JEANETTE DIAZ, LEAH HOFFMANN-BERNHARDT, Individually and on Behalf of Others Similarly Situated, Plaintiffs and Appellants, v. STATE OF MONTANA, Defendant and Appellee.
No. DA 16-0023
Supreme Court of Montana
Submitted on Briefs July 27, 2016. Decided October 25, 2016.
2016 MT 270 | 385 Mont. 220 | 383 P.3d 206
For Appellee: Robert Lukes, Garlington, Lohn & Robinson, PLLP, Missoula.
JUSTICE McKINNON delivered the Opinion of the Court.
¶1 Jeanette Diaz, Leah Hoffmann-Bernhardt, and others similarly situated, collectively (Diaz), appeal from an order entered in the First Judicial District Court determining the manner in which prejudgment interest on payments due to class members was to be calculated. The underlying payments arose from the Defendant‘s application of its policy‘s Coordination of Benefits Provision to avoid payment of medical expenses already paid by a third-party liability carrier without Defendant first undertaking a made whole analysis. The District Court found that, except for claims “arising after December 24, 2009,” interest for all such payments is to commence 30 days following our decision in Blue Cross & Blue Shield of Mont. v. Mont. State Auditor, 2009 MT 318, 352 Mont. 423, 218 P.3d 475 (BCBS). For claims arising after December 24, 2009, the District Court required that the State pay interest commencing on the day the underlying medical expenses were incurred. We affirm the District Court order, but remand for correction of the date to be applied for determining the calculation of prejudgment interest.1
¶2 Diaz presents the following issue for review:
Whether the District Court correctly determined the date upon which interest should first accrue on claims for members of the State of Montana Health Benefit Plan.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 This case has been appealed on three previous occasions on various questions. The underlying claim in these proceedings concerns an exclusion in the State‘s health benefit insurance plan which allowed the State to coordinate benefits in violation of Montana‘s made whole laws. The State offers a State Employee Health Benefits Plan (Plan) paid to its employees, retired employees, and dependents of both. The Plan enrolls approximately 32,000 members and provides for coverage of health care costs to health care providers. Significantly, it does not provide for any payments to be made directly to a Plan member.
¶4 The Plan had a coordination of benefits provision, in conjunction with payments from third parties, which excludes:
5. Expenses that a member is entitled to have covered, or that are paid under an automobile insurance policy, a premise liability policy, or other liability insurance policy. This includes but is not limited to, a homeowner‘s policy or business liability policy, or expenses that a member would be entitled to have covered under such policies if not covered by the State Plan.
Both Diaz and Hoffmann-Bernhardt‘s original medical bills were paid timely and in full by third-party insurers and the State. Diaz filed suit alleging that defendants, third-party administrators and the State, had violated the employees’ made whole rights under Montana law.
¶5 Our first consideration of coordination of benefits language, such as here, was in 2009 when we decided BCBS. In BCBS, coordination of benefits language in a Blue Cross & Blue Shield policy excluded coverage for any health care costs incurred by its insured if they received or were entitled to receive payment for those costs from a third-party‘s automobile or premises liability policy. The
¶6 The Diaz trilogy is premised upon our decision in BCBS. The first appeal dealt with Rule 23 class certification. We concluded that the District Court had properly certified a class which addressed issues of the Plan‘s coordination of benefits language. Diaz v. Blue Cross & Blue Shield, 2011 MT 322, ¶ 50, 267 P.3d 756 (Diaz I). The second appeal addressed the definition of the class by the court which included those claims with an “eight-year statute of limitations suggested by the Plaintiffs, but also adopting the one-year filing limitation proposed by the State ....” Diaz, ¶ 14. We affirmed the court‘s class definition, observing that class action orders “are not frozen once made” and that a “District Court maintains discretion to alter the class definition as the case proceeds.” Diaz v. State, 2013 MT 219, ¶ 28, 308 P.3d 38 (Diaz II). The third appeal affirmed the district court‘s award of summary judgment finding the policy‘s coordination of benefits provision to be de facto subrogation and that the State, which operates as an insurer, is subject to the Insurance Code and Montana‘s made whole laws. Diaz v. State, 2013 MT 331, ¶¶ 14-16, 313 P.3d 124 (Diaz III).
¶7 In the current appeal, which is the fourth, Diaz asks us to determine when interest should begin to accrue on the class members’ claims. Some of the claims, given the court‘s broad class definition which we affirmed in Diaz II, predate our decision in BCBS, while other claims arose following our decision in BCBS. The District Court addressed both categories of claims and ordered that for pre-BCBS claims, interest commences 30 days following the date of our BCBS decision. For all claims arising subsequent to BCBS, the District Court required the State to pay interest commencing on the day the underlying medical expense was incurred.
STANDARD OF REVIEW
¶8 “We review a district court‘s grant or denial of prejudgment interest to determine if the district court‘s interpretation of the law is correct.” Fitterer Sales Mont., Inc. v. Mullin, 2015 MT 272, ¶ 16, 381 Mont. 107, 358 P.3d 885.
DISCUSSION
¶9 Whether the District Court correctly determined the date upon which interest should first accrue on claims for members of the State of Montana Health Benefit Plan.
¶10 Diaz argues that
¶11 The State does not dispute that it is held to the same standard as an individual when it enters into a contract.
¶12 We have previously stated that “prejudgment interest is to be awarded unless either the law or the creditor prevents the payment of principal.” Byrne v. Terry, 228 Mont. 387, 391, 741 P.2d 1341, 1343 (1987) (citing Price Building Services, Inc. v. Holms, 214 Mont. 456, 468-69, 693 P.2d 553, 559-60 (1985)).
Each person who is entitled to recover damages certain or capable of being made certain by calculation and the right to recover that is vested in the person upon a particular day is entitled also to recover interest on the damages from that day except during the time that the debtor is prevented by law or by the act of the creditor from paying the debt.
¶13 We have interpreted this statute as having three requirements a party must satisfy to be eligible for an award of prejudgment interest under
¶14 The first criterion entitling a party to prejudgment interest is the existence of a monetary obligation. Here, the State had no monetary obligation under the Plan to its members. The policy provisions of the Plan did not allow for any payment or right to monetary recovery by a Plan member. As noted previously, the Plan provides for payment to health care providers and does not provide for any direct payments to a Plan member. With respect to third-party health care providers, the Plan recognized that payment of medical expenses may not be due because the coordination of benefits provision recognized the State‘s obligation as secondary to the payment from a third-party liability carrier. There is no dispute that Diaz‘s medical expenses were paid in a timely manner by a third-party carrier. It was not until our decision in BCBS, that any right to monetary recovery for damages arising out of the State‘s violation of the made whole laws was recognized. We conclude that the existence of an underlying monetary obligation did not exist under the Plan‘s provisions until our decision in BCBS and the first criterion of
¶15 Our conclusion that the underlying monetary obligation did not arise until our decision in BCBS also disposes of the third criterion in
¶16 We do note, however, that BCBS was decided on September 24, 2009, and our remittitur was issued October 15, 2009. Therefore, 30 days following the remittitur was November 14, 2009. We therefore remand only for the purpose of: (1) changing the date of December 24, 2009, to November 14, 2009, as the correct date upon which interest is to commence, and (2) that the date of November 14, 2009, is also to be applied for purposes of assessing when a claim arose. For claims arising after November 14, 2009, the State shall pay interest commencing on the day the underlying medical expense was incurred.
CONCLUSION
¶17 We affirm the District Court‘s order declaring interest to begin 30 days following our decision in BCBS. We remand for the District Court to correct the commencement date for interest from December 24, 2009 to November 14, 2009. Additionally, the order should reflect this applies to all claims arising prior to November 14, 2009.
CHIEF JUSTICE McGRATH, JUSTICES WHEAT, COTTER, BAKER, SHEA and RICE.