Title: Commonwealth v. Huynh
Citation: N/A
Docket Number: 001881
State: Virginia
Issuer: Virginia Supreme Court
Date: June 8, 2001

Present: All the Justices 
 
COMMONWEALTH OF VIRGINIA, DEPARTMENT 
 OF MEDICAL ASSISTANCE SERVICES 
 
 
 
OPINION BY 
v.  Record No. 001881 
JUSTICE LAWRENCE L. KOONTZ, JR. 
 
 
 
June 8, 2001 
VIRGINIA HUYNH, AN INFANT, BY HER 
MOTHER AND NEXT FRIEND, TIEN HA, ET AL. 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 
A. Bonwill Shockley, Judge 
 
 
The dispositive issue in this appeal is whether the 
authority granted by Code § 8.01-66.9 to a trial court to reduce 
a lien in favor of the Commonwealth for medical services 
rendered to an infant injured by the alleged negligence of her 
physician permits the trial court to exclude the Commonwealth 
from receiving any portion of the infant’s settlement with the 
physician. 
BACKGROUND 
 
The material facts are not disputed.  Virginia Huynh, an 
infant, suffered permanent, devastating brain damage during her 
birth.  In a subsequent medical malpractice suit brought in 
Huynh’s name by her mother as next friend, the physician 
attending Huynh’s birth, without admitting liability, agreed to 
pay $595,000 to settle the suit. 
 
The Commonwealth, through the Department of Medical 
Assistance Services, had paid for medical care received by Huynh 
related to her birth injuries because she was a Medicaid 
recipient.  The Commonwealth asserted a lien against the 
proceeds of the settlement under Code § 8.01-66.9.  The amount 
of the payments secured by the statutory lien was $144,957.22.
 
Pursuant to a further provision of Code § 8.01-66.9, Huynh 
filed a motion to reduce the Commonwealth’s lien and to 
apportion the recovery from her physician between herself, her 
attorneys, and the Commonwealth.  Huynh asserted that, pursuant 
to Code § 2.1-127, her attorneys had sought “without success” to 
negotiate a compromise of the amount of the lien with the office 
of the Attorney General.  According to the motion, Huynh 
expressly sought a “waiver” of the Commonwealth’s lien. 
 
The Commonwealth responded to the motion to reduce its lien 
by contending that Huynh’s attorneys had not made a good faith 
effort to negotiate a compromise.  The Commonwealth further 
contended that it was willing to consider a compromise of the 
amount of its lien if Huynh’s attorneys would accept a 
proportional decrease in their 40% contingency fee. 
 
Following a hearing, the trial court entered an order 
approving the amount and terms of the infant settlement pursuant 
to Code § 8.01-424.1  The order further provided that the trial 
court would reduce the Commonwealth’s lien on the ground that 
“the equities of this tragic case, the limited funds available 
                     
1 The trial court’s approval of the amount and terms of the 
settlement is not an issue in this appeal. 
 
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to compensate Virginia Huynh, and the permanent injuries of 
Virginia Huynh, require such action.”  The order then provided 
for the disbursal of the entire recovery of $595,000 by first 
reducing the amount of the Commonwealth’s lien to “zero,” and 
awarding $238,000 to Huynh’s attorneys (representing their full 
40% contingency fee), $13,779.30 to these attorneys for 
litigation expenses incurred on Huynh’s behalf, and the balance 
of $343,220.70 to Huynh.  Huynh’s portion of the recovery was 
divided into two funds; one to purchase an annuity for the sole 
benefit of the child, and the other to fund a “Special Needs” 
trust established under the applicable law for the benefit of 
disabled persons under certain provisions of the Social Security 
Act.  Although apportioning no part of the recovery to the 
Commonwealth, the order expressly stated that the Commonwealth’s 
claim for medical care provided to Huynh “shall not be 
extinguished by the elimination of the lien.”  We awarded the 
Commonwealth this appeal. 
DISCUSSION 
 
When the Commonwealth pays for, or provides, medical 
services to an indigent person necessitated by a tortious 
injury, Code § 8.01-66.9 creates a lien in favor of the 
Commonwealth for the amount of those services on any recovery 
from the tortfeasor by the injured party.  Pursuant to Code 
 
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§ 2.1-127, the Attorney General may compromise the amount of the 
Commonwealth’s claim. 
 
We have previously recognized that, subject to certain 
procedures and limitations, “Code § 2.1-127 has, for many years, 
given authority to the Attorney General . . . to compromise, 
settle, and ‘discharge’ disputes and claims involving the 
interests of the Commonwealth and its institutions.”  Rector and 
Visitors of University of Virginia v. Harris, 239 Va. 119, 123, 
387 S.E.2d 772, 775 (1990).  Thus, under the authority of Code 
§ 2.1-127, the Attorney General may reduce or eliminate a claim 
of the Commonwealth, and the amount of the Commonwealth’s lien 
created by Code § 8.01-66.9 would be reduced or eliminated 
correspondingly. 
 
Code § 8.01-66.9 also provides that “[t]he Commonwealth’s 
. . . lien shall be inferior to any lien for payment of 
reasonable attorney’s fees and costs, but shall be superior to 
all other liens created by the provisions of this chapter and 
otherwise.  Expenses for reasonable legal fees and costs shall 
be deducted from the total amount recovered.”  Pertinent to this 
appeal, the statute further provides that when the Commonwealth 
asserts a lien against the recovery in a personal injury suit, 
the trial court “may . . . reduce the amount of the lien[] and 
apportion the recovery, whether by verdict or negotiated 
 
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settlement, between the plaintiff, the plaintiff’s attorney, and 
the Commonwealth . . . as the equities of the case may appear.” 
 
In Commonwealth v. Smith, 239 Va. 108, 387 S.E.2d 767 
(1990), decided the same day as Harris, we held that the effect 
of Code § 8.01-66.9 “was to vest in the trial judge, in the 
circumstances specified by the statute, the authority, otherwise 
vested in the Attorney General . . . by Code § 2.1-127, to 
compromise and reduce the Commonwealth’s lien . . . [in order] 
to reduce expense and delay, to avoid litigation, and to promote 
settlements.”  Smith, 239 Va. at 112, 387 S.E.2d at 769.  While 
recognizing the similarity between the authority granted to the 
Attorney General and that given to the trial judge, in Harris we 
held that the trial judge’s authority was limited to 
“ ‘reduc[ing] the amount of the lien.’ ”  239 Va. at 125, 387 
S.E.2d at 775.  This is so because the General Assembly “did not 
take the further step of authorizing the judge to ‘discharge’ 
the Commonwealth’s claim, although [Code] § 2.1-127 vested that 
authority in the Attorney General, subject to the appropriate 
approvals.”  Harris, 239 Va. at 124, 387 S.E.2d at 775. 
 
In the present case, the trial court properly recognized 
that it lacked the authority under Code § 8.01-66.9 to reduce or 
eliminate the amount of the Commonwealth’s claim which was 
secured by the lien created by the statute.  The issue raised by 
the Commonwealth in this appeal is whether the trial court 
 
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nonetheless had the authority to “apportion” to the Commonwealth 
no part of the recovery against which the Commonwealth had 
asserted its lien.2
 
“The legislative purpose of Code § 8.01-66.9 [is] to secure 
to the public treasury such recompense as [may] be found, where 
public funds [have] been expended for the treatment of tortious 
injuries.”  Commonwealth v. Lee, 239 Va. 114, 118, 387 S.E.2d 
770, 772 (1990).  However, no language in this statute suggests 
that the Commonwealth be permitted to enforce its lien in its 
entirety if in a particular case this would result in the 
injured party being denied a just recovery for her injuries or 
her attorneys failing to receive reasonable compensation for the 
services they rendered to obtain that recovery.  Rather, the 
statute expressly directs the trial court to “apportion the 
recovery, . . . as the equities of the case may appear.” 
 
In this context, Code § 8.01-66.9 necessarily involves a 
case-by-case analysis to ensure that the Commonwealth is 
                     
2 During oral argument of this appeal, the Commonwealth 
asserted, as it had in the trial court, that Huynh had not “made 
a good faith effort to negotiate a compromise pursuant to [Code] 
§ 2.1-127” as required by Code § 8.01-66.9 and, thus, was not 
entitled to petition the trial court for a reduction of the 
Commonwealth’s lien.  However, the Commonwealth did not assign 
error to the trial court’s failure to deny Huynh’s motion to 
reduce the lien on this ground.  Accordingly, we will not 
consider this issue.  Rule 5:17(c); City of Winchester v. 
American Woodmark Corp., 250 Va. 451, 460, 464 S.E.2d 148, 153-
54 (1995) (this Court does not consider arguments that are not 
the subjects of assignments of error). 
 
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permitted to assert its lien subject to a just recovery for the 
injured party and reasonable compensation for her counsel.  The 
statute, however, provides little guidance for determining 
whether, or by how much, to reduce the Commonwealth’s lien if 
the recovery is inadequate to meet the just claims of all three 
parties.  The only guidance which has been given to assist the 
trial court, and this Court on appeal, in determining what 
factors should be considered in deciding how, or even whether, 
such relief is warranted, is the general doctrine of “the 
equities of the case.”  Accordingly, the ultimate decision is a 
matter of sound judicial discretion. 
 
In the absence of express direction from the legislature, 
it becomes the province and duty of this Court to provide 
guidelines which will assist the trial court in exercising its 
discretion to apportion a recovery between the injured party, 
the injured party’s attorneys, and the Commonwealth.  In doing 
so, we look to the plain meaning of the language used by the 
legislature.  See Abbott v. Willey, 253 Va. 88, 91, 479 S.E.2d 
528, 530 (1997). 
 
As we stated in Harris, “ ‘Apportion’ is defined:  ‘To 
divide and assign in just proportion . . . to allot.’ ”  239 Va. 
at 125, 387 S.E.2d at 776 (quoting Webster’s New International 
Dictionary 132 (2nd ed. 1934)).  Thus, we held that, by this 
choice of a precise word, it was apparent “[t]he General 
 
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Assembly, . . . intended that the court would have the power to 
determine what portion of the recovery each of the contending 
parties would ultimately receive, and to divide and distribute 
the recovery accordingly.”  Harris, 239 Va. at 125, 387 S.E.2d 
at 776.  
 
Although we did not address the issue in Harris, or in 
Smith or Lee, it is equally apparent that in order to divide and 
assign a just portion of the recovery between three parties with 
claims to shares of the recovery, the General Assembly could not 
have intended for the trial court to wholly disregard the claim 
of the Commonwealth in order to benefit the injured party or her 
attorneys.  Accordingly, we hold that a trial court must assign 
or allot some portion of the recovery to the Commonwealth. 
We recognize, as was asserted by Huynh’s counsel during 
oral argument of this appeal, that part of the philosophy 
underpinning the policy of making legal services accessible by 
permitting attorneys to take cases on contingency is that a fee 
collected in an individual case, while appearing excessive in 
the abstract, actually represents, in part, compensation for the 
risk taken by counsel in undertaking contingent representation 
where no recovery may be ultimately obtained.  Certainly, in 
weighing “the equities of the case,” this is one factor the 
trial court may consider in determining what compensation is 
reasonable for the services rendered to the plaintiff by her 
 
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attorneys.  Nonetheless, in undertaking a representation of a 
tort plaintiff whose recovery would be subject to a statutory 
lien under Code § 8.01-66.9, an attorney is presumed to be aware 
that her fee may be subject to apportionment under the terms of 
that statute. 
 
Although the Commonwealth’s lien is statutorily “inferior” 
to any lien for the payment of “reasonable” attorney’s fees, we 
further hold that such fees are not immune from apportionment 
under Code § 8.01-66.9.  Rather, in apportioning the recovery, 
the trial court is required to determine the reasonable 
attorney’s fees after considering the circumstances of the 
particular case, including, but not limited to, the efforts 
expended in obtaining the recovery for the injured party, the 
amount of the recovery, and the amount of the Commonwealth’s 
lien against that recovery.  In making this determination, the 
trial court may reduce, but not eliminate, the fee provided for 
in the contract for legal services between the injured party and 
the attorneys in order to provide equitable portions of the 
recovery to the injured party, the injured party’s attorneys, 
and the Commonwealth. 
 
Applying these principles to the facts of this case, we 
hold that the trial court erred in failing to award some portion 
of the recovery to the Commonwealth while providing Huynh’s 
attorneys the full amount of their contractual fee.  This is 
 
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particularly true in light of the fact that both the 
Commonwealth and Huynh’s attorneys concede that the portion of 
the recovery afforded to Huynh under the trial court’s 
apportionment provided her with less than complete relief, and 
was inadequate to meet her expected future needs.  Indeed, the 
trial court’s use of a “Special Needs” trust to preserve Huynh’s 
share of the recovery was predicated on the inescapable 
conclusion that her future medical expenses would rapidly 
exhaust the money awarded to her if it were not sheltered in a 
manner that would allow her to continue receiving assistance 
from the Commonwealth.  Accordingly, we will reverse the 
judgment of the trial court on this issue and remand this case 
to the trial court to make an appropriate apportionment.3
 
In addition to challenging the trial court’s application of 
its authority to reduce the Commonwealth’s lien pursuant to Code 
§ 8.01-66.9, the Commonwealth also assigned error to the trial 
judge’s failure to recuse herself from consideration of this 
case.  Nothing in the record discloses an actual conflict of 
                     
3 In light of our holding, we need not address in detail 
Huynh’s assertions that the trial court did not reduce the 
amount of the Commonwealth’s claim and, thus, that the 
Commonwealth may ultimately recover on its claim at her death 
under the provisions of the Special Needs trust.  We simply note 
that Code § 8.01-66.9 concerns the Commonwealth’s lien on the 
injured party’s present recovery from the tortfeasor and not the 
Commonwealth’s ability to ultimately recover on its claim in the 
future. 
 
 
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interest, as defined by Canon 3(E) of the Code of Judicial 
Conduct, that would have required the trial judge to recuse 
herself.  Accordingly, we find no merit in this assignment of 
error. 
CONCLUSION 
 
For these reasons, we will reverse the judgment of the 
trial court and remand the case for further proceedings 
consistent with the views expressed in this opinion.4
Reversed and remanded. 
                     
4 In light of our resolution of the main issue, we need not 
address the Commonwealth’s remaining assignment of error. 
 
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