benefit payments from a 
third-party settlement occurring before the applicant is ruled eligible for 
Medicaid benefits. Appellant Department of Health, Division of Health Care 
Financing (State) paid Medicaid benefits and then sought recovery for those 
benefits from Appellee Dairyland Insurance Company and their insured, Billy Joe 
Wright. The district court granted summary judgment to Dairyland Insurance 
Company, denied the State's motion for summary judgment, and dismissed the 
complaint against Wright.

 

  [¶2]       We affirm the order of the 
district court.

 

                                      
ISSUES

 

 [¶3]         The State presents these 
issues for our review:

 

I.  Did 
the district court err in denying the state's claim for third-party 
reimbursement under Wyoming's Medicaid Statutes?

 

II.  Did 
the district court err in dismissing the claim for relief against Billy Joe 
Wright?

 

   Dairyland states the sole issue 
as:

 

Was the district court correct in granting 
Dairyland's Motion for Summary Judgment, denying the State's Motion for Summary 
Judgment and dismissing the State's Complaint as the State was not entitled to 
third-party reimbursement under the Wyoming Medical and Assistance Service Act, 
Wyo. Stat. § 42-4-101 through § 42-4-207 (1994 ed.)?

 

                                      
FACTS

 

 [¶4]         On January 20, 1994, Sylvia 
Knapp (Knapp) was seriously injured when she was struck by a vehicle driven by 
the insured of Dairyland, Billy Joe Wright. The parties have stipulated that she 
applied for Supplemental Social Security Income (SSI) in February of 1994, and 
that approval for SSI automatically made her eligible for Medicaid, a federal 
program that provides medical benefits.  
On May 23, 1994, while represented by an attorney, Knapp signed a 
"Release Of All Claims" and settled her case against Wright for the policy 
limits of $25,000 in damages and for $5,000 under the policy's medical benefits. 
Knapp was determined to be eligible for SSI on July 26, 1994, and eligible for 
Medicaid on August 8, 1994, under the Wyoming Medicaid Program.  Her eligibility was made retroactive to 
February 1, 1994, and in August and October of 1994, Wyoming Medicaid paid over 
$12,000.00 in medical assistance on Knapp's behalf.  On December 14, 1994, Consultec, Inc., 
the State's agent, contacted Dairyland about the settlement and was advised of 
the settlement amount and told that the settlement was not for medical expenses, 
but for general damages such as pain and suffering.1

 

  [¶5]       In 1999, the State filed suit 
against Dairyland for reimbursement of its Medicaid expenditures.  The suit included a claim for relief 
against Wright, but he was never served. Summary judgment was granted in favor 
of Dairyland, and the claim against Wright was dismissed with prejudice.  This appeal 
followed.

 

                
                    DISCUSSION

 

   
Standard of Review

 

[¶6]          Summary judgment is 
appropriate if no genuine issues of material fact exist and the prevailing party 
is entitled to judgment as a matter of law.  Terry v. Pioneer Press, Inc., 947 P.2d 273, 275 (Wyo. 1997); W.R.C.P. 56(c).  
Where the case only involves questions of law, summary judgment allows 
parties to forgo a formal trial. England v. Simmons, 728 P.2d 1137, 1141 (Wyo. 
1986).  "We review a grant of 
summary judgment deciding a question of law de novo and afford no deference to 
the district court's ruling."  
Blagrove v. JB Mechanical, Inc., 934 P.2d 1273, 1275 (Wyo. 
1997).

 

   
Kirby v. NMC/Continue Care, 993 P.2d 951, 952-53 (Wyo. 
1999)

 

  [¶7]       The State contends that it is 
entitled to recover from Dairyland under the Wyoming Medical Assistance and 
Services Act, Wyo. Stat. Ann. §§ 42-4-101 through 
42-4-208.

   

Statutory interpretation is a question of law, so our 
standard of review is de novo.  If 
the conclusion of law is in accordance with the law, we affirm it; if it is not, 
we correct it. We endeavor to interpret statutes in accordance with the 
Legislature's intent. We begin by making an inquiry respecting the ordinary and 
obvious meaning of the words employed according to their arrangement and 
connection.  We construe the statute 
as a whole, giving effect to every word, clause, and sentence, and we construe 
together all parts of the statute in pari material.

 

   Cargill v. State, Dept. of Health, 
Div. of Health Care Financing, 967 P.2d 999, 1001 (Wyo. 1998) (citations and 
quotations omitted).

 

   
Wyoming Medical Assistance and Services Act

 

   [¶8]     Conceding that Knapp was not a recipient 
of Medicaid at the time of the settlement, the State nevertheless contends that, 
under both federal and state law, Dairyland had a duty to notify it of the 
settlement because Knapp was a recipient at the time that the State was seeking 
reimbursement.  We have previously 
described the Medicaid program:

 

Medicaid is funded jointly by the state and federal 
governments.  Before a state can 
receive federal appropriations for Medicaid, a state plan must be approved by 
the federal Health Care Financing Administration.  42 U.S.C. § 1396; 42 C.F.R. § 430.  Under federal law, the state plan must 
include provisions for collecting payments from liable third parties and 
reimbursement of those payments to Medicaid.  States must require recipients to assign 
to the state any rights to recovery of payment of medical care from a liable 
third party. This assignment is a condition of eligibility to receive Medicaid 
benefits.  42 U.S.C. § 
1396(k).

 

Wyoming's compliance with this federal mandate is 
found at Wyo. Stat. §§ 42-4-201 - 42-4-208 . . . . Wyo. Stat. § 42-4-201(a) 
clearly and succinctly reiterates federal law and states the intent of the 
Wyoming legislature:

 

If 
a recipient covered by this chapter receives an injury under circumstances 
creating a legal liability in some third party, the recipient shall not be 
deprived of any medical assistance for which he is entitled under this chapter.  He may also pursue his remedy at law 
against the third party.  If the 
recipient recovers from the third party in any manner, including judgment, 
compromise, settlement or release, the 
state is entitled to be reimbursed for all payments made, or to be made, on 
behalf of the recipient under this chapter.

 

There can be no clearer statement that Wyoming's 
legislature intended the Department be fully reimbursed for Medicaid payments 
made on behalf of a recipient who recovers those payments from a liable third 
party.

 

   
Cargill, 967 P.2d  at 1001-02.

 

   
Statutory Notification Obligations

 

  [¶9]       "Upon signing an application for 
medical assistance . . ., an applicant assigns to the department any right to 
medical support or payment for medical expenses . . . .  The assignment is effective upon a 
determination of eligibility . . . ."  
Wyo. Stat. Ann. § 42-4-106(b) (Michie 1994).  When a recipient of Medicaid benefits 
recovers from a third party as specified by statute, the State is entitled to be 
reimbursed for payments made or to be made. Wyo. Stat. Ann. § 42-4-201(a) 
(Michie 1994).  "Recipient" is 
defined as "any person receiving benefits under programs provided pursuant to 
this title." Wyo. Stat. Ann. § 42-1-101(a)(v) (Michie 
1994).

 

The 
statutes give the Department three methods for achieving reimbursement.  Wyo. Stat. § 42-4-202 provides for a 
lien against the recipient's recovery.  
Wyo. Stat. § 42-4-204 makes the Department subrogated to the recipient's 
right of recovery and also grants the Department an assignment of "any 
entitlements from * * * a claim or action against any responsible third party 
for medical services, not to exceed the amount expended by the department * * 
*."

 

Cargill, 967 P.2d  at 
1002.  In this case, the State 
informs us that it is not relying on a lien theory for reimbursement but is 
instead relying upon its statutory subrogation and assignment 
rights.

 

   [¶10]            
   The obligation and 
method of providing notice is provided for in Wyo. Stat. Ann. § 42-4-202(d) 
(Michie 1994), which states:

 

(d) 
The department shall be given notice of monetary claims against a person, firm 
or corporation that may be liable to pay part or all of the cost of medical care 
when the department has paid or become 
liable for the cost of that care.  
Notice shall be given as follows:

 

(i) 
Applicants for medical assistance shall notify the state or local agency 
of any possible claims when they submit the application.  Recipients of medical assistance shall 
notify the department of any possible claims when those claims arise.  A recipient's noncooperation in 
providing information to the department to assist in pursuing liable third 
parties shall result in denial or termination of eligibility per federal 
law;

 

(ii) An enrolled medicaid provider  shall notify the department when the 
person has reason to believe that a third party may be liable for payment of the 
cost of medical care.  If the person 
providing medical care services fails to notify the department when a third 
party is liable for payment of the cost of medical care and the department, 
because of lack of notice from the provider, does not receive reimbursement for 
the cost of medical care, the department may adjust the value of those claims 
from future payments to that provider;

 

(iii) An attorney representing a recipient of 
medical assistance in a claim upon which the department may be entitled to a 
lien under this section shall notify the department of its potential lien claim 
before filing a claim, commencing an action, or negotiating a settlement.  Any attorney who knowingly fails to 
notify the department of any settlement or knowingly fails to ensure the state 
is reimbursed, to the extent of the lien, from the proceeds of any settlement or 
judgment under this section shall be reported to the state board of professional 
responsibility for the Wyoming 
state bar.2

 

(emphasis added).  The language of the 1994 statute plainly 
limits notice obligations to the applicant and the Medicaid provider when either 
has reason to believe a third-party may be liable, and obligates a recipient and 
the recipient's attorney to notify the State of third-party claims and 
payments.  Knapp was an applicant 
and not a recipient at the time that she settled with Dairyland, her assignment 
was not effective until she was ruled eligible for benefits, and the statute did 
not obligate the insurer to provide notice of the settlement to the State.  As the district court determined, after 
the settlement when Knapp was ruled eligible for benefits and her assignment of 
rights became effective, Dairyland no longer had any legal liability to her and 
was not required to notify the attorney general of the signed 
release.

 

   [¶11]            
  The State contends, 
however, that an insurer's responsibility to notify the State arises not from 
the above section, but from the statutory requirement that it obtain a signed 
release from the Wyoming Attorney General.  
Wyo. Stat. Ann. § 42-4-201(b) (Michie 1994) states that "the person 
paying the settlement remains liable to the state's claim unless the state 
through the attorney general signs the release prior to payment of an agreed 
settlement."  Section 201(a) allows 
action against a third party by a "recipient" and subsection (b) provides for 
notice to the State and subrogation in the event that suit is filed or payment 
made "in any suit initiated pursuant to subsection (a) of this section."  Wyo. Stat. Ann. § 42-4-201(b) 
states:

 

(b) 
The department shall be served by certified mail, return receipt requested, with 
a copy of the complaint filed in any suit initiated pursuant to subsection (a) 
of this section. Any attorney who knowingly fails to serve the complaint on the 
department shall be reported to the state board of professional responsibility 
for the Wyoming state bar.  The 
department shall be notified in writing by certified mail return receipt 
requested of any judgment, compromise, settlement or release entered into by a 
recipient.  If there is a 
settlement, compromise or release entered into by the parties the attorney 
general representing the director shall be made a party in all negotiations for 
settlement, compromise or release.  
The department, for purposes of facilitating compromise and settlement, 
may in a proper case authorize acceptance by the state of less than the state's 
claim for reimbursement under this section for all current and future assistance 
under this chapter.  Any lien 
created pursuant to this article shall remain in effect until the state is paid 
the amount authorized under this section.  
In addition the person paying the settlement remains liable to the 
state's claim unless the state through the attorney general signs the release 
prior to payment of an agreed settlement.

 

  [¶12] 
   Plainly this section 
applies to "recipients" and contemplates that the person paying the settlement 
knows that the State is a party to any negotiations for settlement, compromise, 
or release.  Knapp was not a 
recipient, and the State was not a party to the negotiations for settlement and 
release.  Dairyland did not have any 
obligation under this section to notify the State of its settlement with 
Knapp.

 

   [¶13]            
  We affirm the district 
court's order granting summary judgment to Dairyland, and for the reasons just 
stated affirm the order dismissing with prejudice the suit against 
Wright.

 

      

 

FOOTNOTES

1 Whether 
this categorization is appropriate for purposes of Medicaid reimbursement is not 
at issue.

  

2 By 
1999, the statute had been amended to state:

 

     (iv) Insurers shall 
not disburse any settlement payment for a personal injury claim made to a 
recipient of medical assistance under this act until seven (7) days after the 
department has received written notice of the proposed settlement or judgment 
and failed to provide a written objection to the insurer.  Failure to provide notice under this 
paragraph shall commence the tolling of any applicable statute of limitations.