Court Opinion

ID: 9903899
Source: CourtListenerOpinion
Date Created: 2023-11-27 16:09:18.025806+00
Date Added: 2024-06-11T09:20:45.095102
License: Public Domain

[Cite as In re Estate of Goode, 2023-Ohio-4253.]

                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                              MARION COUNTY

IN RE:                                                    CASE NO. 9-23-12

THE ESTATE OF:
JUDITH GOODE, (JOANNE M. BROOKS,
ADMINISTRATOR)

[STATE OF OHIO, OHIO DEPARTMENT                           OPINION
OF MEDICAID - APPELLANT]

                 Appeal from Marion County Common Pleas Court
                                  Probate Division
                           Trial Court No. 20 EST 00224

                                      Judgment Affirmed

                          Date of Decision: November 27, 2023

APPEARANCES:

        Thomas P. Kemp and Charles E. Hatch for Appellant

        Matthew A. Mooney for Appellee
Case No. 9-23-12

WILLAMOWSKI, J.

       {¶1} Appellant the Ohio Department of Medicaid (“the State”) brings this

appeal from the judgment of the Court of Common Pleas of Marion County, Probate

Division denying the State reimbursement from the wrongful death settlement for

expenses paid by Medicaid. The State relies upon an indemnification agreement

between Appellee the Estate of Judith Goode, Joanne M. Brooks, Administrator

(“the Estate”) and Promedica Health System, Inc. and its subsidiaries (“Released

Parties”). The State claims on appeal that the trial court erred in failing to determine

that the terms of the settlement agreement required payment in full to the State. For

the reasons set forth below, the judgment is affirmed.

       {¶2} Judith Goode (“Goode”) died on September 18, 2020. On November

23, 2020, the Estate was opened. The State sought reimbursement in the amount of

$198,128.51 plus statutory interest for money expended through its Medicaid

program on behalf of Goode.

       {¶3} On June 3, 2022, the Estate requested that the trial court approve the

provisional settlement and distribution of a wrongful death claim that had been

brought by the Estate on behalf of Goode and her children. The Estate and the

defendants in the case had reached a settlement and the Estate requested that 100%

of the settlement be apportioned to the wrongful death portion of the claim rather

than the survival portion. The State filed its memorandum in opposition to the

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Case No. 9-23-12

proposed allocation of damages on June 16, 2022. The State attached a copy of the

confidential release and settlement agreement as Exhibit 12.        The agreement

contained a clause dealing with subrogated claims and liens.

      VII. SUBROGATED CLAIMS AND LIENS

      Releasor agrees to pay the amount of any and all subrogated claims
      whatsoever, including, but not limited to, any claims or liens asserted
      by or on behalf of (or any judgments entered in favor of) any
      applicable healthcare providers, health insurance carriers, and/or
      governmental agencies, including but not limited to CMS, Medicare
      and/or Medicaid (collectively, “Subrogated Claims”). Releasor or
      Releasor’s Attorneys shall set aside and hold in trust a sufficient
      amount from the settlement funds to satisfy any and all such
      Subrogated Claims and agrees that these funds will not be released to
      any other person, including to Releasor herself, until the liens have
      been satisfied fully from those funds.* * *

      Releasor further agrees that she will indemnify the Released Parties,
      * * * and hold each harmless from any Subrogated Claims, including,
      but not limited to, Ohio Department of Medicaid’s (“ODM’s”)
      existing claim on which judgment was entered in ODM’s favor in the
      Court of Common Pleas of Marion County, OH in case number 2021-
      CV-0036 on January 21, 2022, and/or any claims for any medical
      and/or hospital payments made to or on behalf of Releasor or the
      decedent Judith Goode, by any healthcare plans, healthcare medical
      insurance companies or benefits from medical reimbursement
      programs or governmental agencies and any and all claims of
      subrogation by any insurers or governmental agencies arising by
      virtue of payments made to or on behalf of Releasor the decedent,
      Judith Goode, as a result of any injuries to and/or the death of Judith
      Goode stemming from the Incident and/or Litigation described above.
      ***

Doc. 23, Exhibit 12. The Estate filed its reply to the State’s memorandum on July

20, 2022. On August 18, 2022, the State filed a motion to enforce the terms of the

settlement agreement interpreting them to mean the Estate must pay the full amount

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Case No. 9-23-12

of the money owed to the State. The Estate filed its response on August 30, 2022

claiming that the State had no right to enforce the agreement because it is not an

intended third party beneficiary.

       {¶4} A trial was held on this matter on January 9-10, 2023. On February 8,

2023, the trial court entered judgment approving the settlement. The trial court

determined that the terms of the agreement does not require that the State be paid in

full, but only up to that amount that it has a subrogated claim. The trial court then

allocated the $400,000 with $46,100 to the Estate for the survival claim and the

remainder to the wrongful death claim. The trial court further held that attorney

fees and costs “shall not impact the amount allocated to the survival claim.” Doc.

53 at 18. The State appealed from this judgment. On appeal, the State raises the

following assignment of error.

       The trial court erred as a matter of law when it failed to enforce
       the plain and unambiguous terms of a Confidential Release and
       Settlement Agreement which required payment, in full, of a
       judgment in favor of [the State].

       {¶5} The State in its assignment of error is essentially arguing that the trial

court did not correctly interpret a contract. Before a determination about how to

interpret the contract is made, this Court must first determine whether the State has

a right to enforce the contract. “Only a party to a contract or an intended third-party

beneficiary may bring an action on a contract.” Stride Studios, Inc. v. Alsfelder, 1st

Dist. Hamilton No. C-220395, 2023-Ohio-1502, ¶ 20, 219 N.E.3d 986. “It is well

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Case No. 9-23-12

established that a contract is binding only upon the parties to the contract and those

in privity with them and that an action for breach of contract can only be maintained

by the parties to the contract and those deriving rights from the contracting parties.”

Am. Rock Mechanics, Inc. v. Thermex Energy Corp., 80 Ohio App.3d 53,58, 608

N.E.2d 830 (8th Dist. 1992). The Supreme Court of Ohio has addressed the issue

of who is an intended third-party beneficiary and held as follows.

       In Hill v. Sonitrol of Southwestern Ohio, Inc. (1988), 36 Ohio St.3d
       36, 40, 521 N.E.2d 780, we adopted the statement of law in
       Restatement of the Law 2d, Contracts (1981), Section 302. Section
       302(1)(b) provides that “a beneficiary of a promise is an intended
       beneficiary if recognition of a right to performance in the beneficiary
       is appropriate to effectuate the intention of the parties and * * * the
       circumstances indicate that the promisee intends to give the
       beneficiary the benefit of the promised performance.” Comment e to
       Section 302 limits the creation of duties to third parties: “[U]nless the
       third person is an intended beneficiary as here defined, no duty to him
       is created.”

       In applying this rule, we referred to Norfolk & W. Co. v. United States
       (C.A.6, 1980), 641 F.2d 1201. We adopted language from Norfolk &
       W. Co. explaining the “intent to benefit” test, which is used to
       determine whether a third party is an intended beneficiary of a
       contract: “ ‘Under this analysis, if the promisee * * * intends that a
       third party should benefit from the contract, then that third party is an
       “intended beneficiary” who has enforceable rights under the contract.
       If the promisee has no intent to benefit a third party, then any third-
       party beneficiary to the contract is merely an “incidental beneficiary,”
       who has no enforceable rights under the contract.’ ” Hill at 40, 521
       N.E.2d 780, quoting Norfolk & W. Co. at 1208.

       Courts generally presume that a contract's intent resides in the
       language the parties chose to use in the agreement. Shifrin v. Forest
       City Ents., Inc. (1992), 64 Ohio St.3d 635, 638, 597 N.E.2d 499.
       “Only when the language of a contract is unclear or ambiguous, or
       when the circumstances surrounding the agreement invest the

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Case No. 9-23-12

       language of the contract with a special meaning will extrinsic
       evidence be considered in an effort to give effect to the parties'
       intentions.” Id. at syllabus. Ohio law thus requires that for a third
       party to be an intended beneficiary under a contract, there must be
       evidence that the contract was intended to directly benefit that third
       party. Generally, the parties' intention to benefit a third party will be
       found in the language of the agreement.

Huff v. FirstEnergy Corp., 130 Ohio St.3d 196, 2011-Ohio-5083, ¶ 10-12, 957

N.E.2d 3. “Further, courts have noted that for a person to claim intended third party

beneficiary status, the contracting parties must have entered into the contract for the

primary purpose of that person.” Daley v. Fryer, 3d Dist. Allen No. 1-17-48, 2015-

Ohio-930, ¶ 33, 30 N.E.3d 213.

       {¶6} In this case, the contract in question was a confidential release and

settlement agreement between the Released Parties and the Estate. The State was

not a party to this contract. Thus, to enforce it, the State must have the intended

third-party beneficiary status. The State claims it obtains this status because of

Section VII of the contract addressing subrogated claims and liens. The language

of the contract does specify that the Estate will pay any subrogated claims or liens

brought, including those brought by the State. However, the intent of this language

was not to benefit the State, but to protect the Released Parties from further liability.

Reviewing the contract as a whole, it does not indicate any intent to benefit the State

or any other outside party. Thus, the State is merely an incidental beneficiary, if a

beneficiary at all, to the agreement and has no enforceable rights under the contract.

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Case No. 9-23-12

Hill, supra. Since the State has no enforceable rights under the contract, the trial

court did not err in its judgment. The assignment of error is overruled.

       {¶7} Having found no error in the particulars assigned and argued by

appellant, the judgment of the Court of Common Pleas of Marion County, Probate

Division is affirmed.

                                                               Judgment Affirmed

WALDICK and ZIMMERMAN, J.J., concur.

/hls

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