Opinion ID: 2112221
Heading Depth: 1
Heading Rank: 2

Heading: Reduction for Attorney Fees and Court Costs.

Text: Iowa Code section 249A.6(4) obligates the department to reimburse the recipient for attorney fees and court costs the recipient incurs in collecting the department's subrogation claim. The statute in existence at the time of Patrick's accident in 1987 provided: If a recipient of assistance through the medical assistance program incurs the obligation to pay attorney fees and court costs for the purpose of enforcing a monetary claim to which the department is subrogated under this section, upon the receipt of a judgment or settlement of the claim, the court costs and reasonable attorney fees shall first be deducted from the judgment or settlement. One-third of the remaining balance shall then be deducted and paid to the recipient. From the remaining balance, the claim of the department shall be paid. Any amount remaining shall be paid to the recipient. (Emphasis added.) We think the above italicized language requires the recipient to meet two conditions before the recipient is entitled to any attorney fees and court costs from the department's subrogation claim. First, the recipient must incur an obligation to pay attorney fees and court costs in enforcing the department's claim. And, second, through the efforts of the recipient and the recipient's attorney, the department must recover on its claim either by judgment or by settlement. Cf. Scott, 438 N.W.2d at 836 (interpreting Iowa Code section 249A.6(4); from the department's subrogation claim, there must first be allocated and paid over toward plaintiff's attorney fees the amount customary for obtaining this portion of the settlement (plus court costs).) (emphasis added). Because of the result we reach in division I, the department receives no recovery of its subrogation claim through the efforts of Patrick and his attorneys. There has been no judgment entered on the claim against the defendants and in favor of the department. Nor has there been any settlement of the claim. The department must still litigate its claim to realize anything on it. Clearly the conditions in section 249A.6(4), triggering payment of attorney fees and court costs from the subrogation claim, have not been met. For these reasons, we think the district court erred in concluding that the department's subrogation claim was subject to reduction for any attorney fees and court costs under section 249A.6(4).