Court Opinion

ID: 9758545
Source: CourtListenerOpinion
Date Created: 2023-08-28 23:35:36.375614+00
Date Added: 2024-06-11T07:28:52.790039
License: Public Domain

Schreiber, J.,
dissenting. I must respectfully dissent from the proposition that an attorney for a medicaid recipient may charge the State for legal services in the absence of any express or implied authorization to recover monies due the State.
The issue here is whether the medicaid beneficiary’s attorney is entitled to a counsel fee from the State irrespective of any notice to the State of the rendition of such services or consent by the State thereto.
Conspicuous by its absence is any statutory provision which states that the medicaid recipient’s attorney may charge the State for legal fees in connection with recovery of the funds to which the State is entitled. The federal grants to states for medical assistance programs require that a state must seek reimbursement from third parties found legally responsible for the injury, disease or disability which gave rise to the medical assistance. 42 U. S. C. § 1396a(a) (25) (1974). The regulations promulgated by the Secretary of Health, *375Education and Welfare in conformity with the statute state that:
The State or local agency will seek reimbursement from a tMrd party for assistance provided when the party’s liability is established after assistance is granted and in any other case in which the liability of a third party existed, but was not treated as a current resource. 45 C. F. R. § 250.31(a) (4) (1976).
New Jersey has met the obligation by enacting N. J. S. A. 30:4D-7(j) which imposes the duty on the Commissioner of the Department of Institutions and Agencies
To take all reasonable measures to ascertain the legal liability of third parties to pay for care and services (available under the plan) arising out of injury, disease, or disability; where it is known that a third party has a legal liability, to treat such legal liability as a resource of the individual on whose behalf the care and services are made available for purposes of determining eligibility; and in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, to seek reimbursement for such assistance to the extent of such legal liability. In any case where such a legal liability is found the department shall be subrogated to the rights of the individual for whom medical assistance was made available.
The use of the word “subrogated” in the New Jersey Medical Assistance and Health Services Act quoted above refers only to the statutory right of reimbursement subject to the defenses which the third party may have against the medicaid recipient.1 The legislature’s use of the word “subrogated” in this sense is confirmed by the fact that *376when the New Jersey Medical Assistance and Health Services Act was enacted in 1968, N. J. S. A. 30:4D-1 et seq., there was no reason to expect that an insurer’s reimbursement recovery would be subject to deduction of a pro rata share of the insured’s counsel fees. It is probable that the legislature would have expressly provided for a deduction of counsel fees if it so desired, particularly in view of the decision in Fireman’s Fund Indemnity Co. v. Batts, 11 N. J. Super. 242 (App. Div. 1951). That case held that a worker’s compensation carrier was entitled to reimbursement without deducting the attorney’s counsel fee. In 1951 the legislature amended N. J. S. A. 34:15-40, L. 1951, c. 169, § 1, to provide expressly for such deduction under the Workers’ Compensation Act. Klacik v. Kovacs, 111 N. J. Super. 307 (App. Div.), certif. den. 57 N. J. 237 (1970), the first pronouncement in this State holding that reimbursement of the insurer under a subrogation contractual right should be made after deduction of a pro rata share of the insured’s counsel fee expended to recover the claim, was decided two years after enactment of the Medical Assistance and Health Services Act.
Furthermore, the public policy of this State has been generally to permit only the Attorney General or his designee to represent the State, although private counsel could be retained by him. In the light of this policy and the legislative history reflected in the time sequence of the 1951 Workers’ Compensation Act interpretation and subsequent amendment, enactment of the New Jersey Medical Assistance and Health Services Act in 1968, and adjudication of Klacik v. Kovacs, supra, in 1970, evidence of the legislature’s intent not to provide a fee for the subrogor’s attorney is overwhelming.
Even though an express provision authorizing deduction of counsel fees is absent, I would hold that the State is responsible for its proportionate share of those counsel fees where the Attorney General has consented to the action taken on behalf of the State by the attorney for the medicaid *377recipient. This procedure conforms with the statutory limitations that only the Attorney General and private counsel retained by him may represent state departments in actions brought by them. N. J. S. A. 52:17A-4 and N. J. S. A. 52:17A-13. See Keenan v. Bd. of Chosen Freeholders of Essex Cty., 106 N. J. Super. 312 (App. Div. 1969). No decisions of our courts have ever interpreted these provisions to permit an officious volunteer to represent the State. Creation of an attorney-client relationship under these circumstances is peculiarly inappropriate where the State has attorneys in the office of the Attorney General available to litigate these matters. To compensate private counsel when staff attorneys are being paid to handle these actions results in a needless expenditure of public funds.
The two cases cited by the majority to support the proposition that N. J. S. A. 52:17A-4 and 13 do not apply, 74 N. J. at 373, State v. United States Steel Corp., 22 N. J. 341 (1956) and State v. Otis Elevator Co., 12 N. J. 1 (1953), confirm the authority of the Attorney General to designate counsel. Both were escheat cases. In Otis Elevator, this Court stated that absent N. J. S. A. 52:17A-13 “the Attorney General would have been without authority to appoint special counsel to prosecute” escheat proceedings for the State. 12 N. J. at 9. In United States Steel, this Court recognized the right of the attorney, who had been appointed by the Attorney General to act on behalf of the State in accordance with R. S. 52:17A-13, to the statutory allowance of counsel fees. 22 N. J. at 360-361.
The majority places substantial reliance for holding inapplicable the statutory provisions requiring Attorney General designation on a lower Pennsylvania court decision, Furia v. City of Philadelphia, 180 Pa. Super. 50, 118 A. 2d 236 (1955). A city employee had been injured and was paid wages by the City of Philadelphia during his disability. He recovered damages, including lost wages, against the third party tortfeasor. The court held that the City was entitled to be reimbursed because of equitable subrogation *378and, since only the injured employee could sue the third party and there was no statutory requirement that the city solicitor represent the employee in the suit, counsel fees should be deducted. Conspicuous by their absence were any statutory provisions such as are involved here both with respect to the governmental right to institute an action and the prohibition against use of outside counsel.
The requisite that the subrogee be given notice and an opportunity to act on its own before being charged with a proportionate share of the subrogor’s counsel fees has been generally applied in equitable subrogation cases. Klacik v. Kovacs, 111 N. J. Super. at 312, adopted the Nebraska position reflected in United Services Automobile Association v. Hills, 172 Neb. 128, 109 N. W. 2d 174 (1961). The Nebraska court held that a fee deduction was proper when the insurance carrier, after being notified by the assured’s attorney of his intention to sue, refused to intervene in that proceeding and acquiesced in the plaintiff’s action. 109 N. W. 2d at 177. The court reasoned that the insurance company had thereby elected to proceed through the assured and had abandoned its right to sue directly. 109 N. W. 2d at 178. No such election was made in this case. The State Division of Medical Assistance and Health Services and the Attorney General were not aware of the proceedings against the third party tortfeasor until judgment had been entered.
The majority assumes that the medicaid recipient’s attorney could and would charge his client for recovery of the sums due the State and that this could possibly cause an indigent medicaid recipient to finance the State’s recovery. Such a legal charge against the recipient would he improper, for the services rendered would not have been on behalf of the indigent. The attorney knew or should have known that the right to the special damages based on the medicaid payment belonged to the State and not his client. He could not justifiably assess his client for that recovery. Having proceeded without notifying' the Attorney General *379and obtaining his acquiescence, the attorney became an officious volunteer. “[A] volunteer never can claim the benefit of the law of subrogation.” Fay v. Fay, 43 N. J. Eq. 438, 440 (Ch. 1887); Meier v. Planer, 107 N. J. Eq. 398, 404 (Ch. 1930). Equitably, under the circumstances here, he would not be entitled to a legal fee from the State or from his client. See also 12 Williston, Contracts, § 1479, at 276 (3d ed. 1970).
I would affirm.
Justice Mountain joins in this opinion.
For reversal — Chief Justice Hughes and Justices Sullivan, Pashm an, Clifford and Handler — B.
For affirmance — Justices Mountain and Schreiber — 2.

The Federal Medicare Recovery Act, 42 U. S. C. § 2651 et seq. (1973), empowers the federal government to recover the reasonable value of medical treatment and hospital care it has furnished from a third party tortfeasor who caused the injury. The act states that the government “shall, as to this right be subrogated to any right or claim that the injured” person has against the third party. 42 U. S. C. § 2651(a) (1973). In construing this act in United States v. Nation, 299 F. Supp. 266 (N. D. Okl. 1969) it was held that the United States was entitled to reimbursement without deduction of the counsel fee.