Title: Bacerra v. MacMillan. S.Ct. Order Denying Motion to Clarify, or in the Alternative, for Reconsideration, filed 07/18/2006 [pdf], 111 Haw. 121.

State: hawaii

Issuer: Hawaii Supreme Court

Document:

*** FOR PUBLICATION ***

 

IN THE SUPREME COURT OF THE STATE OP HAWAI'I

 

--- 000

 

NOLY BACERRA and NELY BACERRA, Individually, and
SEAN BACERRA, a minor, through NELY BACERRA,
his mother and next friend, Plaintiffs-Appellees,

JAMES B. MacMILLAN, III, M.D., THE QUEEN'S
MEDICAL CENTER, Defendants-Appellees,

 

and

DOE DEFENDANTS 1-100, Defendants.

me oats
vn ee
S21 Ra oc Nar some

‘0G

 

 

APL HOTEL & RESTAURANT WORKERS HEALTH & ae
‘TRUST FUND, by its Trustees, Lienor-Appellant.

 

STATE OF HAWAI'I, DEPARTMENT OF HUMAN SERV:
Tntervenor-Appellee.

ICES,

 

No. 26377

APPEAL FROM THE FIRST CIRCUIT COURT
(crv. No,-01-2-3563)

guns 30, 2006

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, AND DUFFY, JJ.

OPINION OF THE COURT BY MOON, C.3.
Lienor-appellant AFL Hotel & Restaurant Workers Health

& Welfare Trust Fund, by ite trustees [hereinafter, the Trust

 

aa
zy

##* FOR PUBLICATION ***

eee
rund) , appeats from the January 5, 2004 orde of the Circuit
court of the First Ciroutt, the Honorable Een Elizabeth Hifo
presiding, dismissing ite wotice of Hien” filed Septenber 12
yoo in an underlying medical malpractice action (the instant
case) brought by plaintiffs-appeless Noly B2ceese (tr. Bacerra)

wuatty, and Sean Bacerza (Sean), 3 MinOT,

 

and Nely Bacerra, indi
chrough Nely Bacerra (lira, Bacerra), Ti mother and next friend
tnereinafter, collectively, the Bacerrae] against defendante-
apperices Janes B. Macwillen, THT, 6D) (OF yacMillan) and the

queen's Medical center (the ONC) (hereinafter, collectively, the
defendants] -

ssased on the discussion below, we conclude that
pecause the Trust Fund failed to property intervene = the

jmatant case, if 46 not a party tO ERE case ‘therefore, the

pruat Fund lacks standing to appeal the cixeuit court's order

 

gly, we are compelled to

 

aiemissing the notice of lien Recor
dismise the instant appeal.
1. BACKGROUND

the Trust Pond provides medical coverage te thousands
of hotel collective bargaining employees and their families
including the Bacerras. on July 2, 1999+ NES Bacerra went into
tapor and was admitted to the Queen's Hedical Hospital. As &
reoult of a uterine rupture, the newborn, Seah euffered severe
brain damage due to lack of oxygen and developed spastic

quadriplegia, The medical expenses incurred as a result of

 

 
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a

Sean‘s extensive medical care and treatment were paid by:
(a) the Trust Fund, pursuant to Mr. Bacerra’s employer-sponsored
group health insurance policy issued by the Trust Fund; and
(2) the state of Hawaii's Department of Human Services (DHS),
pursuant to an “Application for Medical Assistance” submitted on
Sean’s behalf.

on Decenber 17, 2001, the Bacerras filed a four-count
medical malpractice complaint against the defendants, essentially
alleging lack of informed consent and negligence. Ultimately,
the Bacerras reached a settlement with Dr. MacMillan, as evinced
by their “Petition for Approval of Good Faith Settlement" (the
Petition), filed December 17, 2001. In the Petition, the
Racerras stated that the case against Dr. MacMillan had bee:
seettled for a confidential amount, which amount w(ould] be
provided under seal to the [circuit cJourt and to counsel." on
Novenber 19, 2002, Dr. MacMillan filed his joinder in the
Petition.

on Decenber 5, 2002, DHS requested permission from the
circuit court to intervene in the instant case (motion to
intervene) to recover $326,288.74 in medical costs, paid by DiS
through Medicaid, on behalf of Sean. Attached to ite motion to

intervene was a proposed Intervenor’s Complaint, wherein DHS

 

asserted that: (1) the Bacerras were obligated to reimburse DHS
for medical coste paid on behalf of Sean in the event Sean

received any compensation for injuries and medical costs incurred
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as a result of the incident alleged in the complaint; and (2) DES
had a first lien on any judgment or settlement award in favor of

Sean. On February 4, 2003, the circuit court granted DHS’s

 

motion to intervene.

on February 11, 2003, the circuit court issued an
vorder for Attendance of Persons/Entities at Further Settlement
Conference,” mandating the Trust Fund’s attendance at a further
settlement conference.’ The order was the first notification to
the Trust Pund that Sean’s condition may have been caused by a
third-party against whom the Bacerras were pureuing an action to
ecover damages. As a result, the Trust Fund filed ite notice of
Lien on Septenber 12, 2003, asserting its right of reimbursement

for payments made by the Trust Fund on behalf of Sean in the

 

2 we note that, although the circuit court granted Dls' motion to
intervene, the record does not reflect that the "Intervenor’s Complaint,”
attached Co Dis's motion as Exhibit B, waa ever filed. However, we recogalze
that ONS, in its nenorandum regarding the Sacerras’ notion to dienise the
Trust Fusd’e notice of lien, stated that ‘it haw not been necessary to file
the complaint because the (Sacerras) and the State have cone to an agreement,

regarding distribution of proceeds.”

 

 

* Inacmuch a the Trust Fund had not formally intervened in the
underiying medical malpractice action, we believe the circuit court had no
personal jurisdiction over it and, therefore, did not have the suthoriey fo
fandace its attendance at a settlement conference. Kevertheless, the Trust
Fund did not object (presurably because it was in ite beat interest fo
participate); thus, it could be esid that the Trust Fund waived personal
Jurisdiction, ‘Hawai'i Rules of civil Procedure Rule (RCP) Rule 12(h) (2)
(Zo04) ("A defence of lack of juriediction over the person... is waived (A)
Af omitted from a notion in the circumstances described in subdivision Tg) or
(B) if it is neither made by notion under this rule nor inclued in «
responsive pleading or an anenduent thereof permitted by Rule 15(a) to be made
ae 2 matter of course.“); Roxas v. Marcos, 89 Hawai'i 91, 135, 969 P.24 1209,
43253 (1998) (stating chat, “notwithstanding that the ‘of tack of
personal jurisdiction vas agserted in the [defendante’| answer to che
iplaintitfs'} complaint, [ehe defendanta’) failure to assert it in eheir
notion to dismiss constitutes a waiver of the issue pursuant to HRCP Rule
2g) and (h)"); see also Rearden Family 7 Wisenbaker, 101 Hawai't 237,
247"50, 65 P.3a 1029, 1039-42 (2003). In any event, we need not address the
Sesue in light of cur decision to dignies the Trust Fund's appeal Desed on

lack of standing

 

  

  

 

 

 
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ee
amount of $532,960.32. However, unlike DHS, the Trust Pund did

not file a motion to intervene as a party in the instant action.

on Septenber 29, 2003, the Bacerras moved to dismiss or
determine the Trust Fund’s notice of lien (motion to dismiss) .
Although the Bacerras did not dispute the fact that Sean had
received $532,960.32 in medical benefits from the Trust Fund,
they argued that the Trust Fund’s lien action was preempted by
the Federal Employees Retirenent Income Security Act of 1974,
commonly known as ERISA, codified at 29 U.S.C. § 1001 et seq.
the Bacerras maintained that, because the Trust Fund -- an ERISA-
fiduciary -- was essentially seeking monetary compensation from
the Bacerras -- the plan-beneficiaries, -- the relief being
sought was legal (and not equitable) in nature and was,

therefore, preempted by federal law.

 

DHS and the GMC each filed memoranda regarding the
Bacerras’ motion to dismiss, essentially supporting the motion.
In the event the circuit court decided not to dismiss the notice
of lien, DHS urged the court to determine that its Medicaid lien
should “enjoy{] a firet priority.” The QMC requested that the
circuit court determine how much, if any, of the lien should be
allowed. ‘The Trust Fund opposed the motion, arguing that its
state law claim for reimbursement did not come within the acope
of ERISA and was, therefore, not preempted, and that its lien
should be given priority over DHS’ lien because “ERISA preempts

any state laws that interfere with an ERISA plan‘s right of first

 
 

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covery, including any state Medicaid program's right of first

 

recovery." (Emphasis omitted.)

A hearing on the motion to dismiss was held on November
5, 2003. The circuit court, over the Trust Fund's objection,
“grant [ed] the motion{,] finding there [was] a preemption,”
indicating also that it would “not now decid{e] which lien would
have priority." The written order granting the Bacerras’ motion
to dismiss was filed on January 5, 2004. On Fébruary 4, 2004,
the Trust Fund filed its Notice of Appeal.

TT. STANDARD OF REVIEW

‘This court reviews a dismissal under Hawai'i Rules of
Civil Procedure Rule (HRCP) 12(b) (6) and a determination of
subject matter jurisdiction de novo. AFL Hotel & Rest. Workers
Health & Welfare Trust Fund v. Bosque, 110 Hawai'i 918, 322, 132
P.34 1229, 1232 (2006); Aames Funding Com, v, Mores, 107 Hawai‘
95, 98, 120 P.3d 1042, 1045 (2005); Noxxia v. Hawaiian Airlines,

Inc., 74 Haw. 235, 239, 842 P.2d 634, 637 (1992), aff'd, 512 U.S.

246 (1994)
III. DISCUSSION
Before this court can address whether the Trust Fund’s
notice of lien is -- as the Trust Pund asserts -- a state law
claim for reimbursement and, therefore, not preempted because it
does not come within the scope of ERISA, we must first determine
whether the Trust Fund has standing to appeal in the firet

instance. We conclude that it does not.
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oe

In Kepo'o v. Watson, 87 Hawai'i 91, 952 P.2d 379 (1998),

 

thie court state:
Generally, the requirenents of standing to appeal ares
(i) the xerson must first have been a party to the action:
(3) ERE-SEtton seeking modification of the order oF judgment
must have had standing to oppose it in the trial court; and
3) such person mst be aggrieved by the ruling, i.e., the
person must be one who ie affected Or prejudiced by the
Bppealable order.

Id. at 95, 952 P.2d at 383 (quoting Waikiki Malia Hotel, Inc, v.
Kinkai Props., Ltd. P’ship, 75 Haw. 370, 393, 862 P.2d 1048, 1061
(2993) (emphasis added) (internal quotation marks and brackets
omitted; see also Chierighino v, Bowers, 2 Haw. App. 291, 293,
631 P.2d 183, 185 (1981) (per curiam).

‘The instant case was filed solely in the names of the

 

Bacerras, who, in turn, named only Dr. MacMillan and the QMC as
defendants. As previously stated, the Trust Pund, unlike DHS,
did not move to intervene in the instant case, but merely filed
ite notice of lien. However, the act of filing of a notice of
lien, in and of itself, does not make the lienor a party to the
case. See Valenta v, Regente of the Univ. of California, 262
cal. Rptr. 612, 815 (Cal. Ct. App. 1991). In Valenta, the
plaintiff successfully pursued a wrongful termination action,
obtaining a judgment of $866,000. When the defendants appealed,
plaintiff's trial counsel associated with another attorney to
handle the appeal. At some point, plaintiff's discharged counsel
filed a notice of lien for his reasonable attorney's fees and
cost advanced in the underlying wrongful termination case. The

california Court of Appeals stated:

 
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Clearly, the practice of filing a notice of 1ien in a

pending action is perniseible, and even advisable.

Rowever, while a previously discharged attorney may file a

notice of lien n'a pending action, an independent’ action is

required fo establish the exiatence and amount of the lien
to enforce it.

Id. (emphases added). In other words, a notice of lien is not

 

 

the same as a lien or a lien claim. To assert its lien or lien
claim in the instant case, the Trust Fund was required to
institute ‘an independent action* or intervene as a party in the
instant case, pursuant to HRCP Rule 24 (2004).’ Having failed to
do so, the Trust Fund does not meet the first prong of the
standing requirements recited in Keno’, i.e., “the person must
first have been a party to the action.” Kepo'o, 87 Hawai'i at 95,
952 P.2d at 383 (citation omitted). We, therefore, hold that,
because the Trust Fund was not nade a party to the instant case,
it lacks standing to appeal. See Stewart Props., Inc. v.
Brennan, @ Haw. App. 431, 433, 807 P.2d 606, 607 (1992) (stating

“[a] well-settled rule is that only parties to a lawsuit

> RcP Rule 24 provides in relevant part:

(a) Intervention of right. Upon timely
application (;] anyone shail be permitted to intervene in an
action: (r) ‘shen s statute confers an unconditional right
to intervene; or (2) when the applicant claim an interest
Felating to the property or transaction which fe the subject
of the action and the applicant is so situated that the
@isposition of the action may ae a practical matter inpair
or inpede the applicant's ability to protect that interest,
Uslene the applicant's interest 18 adequately represented by
existing partie

 

   

 

 

 

ic) ‘piccedure. A person desiring to intervene shall
serve 4 motion to intervene upon the parties as provided in
Rule S. “The notion shall state the grounds therefor and
shall Be accompanied by a pleading setting forth the claim
or defense for which intervention ie sought

 

in eriginal.) (Bold emphases added.)

 

cone

 

racored empha

 
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a

may appeal an adverse judgnent{.] . . . In other words,
nonparties, who did not or could not intervene, are ordinarily
denied standing to appeal’ (citations, footnote, and internal
quotation marks omitted) (second ellipses added)); see
also Chierichino, 2 Haw. App. at 295, 631 P.2d at 186 (holding
that, because the appellant was not a party to the action, his
appeal must be dismissed) .
IV. CONCLUSION
Based on the foregoing, the Trust Fund's appeal, filed

on February 4, 2004, is dismissed.

on the briete:
Derek R. xebayesht and Gem
BESSA i Ince’ tot coodesn
Anderson Quinn & Stifel), BivenPhohernee—
Mee Tenor appel ent
Janes T. Leavitt, Jz. and Dan Corowa
Joke’on visanes dor
plaintiffs-appellees Noly Lr
Bra ely Baceeza, OOS
Md.viatenty Unc mast

Charles J. Ferrera, for
plaintiff appellee Sean
Bacerra, a minor, through
Nely Bacerra, his mother
and next friend

 

Michael S. Vincent and
Cora K. Lum, Deputy
Attorneys General, for
intervenor-appellee