Court Opinion

ID: 6709304
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:34:05.175389+00
Date Added: 2024-06-11T09:06:40.370528
License: Public Domain

Justice Meyer
dissenting.
While it is clear that we have done so implicitly, this Court should very explicitly disavow the holding of the Court of Appeals in this case to the effect that any distinction drawn between the assignment of a claim of personal injuries and the assignment of the proceeds of such a claim is a “mere fiction,” and therefore an assignment of proceeds is a violation of public policy and thus invalid.
The Court of Appeals was quite correct in holding that a raw claim or the cause of action itself is not assignable. “It seems that few legal principles are as well settled, and as universally agreed upon, as the rule that the common law does not permit assignments of causes of action to recover for personal injuries.” Annot. “Assignability of claim for personal injury or death,” 40 A.L.R. 2d 500, 502 (1955) (emphasis added). However, courts have drawn a distinction between an assignment of the claim or cause of action itself and an assignment of the proceeds of whatever recovery is had from a settlement or an action by the claimant against the tort-feasor. Id. at 512; Annot. “Assignability of proceeds of claim for personal injury or death,” 33 A.L.R. 4th 82, 88 (1984).
There are very substantial differences between an assignment of a raw claim or cause of action for a personal injury action and the assignment of the proceeds which might be derived from the claim by settlement or by judgment. In an assignment of a raw claim or cause of action for personal injuries, the claimant loses all control of the conduct of settlement negotiations, the right to bring an action against the tort-feasor in his own name, the right to control the litigation, and the right to control the settlement of the lawsuit. This is not true if only the proceeds of a claim are assigned.
*535The important differences between the assignment of the claim and an assignment of the proceeds simply cannot be reasonably adjudged “mere fiction.”
We should particularly disavow the statement of the panel below to the effect that the “more reasoned view is that [proceeds of a personal injury claim] are not assignable before judgment,” 88 N.C. App. 263, 266, 362 S.E. 2d 841, 843, because the assignment of proceeds is virtually always executed “before judgment.”
The majority also errs in concluding that the manifest purpose of the statute is to provide that the claimant shall receive at least a part of any recovery for his injuries. The manifest purpose of the statute in question is to create a lien on the proceeds of the personal injury recovery in the hands of a third person. The statute in no way addresses the public policy question of the right of a person to contract for the disposition of proceeds for the purpose of securing (or reimbursing for) badly needed medical care. Had the legislature chosen to address this public policy question, it would no doubt have specifically authorized such an assignment of proceeds in order to assist injured people in obtaining immediate medical treatment for their personal injuries. If the law did not permit such assignments, we would no doubt see injured parties turned away or at least shuttled out to other treatment facilities, as we now see in the case of indigents. Public policy favors the assignment of proceeds to medical care providers. For a review of numerous cases approving assignments of proceeds to pay hospitals and doctors for medical services, see Annot. “Assignability of proceeds of claim for personal injury or death,” 33 A.L.R. 4th 82, 100 (1984).
The United States District Court for the Western District of Virginia, applying Virginia law, examined and upheld as valid an assignment virtually identical to the one in this case. In re Musser, 24 Bankr. 913 (W.D. Va. 1982), involved an assignment to a hospital of proceeds which might arise resulting from personal injuries leading to the hospitalization. The court held that this constituted an equitable assignment of a future right which was fully enforceable. In determining that the proceeds of a personal injury action were assignable (at least to the medical care provider), the court relied heavily on the reasoning in Collins v. Blue Cross of Virginia, 213 Va. 540, 193 S.E. 2d 782 (1973) (superseded *536as to subrogation provisions by statute), which, like Carver v. Mills, 22 N.C. App. 745, 207 S.E. 2d 394, cert. denied, 285 N.C. 756, 209 S.E. 2d 280 (1974), held that insurers were entitled to assert subrogation claims against subsequent personal injury recoveries. The court noted that the reasons underlying the common law rule against assignment of the cause of action, e.g., the prevention of champerty and maintenance, are absent in the assignment of proceeds. The court observed that the assignment of proceeds differs significantly from an assignment of a cause of action in that the assignment of proceeds is valid only to the extent of the charges for services provided, gives the assignee rights only to proceeds, leaves the debtor in complete control over his personal injury claim, gives the assignee no right to proceed directly against the tort-feasor even if the debtor chooses not to proceed, and gives the assignee no right to force the debtor to proceed against the tort-feasor.
Block v. California Physicians ’ Service, 244 Cal. App. 2d 266, 53 Cal. Rptr. 51 (1966), addressed the same issues in the context of a health insurer’s suit for reimbursement out of funds received by its insured through a personal injury action. It is important to note that the insured in that case agreed to reimburse his medical carrier, but the standard “subrogation” language was not used. The agreement merely provided that the insured would “reimburse CPS [California Physicians’ Service] to the extent of benefits provided, immediately upon collection of damages by him.” Id. at 268, 53 Cal. Rptr. at 52. The language is strikingly similar to the assignment in the case at bar.
The law should encourage such assignments rather than discourage them, as the majority has done.
In Goldwater v. Fisch, 261 A.D. 226, 25 N.Y.S. 2d 84, reh’g and appeal denied, 261 A.D. 1056, 27 N.Y.S. 2d 463 (1941), the hospital brought an action against the attorney based upon his client’s assignment of the proceeds of a settlement to cover charges for medical and surgical services. The court held that when the proceeds of the settlement were paid over to the attorney, the equitable title of the hospital for the amount of its claim ripened into legal title, and the attorney, having full knowledge of the hospital’s interest, was obligated to pay to the hospital the sum to which it was entitled. If the recipient of *537the settlement fund is notified of the assignment, the fact that the recipient has already paid out the funds to the injured party is of no consequence. See Reddy v. Zurich General Accident & Liability Ins. Co., 171 Misc. 69, 11 N.Y.S. 2d 88 (Sup. Ct. 1939).
In Brinkman v. Moskowitz, 38 Misc. 2d 950, 238 N.Y.S. 2d 876 (Sup. Ct. 1962), the court held that an attorney who had notice of an assignment to a physician, for medical services rendered, of a portion of the proceeds of his client’s claim for personal injuries, was liable to the physician for paying out the moneys in disregard of the assignment.
Another case addressing the identical issues as in the case sub judice is Bonanza Motors, Inc. v. Webb, 104 Idaho 234, 657 P. 2d 1102 (Ct. App. 1983), which held that personal injury proceeds held by the successful plaintiffs attorney were subject to the assignment previously executed by the plaintiff to an unrelated third party. The court relied in part upon Brinkman. Bonanza Motors also addressed the ethical responsibilities of an attorney in such a situation. The pertinent portions of the Code of Professional Responsibility in effect in Idaho at the time were identical to those in effect in North Carolina at the time of the transaction at issue in this case. Idaho Code of Professional Responsibility DR 9-102(B)(4) provided that an attorney should “promptly pay [to the client] ... as requested . . . the funds ... in the possession of the lawyer which the client is entitled to receive.” The court in Bonanza Motors held that this ethical provision did not act to prevent the attorney from honoring the assignment, since the client in that case was not “entitled to receive” the funds which he had already assigned. Bonanza Motors, 104 Idaho at 237, 265 P. 2d at 1105. See also Topik v. Thurber, 739 P. 2d 1101 (Utah 1987).
In the case sub judice, copies of the assignment were mailed to the defendant on two different occasions, long before the defendant disbursed any funds. The defendant admitted receiving the two packages containing the assignment and admitted having a copy of the assignment in her files. She was thus charged with the duty of paying funds of her client, up to the amount of the hospital charges, to the hospital-assignee according to the terms of the assignment.
Neither N.C.G.S. § 44-50 nor its companion, N.C.G.S. § 44-49, contains any language which suggests that they provide the ex-*538elusive remedy for recovery of medical expenses where a personal injury claim is involved. Nor do they contain any language which suggests the invalidity of an assignment made independently of the statutes.
Had the legislature intended to limit recovery of a medical care provider, as opposed to simply providing a limited lien, it could have done so. There is no doubt that the legislature knows how to draft such language when it chooses to do so. For example, just such a limitation has been imposed upon recovery by a medical care provider out of wrongful death proceeds. That statute unambiguously states that a wrongful death recovery “is not liable to be applied as assets . . . except as to . . . reasonable hospital and medical expenses not exceeding one thousand five hundred dollars ($1,500) incident to the injury resulting in death.” N.C.G.S. § 28A-18-2(a) (Cum. Supp. 1988). The statutory sections at issue in this case provide no such limitations nor any basis for the inference of such a limitation.
The majority opinion impacts upon governmental programs as well as medical service suppliers in the private sector. The amici, North Carolina Memorial Hospital, the Division of Vocational Rehabilitation Services, and the Division of Medical Assistance (Medicare), will be very severely hampered in their attempts to recoup funds expended from the public treasury. In any personal injury case involving medical expenses, the amount of the bills is taken into account in both settlements and jury verdicts. Because of the collateral source rule, whether or not the bill has been paid is irrelevant in determining the patient’s damages. It is patently inequitable for a patient-plaintiff to collect all or a portion of his medical expenses in a personal injury claim and not be required to pay that money to the medical use provider. While the Court of Appeals in the case sub judice found a violation of public policy in assigning proceeds of a cause of action, the court failed to note competing public policy considerations regarding a patient’s paying his bill or having the rest of society pay it for him. When the patient has money to pay, it is the better public policy to require the patient to do so. Assignment to a health care provider of the proceeds of a personal injury claim prior to recovery is a good and rational public policy to ensure payment of the medical costs and, in the case of a public medical care provider, to *539prevent the taxpayer from directly paying for medical services even though the patient-plaintiff has recovered from third parties.
I believe the majority also errs in its conclusion that being able to retain a part of the settlement for himself is the claimant’s only incentive to pursue his claim against the tort-feasor. The overwhelming majority of our citizens want to pay their debts for medical care. Even those who do not are motivated to escape lawsuits and judgments against themselves and the subsequent adverse effect on their credit ratings. It is only a small percentage of our citizens who absolutely do not care that have no incentive other than the lien statute to pursue the tort-feasor, even though all the proceeds would go to pay medical bills.
If an attorney for a patient-plaintiff cannot disburse his client’s funds by agreement of the parties and does not wish to choose between the lien statute and his client’s valid assignment to the medical care provider, he or she can simply deduct his fees and pay the balance into the court or clerk’s office.
Admittedly, the attorney in this case acted completely innocently and in good faith. This Court should not, however, permit these “bad facts” to lure it into making “bad law.” I vote to find the assignment valid and enforceable against the defendant-attorney who disbursed the funds with full notice and knowledge of the assignment.
Justices WEBB and WHICHARD join in this dissenting opinion.