Diaz v. State
2016 MT 270
| Mont. | 2016Background
- Plaintiffs (Jeanette Diaz, Leah Hoffmann-Bernhardt, and similarly situated Plan members) challenged the State of Montana Health Benefit Plan’s Coordination of Benefits provision, which excluded payment where a third-party (e.g., auto insurer) had paid medical providers.
- The Plan paid providers, not insured members, and contained language the plaintiffs argued functioned as de facto subrogation that violated Montana’s "made whole" statutes.
- This litigation follows multiple appeals: class certification (Diaz I), class definition and statute-of-limitations adjustments (Diaz II), and summary judgment holding the provision unlawful and the State subject to Montana’s Insurance Code and made-whole rules (Diaz III).
- The remaining issue on this appeal was the proper commencement date for prejudgment interest on awards to class members: whether interest runs from the date medical bills were incurred (or became due) or from a later date tied to this Court’s decision in Blue Cross & Blue Shield of Montana v. Montana State Auditor (BCBS).
- The District Court ordered that for claims predating BCBS interest begins 30 days after BCBS; for claims arising after BCBS, interest begins on the date the medical expense was incurred. The court mistakenly used December 24, 2009 as the 30-day date.
- The Supreme Court affirmed the District Court’s approach but corrected the 30-day date: 30 days after the BCBS remittitur (November 14, 2009) is the correct cutoff; claims arising after November 14, 2009 accrue interest from the date the expense was incurred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When should prejudgment interest begin for Plan members whose claims arose before this Court’s BCBS decision? | Diaz: interest runs 30 days after the underlying bill became due (statutory rule), so from the bill date. | State: no interest until a monetary right vested; that occurred only after BCBS resolved the legal dispute. | Held: For pre-BCBS claims, no monetary obligation or vested right existed until BCBS; interest begins 30 days after BCBS remittitur (Nov. 14, 2009). |
| When should prejudgment interest begin for claims arising after BCBS? | Diaz: interest should begin when the bill was due/incurred under statutes. | State: once BCBS clarified the law, post-BCBS claims create immediate vested monetary rights so interest should run from bill date. | Held: For claims arising after Nov. 14, 2009, interest accrues from the date the medical expense was incurred (bill date). |
| Do §§ 18-1-404 and 17-8-242 (MCA) require interest from the original bill date despite a good-faith legal dispute? | Diaz: statutes mandate interest from the payment-due date and are retroactive. | State: statutes allow interest only when a monetary right has vested; a good-faith dispute delays vesting until judicial resolution. | Held: The good-faith legal uncertainty meant no vested monetary obligation pre-BCBS; statutes do not require interest to run before the right vested. |
| Is the District Court’s chosen cutoff date (Dec. 24, 2009) correct? | Diaz: disagreed with the District Court’s date and proposed a different 30-day computation. | State: also disagreed with District Court’s date, proposing another date. | Held: District Court was correct in concept but erred in the date; corrected to Nov. 14, 2009 (30 days after BCBS remittitur). |
Key Cases Cited
- Blue Cross & Blue Shield of Mont. v. Mont. State Auditor, 218 P.3d 475 (Mont. 2009) (held coordination-of-benefits language effecting subrogation before paying insured violated Montana’s made-whole laws)
- Diaz v. Blue Cross & Blue Shield, 267 P.3d 756 (Mont. 2011) (affirmed class certification)
- Diaz v. State, 308 P.3d 38 (Mont. 2013) (affirmed class definition and limitations rulings)
- Diaz v. State, 313 P.3d 124 (Mont. 2013) (held Plan’s COB provision was de facto subrogation and illegal under made-whole statutes)
- Byrne v. Terry, 741 P.2d 1341 (Mont. 1987) (prejudgment interest generally awarded unless law or creditor prevents payment)
- Kraft v. High Country Motors, Inc., 276 P.3d 908 (Mont. 2012) (articulated the three statutory requirements for prejudgment interest)