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

Heading: Reduction for Comparative Fault.

Text: The amount that the department is entitled to recover is governed by Iowa Code section 249A.6(1). The statute provides in part: When payment is made by the department for medical care or expenses through the medical assistance program on behalf of a recipient, the department is subrogated, to the extent of those payments, to all monetary claims which the recipient may have against third parties as a result of the medical care or expenses received or incurred. (Emphasis added.) The statute expressly provides that the department's right to reimbursement depends on subrogation principles. We said so in two cases. See Scott v. Department of Human Servs., 438 N.W.2d 834, 835 (Iowa 1989); Department of Human Servs. v. Brooks, 412 N.W.2d 613, 614-16 (Iowa 1987). Subrogation has been described as contemplat[ing] full substitution and plac[ing] the party subrogated in the shoes of the creditor. Generally speaking, the party subrogated acquires all the rights, securities, and remedies the creditor has against the debtor who is primarily liable.... His right of subrogation, although not superior to the rights of the original creditor, extends to the latter's rights, both direct and incidental. The rights to which the subrogee succeeds are the same as, but no greater than, those of the person for whom he is substituted. He cannot acquire any claim, security, or remedy the subrogor did not have. Moreover, the rights, claims, and securities to which he succeeds are taken subject to the limitations, burdens, and disqualifications incident to them in the hands of the party to whom he is subrogated, and subject to any defenses that might have been urged against the latter. Beyond this he has no right and no valid claim for protection. 73 Am.Jur.2d Subrogation § 106, at 665-66 (1974). This court has taken a similar view of subrogation. See Kent v. Bailey, 181 Iowa 489, 493-94, 164 N.W. 852, 853 (1917). In Kent v. Bailey , this court discussed the origins of subrogation: The books agree that subrogation is not founded on contract or privity or strict suretyship, but is born of equity, and results from the natural justice of placing the burden where it ought to rest. The remedy depends upon the principles of justice, equity and benevolence to be applied to the facts of the particular case. It is of equitable origin, adopted to compel the ultimate discharge of a debt or obligation by him who in good conscience ought to pay it.... The remedy is to be administered according to the established rules of equity jurisprudence. Id. In Brooks and Scott, we pointed out that under section 249A.6(1), the department has two options for enforcing its right to reimbursement. The department may either sue the tortfeasor directly or claim against the settlement or judgment. Scott, 438 N.W.2d at 836; Brooks, 412 N.W.2d at 615. Here the department chose to claim against the settlement. This option presupposes that there has been a settlement as to medical expenses, the only element of recovery to which the department is subrogated under section 249A.6(1). Under the evidence here there clearly has been no settlement of the medical expenses. The settlement agreement leaves that element open and unresolved. So in the absence of any effort on the part of Patrick to enforce the claim for medical expenses, the department is left with two choices: pursue the claim against the tortfeasor or forego it. Cf. Scott, 438 N.W.2d at 835-36 (medical expense claim for $258,835.51 was settled for $88,750 in a total settlement of $625,000; department was entitled to be subrogated to only $88,750 because it was fully apprised of the settlement and the court approved it); Brooks, 412 N.W.2d at 615 (department was not entitled to be subrogated to plaintiff's jury award for medical expenses it paid where plaintiff asserted no claim against the tortfeasor for such medical expenses). If the department elects to pursue its claim against the tortfeasor directly, Patrick's degree of contributory fault will be a factor in determining what amount the State is entitled to recover. This is because under the earlier cited principles of subrogation, the department's right to the medical expense claim is subject to any defense that might be asserted against Patrick. We see no inequity or injustice in this result because the department's subrogation interest is tantamount to a full ownership interest of the medical expense claim. Like the plaintiffs in Scott and Brooks, Patrick was not obligated to pursue on the department's behalf a claim in which he had no financial interest. The district court correctly concluded that the department's subrogation claim for $48,981.13 was subject to reduction for any contributory fault assigned to Patrick. That brings us to the question whether the department's subrogation claim should be reduced by attorney fees and court costs allegedly incurred by Patrick in collecting the amount of such claim.