Houghton v. Department of Health

jurisdiction lacks over his appeal, this court

appeal appeal is dismissed. DURHAM, Associate Chief Justice DURRANT,

Chief Justice Justice

WILKINS, Judge BILLINGS concur opinion.

Justice RUSSON’s participate Justice HOWE does

herein; Appeals Judge M. JUDITH

BILLINGS sat. UT HOUGHTON, Henderson,

Paul Billie indi

vidually representative each

class, Henderson, Wayne Damian Ru

bens, Roes, Ron Roes and Susan who classes,

are other members of these sim

ilarly situated, Appel Plaintiffs

lants, HEALTH,

DEPARTMENT OF Office Recovery Services, Department

Human and the State Services of Utah (the Defendants”), al., et “State Defen Appellees.

dants and

No. 20001103.

Supreme Court of Utah.

Oct. Sykes, City, plain- B.

Robert Salt Lake tiff. Shurtleff, Gen., Att’y

Mark L. Reed M. III, Combe, Stringham A. Steve A. Brent Gen., Burnett, City, Att’ys Asst. Lake Salt for defendants.

1068

DURRANT, property and therefore invalid. district Associate Chief Justice. of plaintiffs, classes Class court certified two ¶ priority appeal 1 This concerns liens composed I II.2 classes and Class Both were attorney recipients’ related to Medicaid fees recipients of on whose settlement Medicaid In parties. third this class settlements with proceeds placed priority the had State lien. lawsuit, two the district court certified action II, however, Only included members Class both which contend on plaintiffs, classes of of counsel, making who had retained both plain- lien priority on appeal that the State’s parties negoti- against tiffs’ violates federal ating payments with the Class II lien State. granting and that the district court erred not plaintiffs claimed that the State did offset judgment plead- on the motion for the State’s attorney the fees Class II from its (“Class II ings class on this issue. One plaintiffs negotiating had their incurred attor- plaintiffs”), whose members retained settlements and demanded reimbursement. in- neys, argues also that the district court ¶ 27, 1999, correctly motion granted the State’s for sum- moved On October the State mary judgment attorney judgment pleadings, arguing on the fees. issue on the State, 439, approval affirm the district court’s our decisions in v. We S.S. (Utah lien, 1998), priority grant but reverse and Wallace v. Estate State’s (Utah summary Jackson, 446, 1998), judgment attorney on fees 972 P.2d validity brought by plaintiffs upheld II and re- claim Class of liens third- settlements, plain- proceedings with nullified mand further consistent opinion. granted tiffs’ claims. The district court issue, priority respect with lien motion BACKGROUND ruling plain- that S.S. and Wallace rendered invalid, priority attack on tiffs’ but ¶ reviewing grant In a motion respect attorney denied motion with judgment pleadings, accept we ground fees on those decisions did allegations complaint “the factual as not address that issue. allegations true” and “consider such and all in a ¶ reasonable inferences drawn therefrom 2000, May 24, moved 5 On State light plaintiff.” most favorable to summary judgment remaining issue of Group Dep’t Healthcare v. Utah Servs. fees, attorney submitting claiming affidavits Health, 5, 3, (internal 2002 UT 40 P.3d 591 that Class II’s named members had either omitted). quotation and citation Additional attorney already incurred fees had or ly, reviewing grant summary judg “[i]n response, their Class II received offset. ment, all we review the facts and reasonable plaintiffs of an submitted affidavit attor- in the light inferences drawn therefrom most ney stating represented that he two individu- party.” Regal nonmoving favorable to the attorney entitled to fees related to their als Bott, 2, 71, v. Ins. Co. UT P.3d 524. parties with and that settlements accordingly. recite We the facts allow State had refused to offset of those n plaintiffs On June II 19—5(l)(b) fees. Class 3 Pursuant to section 26— Request filed a “First for Production Doc- Code,1 placed priority the State of Utah Utah uments,” seeking regarding evidence Medic- liens on Med- settlements that attorney recipients who had incurred fees aid ("plaintiffs”) had negotiated icaid retaining attorneys negotiate help them injured who had them. 27, 1995, settlements. State re- plaintiffs brought On October State, request, claiming against language claiming, class fused action suit discovery request overly was among things, section used 26-19- 5(l)(b) broad, protective for a inconsistent federal law moved order was hibiting plaintiffs recipients’ against producing the documents liens 19—5(l)(b) attorney's proceeds, except 1. as "The claims for fees Section reads follows: 26— department's costs under Subsection 26-19- and 7(4).” authorized claim recover medical assistance 26-19-5(l)(b) disease, Ann. Code provided injury, a result of disability against any proceeds payable ais oppose certify on behalf that third State did motion party. priority This lien has over all other claims the classes. 25, 2000, July requested. plaintiffs legally do not had On become the prop- evidence,3 compel production erty until moved valid settle- after ment, the district court necessarily on November must include reim- Medicaid.”) summary motion for granted added); State’s bursement plaintiffs’ judgment McCoy, claim with and dismissed State 2000 UT 999 P.2d Wallace, 572; prejudice, reasoning that all 972 claims of P.2d at 448. Plaintiffs unnamed, plaintiffs, named failed on concede that State’s lien itself does not law, plaintiffs because the named violate argue merits either that the lien’s attorneys already priority gives had not retained or had illegal status it an Spe- effect. cifically, plaintiffs received their offset from the State. contend that because the priority of the State’s lien allows the State to ¶ appeal, jurisdic- 6 and we Plaintiffs have completely reimburse itself and before Med- 78-2-2(3) pursuant §Ann. to Utah Code recipients can pro- icaid use the settlement (Supp.2001). appeal, of On both classes satisfy claims, ceeds to their the lien could plaintiffs argument abandon that sub- result in a seizure of recipient’s property. 19—5(l)(b) section is invalid under federal 26— They argue because, this could occur prohibiting against recipi- liens Medicaid after the State takes its share settlement ents’ and instead maintain that the proceeds, nothing there be left with priority of lien has the State’s the effect compensat- Medicaid be can violating plaintiffs II fur- federal law. Class claims, ed for their nonmedical and nonmedi- maintain ther that the failure of the named recipient’s cal proper- claims are Medicaid attorney plaintiffs’ claims for fees does ty. disagree. We the claims moot of the unnamed class mem- ¶ 9 bers. statute requires

lien not recipient’s encumber a Medicaid ANALYSIS places property and no additional restrictions priority on the valid otherwise liens. We I. STANDARD OF REVIEW already have held on three occasions that judgment 7 Because both against third-party proceeds liens settlement pleadings summary judgment and a involve proceeds are valid because those do not be- law, questions of review we both for correct recipient’s property come a Medicaid until ness and accord district court’s decision reimbursed, McCoy, Medicaid is see 2000 UT West, no deference. In re Estate P.2d 948 ¶ 10, 572, S.S., 39 at 972 P.2d at (Utah 1997). 448; thus, priority P.2d at lien recipient’s third-party on a settlement II. OF THE LEGALITY recipient’s ceeds does not encumber PRIORITY LIEN property, proceeds if those include com- ¶ 8 It pensation is well settled in According- for nonmedical claims. against third-party ly, liens correctly settlement court district concluded that priority do violate federal law because settlement State’s on Medicaid payments do not proper third-party become ents’ settlement did not ty S.S., until Medicaid is reimbursed.4 prohibiting against violate liens (Utah 1998) (“Payments P.2d at 442 recipients’ property.5 made 17, 1996, 3.Additionally, plaintiffs April prohibits imposition filed Federal law of liens 4. depositions request production notice of "against individual ... on documents, requesting, among things, paid paid account medical assistance or to plaintiffs the identities of those had who had and plan.” on his behalf the State not retained counsel. The State countered 1396p(a)(l) moving discovery. protective against for a order 20, 1998, plaintiffs On November moved for dissent, heavily In her Justice relies Durham conference, scheduling proposing June case, newly on a decided Minnesota Martin v. completing discovery. aas deadline for Because Rochester, (Minn.2002), 642 N.W.2d 1 protective the State filed a July for a motion order on opinions criticizes this court’s in Wallace and discovery we assume was not S.S. We decline to abandon well-established deadline, our completed by this at least on the issue precedent approach, in favor of attorney the Martin plain- fees. We further assume that view, which, discovery produce attempts tiffs’ at had in our would "results that been unsuccess- jeopardize goal ful. would ultimate Medicaid— FEES III. ATTORNEY CONCLUSION pri- Having ruling that the State’s concluded affirm the district court’s We recipients’ third- ority plain- approving priority lien on the State’s permissible under proceeds. feder- settlements We tiffs’ plaintiffs’ II grant al we next examine Class verse the district State’s court’s erred in argument summary judgment II on Class motion district summary granting attorney the State’s motion plaintiffs’ fees claim. We therefore dismissing judgment their claims at- proceedings consistent remand further torney prejudice. The State con- opinion. fees with with this cedes that the district court erred dismiss- RUSSON, HOWE, 12 Justice Justice prejudice, ing plaintiffs’ Class II concur Chief Justice WILKINS Associate that the error was harmless but maintains opinion. DURRANT’s Justice plaintiffs no because II received notice Class action or dismissal and of either the class Justice, DURHAM, concurring and Chief by the court’s deci- are not bound district so dissenting. that agree therefore sion. The majority I in Part III 13 concur respect to the attor- district court erred suggest Part II opinion, respectfully that issue; they ney fees differ in the reme- wrong. has it they propose. plaintiffs Class ask us dies II 1998, grant companion of sum- 14 In cases decided to reverse the district court’s (Utah State, 1998), mary us v. P.2d 439 and judgment, while asks to S.S. 972 the State (Utah Jackson, v. 972 446 simply modify the district court’s dismissal so Wallace P.2d 1998), thereby example this prejudice, allowing to be court followed without Appeals upholding plaintiffs II New York unnamed Class to reconstitute attorney begin place laws a lien on and anew their action for fees. grant proceeds allocated Medicaid re- reversing

Because court’s district Pennisi, remanding cipients. v. 90 N.Y.2d summary judgment and for See Cricchio (1997). 679, 296, discovery places plaintiffs 683 N.E.2d 301 further Class II 660 N.Y.S.2d doing, By if court saved liens from position the same as we modified dis- so this prohibiting prejudice, only preemption missal without a federal statute so as to be steps recipients’ property reconstituting without liens on Medicaid the additional persuaded, judicial holding “[pjayments refiling, we are made economy plain- legally II do not become the grounds, accept Class settlement, reverse until after valid proposal, tiffs’ We therefore' attorney necessarily district must include reimburse- court on issue of fees S.S., discovery. 972 P.2d at 442. for further ment Medicaid.” remand controlling precedent program pay[er] last consistent be the resort.” —are Calvanese, 111, Wallace, S.S., McCoy, and we established in v. 93 N.Y.2d 688 Calvanese 1082, 479, 1079, County today. we See v. 710 N.E.2d cert. de follow Sullivan N.Y.S.2d nied, 282, (2d Cir.1999) 928, 323, Suffolk, 120 174 F.3d 286 cert. 528 U.S. S.Ct. 145 L.Ed.2d of denied S.S., 950, 372, (1999), 528 120 S.Ct. 145 L.Ed.2d 252 deed, 972 at 443. U.S. see also P.2d In Estabrook, 290; history Agency legislative Health Admin. v. of the federal statute Fla. Care 161, clearly Congress (Fla.Dist.Ct.App. specifically 1 166-167 indicates that "in So.2d 71 Chandler, 23572, resort, 1998); — payer tended to be of last Nacino v. No. [Medicaid] — is, —, —, —, —, 2002 WL Hawai'i P.3d other available resources must used 31019351, 187, pays Haw.App. at *36 before care of an individu 2002 Lexis Medicaid 11, 2002); (Haw.Ct.App., S.Rep. Sept. program.” v. Total al in the Medicaid Roberts enrolled Cafe, Inc., 142, 499, 99-146, (1986), reprinted in Health 349 709 A.2d No. at 312 1986 Md. 42, (1998); Candia, N.J.Super. the dissent and 152 Waldman 317 U.S.C.C.A.N. While 464, 581, (1999); Grey rely heavily preemption arguments 722 v. N.D. Martin A.2d 586 Bear Servs., 611, regarding Dep’t 651 N.W.2d 2002 between statutes and the Human conflicts 139, Calvanese, 479, ¶ 14; "goal,” 710 "purposes of ND N.Y.S.2d State, scheme,” Martin, 1082; at Wilson v. 142 Wash.2d 642 N.W.2d at neither ad N.E.2d 40, denied, (2000), Further, overarching goal. it cert. dresses noting U.S. S.Ct. 149 L.Ed.2d worth of other courts have number Martin, although, reached like results that — here, 1396a(a)(25)(H) reasoning a 42 majority’s (Supp.2002)(em- Under attaches to phasis acquiring state’s recipient’s recipient’s party, proper- not to right parties, payment from third the state opportunity an ty. provides This case acquires right also to enforce position to reexamine legal through means. provisions govern- years opportunity an adopted ago, four ing assigned actually claims both and those develop conception more refined deemed to a unequivocally giving an incident created give pursue directly states the injury, opportunity an an en- rise to expended liable third the costs that state law conforms to both the sure state for a medical care.1 spirit mandates. letter ¶ 17 The federal scheme reimburse- merely provide states with FEDERAL I. MEDICAID PROVISIONS expenditures, recover their it also structuring imposes obligation so. to do administering and state functions in (a) plan A state for medical assistance duty simultaneously imposes states a (25) (B) provide must ... in any collect reimbursement and a limit on fulfilling legal liability case in which such a employ means states can is found obligations. ef- collection States’ collection after medical exist assistance has been as to the to forts are limited both sources made available on behalf individual they can look for reimbursement ... State ... will seek reimbursement expect they may as to extent to which for such assistance extent to the of such expended. for funds reimbursement Medicaid liability. legal recipi- provisions requiring Federal 1396a(a)(25)(B) § (Supp.2002)(em- 42 U.S.C. assign to claims to ents certain the state added). 1396a(a)(25)(B) phasis §While suggest that for states look reimbursement reimbursement, quires states to seek it does any parties pay third to for a to not to appear any direct states to look to expenses. medical States condi- ent’s must particular source for that reimbursement. eligibility assignment on tion Medicaid to the together preceding When read with the sec- any recipient’s “rights ... however, tion, the contours payment any for care from to medical third greater emerge collection scheme detail: 1396k(a)(l)(A) (1992). § party.” U.S.C. (a) plan A medical for assistance explicitly required are While states to obtain (25) (A) provide must ... that the State assignment rights an before an individual ... will take all reasonable measures to Medicaid, eligible becomes for legal liability parties ascertain the of third payment to medical are for care pay ... to for care and services assigned any available deemed to the state event: (i) plan, including the under the collection (a) plan A state for medical assistance (25) (H) ... of sufficient to enable the ... ... provide information must to payment pursue against extent that has been made under State to claims such third plan State medical for assistance parties [.] party any legal case where a third has a 1396a(a)(25)(A) (em- § (Supp.2002) 42 U.S.C. liability payment to make for such assis- phasis tance, the in effect under State has laws The state is thus directed which, payment to the extent that has been 1396a(a)(25)(A) § gather information “to plan made the State pursue against enable State to ... for health care items or assistance services and, parties,” third the subsection immedi- individual, is furnished to an the State ately following, required is to seek reim- acquired to have considered 1396a(a)(25)(B) § bursement. payment any such individual (Supp.2002). The clear implication is party for such care ser- health items or vices. reimbursement state’s mandate seek statute Whether retains a applicable pends assignment. medical de- claims for pursue expenses scope against parties. duty As- states to seek to action third reimbursement.

directed the state take signment provisions required liability enable States are to ascertain the against parties, directly third while action parties pay “to care services for require it to do so. and, reimbursement legal plan,”3 under the when available exist, liability found to reimburse- “seek forego- emerge from the 19 Two themes provided by [as ment for such assistance was ing provisions. examination these States legal such liabili- Medicaid] extent required explicitly pursue reimburse- 1396a(a)(25)(A) (B) ty.” § 42 U.S.C. and, expended, funds while added). Thus, extent of 1396a(a)(25)(B) specify § from against claim is limited state’s sought, to be whom that reimbursement liability (B) party’s the third medical ex- 1396a(a)(25)(A) reading together penses, party’s liability the third total parties strongly suggests that it who expen- actual state’s to be the source of are intended reimburse- ditures for medical ment.2 passages designate 20 The same ¶21 implicit limits These in the federal proper as the source of liable third may a state statutes on sources which reimbursement also set limits on the extent look for and on the extent reimbursement recover; may to which a the measure of supplement- may which the state recover are a state’s is not explicit ed limit on both source and expenses, expenditures state’s recovery: extent of party’s liability but a third for medical ex- imposed prop- No lien be penses. assignment provision The federal erty prior individual to his death on “rights makes paid or to account medical assistance ” eligibility medical care a condition of paid his behalf under the State 1396k(a)(l)(A) (em- Medicaid. 42 U.S.C. plan.... added). phasis Similarly, the claims deemed § 1396p(a)(l) (Supp.2002). 42 U.S.C. The 1396a(a)(25)(H) § are limited under prohibition recipient’s property on liens on a payment to to “the of such individual compels pursue parties states third to rather other such health care items for 1396a(a)(25)(H) prevents aug- than states from § or U.S.C. services.” added). menting recipients any from the per- assets These limits the remaining deficiencies after collection from missible extent of a state’s capitulated provisions imposing parties. in those third so), 1396k(a)(l)(C). Thus, assignment provi- recipient’s § language

2. The do to suggests recipient's largely sion also to to role is role in this scheme is assist the state in collecting qualifica- fulfilling responsibilities. assist state liable third its own parties, to duty identifying rather than be a source reimburse- cooperate tion of the to 1396k(a)(l)(C)(1992) 1396k(a)(l)(C) ment. Section mandates particularly §in require recipient that state law telling; imposes some federal scheme obli- gations recipient, obligations but cooperate identifying, to State in give way they recipient’s if can undermine the providing information to assist State plan unlikely best interests. It seems so may pursuing, any be who liable to recipients' solicitous of interests would neverthe- pay for available care services under strip recipients allow of what less likely states to good plan, such for unless individual cause be financial resource: settle- cooperate refusing as determined proceeds. ment agency State in accordance with standards prescribed by Secretary, which standards 1396a(a)(25)(A) language sug- of section shall take into consideration the best interests of gests expendi- some claims medical the individuals involved. for may recipient. tures be retained A state is 1396k(a)(l)(C)(emphasis § 42 U.S.C. capitalize party's liability entitled to recipient role in tire scheme state, expenses covered assign under Medicaid. liability 1396k(a)(l)(A); party's for medical ex- cooperate establishing Should penses provided by beyond paternity obtaining payments extend what is Medic- support aid, circumstances, 1396k(a)(l)(B); expenditures, according specified these additional 1396a(a)(25), language appear identifying par- to assist state in liable third section (unless recipient's ties for state it is not in the best interest be unavailable reimbursement. Nelson, out in 42 sec- Barnett Bank v. The scheme set 517 U.S. (1996) (citations Congress’ represents determination S.Ct. 134 L.Ed.2d omitted). appropriate between a state’s balance obligation Med- to collect reimbursement for ¶ Congressional preempt intent to state expenditures and an individual icaid variety law can manifest ways, itself in a property from a need to shield require all of preemption of the offend- collection efforts. The two interests state’s ing statutory provisions. While a fed- another; as- to limit one serve may explicitly preempts eral law that it signment provisions ensure that a Medicaid field, state law in more often the determi- judg- settlement cannot retain or congressional requires nation of intent an proceeds designated for ex- medical inquiry purposes underlying into the the fed- penses, and the federal anti-lien eral law. portions ensure states cannot use courts, facing Sometimes pre- when designated damages question, emption language find in the fed- expenses, belonging medical than to a explicit eral statute that reveals con- ent, to reimburse itself for medical gressional pre-empt intent state law. attempt laws that to alter State this balance often, explicit pre-emption language More allowing to retain appear, directly or an- expenses, by allowing intended for medical question. event, swer In that courts itself from a state reimburse must consider whether the federal stat- expenses, intended conflict purpose,” nonspe- ute’s “structure and subject preemption. this scheme and are statutory language, cific nonetheless reveal clear, implicit, pre-emptive intent. A II. PREEMPTION statute, may example, create a analyzing- In developing standards for regulation pervasive scheme of federal “so preemption, this court has drawn as to make reasonable the inference that Supreme jurispru- from United States Congress left no room States to governing preemption of dence Alternatively, supplement it.” federal law Although federal. may “irreconcilable conflict” with preemption Utah case law has addressed Compliance statutes, state law. with both developed have not several times we example, may “physical impossibil- be a analytical determining model for detailed or, ity,” the state law “stand as an preemptive intent. We therefore find it accomplishment and obstacle execu- useful to look to United States Su- purposes objectives full tion of the and of preme years over the Congress.” developed preemption helpful model.... (citations omitted). 31, Id. at 116 S.Ct. 1103 Orem, Development Company v. 2000 Price suggests 25 there are Barnett that three ¶26, 12, congres 995 P.2d 1237. It UT is categories statutory of schemes that can re- preempt sional intent to is determina congressional preempt flect intent state tive; “determining particular stat whether (1) containing explicit language law: statutes standing preempts other law of inferior is ute (2) effect; statutory pur- to that or structure essentially question legislative of intent.” revealing intent; pose preemptive a clear Hernandez, 23, Gilger v. 2000 UT 997 (3) (citations omitted). in conflict statutes result between centrality 305 P.2d The (Conflict preemption state and federal law. congressional analy in preemption of intent (a) is further subdivided into situations in analytical is borrowed from the federal sis model; question preemption compliance with of is simultaneous state (b) impossible and and federal circum-

basically congressional one of Did intent. stances in which state laws undermine con- Statute, Congress, enacting in the Federal court, purposes.) quoting gressional in This constitutionally intend to dele exercise Barnett, foregoing language Price gated authority set aside the laws so, preemption differently. Supremacy analysis If re structured State? Clause federal, categories congressional quires courts not state For the three to follow above, law. intent described this court substituted whether, primary The im- function is determine weighted categories. equally four particular of this compliance and under circumstances possibility simultaneous become, law stands as an obstacle undermining purposes [state] of federal case analysis articu- and preemption accomplishment execution in the version of Pnce, separate categories, purposes objectives Congress. not as- lated full and analysis. pects conflict Id.; & see also Florida Lime Avocado Grow- Paul, ¶26 v. ers 373 U.S. S.Ct. category under which court (1963); 31,116 at 10 L.Ed.2d 248 U.S. analyze preemption issue can chooses in- An 134 L.Ed.2d S.Ct. significant effects on the result. When have goals underlying into a federal aspect quiry between of conflict' treated one necessary court’s analysis is a element of whether statute federal pur- analysis, court preemption federal an element this to undermine tends Barnett) 3(b) adopted, highlighted, sus- in its state- (category and even poses being preemption conflated overt conflict model in Price. ceptible with (category between state law federal ¶27 obviously congressional There is no S.S., 3(a)), and therefore overlooked.4 in the federal Medicaid statutes intent preemption test applied preempt legislation altogether; federal questions a manner that tended elide area, legislation in the law mandates state under- provisions relevant state whether the conformity .guidelines. albeit with federal purposes: mined “a federal statute federal explicit nor an preemption, neither Where only in the case preempt will a state statute present, it none- occupy intent to the field is federal unless the stat- actual conflict possible legislation theless remains preemptively occupy ute has shown to been may conflict or otherwise undermine field_We no con- find irreconcilable objectives the federal purposes ” S.S., (empha- at 443 flict here.... P.2d consideration, in addition to scheme. This recognized have that actual sis We emphasized in S.S. and must “provi- may include conflict with conflict part preemption of our calculus. ” goals superior au- of a statute of sions Batchelor, thority, Smith III. UTAH MEDICAID PROVISIONS (Utah 1992) added), but the court’s ¶28 provisions address Utah’s fo- analysis of S.S. and Wallace conflicts requirements primarily impossibility cused dual reimbursement, apparent in an effort to but compliance. explicitly The court addressed high degree flexibility ensure the state a need to harmonize regard and extent of to both source quiring to seek reimbursement states reimbursement, broadly are so drafted as to provision, fully did not federal anti-lien beyond permit go acts that limits set purposes examine the law. The statute reads: serve, or intended whether court’s department’s claim recover medical pur- likely to resolution undermine inju- as a provided assistance result of jurisprudence pose. on which ry proceeds pay- ... a lien analysis preemption relies makes it Utah recipient by the that able to or on behalf of that there is no “infallible consti- clear while party. ... constitutional tutional test or exclusive (em- 26-19-5(l)(b) (1998) § determining Code Ann. yardstick” congressional in- Utah Davidowitz, 67, tent, 52, phasis provision The state 312 U.S. lien Hines v. 399, (1941), the L.Ed. 581 its face exceeds federal limits both as to S.Ct. court’s preemption, Appeals of has flicl which an actual 4. The Circuit Court contrib- results from Tenth categorization uted a “at least” useful of four conflict between federal and state law preemption silent, which can occur: (4) circumstances in though preemp- Congress is field (1) tion, express preemption, results which when a which results from determination Congress preempt expresses a clear intent subject Congress to remove an entire intended law, (2) implied preemption, which re- regulatory authority. from state law an obstacle sults when state "stands as Comm’rs, 755, County v. 994 F.2d Evans Bd. of accomplishment the purposes of the execution full (10th Cir.1993) (citations omitted). (3) objectives Congress,” of con-

1Q75 78-22-1(2) § permissible state recov- Utah Code Ann. and extent of source lien to ery, it a attach to (Supp.2001)(current since allows version at Utah Code legal claim 78-22-l(7)(a) on which the ceeds § Ann. (Supp.2001)).5 While the lien to attach to appears also to allow law a judgment Utah of its des- any proceeds, rather than to those immediately own ownership force transfer of ignated creditor, property judgment by real majority does, 29 In and S.S. of judgment Wallace statute a the moment it is provision lien saved the state’s entered, court types create a lien on certain of by provision preemption property judgment owned debtor. proceeds holding that through When this lien is enforced execution prop- attaches are state’s lien sale,6 proceeds property are the erty designated party, of the third judgment property creditor. While that beneficiary the settlement. While this subject could be made to other liens other spare reading operated the statute from creditors, indisputably proper- it remains comports it “actual conflict” with ty creditor; indeed, judgment of the other awkwardly with well-established Utah precisely liens attach prop- because the judgments determining the effects erty judgment belongs creditor. interpretation property rights. The court’s judgment upon 30 While lien created as- provision Utah’s lien rested on the entry judgment equivalent of a is not subject judg- sumption that the matter of a ownership property of the the lien (the value to be owed to the determined attaches, security it is form of creditor) property judgment is not the of the readily that can transformed into owner- judgment judgment the moment creditor at ship. court This has had occasion to entered, observe remains the of the but judgment always that “a lien has been re- analysis judgment This is difficult to debtor. garded highest security as form of to a reconcile with other give Belnap v. judgment [creditor].7” creditor a lien in some Blain P.2d 1978) (citation (Utah omitted). judgment assets of the debtor at Absent judgment statutory effect, moment entered: explicit language unlikely legislature seems intended to entry judgment [T]he district judgment postpone eliminate liens or to upon creates a lien the real debtor_located judgment when judgment coun- attachment creditor is a ty judgment recipient.8 in which the is entered. The conclusion in S.S July longer entry department’s 5. After it is no claim to recover as- judgment, provided against any judgment but recordation of the sistance is a lien recorder, proceeds payable recipi- to or on county office behalf that "creates party. priority ent lien has property. This real Utah Code Ann. 78-22- except l(7)(a) proceeds, over all claims (Supp.2001). attorney's fees and costs.... 26-19-5(l)(b) §Ann. Utah Code Levy ordinarily only proper 6. execution "is however, not, alter the meth- judgment Belnap method to enforce a lien.” 78-22-1(2) od established Utah Code Ann. Blain, (Utah 1978). 575 P.2d determining whose attach are. The lien does not to real source, Belnap misquotes Kinney v. Vallen property, "proceeds payable" tyne, Cal.Rptr. 15 Cal.3d proceeds, ent. the statute does not define Since Kinney judg 537. In observed the court that "a the definition in Black’s Law Dictio- recourse to nary high always regarded ment lien has been as the appropriate. Black’s defines security est form of to a creditor.” Id. 124 Cal. land, goods, value or investments when ”[t]he Rptr. (quoting at 541 P.2d Morton money.” Dictionary into Law converted Black’s Adams, (1899) (empha 124 Cal. 56 P. 1038 (7th ed.1999). Medicaid lien added)). Belnap Kinney, sis this In court cited money would attach to the realized thus mistakenly judgment is stated lien money execution sale. The realized an execu- debtor, security judgment for a a rather than indisputably judg- property the tion sale the is judgment creditor. creditor, recipient, here the Medicaid subject proceeds are A state law if those to liens. provision give priority permits property 8. The state that a Medicaid lien on the status recipient expressly its Medicaid lien: the Medicaid contradicts the with subject provision of a the anti-lien would interfere that the matter and Wallace property parties: of the third- judgment remains the third collection efforts liable is reim- party debtor until after Medicaid Congress could not have intended awkwardly legislative with a bursed thus fits third-party inhibit recoveries hibit or creditor, gives judgment at that the scheme the Securi- which directed same Social entered, legal a judgment the moment a Act_ ty provision] has [The anti-lien can property that be converted interest many years U.S.C. coexisted ownership through proceeds execution into 1396a(a)(25)(A), in the section sister preliminary resolution and sale.9 The' court’s Act, reim- mandates states to seek potential conflict between state and of the parties who are le- bursement from provisions assump- lien rests the federal gally payments. for the medical legal no that has interest Wallace, third-party 448. P.2d at If the judgment; position this liability recognized judgment in a or settle- statutory consistent with and com- property par- ment remains the of the judgment concerning the effect of a mon law ty, subject the state’s then it can be judgment creditor’s interest without of the anti- judgment. efforts violation subject matter of provisions. permits the 31 If statute Utah’s Medicaid potential what is in fact the state to obtain a lien on 33 Wallace’s resolution of provi- recipient’s property, then Utah’s lien obligations reim- conflict between to collect subject preemption sions would be protect recipi- bursement and to some of aspect preemption model the conflict accomplish goal ent’s of har- assets did explicitly A outlined above. that other, monizing provisions each federal permits clearly prohibited by what federal important but it did not address the more impos- compliance law makes with both laws law, goals required issue of federal sible. above, analysis. preemption explained As money that 32 The notion in Wallace provisions properly can more realized from settlements or looking plain mean- harmonized to their property judgments remains the of the third ing, state law. and without reference to argument is not an Utah’s informed provisions require Federal a re- argu- property judgments, law of but an cipient assign claims care to statutory ment based on construction. Med- eligibility the state as a condition of opinion “sections of a statute observed that they assigned, icaid. these claims Once are possible should be wherever harmonized longer recipient, property are no of the them.” avoid conflict between assigned. agency they are but of the whom conflict, perceived 972 P.2d at how- 448. liability pursuing of third ever, was not a conflict between state and expenses, enforcing a lien on but rather one between different by a medi- payable provisions of Medicaid statute. expenses, enforcing cal the state its own provisions anti-lien Wallace treated the property rights and potentially conflicting § 1396p(a)(l) U.S.C. ent, already has them to who with the mandate states collect sufficient ' state. information to enable them “seek reim- Supreme 34 The Minnesota parties.” (citing 42 bursement from third Id. 1396a(a)(25)(A)). recently adopted interpretation Congress, went, implications reasoning preemptive not have federal law and its could intended subject and is sor assets are real federal anti-lien thus whose primary property (protected preemption. should obtain interest property statute) subject matter federal anti-lien in the Treating judgment statutory judgment, while victim of tortfeasor as a rule real-property exception assets whose primary personal judgment sub- creates no interest in the subject should obtain no interest ject judgment would matter lead to arbi- (and judgment no matter of thus protection most results. It seems trary unlikely statute). from the federal legislature intended that the victim of a tortfea- Rochester, prohibition to state law in Martin v. violate the federal relative liens since (Minn.2002). The Minnesota assigned 642 N.W.2d not been have claims likens a tort victim’s court recipient’s property. thus remain the sticks”; to a “bundle property 36 The par- created requires law that certain sticks in the liability ty’s single, is not a undifferentiated arising causes of action out bundle —certain mass, nor recipient’s any is a claim on ele- of the incident that created need for property necessarily identical to state, assigned to the medical assistance —be any claim her other element. The Martin any but allows other causes action to rejects analysis court cases such as property recipient. remain Id. at S.S. Wallace because of their unwilling- ness sticks, analogy to the bundle recognize personal to injury tort operates to students of familiar against potentially action par- liable third provisions to harmonize federal collection comprises right ties than a more to recover protections with the creates for expenses. medical The tort action in- recipients. the assets of Medicaid Federal pain cludes claims for and suffering, emo- not, requirements assignment under this do distress, tional of earnings, loss and other provision approach, conflict with anti-lien part familiar any tort claims. The set- gives because event that rise to a need tlement to unassigned attributable these multiple rights. care for medical also creates claims is the of medical assis- requires federal law that a Medicaid While life, recipient during tance his recipient assign rights the state all to recover to right has no these claims under expenses any medical liable third assignment. while ... So [Utah recipient rights party, the retains all to re- court is] [its] correct ... conclusion any damages: cover for other recovery expenses for medical is not state becomes the sole owner of the [T]he of a medical assistance against any claim for medical ignore[s] part ent ... [it] of the recov- expenses. recipient But the retains own- ery or settlement for claims other than ership remaining sticks the bun- medical say, pain dle—that is the claims for Martin, 642 23-24. N.W.2d at The Martin distress, suffering, disability, emotional assignment links and collec- earnings, disfigurement, loss of and loss of provisions: earning it is claims for medical capacity. expenses assigned that have been Martin, 642 N.W.2d State at 30-31. laws only proceeds expenses for medical providing portion for liens on settle- that the state can collect. state obtains judgment designated for ment or medical right precisely what has been as- expenses do not conflict signed; provision pre- the federal anti-lien provisions because the to these acquiring vents state from a broad and have completely ceeds been to the right undifferentiated collect its reim- longer state and thus no proceeds payable property.10 proceeds designat- State bursement from liens on damages expenses recipient. ed for other than medical the third assignment payments 10. Even retains interest in the some claim to expenses may complete assigning expenses right after medical not be as as the medical very suggests, Minnesota Court since collect to the state. structure of 1396k(b) requires recognition § suggests amount that if the the state Utah’s a tacit right assignment pursue par- collects retains some 1396k(a)(l)(A) expenses: expended by assignment ties even for “the exceeds amounts medical governments, right party-payments [of the state and federal "the to third remain- exclusive, expenses] paid such der of amount collected shall be was not as evidenced 1396k(b) (1992). willingness pur- such individual.” 42 U.S.C. Medicaid’s allow independent- itWhile is no doubt unusual for the state to sue actions ly.... expenditures, recipient] collect amount in excess of its retained the still [The discerning third-party payments....” is of sue for and Wallace, some use receive (Durham, J., rights, extent which the even to 972 P.2d at 450 dissent- expenditures, complete; ing). collect right only precedents not re- A and 39 Not do our sweeping indiscriminate by quire third-party that all set- third-party payments, rejected conclusion to entirety to court, majority are available precisely is what the tlements Martin satisfy rights assigned state claims for Medicaid reimburse- today If the creates. differentiated, ment, by support there in fact case law recipient are not our retained proposition that the retains may even for the then a obtain reimbursement state — n rights payment designated some claims—and some to payments for causes ac- assignment provisions. The despite for medi- damages other than those majority opinion in that har- today, The court reaches the Wallace holds expenses. cal mony precedent our between the federal that because allows conclusion provisions may proceeds, be “if that priority “a achieved liens settlement proceeds assigned ... recipient’s third-party part the insurance settlement [by recipient] considered encumber to state are not ceeds does recipient’s] property_” if those include com- to not be ... property, [the even added). (emphasis pensation 972 P.2d at 448 for nonmedical claims.” precedent recognizes some of measure of the state’s Our proceeds, only rights some of the to expenditures, the state’s not thus becomes state, liability. assigned party’s payment, the third to the and that the amount of compelled by prece- assigned that are not are re- This not our result by dents; recipient. only part tained If payments if remain state, assigned until party the third after insurance reimbursed, against payments not necessar- the state cannot collect Medicaid is does flowing by ily how- from those retained third-party payments, follow that all recipient. designated, may reimburse ever be used to

the state. precedent 40 Even if our the effect

¶38 third-party payments do years ago this that state liens on Two court addressed recover not violate federal anti-lien is cor- the extent which the state can rect, expenditures proceeds. lien must against settlement conclusion state’s recip- full Recovery McCoy, 2000 satisfied to its extent before the See Servs. v. be Office of may majority’s payments interest in UT 572. While the ient have 999 P.2d language appear necessarily not follow. The has an might give the state the right satisfy against its lien interest of a third entire hands proceeds payable holding party relationship recipient, because of between facts, party recipient; the rela- should be restricted to its and its lan- that third may tionship guage McCoy not be over-read. that creates the state’s interest should limiting the court' read the as be construed as the extent giving analogy “a lien An to the entire state’s interest. rules including governing garnishment point: proceeds, both the illustrates the right designated payment having amount as medical in the hands of pay- designated bodily injury party necessarily the amount create comprehended obligation 12. What entitlement entire owed ment.” Id. at “bodily injury” party. the third Proce- in a settlement for is difficult Utah Rule of Civil define, may indistinguish- governs garnishment, process virtually be dure 64D obligations payment able from medical debts and other owed bodily injury may may to a debtor reached Because be include, and, indeed, to, pay- gar- be limited the debtor’s creditors. The fact that provides expenses, McCoy need a means which third- ments medical nishment reached, however, compel holding obligations may be read that claims for be damages assigned the state-—and not does not mean that the circumstances of the relationship required garnishee debtor and to be to the state —and between clearly payments damages may ignored. designated as of setoff embod- 64D(m) expenditures, than can be the ied Utah Rule of Civil Procedure subject continuing importance a state lien recover Medicaid demonstrates expenditures. garnish- relationship between debtor and determining garnish- extent of the mine whether state law “stands as an ee in obsta- par- accomplishment from the cle to the and execution right to be satisfied or’s purposes objectives full and ty’s property. lien includes Con- Possession Davidowitz, gress.” Hines v. guarantee full satisfaction. U.S. no of its (1941). 61 S.Ct. 85 L.Ed. 581 A provisions on 41 The reimbursement scheme that eviscerates the McCoy completely are not we relied purpose shielding recipient some provides that ambiguity. without Utah law assets from collection efforts is incom- department recover in full from patible protection recipients evi- any party recipient to which dent analytical in the scheme.12 The payable proceeds11 made all medical were adopted past model this court has and provided assistance which has and today properly extends account for independent tains its to commence congressional operation pre- intent and the party.... action emption; it “stands as an obstacle 26-19-7(2)(b) Ann. Code accomplishment pur- and of the full execution provision guarantees Whether or not this fall objectives poses Congress.” and Id. The depends reimbursement the construction recently adopted by model the Minnesota “may.” “May” placed on the word can either Supreme purposes Court harmonizes federal suggest will possible that it logical, support- with state law a far more expenditures in full recover its or that able, path and fair manner than the chosen invariably Ml. state is allowed to recover in majority. nothing compels While in the statute interpretation recovery a full inevitable, outcome,

permissible, it is not an require

equally true that the statute does not today. the court reaches the result 2002 UT 103 CONCLUSION TOONE, Fuller, Ben P. Kent D. Robert J. Haynes Fuller, Fuller, Roger R. and E. precedent approach Our Cannon, Appellants, Plaintiffs and adopted by Supreme the Minnesota purport competing obli- both to harmonize majori- gations imposed by federal law. The COUNTY, political subdivision, WEBER ty supported proposition Wallace County Commission, Weber third-party payments remain the Burton, Commissioners Glen Ken Bis after Medicaid been until choff, Caine, Decaria, Camille Mark primarily principle with the reimbursed County Attorney, Jones, an Weber Rulon “sections of a statute should be harmonized individual, 1-10, and John & Does Jane conflict so to avoid between them.” Defendants, Appellees. P.2d at No. 20010142. interpretation necessary That statute, harmonization of the however. The Supreme Court of Utah. approach, the one I better believe Oct. required by preemption princi- herein, suggests ples discussed that a court’s

“primary in determining function” if state preempted by

law is federal law is to deter- proceeds, 11. Because the does not define held for the medical and other needs of statute in trust possible portions defeating eligibili- it is and other without (including provisions Code ty), 1396p(d)(4)(A)(Supp.2002), the lien of Utah 42 U.S.C. 19—5(l)(b)) pre- §Ann. could be saved from mandating the return to the 26— emption by judicial interpretation expen- of amounts excess of state and meaning that restricts the term’s in this context Congress' all intention both to diture underline expenditures alone. recipients’ protect assets from state claims for protect reimbursement and to resulting ineligibility provision, supple- from an overabundance of 12. The anti-lien the creation of (which mental needs allow to be trusts assets assets.

Case Details

Case Name: Houghton v. Department of Health

Court Name: Utah Supreme Court

Date Published: Oct 18, 2002

Citation: 57 P.3d 1067

Docket Number: 20001103

Court Abbreviation: Utah