Case Title: Layman v. Woo

Citation: 1997-Ohio-195

Docket Number: 19960390

State: ohio

Court: Ohio Supreme Court

Date: 1997-05-28T00:00:00Z

Document:
LAYMAN ET AL.; OHIO DEPARTMENT OF HUMAN SERVICES, APPELLEE, V. WOO ET 
AL., APPELLANTS. 
[Cite as Layman v. Woo (1997), ___ Ohio St.3d ___.] 
Medical malpractice -- Statutory construction -- R.C. 5101.58 is an 
exception to former R.C. 2305.27. 
 
(No. 96-390 -- Submitted March 19, 1997 -- Decided May 28, 1997.) 
 
APPEAL from the Court of Appeals for Ashtabula County, No. 95-A-
0036. 
 
On November 29, 1993, plaintiff Natalie Layman, the mother and 
guardian of Matthew Layman, filed a medical malpractice complaint in the 
Ashtabula County Court of Common Pleas against defendant-appellants, C.K. 
Woo and Ashtabula County Medical Center.1  In count one of the complaint, 
plaintiff alleged that the defendants were negligent in delivering her son and 
that their negligence proximately caused him to sustain profound mental 
retardation and severe physical handicaps.  Plaintiff sought compensatory 
damages, including future custodial care expenses for Matthew.  In count two 
of the complaint, plaintiff, along with her husband, Kevin Layman, set forth a 
 
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loss-of-consortium claim.  In this count, they also sought past and future 
medical damages but later struck this claim. 
 
After the lawsuit was filed, appellee, Ohio Department of Human 
Services (“ODHS”), sought reimbursement for the money it had expended 
through Medicaid for Matthew’s medical care.  ODHS filed a complaint in 
intervention, asserting a right of subrogation pursuant to R.C. 5101.58 against 
defendants and a cross-claim against plaintiff for reimbursement of past and 
future medical benefits it had provided for Matthew Layman. 
 
Plaintiffs filed a motion to dismiss ODHS’s complaint and cross-claim.  
Plaintiffs relied upon cases interpreting R.C. 2305.27 and argued that ODHS 
could not recover Medicaid payments it had expended on Matthew’s behalf.  
Additionally, plaintiffs said there was no right to subrogation because they had 
struck their claim for past and future medical expenses.  ODHS filed a 
memorandum in opposition to plaintiffs’ motion to dismiss.  ODHS argued 
inter alia that R.C. 5101.58 provides the department with a statutory right to 
subrogation and is an exception to R.C. 2305.27. 
 
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On the first day of trial, the court orally granted plaintiffs’ motion to 
dismiss ODHS’s complaint in intervention.  The case proceeded without ODHS 
as a party.  The jury returned a verdict for the plaintiffs, but prior to the jury’s 
determining the amount of damages, the plaintiffs reached a settlement with 
defendants on the amount.  The parties subsequently filed a notice of dismissal.  
An entry granting plaintiffs’ motion to dismiss ODHS was later journalized. 
 
ODHS appealed the trial court’s dismissal of its complaint in 
intervention.  The court of appeals reversed the trial court’s dismissal of 
ODHS’s complaint and remanded the cause.  According to the court of appeals, 
R.C. 5101.58 expressly provides ODHS with a right of subrogation.  
 
The cause is now before this court upon the allowance of a discretionary 
appeal. 
_________ 
 
Betty D. Montgomery, Attorney General, and Robert J. Byrne, Assistant 
Attorney General, for appellee Ohio Department of Human Services. 
 
Jacobson, Maynard, Tuschman & Kalur Co., L.P.A., Elizabeth E. Baer, 
Janis L. Small, Donald H. Switzer and Joseph A. Farchione, Jr., for appellants. 
 
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__________ 
 
FRANCIS E. SWEENEY, SR., J.   In this case, we are asked to determine 
whether ODHS has a right of subrogation against defendants in a medical 
malpractice lawsuit for Medicaid benefits it expended on behalf of an injured 
plaintiff. 
 
Appellants contend that R.C. 2305.27 prohibits ODHS from recovering 
Medicaid benefits from a defendant found negligent in a medical malpractice 
lawsuit.  R.C. 2305.27, which has since been repealed by 1996 Am.Sub.H.B. 
No. 350,2 provided: 
 
“Except as provided in section 2743.02 of the Revised Code, in any 
medical claim, as defined in division (D) of section 2305.11 of the Revised 
Code, an award of damages shall not be reduced by insurance proceeds or 
payments or other benefits paid under any insurance policy or contract where 
the premium or cost of such insurance policy or contract was paid either by or 
for the person who has obtained the award, or by his employer, or both, or by 
direct payments from his employer, but shall be reduced by any collateral 
recovery for medical and hospital care, custodial care or rehabilitation services, 
 
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and loss of earned income.  Unless otherwise expressly provided by statute, a 
collateral source of indemnity shall not be subrogated to the claimant against 
a physician, podiatrist, or hospital.”  (Emphasis added.) 
 
Appellee ODHS concedes that R.C. 2305.27 bars some subrogation.  
However, in relying upon the last sentence of R.C. 2305.27, appellee argues 
that there may be statutory exceptions to the general rule that collateral sources 
not be subrogated.  Appellee maintains that R.C. 5101.58 is such an exception 
to R.C. 2305.27.  R.C. 5101.58 states: 
 
“The acceptance of aid pursuant to Chapter 5107., 5111., or 5115. of the 
Revised Code gives a right of subrogation to the department of human services 
of any county against the liability of a third party for the cost of medical 
services and care arising out of injury, disease, or disability of the recipient.  
***” 
 
It is a basic principle of statutory construction that unless a different 
intention appears in a statute, words in a statute shall be construed in their 
ordinary and natural meaning to effectuate the intent of the legislature.  State ex 
rel. Gareau v. Stillman (1969), 18 Ohio St.2d 63, 47 O.O.2d 187, 247 N.E.2d 
 
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461.  Thus, when construing a statute, “none of the language employed therein 
should be disregarded ***.”  Carter v. Youngstown Div. of Water (1946), 146 
Ohio St. 203, 32 O.O.184, 65 N.E.2d 63, paragraph one of the syllabus.   
 
In applying these principles of statutory construction, we find that R.C. 
2305.27 permits subrogation against a physician, podiatrist, or hospital if a 
statute expressly provides for a right of subrogation.  The inclusion of the 
words “[u]nless otherwise expressly provided by statute” in R.C. 2305.27 
reveals that the legislature intended that there could be statutory exceptions to 
the statute’s bar against subrogation.  R.C. 5101.58 is a statute which 
“otherwise expressly provide[s]” for a right to subrogation to a department of 
human services.  Therefore, R.C. 5101.58 is an exception to R.C. 2305.27. 
 
Appellants, however, believe that these two statutes conflict and that 
R.C. 2305.27 prevails over R.C. 5101.58.  In making this argument, appellants 
rely primarily upon the appellate court decision of Holaday v. Bethesda Hosp. 
(1986), 29 Ohio App.3d 347, 29 OBR 475, 505 N.E.2d 1003.  In Holaday, 
ODHS sought reimbursement for medical services rendered to the plaintiff.  
The trial court held, in part, that the Ohio Department of Human Services may 
 
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not be subrogated to a claimant against a physician, podiatrist or hospital.  In 
reaching its determination, the court relied upon R.C. 1.51, which provides:  “If 
a general provision conflicts with a special or local provision, they shall be 
construed, if possible, so that effect is given to both.  If the conflict between the 
provisions is irreconcilable, the special or local provision prevails as an 
exception to the general provision, unless the general provision is the later 
adoption and the manifest intent is that the general provision prevail.”  Thus, 
the court reasoned: 
 
“We must agree with the trial court that R.C. 2305.27 is a special 
provision and that R.C. 5101.58 is a general provision which obviously 
conflict.  We deem the conflict between the provisions to be irreconcilable.  
Further, we find no manifest intent therein that the later enacted general 
provision is to prevail.  We point out that had the legislature intended R.C. 
5101.58 to prevail it could have manifested its intent either by stating that 
medical malpractice was included within the section or by including R.C. 
2305.27 by number within R.C. 5101.58.”  Id. at 350, 29 OBR at 479, 505 
N.E.2d at 1006-1007. 
 
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We believe the court’s focus and reasoning in the Holaday decision is 
misplaced.3  In holding that R.C. 5101.58 irreconcilably conflicts with R.C. 
2305.27, the Holaday court failed to consider the specific language of R.C. 
2305.27 that states that “[u]nless otherwise expressly provided by statute” a 
collateral source shall not be subrogated.  (Emphasis added.)  In giving plain 
meaning to these words, we find no conflict between the statutes.  Accordingly,  
pursuant to R.C. 5101.58 a department of human services may assert a right of 
subrogation to recover Medicaid benefits against defendants in a medical 
malpractice lawsuit. 
 
Appellants also argue that since the plaintiffs withdrew all claims for 
past and future medical expenses, ODHS is prohibited from recovering 
Medicaid benefits under R.C. 5101.58.  Appellants contend that since a claim 
for subrogation is derivative in nature (see Chemtrol Adhesives, Inc. v. Am. 
Mfrs. Mut. Ins. Co. [1989], 42 Ohio St.3d 40, 42, 537 N.E.2d 624, 628), any 
right ODHS had terminated when the plaintiffs withdrew the claim for past and 
future medical expenses.  This, too, is a false argument.  The fact that this claim 
was withdrawn is of no significance.  Under R.C. 5101.58, ODHS, as the real 
 
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party in interest, still has the right to intervene or join in an action to enforce its 
subrogation interests.  Consequently, ODHS is not affected by the plaintiffs’ 
withdrawal of their claim for past and future medical damages.  
 
Accordingly, the judgment of the court of appeals is affirmed. 
                                                                                                 Judgment affirmed. 
 
MOYER, C.J., DOUGLAS, RESNICK, PFEIFER, COOK and LUNDBERG 
STRATTON, JJ., concur. 
Footnotes: 
1 
Plaintiffs dismissed other parties named in the complaint from the 
lawsuit prior to trial. 
2 
R.C. 2305.27 was repealed effective January 27, 1997.  1996 
Am.Sub.H.B. No. 350 also amended R.C. 2317.45, which discusses collateral 
benefits in tort actions. 
3 
Appellants also cite Hodge v. Middletown Hosp. Assn. (1991), 62 Ohio 
St.3d 236, 239-240, 581 N.E.2d 529, 532, in urging that we apply the Holaday 
decision.  Although we briefly discussed Holaday, we neither approved nor 
disapproved of it in Hodge.  We simply distinguished Medicare Part A benefits 
 
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(at issue in Hodge) from Medicaid benefits (which were involved in Holaday) 
and held that Medicare Part A benefits fall under the definition of “insurance” 
and do not reduce medical malpractice damage awards.