# FILED

July 29, 1998 Cecil W. Crowson Appellate Cou rt Clerk IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

______________________________________________

BENNY N. BLANKENSHIP, and SHEILA BLANKENSHIP, Plaintiffs-Appel

lees, and BLUECROSS BLUESHIELD OF TENNESSEE, as administrator of TennCare for the State of Tennessee, Plaintiff by Intervention/ Appellant, Vs. Sumner Circuit No. 15078-C C.A. No. 01A01-9709-CV-00492 ESTATE OF JOSHUA D. BAIN a nd BOB WILLIAMS FORD LINCOLN-MERCURY, Defendants.

_____________________________________________________________________ _______ FROM THE SUMNER COUNT Y CIRCUIT COURT THE HONORABLE THOMAS GOODALL, JUDGE

David E. High of Na

shville John Pellegrin of G

allatin For Appellees Jerome J. Cohen of

Nashville For Appellant

REVERSED AND REMANDED Opinion filed:

W. FRANK CRAWFORD,

PRESIDING JUDGE, W.S. CONCUR: ALAN E. HIGHERS, JUDGEHOLLY KIRBY LILLARD, JU DGE The sole issue in this case is whether the statutory subrogation and/or assignment provisions of the Tennessee TennCare Program are subject to the common law “made whole” doctrine. Plaintiffs, Benny Blank enshi p and Sheila Blankenship, were enrolled in the TennCare program and paid monthly pre

miums for the hea lth care coverage. On July 18, 1995, Benny Bl an kenship

was seriously injured in an automobile accident due to the negligence of Joshua Bain, who was killed in the accident. Bain’s estate w as insolvent bu t there was a total of $125,000.00 liability insurance coverage available in his behalf. Blankenship’s medical expenses totaled

in excess of $30,000.00, and TennCare, throu

gh its administrator

, BlueCross BlueShield of Tenne

ssee, paid $20,713 .83 of the said medi cal expenses. The Blankenships filed a complaint against the estate and the owner of the vehicle Ba

in

was driving to

recover for the losses, injuries, and damages sustained. TennCare’s administrator was allowed to intervene to pursue its subrogation claim, and the plaintiffs filed a “Petition to Determine the Validity

and/or the Amount of the Alleged Subrogation Claim.” Thepetition was treated as an action for

declaratory relief

pursuant to Rule 57, Tenn.R.Civ.P. It is undisputed that the plaintiffs’ tort claims wereclearly worth in excess of the policy limits settlement plaintiffs received. The trial court held that the administrator’s right torecover pursuant to T.C.A. § 71-5- 117 (Supp. 1997) was su

bject to the Blanke

nships first being ma

de whole, and sin

ce they had notbeen made whole by virtue of the settlement, there could be no subrogation recovery by the administrator. There are no mate

r ial factual disputes; the sole issue is purely a question of law. Therefore, our review of thetrial court’s rul ing is de novo withno presumption of c orrectness. Marriott Employees’

Fed. Credit Union v. Ha rris , 897 S.W.2d 723, 727 (Tenn. App. 1994). The medical expense payments were made pursuant to Tennessee’s “Medical Assistance Act of 1968," codified as T.C.A. §§ 71-5-101, et seq. (1995 & Supp. 1997). The 1968 Act is intended “to make possible medical a ssistance to those

recipients dete

rmined to be eligible under this chapter to rece

ive medical assist

ance that confo

rms to the requirements of title XIX of the Social Security Act [codified in 42 U.S.C. §§ 1396 et seq. (1992 & Supp. 1996)] and the regulations promulgated pursuant thereto.” T.C.A. § 71-5-102 (1995). T.C.A. § 71-5-117 p

rovides in part, pe

rtinent to the issue

before us: 71-5-117. Recovery of

benefits - State’s right of subrogation - Assignment

of insurance b ene fit rights - Commissioner authorized to require cert ain information ident

ifying persons3 covered by third parties - State’s right of action. - (a) Medical ass ist ance paid to, or on behalf of, any recipient cannot be recover ed from a beneficiary unless such assistance has been incorrectly

paid, or, unless the recipient or beneficiary recovers or is entitled to re

cover from a

third party

reimbursement fo

r all or part of the costs of care or treatment for the injury or illness for which the medical assistance is paid. To the extent of payments of medical assistance, the state shall be subrogated to all rights of recovery, for the cost of

care or treatment for the

injury or illness for which medical a

ssist ance is provided, contractual or otherwise, of the recipien t s against any pers on. Medicaid paymentsto the provider of the medicalservi ces shall not be withdrawn or reduced to

recover funds obtained bythe recipient from third parties for medical services rendered by t he provider if these funds were

obtained wi thout the knowledge or direct assistance of

the provider of medical assistance. When the state asserts its right to subrogat ion, the state

shall notify the recipients in language unders

tandable to all recipients, of

recipient’s righ

ts of recovery agai

nst third parties and that recipient should seek the advice of an attorney regarding those rights of recovery to

which recipient may be entitled. . . . (b) Upon accepting medical assistance, the recipient shall be deemed to have made an as signme nt to the state of the right of third party insurance

benefits to which t

he recipient may be entitled. Failure of the recipient to reimburse the state for medical assistance received from any third party insurance benefitsreceived as a result of the illness or injury from which the medical assi st ance was paid may be grounds for removing the recipient from future par

ticipation in the be

nefits available

under this part; provided, that any r emova l from participation shall be after appropriate adv

ance notic e to the recipient and that the provi d er of service shall not be prevented from receiving payment from the state for medical assistanc e services previo usly furnishedthe recipient, and that nothing he re in shall require an insurer to pay ben

efits to the state which h

ave already be

en paid to the recipient. 42 U.S.C. § 1396a (Sup

p. 1998) states in pe

rtinent part: 1396a. State plans for medical assistance (a) Contents A State plan for medical assistance must --

* * * (25) provide -- (A) that the State or loc

al agency adminis

tering such plan w

ill take all reasonable measures to ascertain the legal liability of third parties (including health

insurers, group health plans (as defined in section 607(1) of the Employee R etire ment Income Secur ity Act of 1974 [29 U.S.C.A. § 1167(1)]), service benefit plans, and hea lth mai ntenance organizations) to pay for care and services available under the plan, including-- (i) the collection of

sufficient information (as specified by the Secretary in re

gulations) to enab

le the State to

pursue claims against such third parties, with such information being collected at the time of any determination or redetermina tion of eligibility for medical assistance, and (ii) t he submission to the Se cretary of a pla

n (subject to the approval by the Se

cretary) for p

ursuing claims

ag ainst such4 third parties, . . . . (B) that in any case where suc h a legal liability

is found to exist after medical assistance has been made available on behalf of the individual and where theamount of reimbur sement the State

can reasonably

expect to recover

exceeds the costs of such recovery, the State or local age ncy wi ll seek reimbursement for such assistance to the extent of such legal liability; Relying primarily upon the holding in Wimberly v A mer. Ca s. Co. , 584 S.W.2d 200 (Tenn. 1979), the Blanken ships assert that th

e administrator is

not entit led to its subrogation claim until they have been made whole. In Wimberly , two fire insurance companies sought to enforcetheir subrogation rights under the ir fire insurance policies issued to the plaintiff, Wimberly. Wimberly’s restaurant was destroyed

by fire that was started after another party had driven her automobile into the restaurant.

The automobile dri

ver’s i ns urance carrie

r paid Wimberly

its policy limits of $25 ,000.00, but it was undisputed that the loss caused by the fire

was $44,619.00. Wimberly’s insurance companies paid $15,000.00, and sought to recover the amount pursuant to

the subrogation provision of their policies and settlement instruments. The Court not ed that the doctrine of subrogation had its origin in general principles of equity, an d under equitable pri nciples an insure d must be made whole

before subroga

tion rights arise in favor of the insured. Id . at 203. The Court h eld that this princi

ple is applicable to

contractual subrogations. Id . at

204. In the instant case, the trial court extended the principle to statutory subrogation because T.C .A. § 71-5-117 contains no statutory exception to the “made whole” doctrine, and held that the st atutory inte

rest of the a dministrator would be subject to the Blankenships being first made whole. We must respectfully disagree. Statutes are to be interpreted so as to give effect to the ordinary meaning of the language used by the legislature. Ganzevoort v. Russe ll , 949 S.W.2d 293, 296 (Tenn. 1997); Chapman v. Sullivan , 608 S.W.2d 580, 581 -82 (Tenn. 1980) ; see also Henry v. White , 250 S.W.2d 70 , 72 (Tenn. 1952) (“If the words of a statute plainly mean one thing they cannot be given another meaning by judicial construction.”). In Wimberly , there was

no statute mandating subrogation. In the instant cas e th e statute specifically provides for subrogation, and the subrogatio n provision is in the s

tatute because o

f the mandate

by the federal government. The statute states: “To the extent of payments of medical assistance, the state shall be subrogated to all rights of recovery , for the cost of care or treatment for the injury or illness for which medical assistance is provided. . .” T.C.A. § 71-5-117 (a). ( emph asis added). The language employed by the legislature in this statute is clear and unequivocal. In the instant case,5

the legislation was passed to provide the medical assistance in conformance with the requirements

of the Social Security Act. The act mandates that the state take the necessary steps to pursue the legal liability of third parties. The legislature, in responding to this

requirement, mandated that “th

e state shall be subrogated to all rights of recovery.” T.C.A. § 71-5-117 (a). There is nothing in the statute to indicate that this mandate is subject to t he recipi ent of the medical benefits being made whole. In Castleman v. Ross Engineering, Inc. , 958 S.W.2 d 720 (Te nn. 1997), the Supr eme Courtconsidered enforcement of a subrogation claim for benefits paid to an employee where fault was attributedto the employee and to the employer. The employee acknowledged that the employer’s insurance carrier has a statut ory su brogation claim for benefits paid under the workers compensation law, but asserted that this claim is subjectto the principles o f equitable subrogation an d is no t enforceable u nless the employee

was made whole. I

n answer to this assertion, the Supr

eme Court said: The statute creating the subrogation claim does not by its terms condition the claim upon the employee ob taining a full recovery of damages sustained. The subrogation lie n attaches to “the net recovery collected” and secures the amount “paid” by the employer or the amount of the employer’s “fut ure liability, as it accrues.” It appears that, under the statute, t he subrogation lien attaches to any recovery from the tortfeasor “b y judg ment, settlement

or otherwise.” Consequently, even if under eq uitable principles of subrogation the employer was not entitled to assert the subrogation lie

n, the statute spec

ifically create

s that right. Id. at 724 (internal citation omitted). This Cou rt h as previously rec ognized the similar

ity between Tenne

ssee’s workers ’ compensation statute and Tennessee’s Medicaid statute. See Hughlett v. Shelby County Health Care Corp. , 940 S.W.2d 571 (Tenn. App. 1996). Insofar as subrogation is concerned, there

is

no meaningful distinction between the statutes. Id. at 574-75. Both workers’ compen sat ion subrogation and TennCare subrogation are mandated by statute. Neither statute makes reference to the “made whole” doctrine, and we are not at liberty to add this langu ag e to the legislative enactments. Therefore, we must reverse the trial court’s judgment which refuses to recognize the subrogation cl

aim. The trial court also held that “if Blue Cross Blue Shi eld had an en forceable and valid subrogation claim regarding the settlement proceeds, their claims would be subject to the reasonable, necessary, and ordinary one-third contingent attorney’s fees inc urre d by the Blankenships and pro rata litigation expenses incurred by the Blankenships pursuant to T.C.A.6

§ 71-5-117 (c).” Although no issue is presented for reviewconcerning the trial court’s holding regarding attorney’s fees, we will consider the trial court’s ruling in view of our

decision concerning the issue presented f

or review. Tenn

essee Code Annota

ted § 71-5-117 (c

) provides: The right of subrogation by the state to the re cipients’ right to recovery shall be subject to ordinary and re

asonable attorne

y fees; provided, that further, where a recipient has retained an attorney, the attorney shall

not be considered liable unless theattorney has notice from the s t ate of the state’ s claim of subroga tion prior to disbursement of th

e funds to the rec

ipient. The admi n istrator asserts that this language is not terminology requiring payment of attorney’s fees out of the subrogation cl aim but pro vides for priority of payment. The administrator

argues that the pr

ovision should be co

nstrued so that the

state is entitled to subrogation claim after the recipient’s counsel receives the ordinary and reasonable fe es out of the total recovery.

We must respectfully disagree. We find no ambiguity in the language of the statute which exp

licitlyprovides that the state’s right of subrogation is subject to the ordinary and reasonable

attorney’s fee

s. Accordingly, the judgment of the trial court declaring that the Blankensh

ip recovery is notsubject to the administrator’s subrogation claim is reversed. The case is remanded to the trial court for a determination of the amount of any attorney’s fees and expenses to be charged to the subrogation claim

. Costs of the appea

l are assessed to

the appellees.

_________________________________ W. FRANK CRAWFORD, PRESIDING JUDGE, W.S. CONCUR:

____________________________________ ALAN E. HIGHERS, JUDGE

____________________________________ HOLLY KIRBY LILLARD, JU DGE