Court Opinion

ID: 4199286
Source: CourtListenerOpinion
Date Created: 2017-08-26 02:22:47.596265+00
Date Added: 2024-06-11T09:27:48.730650
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Noemi Aviles,                            :
                    Petitioner           :
                                         :
             v.                          : No. 1961 C.D. 2016
                                         : SUBMITTED: May 5, 2017
Department of Human Services,            :
                 Respondent              :

BEFORE:      HONORABLE P. KEVIN BROBSON, Judge
             HONORABLE JULIA K. HEARTHWAY, Judge
             HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE HEARTHWAY                             FILED: August 25, 2017

             Noemi Aviles petitions for review of the November 18, 2016 order of
the Secretary of the Department of Human Services (Department) upholding the
final administrative action of the Department of Human Services, Bureau of
Hearings and Appeals (Bureau), dated March 31, 2016, which affirmed the
decision of the Administrative Law Judge (ALJ). The ALJ denied Aviles’ appeal
of the Department’s assessment of personal liability against Aviles based upon her
receipt of cash assistance (CA) benefits in the amount of $3795.00.1 We affirm.

      1
        The Department only seeks to recover $2846.25, which is the CA benefits amount of
$3795.00 less the Department’s pro rata share (25 percent) of the attorney fees.
                 Aviles was a recipient of Medical Assistance (MA) and CA benefits.
On January 20, 2014, Aviles was involved in a motor vehicle accident.                     On
September 17, 2014, counsel for Aviles filed a personal injury claim with the State
Farm Insurance Company due to the accident. On November 6, 2014, counsel for
Aviles sent the Department a letter requesting a statement of claim letter. On
January 14, 2015, Aviles settled the personal injury claim. On January 15, 2015,
Aviles’ counsel again requested a statement of claim letter. On January 22, 2015,
the Department sent Aviles’ counsel a letter explaining the statutory requirements
regarding personal injury claims for recipients of MA and CA benefits, along with
a casualty incident information form for Aviles to fill out and return.

                 On January 30, 2015, the Department received the casualty incident
information form from Aviles. On March 18, 2015, the Department sent Aviles’
counsel a letter indicating that his request for a statement of claim letter was
received and would be processed in approximately 12-16 weeks. On April 30,
2015, the Department sent Aviles’ counsel the statement of claim letter, which
indicated that Aviles had received MA benefits totaling $1179.42 and CA benefits
totaling $3795.00 during the applicable time period.2

                 Aviles’ counsel appealed the CA benefits portion of the claim,
alleging that the Department’s delayed notification of the CA benefits claim was
unfair. Aviles’ counsel set forth that he had no notice of Aviles’ receipt of CA

        2
            Aviles received $3795.00 in CA benefits from February 20, 2014 through February 3,
2015.

                                                2
benefits prior to his receipt of the Department’s statement of claim letter and,
therefore, he had already disbursed the settlement funds.

              On December 8, 2015, the Bureau conducted an administrative
hearing. On March 31, 2016, the Bureau issued its final administrative action
order denying Aviles’ appeal. On May 2, 2016, the Department Secretary granted
reconsideration.    On November 18, 2016, the Secretary issued a final order
upholding the Bureau’s adjudication. Aviles now petitions for review with this
Court.3

              Initially, Aviles contends that the Department should be estopped
from asserting a subrogation lien related to the CA payments because of its
inequitable conduct in unduly delaying the processing of Aviles’ counsel’s request
for the statement of claim letter.       Aviles argues that the Department did not
specifically advise Aviles’ counsel that there was a lien for CA benefits, as well as
MA benefits, when it had that information in its possession. Aviles further argues
that the Department has unclean hands because it asserts that Aviles should have
provided notice of the claim in a timely manner when the Department did not
provide notice of its lien in a timely manner.

       3
          Our review is limited to determining whether constitutional rights were violated,
whether an error of law was committed, or whether the findings of fact were unsupported by
substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa. C.S. § 704.

                                            3
               Pursuant to the Human Services Code (Code),4 a recipient of CA
benefits must provide “timely and accurate information required under section
432.2.” Section 405.3(a)(1) of the Code, added by the Act of June 16, 1994, P.L.
319, as amended, 62 P.S. § 405.3(a)(1). Section 432.2(b) of the Code, added by
the Act of July 15, 1976, P.L. 993, as amended, sets forth that an applicant must
provide information necessary for the Department to determine the applicant’s
continued eligibility. 62 P.S. § 432.2(b). The recipient is required “to report in
accordance with section 432.14 of [the Code] any changes in income or resources
… which may affect eligibility.” Section 432.2(d) of the Code, 62 P.S. § 432.2(d).
Section 432.14(b) of the Code again places the responsibility of reporting any
changes with the recipient of the benefits. 62 P.S. § 432.14(b).

               Further, pursuant to 23 Pa. C.S. § 4604(d), a recipient of CA benefits
must reimburse the Department for funds it expended as follows:

               the [D]epartment shall have a first lien against the
               proceeds of any cause of action that existed during the
               time an individual … received cash assistance. Unless
               otherwise directed by the [D]epartment, no payment or
               distribution shall be made to a claimant … of the
               proceeds of any action, claim or settlement where the
               [D]epartment has an interest without first satisfying or
               assuring the satisfaction of the interest of the
               Commonwealth. Any person who, after receiving notice
               of the [D]epartment’s interest, knowingly fails to comply
               with this subsection shall be liable to the [D]epartment,
               and the [D]epartment may sue and recover from the
               person.

      4
          Act of June 13, 1967, P.L. 31, as amended, 62 P.S. §§ 101 – 1503.

                                                4
             As Aviles’ counsel acknowledged, Aviles was receiving CA benefits
at the time of her injury and during the pending settlement of her personal injury
claim. However, Aviles failed to notify the Department that she had a pending
claim. The burden is on the recipient of CA to notify the Department of an
impending lawsuit or settlement. See 62 P.S. §§ 405.3(a)(1), 432.2(b), 432.2(d),
and 432.14(b); 23 Pa. C.S. § 4604(d); and 55 Pa. Code §257.23.              Here, the
Department received notice on January 15, 2015, and sent Aviles’ counsel a letter
on January 22, 2015 that explained the statutory requirements for recipients of MA
and CA benefits with regard to personal injury claims and also included a form that
Aviles needed to fill out and return. This letter specifically informed Aviles that:

             [n]o distribution may be made of any settlement without
             first satisfying, or assuring satisfaction, of the
             Department’s Interest in the case. [Section 1409(b)(9) of
             the Code, added by the Act of July 10, 1980, as
             amended,] 62 P.S. § 1409(b)(9). No settlement you
             negotiate with the tortfeasor or his insurance company
             will discharge the Department’s claim for MA and/or CA
             reimbursement unless satisfactory arrangements are made
             to repay our claims. 55 Pa. Code §§ 259.3(c) and
             259.4(c).

(Department Letter, R.R. at 21a.) Upon Aviles’ return of the informational form to
the Department, the Department provided Aviles’ counsel a letter informing him
that the statement of claim letter should be processed in 12-16 weeks.            The
Department sent counsel the statement of claim letter on April 30, 2015.

             Pursuant to 23 Pa. C.S. § 4604, and the Department’s January 22,
2015 letter to counsel, the Department must be paid first, before any distributions
are made from any settlement. However, Aviles’ counsel ignored the statute and

                                          5
the letter and distributed the proceeds prior to receiving the Department’s
statement of claim letter.

              Because Aviles’ counsel failed to adhere to the statute when he
distributed the proceeds prior to receiving the Department’s statement of claim
letter, the Secretary did not err in upholding the Bureau’s determination.

              Next, Aviles contends for the first time on appeal to this Court that the
Department’s action in compelling Aviles’ counsel to retain Aviles’ funds in
counsel’s escrow account for an unreasonably long period of time is unlawful and
a violation of counsel’s ethical duties related to retention of client funds.5 Because
Aviles did not raise this issue at the administrative hearing, it is waived. See 2 Pa.
C.S. § 703(a); Pa. R.A.P. 1551(a)(3); and Newtown Land Limited Partnership v.
Department of Environmental Resources, 660 A.2d 150 (Pa. Cmwlth. 1995).

              Accordingly, we affirm the Secretary’s decision.

                                            __________________________________
                                            JULIA K. HEARTHWAY, Judge

       5
         Pennsylvania Rules of Professional Conduct 1.15(e) states that “a lawyer shall promptly
deliver to the client or third person any property, including but not limited to Rule 1.15 funds,
that the client or third party is entitled to receive….” We note that pursuant to 23 Pa. C.S.
§4604(d), Aviles was not entitled to receive any funds until the Department was reimbursed for
the CA benefits.

                                               6
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Noemi Aviles,                          :
                  Petitioner           :
                                       :
            v.                         : No. 1961 C.D. 2016
                                       :
Department of Human Services,          :
                 Respondent            :

                                      ORDER

            AND NOW, this 25th day of August, 2017, the order of the Secretary
of the Department of Human Services, Bureau of Hearings and Appeals, in the
above-captioned matter is affirmed.

                                       __________________________________
                                       JULIA K. HEARTHWAY, Judge