*1 MARTIN, guardian ad litem Joan HOFF, Petitioner, Troy
Appellant, Minnesota, plaintiff on
State of Respondent,
impleader, ROCHESTER,
CITY OF al.,
et Defendants.
No. C3-00-398.
Supreme Court of Minnesota.
March 2002.
Rehearing April Denied *4 Rochester, Bird, A. James A.
Charles Crosse, WI, Koby, O’Flaherty, Parke La petitioner. Hatch, Attorney Mike Minnesota Gener- Schommer, al, Attor- C. Assistant Suzette General, Paul, respondent. ney St. Burchetta Collins & Crannage, Sonia Pomona, NY, Attorneys for ami- Hanley, MN, Inc. and cus curiae ARC NYSARC. Bryant, Bryant, Michael A. Bradshaw & Park, amicus curiae MTLA. Waite *5 OPINION ANDERSON, PAUL H. Justice. injury personal E. Martin settled a Joan multiple defendants against cause of action son, Troy her disabled Hoff. on behalf of a medical assistance The state asserted as reimburse- against lien paid by expenses ment for Hoffs assistance. through the state right to subrogation state also asserted dismissed The district court proceeds. finding proceeds, claim to the the state’s lien and that the state medical preempted subrogation provisions were appealed The state law. re- Appeals, which Court of Minnesota court, holding that fed- versed the district the state’s preempt eral law did appealed Martin rights. subrogation court. We reverse. to this Tlougan were Donald Troy Hoff and July on single-car in a accident involved Rochester, 10, 1991, Minnesota. near the accident. as a result of Tlougan died totally dis- permanent Hoff suffered abling injuries mentally impleader, and was rendered Martin plead was able to incompetent. claim alleging on behalf of the state the defendants were liable to the state for mother, Martin, E. sought Hoffs Joan care, past and future for medical medical assistance from the State of treatment, living, sheltered gen- and other Minnesota on behalf. Hoffs The state specific eral and damages. began making pay- ments for Hoffs care on November being joined plaintiff After im- as later, year 1991. About a and a half on pleader, the state filed an answer and 23, 1993, May Martin assigned to the state against cross-claims Martin. In its an- all rights of Hoffs swer, specifically denied Martin’s any care from liable for Hoffs characterization of the state appro- as an injuries. Martin made the priately plaintiff named and alleged that Hoffs authorized representative.1 “as a lienholder on present cause of The state filed a public assistance lien in action,” it did not need be named as a County the Olmsted Recorder’s Office on plaintiff Instead, pleadings. on the June specifically 1993. The lien was state, Martin, in its against cross-claim placed upon Hoffs causes of arising action relied on its lien under Minn.Stat. out of the accident. This lien was for (2000), subd. claiming the $267,754.50 past medical assistance ben- to reimbursement for medical ex- paid behalf, efits on Hoffs and also includ- penses paid it on Hoffs behalf from any ed future medical assistance benefits award, judgment, or settlement of Hoffs as a consequence of the acci- causes of action.3 fifing After its answer *6 dent. cross-claims, and the state signifi- was not Martin, guardian Hoff, cantly in litigation as ad litem involved for and did not estate, Tlougan’s sued City independently pursue claim against Roch- its de- ester, Rochester Township, and the fendants for medical expenses pleaded Coun- ty of Olmsted.2 sought Martin Martin on its behalf. past for and expenses future Nearly years commencing after this treatment, care and past and pain future action, negotiated Martin settlements with and suffering, disability, disfigurement, defendants, City first with the of Roch- past earnings, loss of earning loss of capac- ester and Tlougan’s then with estate and ity, general and and specific dam- Rochester Township. The combined total ages. joined Martin the state as an invol- $220,000. of the settlements was The set-
untary plaintiff impleader, that, on alleging agreements tlement encompassed all aas result of the state’s medical assistance causes of action and claims. lien, the presence state’s necessary was for “just adjudication rights.” of all As a explicitly district court in stated its result of joining the state plaintiff as a on orders approving these settlement agree- 1. It is legal cross-claim, unclear from record pleaded what 3.The state also a second authority Martin had assignment relying to make this assignment rights provision on the Nevertheless, purposes Hoff. of this in the application. medical assistance Howev- appeal, undisputed er, it is that Martin made a only this attempted cross-claim to recover assignment valid rights. of Hoff’s proceeds Tloug- no-fault insurance an’s no-fault insurer. Martin and the state subsequently 2. Martin regarding dismissed her action later reached a settlement against County of Olmsted. proceeds. state’s claim to the no-fault lien entitled it to the nature and medical assistance obtain that it was aware of ments damages injuries, remaining proceeds Hoffs out of the settlement extent of claimed, respective positions $58,561.82 as reimbursement for the over liability, and the conse- regarding $600,000 paid by it had that time for Hoffs between the litigation of further quences medical care.5 settle- court found that the parties. The Martin filed a motion to dismiss the fair, just, and the best ments were claim, arguing pro- state’s that federal law The court also stated interests of Hoff. placing hibited the a lien on a a dispute it was aware of between recipient’s property. regarding the state’s Martin and the argued pro- Martin the settlement proceeds. part of the settlement claim solely property ceeds were Hoffs because However, the court concluded to the state of Hoffs did not involve the settlements di- dispute left Martin with no the eventual rectly only and concerned for medical ex- power to collect sue settle- of the balance of the disbursement Therefore, penses on Hoffs behalf. Mar- The court concluded that proceeds. proceeds tin asserted that the settlement the state dispute between Martin and solely were Hoffs because the with the delay should not the settlement made Hoffs re- settlement was and that the interests of Mar- defendants i.e., claims, maining injury dam- personal pro- in the tin and the state ages pain suffering, disfigurement, protected depositing ceeds could be distress, of earn- disability, emotional loss an interest- balance but not ings, earning capacity, and loss of bearing account with the court administra- compliance tor. In with the order of the settlement, each Martin approving court motion, to Martin’s response the state released all three defendants (1) that the federal anti-hen statute argued liability stipulated from further to a recoveries, apply does not prejudice dismissal with on their claims. (2) the hen does not attach to record claims It is unclear from the what proceeds, cause of but instead to the action *7 how, if part of the settlement and at were (3) proceeds are the all, allocated the settlement were parties. Additionally, liable third the the among respective the claims. argument on the state contested Martin’s assignment, arguing that the effect of the After the settlements with the three de- not Martin of the assignment deprive did agreed upon, had Martin fendants been ability and collect for medical ex- separate dis- to sue pursued and the state their that the as- penses. The state asserted pute regarding the state’s cross-claim.4 left both Martin and the state Specifically, signment the state asserted that its requires that reasonable a to dismiss the state’s ceeds. State law 4. Martin filed motion collection, fees, City including attorney after the settlement with the cross-claim be costs of approved, but before of Rochester had been recipient’s re- deducted first from a Medicaid Township and the settlement with Rochester covery medical assis- and the full amount of Tlougan ap- the estate Donald had been paid recipient be deducted sec- tance the court, proved by although appears that the it (2000). § Minn.Stat. subd. ond. agreed upon. a had been dollar amount case, any under Minnesota’s system, recovery the must receive $600,000 Although the state had over recovery after attor- least one-third of the net care, sought only for Hoff's medical ney fees and other collection costs. Id. $58,561.82 pro- to recover of the settlement recovery remaining a pursue settled all of Hoffs claims aris- ability with Therefore, against ar- out three expenses. ing state of the accident $220,000. a gues, the settlement included The re- defendants for state Moreover, in its the three from further leased defendants court, claims, district argument liability relying state apparently its part subrogation did not assert that of the settlement its lien and independent claim as expenses paid included state’s recover medical on Hoffs pleaded by point Martin. At this in the The court then found that behalf. proceedings, the state for the first time any was not entitled to of the settle- state claim under Minn. subrogation raised ment funds. The court that the concluded (2000) for the medical as- Stat. 256B.37 were subrogation rights state’s lien and paid. sistance by federal preempted law. granted district mo-
The court Martin’s The combined result of the settlement any releases, tion to dismiss the state’s claim to agreements, and the district The proceeds. the settlement court found court’s order left the state without that, as a result of the in the ability expenses paid to recover medical its application, neither say, on Hoffs That behalf. any right Martin nor Hoff had to recover anything, directly could not collect either from the defendants. through against a cause of action the de- The court found then indirectly through fendants or the use proceeds were Hoffs sole and exclusive or subrogation against liens the settlement that, property. The court further found proceeds.6 imposition of because federal law bars appealed, arguing The state property during lien on of Hoffs his nei- preempts permit lifetime and state lien lien laws ther state’s medical against property, Hoffs state lien laws subrogation statute nor the state’s statute. conflicted with federal laws thus were court of appeals agreed The with the state preempted. rejected court The also court, concluding and reversed the district claim subrogation grounds state’s on the it that Minnesota’s medical assistance statute prohibited by was also the federal anti-lien not does conflict with the federal Medicaid statute and because it as- timely was statutory compliance scheme because serted. provisions both the state and federal was Although foregoing proceedings possible. court appeals concluded confusing, were at times final outcome that federal law therefore did not bar in the district court can best summa- from placing a lien on the settlement *8 rized as follows. The court found that proceeds. appeals The court of con- also right to recover Hoffs medical cluded that settlement was assigned state, completely was to the leav- subject subrogation to the state’s claim. Martin, ing Hoffs guardian, as with no Martin then appealed to this court. right for expenses. collect I. remaining rights
Hoffs to recover included all his for personal claims case injury presents legal dam- This three ages except for questions. questions Martin The are whether prohibited (1994). suing § 6. The state 1396p(b)(l) is. also U.S.C. recipient directly. medical assistance 42 See
9 lien, property as a hen on of a Medicaid medical assistance Minnesota’s paid. of medical assistance 42 because subrogation statutes signment, (1994) (“[n]o § 1396p(a)(l) U.S.C. the federal anti-lien statute. preempted by imposed against be state law is preempts federal law Whether prior to death on individual his account statutory construc an issue of generally * * *.”). Despite Co., Burlington N.R.R. 390 Pikop tion. v. prohibition, a stat- this federal Minnesota (1986). 743, Statutory 748 con N.W.2d hen grants ute for the reviewed de novo. Am. Fami struction is arising injuries cost of care from the which Schroedl, 273, 616 N.W.2d ly Group Ins. to the need lead for assistance. (Minn.2000). 277 (2000). § 1 Minn.Stat. subd. More the Minnesota statute specifically, Statutory Background A. provides part: in relevant understanding legal For an issues agency pays When the state provides, case, necessary it is first to under for, care, or becomes hable medical it statutes. stand the relevant Medicaid shall have a hen for the cost of the care Medicaid, Title XIX of enacted 1965 as upon any and all causes action or Act, Security fund publicly the Social is a recovery rights any policy, plan, under program ed to ensure medical care to cer providing or contract benefits for health tain individuals who lack the resources to injury, per- care or which accrue to the cover the costs of essential medical ser furnished, son to whom the care was or 430.0; 42 vices. C.F.R. see Norwest person’s legal representatives, N.D., Doth, 328, Bank N.A. v. 159 F.3d injuries a result of the ihness or Cir.1998). (8th 331 Medicaid was intended necessitated the medical care. payor of last resort. See H.R. added). (emphasis specifi- Id. The statute (1985). 99-453, Report No. at 542 Conf. cally placed that a hen be on a directs jointly Medicaid is funded the federal A recovery rights. cause of action or governments. 42 C.F.R. action, often referred to as a cause of § 430.0. Each state administers its own claim, operative giv- facts group “[a] re program federally within mandated suing” ing rise to one or more bases level, Id. the federal quirements. On legal theory of lawsuit.” Black’s “[the] Financing Health Care Administration (7th ed.1999).7 Dictionary Law Under (HCFA) responsible administering law, person- a cause of action is Minnesota program. the Medicaid Royal property.8 al See State v. Mineral analysis Ass’n, 232, 236, 128, The focus of our is on 132 Minn. 156 N.W. (1916) (“[T]he ‘credits,’ relationship between federal and state term as used in addressing government’s right statutes, laws choses taxing embraces expended recover funds it has personal in action which are in their nature program. property.”); care under the Medicaid Mattson v. Minnesota & N. R.R., federal statute is an anti-lien Minn. 104 N.W. most relevant Wis. (1905) (holding that the provision prohibiting imposing states from *9 provision, Dictionary Legal purposes 8. For of the anti-lien 7. See also A of Modern Us- ed., ed.1995) age property as "the homestead (Bryan 140 A. Gamer 2d HCFA defines property (defining personal and real group oper- action as “a of and all other cause of facts, act, legal 42 giving recipient has a interest." ative such as a harmful rise 433.36(b). action”). § rights C.F.R. to one or more of 10 damages personal injuries requirement, re-
pursue state law can be read to right); quire see also Minn.Stat. that medical recipients, assistance as (2000) 550.37, (listing § “[rjights subd. eligibility, assign a condition of to the state injuries person” of action for to rights more than the federal re- exempt property). § quires. Compare U.S.C. 1396k with 256B.056, § Minn.Stat. subd. 6. In addi- provision, to the anti-lien addition tion, subrogated any rights the state is federal law also mandates that state’s recipient’s arising under a cause of action plan require that medi- out of an necessitating occurrence recipients assign cal assistance to the state glance, although, first payments to receive for medical assistance — subrogation provision does not run afoul of expenses pay- from third liable for any federal restrictions. Minn.Stat. ment of those U.S.C. (2000). 256B.37, § subd. 1396k(a) (1994).9 § Minnesota’s medical plan assign- assistance includes such an Preemption B. requirement, although arguably
ment it requires assignment rights of more than Because of the conflict between provision. federal MinmStat. provisions, the federal and state we must (2000).10 256B.056, § subd. 6 answer question whether the federal
It is apparent
there is a conflict provisions supersede the state statutes.
so,
between the state lien
assignment pro-
To do
we need to examine
law
visions
requirements.
and the federal
De-
preemption.
There are three dis
spite
provision,
tinct
situations
in which federal
law
gives
law
the state a
preempts
hen on a medical
and invalidates state law. Pi
recipient’s
First,
kop,
causes
action and
11
1396a(a) (1994
§
42
in
field.
v. Rath
see also
U.S.C.
&
action
See Jones
state
1999). Thus,
Co.,
519, 525,
Supp.
97
V
there is no
Packing
explicit
430 U.S.
S.Ct.
(1977).
1305,
implicit
preemption
L.Ed.2d 604
The second
federal
of the field.
51
Instead,
Congress implicitly preempts
the conflict between the
arises when
federal
particular
provisions requires
in a
field of
and state
a determina-
state involvement
involve
if
scope
preemption
apply
law because
tion
will
here
it
law
specific
ment or interest
is so extensive
state
conflicts with
See, e.g.,
law or
fully “occupies
Cipol
the field.”
Medicaid
is an obstacle to federal
Inc.,
504,
Liggett Group,
purposes.
lone v.
505 U.S.
Medicaid
To make this deter-
516,
2608,
mination,
112
is
or because the state law is
accomplishment
pur
obstacle to the
provision
anti-lien
The federal
ensures
poses of the federal scheme. See Fla.
of a
not
Medicaid
Growers,
Paul,
& Avocado
Inc. v.
Lime
depleted during
be
his life
a state seek-
132, 142-43,
1210,
83
10
373 U.S.
S.Ct.
ing reimbursement for medical assistance
(1963);
Davidowitz,
L.Ed.2d 248
Hines v.
time,
paid. At the same
the federal as-
52, 67,
399,
L.Ed. 581
312 U.S.
61 S.Ct.
85
signment
third-party recovery provi-
(1941). Preemption
gener
of state
is
laws
recover,
sions enable a state to
at
ally
Cipollone,
disfavored. See
505 U.S.
third-party liability,
extent of
amounts the
2608;
516, 518, 112
Forster v. R.J.
S.Ct.
recipi-
state has
behalf Medicaid
Co.,
655,
Reynolds Tobacco
437 N.W.2d
conflict;
in
provisions may
ents. These
(Minn.1989).
do
658
When federal
laws
therefore,
step
our first
is to examine
laws, the
preempt conflicting state
law.
seek to harmonize the federal
preempted only
laws are
to the extent that
principles of stat
Fundamental
Dal
they are
conflict with federal law.
utory
require
give
construction
that courts
Servs.,
Planning
Family
ton v. Little Rock
plain meaning
effect to the
of a statute
474, 476,
1063, 134
516 U.S.
116 S.Ct.
See,
language
e.g.,
clear.
Rob
when
Bica,
(1996);
v.
424
L.Ed.2d 115
De Canas
Co.,
337, 340,
519
inson v. Shell Oil
U.S.
351,
5,
933,
n.
U.S.
357-58
S.Ct.
(1997);
843,
see
agency
under the doctrine
interpretations
significant
There are two other
U.S.A., Inc. v.
Medicaid requirements regarding
articulated in Chevron
Nat
a state’s
Council, Inc.,
ability
837,
paid
to recover medical assistance
ural Res.
467 U.S.
Def.
that must be construed in
with
842-43,
concert
our
L.Ed.2d
104 S.Ct.
81
694
interpretation of
provision.
the anti-lien
(1984).
conclude
But we
anti-
The first
these
of
is the federal law that
provision
unambiguous.
unequiv
hen
It
requires
recipients,
states to obtain from
ocally
may
provides
lien
be im
“[n]o
as a
eligibility
condition of
posed against
property
any
of
individu
assistance,
rights
pay-
to
prior
al
death on
to his
account medical
* *
§
ment for medical care. 42 U.S.C.
1396k.
42
assistance
U.S.C.
specific
provision requires a medical
Further,
§ 1396p(a)(1).11
there is no indi
recipient
“assign
assistance
to
the State
language
cation in
statute’s
* * *
any rights, of the
pay-
individual
to
apply
to
provision does not
third-
any
ment
medical care from
third par-
for
party
provision
recoveries. The
ex
means
ty.”
added).
§
42
1396k (emphasis
U.S.C.
actly
death,
his
says prior
what it
no
—
requirement
The second
directs states to
lien may
placed
be
of a
recover
cost of
care from potentially
for recovery of
parties.
liable third
42
See
U.S.C.
Therefore,
paid.
medical assistance
we
1396a(a)(25)(H)
1999).
(Supp. V
The third-
give
will
to the plain meaning
effect
party
provision
provides
provision.12
federal anti-lien
that to the extent
payment
has been
made under the State plan
for
read
We
and construe
stat
any
assistance in
case
where
ute as a
and “interpret
whole
each section
party
legal
has a
liability
pay-
make
in light
surrounding
sections to
assistance,
such
the State has
for
conflicting
interpretations.”
avoid
which,
effect laws under
to the extent
Schroedl,
277;
616 N.W.2d at
see also
has been made under the
Morton,
822, 828,
United
States
467 U.S.
State plan
(1984).
104 S.Ct.
680
L.Ed.2d
health care items or services furnished
Further,
required,
possible,
we are
when
individual,
to an
the State is considered
give
to all of
provisions.
effect
a law’s
acquired
have
such indi-
Walker,
See Duncan v.
533 U.S.
vidual to payment
2120, 2125,
(2001);
S.Ct.
ty, protected by and as such are the feder State Assistance al anti-lien provision. law, Having forth set the federal we expresses juxtapose
The dissent
concern about our must now
the federal anti-lien
willingness
recognize
separate
these
Minnesota’s medical assis-
claims and cites a medical
eligi
compli-
assistance
tance
to determine whether
K.S.,
case,
bility
In re
as sup
impossible
ance with both is
or whether
Welfare of
KS.,
port
analysis.
for its
attempt
accomplish-
we
the state law is an obstacle to
availability
purposes
ed to determine the
of certain ment of the
of the federal Medic-
purposes
assets for
of medical
aid
provision gives
assistance
scheme. The state lien
(Minn.
653,
eligibility.
“upon
427 N.W.2d
658-59
the state a lien for the cost of care
1988). Specifically,
we addressed whether
and all causes of action” which accrue
purpose
for which a tort settlement
to the medical assistance
as a
injuries
fund was received affected the fund’s avail-
result of the
that necessitated
(1994).
impact
holding
1396p(d)(4)
18. We note the
of our
in K.S.
U.S.C.
The assets of such
may
changed
light
have been
of the avail-
properly
created SNT are not considered for
1993,
ability
Congress passed
of a SNT. In
purposes
determining eligibility
for medi-
1993,
Budget
Omnibus
Reconciliation Act of
currently
cal assistance.
Id. Minnesota
rec-
provides
that SNT
be created for
ognizes
validity of
created under
SNTs
the benefit of a disabled individual if the
501B.89,
§
federal law. Minn.Stat.
subd. 3
assets
the trust
to be transferred to the
(2000).
upon
death of such individual.
256B.042,
prohibition
medical care. Minn.Stat.
and broad
of the “no lien” lan-
noted,
previously
guage
1. But as
these
provision,
subd.
the federal anti-lien
we
of action
are the personal
causes
or claims
are not able
an appropriate
to ascertain
recipi
of the medical assistance
limiting construction
the state’s medical
Ass’n,
Royal
See
ent.
Mineral
132 Minn.
Therefore,
assistance hen
we
provision.
130;
Mattson,
at
see
at
N.W.
also
hold that section
Minnesota’s
Minn. at
104 N.W.
448. There
statute,
medical
hen
preempt-
assistance
fore, the state
pro
medical assistance lien
ed to
it
the extent that
allows a hen
appears to conflict with
vision
the federal
placed
to be
assistance
subjected
and should be
recipient’s
ac-
cause of
a preemption analysis.
tion before a
death.
recipient’s
preemption,
Under conflict
II.
preempts
when compliance
law
state law
Having
place
held that
state cannot
impossible
with both is
or when the state
a hen on a
assistance recipient’s
is an
to the purposes
statute
obstacle
personal property on account of medical
the federal scheme. See Fla. Lime &
*15
assistance
recipient’s
before the
Growers,
142-43,
Avocado
373 U.S.
death, we must determine
whether
1210; Hines,
S.Ct.
Having applicant concluded that state hen or recipient medical assis- in provision law, conflict with federal tance assignment any we rights presented now options two with for the support and third party pay- * * * ultimate fate of the state law. option One ments. By signing application assistance, is to hold that the preempted state law is person assigns entirely. However, preemption is disfa- department human all services vored, and a state law preempt- should be person may have to only to ed the extent that it is in support conflict or payments for medical ex- with federal law. Heaney, penses See Weber v. any person entity (8th Cir.1993); Forster, 995 F.2d dependent’s their own or their behalf given 437 N.W.2d at But the clear and agrees cooperate establishing paternity obtaining be broader than federal law and should be payments. subjected third party preemption analysis. to a pro- 6. It also Minn.Stat. subd. assignment While Minnesota’s provision applicant agree apply that an must vides appears broader than the require- federal “all received or receivable the ment, this does not mean that the statute * * * person third hable person and federal law are in per conflict se. The * * for the costs of medical care Id. requirement appears to added). (emphasis set a minimum requirement for what state sentence, plans medical assistance must contain proceeds”
In the “all recipients and for what assign, must reading the clause “for the costs of medical but there is no indication that the federal as- modify “any person care” liable” signment requirement sets a maximum to be the more conventional read appears statute; that states cannot exceed. ing Unlike the language there fore, provision, anti-hen the assignment provi- proceed analyze we will first this sion contains no explicit prohibition or re- interpretation language. If under compliance striction. So reading preemption required, is not with both the assignment requirement analysis our of this will be com and the However, assignment requirement if plete. possible; we conclude that this just the state provision goes reading requires preemption in above whole or beyond what the federal part, we wih then look further to deter abso- However, lutely requires. mine whether the breadth of susceptible statute is *16 assignment may the state implicate the interpretation another that does not raise second form of preemption conflict if it constitutional defect. See Hince v. (Minn.2001) purposes interferes with the O’Keefe, 632 N.W.2d the federal Medicaid scheme. (explaining that we are under an obligation interpret to our statutes to avoid constitu assignment provision, Under defects). tional only assigned the state is not recipi- care, the foregoing right payments
Under construction of the ent’s to statute, when “for the costs of medical assigned rights pro- but is also to “all modify “any person care” is read to third parties ceeds” from third hable for medical liable,” proceeds” “all is not limited to care. The the “ah imphcation proceeds” payments language received or receivable for medi- right is the state has a (“all any payments any cal care and includes payment made to a medical assistance proceeds”) from recipient by third who are lia- a third party liable for the Thus, ble for assign- recipient’s medical care. including settle- care— provision appears ment to give proceeds the state an ment from a cause of action ex- assignment for more than what the expenses. rights clusive of medical law mandates because the federal law these other causes of action are not re- requires that assignment quired assigned by states obtain an the federal as- be of the medical recipient’s right signment provision, assistance and as we have al- concluded, to recover ready nonassigned rights from liable these However, parties. third ability protected by the state’s to recover or claims are expenses paid provision. place recover medical is not anti-hen The state cannot a recovery only recipi- during limited to from a a hen on this property recipi- personal property ent’s to recover for medical hfe because it is ent’s Therefore, it that the statute appears recipient. restriction, assignment provision should be foregoing
Despite the right allows assignment preempted.19 state’s broad what is by assignment state to take Al- by provision. the anti-lien
protected Interpretation Alternative range of the expand lowing the state earlier, under an obli- As noted we are the anti-lien assignment to defeat required interpret our statutes to avoid gation to with the provision interferes Hince, 632 constitutional defects. N.W.2d essence, it circumvents the scheme. Therefore, if the state and eliminates the effi- provision to an alternative susceptible protection. The cacy provision’s of that in operate that allows it to interpretation is to purpose of the anti-lien scheme harmony with the federal Medicaid assets, in- recipient’s limited protect apply we must preempted, and not be recover, and cluding nonassigned rights to Here, interpretation. the state medical pur- assignment statute frustrates this assignment provision differs Therefore, that under pose. we conclude important from the federal mandate one reading as- foregoing of Minnesota’s “all It respect proceeds” sentence. —the statute, signment the statute broader reads, eligible be for medical assis- “[t]o and interferes counterpart than its federal applied have or must person tance must purposes with the of the federal Medicaid apply all received or agree generally provi- scheme and the anti-lien person person’s or the receivable in particular. sion spouse person liable for the Accordingly, that under this we conclude person, of medical care for the costs preempted construction the statute is children.” Minn.Stat. spouse, part. assign- To the extent that the state proceeds” subd. 6. The “all provision gives innovation apparently sentence is recipient’s more than the claim for medical required by and not the federal law.20 expenses, it should feder- preempted interpretation first statute Our However, al law. to the extent that the *17 give right pro- would the state the to all the as- assignment state mirrors federal third parties. ceeds received from liable signment provision requires that medi- Recovery this interpretation under is recipients assign cal assistance to the state proceeds limited to for medical care. But rights payment all to for medical care from injuries susceptible third this section is to an alternative parties liable for the assistance, interpretation. necessitated medical The clause “for the costs state implies obligation headlong 19. The dissent that our decision im- runs into the federal anti- pairs right recipi- of a medical assistance provision. lien ent to transfer causes action his/her assignment. point. But this misses the We Otherwise, assignment the state 20. acknowledge recipi- that medical assistance parallels requirements the federal of 42 right assign ents have the and thus are able to 1396a(a)(25)(H) 1396k(a). §§ U.S.C. To any and all of their causes of action or claims appears give rights to extent it matter, (or, anyone to the state for that to care, against recovery more than else). However, obligation there is no under innovation; it is an to the extent that it has a assign federal law to more than a claim for pro- retroactive effect—as an award of the problem medical care. The here is that the care) (for may ceeds have been medical interpretation assign- dissent's of the state paid out a settlement—it does conform before right transforms a to transfer 1396a(a)(25)(H). to section obligation into what an to transfer more than requires. expansive the federal law Such an modify propriately. assignment provi- to The state can be read of medical care” functionally equivalent sion is now third proceeds” any or “from “all either assignment provision. federal The state person liable.” assignment rights an limited to the has such interpret If we statute right expenses may to medical no modi of medical care” that “for costs longer pursue proceeds” “all from third inter we can avoid an proceeds,” “all fies parties. Effectively, state entitled preempting that necessitates pretation assignment recipient’s right to to an of the read of the state statute. When we part all against recover gives it way, in the state the statute this potentially parties third that are liable for rights recipient than against no more injuries medical as- that necessitated in this requirement.21 federal Under sistance. language, the statute’s terpretation rights to assignment proceeds has all III. care, rights does not have but question next before court is The part recovery. other of a Because any in granting the state whether statute instruct us interpretation our canons subrogation right preempted by interpret statutes to avoid constitutional statutory asserting law.22 addition we that “for the costs problems, conclude rights, the state also asserts a subro- proceeds.” modifies “all of medical care” right gation to the settlement Therefore, we that when a medical hold This under Minn.Stat. subd. I.23 has a cause or causes recipient assistance subrogation provision gives the state a against potentially liable of action “to the of medical right extent cost injuries, for his the medical assis rights any the medical care furnished” grants to the assignment statute tance may have under assignment right to claims for an all “arising an occur- cause of action out of care, grant it does not but rence that necessitated the any claims or assignment scope Id. medical assistance.” recovery therefrom. than subrogation right is broader rights given the statute to the state interpretation This limited assignment provision. ap- the federal scheme function allows However, pertinent subrogation language part, the statute proceeds" 23.In the "all give any operate provides: ef- before the retroactive made —a *18 Upon furnishing requirement goes beyond the in the fect. This * * * action person a cause of who has assignment provision, gives ef- but it federal arising necessitat out of an occurrence that recovery requirement in third-party fect assistance, payment the ed the of medical 1396a(a)(25)(H). § * * * subrogated, to agency shall state of care fur the extent of the cost medical the its Martin asserts that state waived 22. nished, person may have any rights the timely subrogation it was not claim because * * * of under the cause action. record, Upon the we con review of filed. subrogation in this right created The of properly was raised be clude that the issue of portions the cause section includes all of Moore, See v. the district court. Barton fore action, notwithstanding any allo- (Minn. 1997) (explaining 558 N.W.2d 749 purports to state); apportionment cation pleading a notice that Minnesota is dispose of the of action portions of cause Rengachary, 608 852 N.W.2d Anderson J., subrogation. (Gilbert, subject (Minn.2000) part not concurring in subd. dissenting part). Minn.Stat. 20 already limited to subrogation right is not We have concluded
The fact, provision prohibits the anti-lien state expenses. for medical claims attempting to “all from recover its medical as right specifically includes subrogation action, from the of the property notwith- sistance costs of the cause of portions through a lien state and that the Id. standing settlement allocation.” an assignment cannot of than require more provision, interpret subrogation we As right third-party recipient’s receive right for subrogation it the state a allows payments medical care. against any recovery on a the cost of care permit a recover scheme does state to arising incident of action out of the cause assistance, expenses paid authorizing medical an even necessitated medical of assignment rights, those but the anti- if also included claims provision effectively prevents state expenses. than for recovering directly costs of care provision The federal anti-lien does not from, recipient. Allowing n prohibit asserting explicitly states from subrogation right get assert a and thus to a subrogation rights respect with medi- indirectly prohibited what it is attain of action recipient’s cal assistance cause directly would ing purpose defeat the out of an necessi- arising occurrence that provision in the same assistance. tated assignment rights manner the broad Therefore, the same is true here as with Pursuing subrogation discussed above. assignment with provision compliance — right protec an end-run allows around the impossi- federal and state laws both is using tions of the anti-lien assignment per ble se. But as with the subrogation right instead to take of a lien provision, have to determine whether we part recipient’s personal of the allowing a subrogation right outside protected by that is the anti-lien provision. assigned right state’s to medical Essentially, purposes of our preemp be an obstacle to purposes would tion an analysis, assignment rights federal Medicaid scheme. Fla. Lime See subrogation right state and state’s Growers, 142-43, & Avocado U.S. at Therefore, are the same. we hold that the 1210; Hines, 67, 61 S.Ct. S.Ct. U.S. 'subrogation provision state preempted (stating that if state law is preempted to the extent that it allows the state to it is an obstacle to of fed- accomplishment subrogation right assert a against causes purpose). eral of action or settlements than for other preemption analysis of the Our subrogation very simi
state’s will be actually When state obtains analysis assign lar to the the state’s subrogation right payments because a expenses, subroga practical assign same longer appropriate
has the effect as tion is no because the puts ment —it the shoes of the now the owner of the medical respect medical assistance recipient recipient’s claim longer and no *19 recipient’s rights See, to the against par subrogated. needs to e.g., be Em Hermeling A.C.C.T.,Inc., ties for medical expenses. ployers .See Cas. Mut. Co. 580 Co., (Minn.1998) 270, 490, v. Minn. Fire & Cas. N.W.2d 548 N.W.2d 493 (explaining (Minn.1996) (explaining 273 the distinction that subrogation give subrogee does not (over subrogation indemnity) between any independent rights, merely and but allows grounds). ruled on other subrogee step into the shoes
21
Bonte,
751,
6,
subrogor).
may
ap
But
be
520
762
subrogation
U.S.
n.
117 S.Ct.
1673,
(1997)
where medical
propriate
(concluding
situations
as
IV. third-party recovery are not am- argu- The state makes three additional biguous smoothly and interact with our supplement argument its main ments interpretation of the anti-lien provision. lien, plain of Minnesota’s language clear, Congress Because the intent is assignment, subrogation and statutes does there is no agen- need for deference to an conflict pur- not with federal law cy interpretation the grounds that the poses provisions. behind the Medicaid statute ambiguous. is arguments posi- are' that the state’s These (1) is supported by
tion
deference to
Even if
were to
we
conclude that
interpretation
HCFA’s
federal anti-
assignment requirement
the federal
and
(2)
provision,
jur-
decisions from other
provision inject
some
isdictions,
specifically Washington
law,
and ambiguity
agency
into federal
defer
(3)
Utah,
equitable
considerations.
ence is
appropriate
still not
here. When
arguments
persuasive,
None
these
are
an agency statement does not reflect for
we will
in turn.
address each
adjudications,
mal
agency
yet
rules or
at
law,
tempts
ambiguity in
to address an
A.
to HCFA
Deference
is
agency
deference to the
under Chevron
argues
appropriate.
The state
that we must
Christensen v.
See
Har
576, 587,
interpretation
County,
defer HCFA’s
of the fed
ris
529
120
U.S.
S.Ct.
(2000)
1655,
provision.
(concluding
anti-lien
The state
146
621
eral
asserts
L.Ed.2d
letters,
statements,
opinion
policy
HCFA
that the
has decided
manuals,
agency
impos
guide
does not bar a state from
and enforcement
Chevron-style
a lien on a
lines are
ing
recipi
not warranted
def
erence).
agency interpretations
for other
than
ent’s
recover
Such
* * *
agency
respect
care.
Deference
inter
“entitled to
to the ex
for, however, only
interpretations
tent
pretation
called
when
those
have the
(internal
power
is an
Id.
ambiguity
expression
persuade.”
quota
there
in the
Chevron,
omitted);
congressional
467
tion marks
see also
Dep't
intent.
U.S.
Wis.
(“If
Blumer,
Health
Family
S.Ct. 2778
intent of
Servs. v.
(“The
(2002)
Congress
clear,
that is the end of the U.S.
S.Ct.
matter.”);
Secretary
Services’]
see
States v. La-
Health and Human
[of
also United
application
approximately 18
24. Martin's
until
months after medical
*20
assignment
began.
completed
payments
was
assistance
first
and
not
withheld federal
properly
HCFA
warrants whether
law]
Medicaid
[regarding
position
on the
consideration”).
program based
from a state
funds
respectful
a sufficient
failure to recover
state’s
us to defer
urges
The state
recipi
from settlements between
amount
directives,
letters,
ap
and
agency
various
In both
tortfeasors.
third-party
ents and
inter
demonstrating
agency’s
provals
adjudica
Washington
and
the California
provision as not
pretation of the
tions,
prop
stated that HCFA
the Board
recovering on
a state
prohibiting
recoveries from
erly characterized
than medical
actions for other
care.
payments for medical
parties first as
a “Best
materials include
These
care.
charac
that “[t]his
The Board reasoned
Minnesota’s
that cites
Practices Guide”
of tort
manipulation
prevents
terization
legislation”
“model
statute as
subrogation
prevent
by recipients who seek
awards
adminis
from HCFA’s
various letters
and
for the
being
reimbursed
public
and others
administrators
trators to state
has advanced for their
funds it
are
liens
stating that medical assistance
suffering
(e.g., by suing
pain
care
law. These
not
under
prohibited
rather
than for medical
wages
or lost
not accorded defer
materials are
agency
costs).”
1561, p. 5.
DAB No.
reflect formal
they do not
ence because
Christensen,
agen
need not defer
these
We
adjudications.
rules or
And,
adjudications
they do not ad
although
cy
because
1655.
120 S.Ct.
U.S.
here,
presented
the central
issue
to some re
dress
are entitled
these materials
pro
the federal anti-lien
this which is whether
persuade
be used to
spect and
purport
state laws that
court,
preempts
the inter
vision
persuaded
not
we are
recovery of
impose
liens on
materials.
allow states
these
pretations contained
payment
designated
amounts
agency
two
has referenced
The state
Indeed,
agency
ad
relevant,
that,
would be
adjudications
if
mention the federal anti-
judications do not
under a Chevron
entitled to deference
provision.26
e
adjudications were
analysis. Th
two
mindful of the con-
are nonetheless
Department of Health
We
made
(Board).25
adjudications
expressed
agency
cern
Appeals Board
Human Services
Servs.,
recipients could fashion
DAB No.
that Medicaid
Dep’t
Cal.
Health
for costs of
settlement to exclude
& Human Servs.
(Dep’t
of Health
any obligation
5, 1995);
Dep’t
medical care so as
avoid
Wash. State
Soc.
Jan.
govern-
Services,
the state and federal
DAB No. 1561 to reimburse
Health
options
But
Feb. ments.
the state has
Human Servs.
(Dep’t of Health &
1996).
in federal
ignore
than to
a clear
adjudications addressed
Both
only
"payment
disagrees
determi-
to an
with HCFA’s
refers
If
1504;
partic-
regarding
financial
nations
DAB
care.” DAB No.
see also
program,
ipation
1504).
in a state medical
(relying
No.
How-
No. 1561
on DAB
adjudication
dispute
be-
is resolved in an
ever,
Board then concludes that "the stat-
Department of
and Human
fore the
Health
utory
contemplates that
scheme as a whole
Departmental Appeals Board. 42
Services
and,
recovery might
greater,
if it
the actual
430.42(b);
§§
45 C.F.R.
16.1-.23.
C.F.R.
is,
should be
first.” Id.
that Medicaid
significant
analytical leap is
This broad
such
notes, agency interpretations
26. As the dissent
departure
plain language of the stat-
from the
they
if
deference
entitled to Chevron
843-44,
Chevron,
we conclude it to be unreasonable
ute that
467 U.S. at
are reasonable.
adjudica-
23 1998). being a im- prohibits law that lien from The Utah court concluded that “payments posed against property of individu- made a do not legally of paid. property al on account medical assistance become the the recipi- protect right can to reim- ent until a The state its after valid which settlement by participating litigation in the must bursement include reimbursement State Wallace, recovery so as to of medical costs ensure Medicaid benefits.” 972 P.2d case, S.S., 442). did at paid. (citing In this not active- 448 972 at P.2d Utah, in ly litigation Washington until relied on in participate settle- which turn ment, case, being a on relied on the New York despite plaintiff implead- Cricchio v. also er. state concluded that the lien participate But the did at the Pennisi proceeds and did each settlement attaches to settlement release defendant property party. 296, of a third 90 N.Y.2d any liability state 679, 301, 660 N.Y.S.2d 683 time, N.E.2d 306 expenses. At this the state did es- (1997), claim to part tablish its settlement
proceeds
dispute solely
a
court,
—but
The
York
New
and later
Martin.
Washington
courts,
and Utah
reached the
conclusion that
proceeds
settlement
were
B. Other Jurisdictions27
not
property
of the medical.assistance
position
sup-
The state asserts its
recipient.
when they
But
reached this
ported by
Washington
decisions from
and conclusion, they failed to unbundle the
However, in reaching
respec-
Utah.
their
up
sticks that
a personal injury
make
ac-
holdings,
Washington
tive
neither
nor
tion. These courts correctly recognize
of preemption.
Utah addressed the issue
federally-required assignment of
the.
State,
v.
Washington
Wilson
Su-
expense
re-
preme
Court concluded that
gives
up
coveries
a state the
right,
provision
anti-lien
was irrelevant because
amount of
expenditures,
the state’s
to any
a lien on the
placed
recovery or
right
settlement
for that
itself, and therefore not on the “property”
recover.
the extent
To
that a settlement
40,
142
recipient.
Wash.2d
10 P.3d
expenses,
is for medical
those
are
(2000).
1061,
Similarly,
1065-66
the property
two
of the state
virtue of the
cases,
companion
Supreme
required assignment.
the Utah
Court
But
these courts
concluded that the anti-lien
failed to
recognize
personal injury
was
not implicated
placed
when a state lien was
tort action against potentially liable third
State,
recovery.
on a
S.S. v.
comprises
more than a
(Utah
1998);
442
972 P.2d
v.
expenses.
Wallace
recover .for
The tort
Jackson,
(Utah
Estate
972 P.2d
action
claims
pain
includes
and suffer-
upon
supreme
upon
27.
The dissent relies
anti-lien statute and relied
New
Utah, Washington,
exception.
court cases from
York
Sullivan
New
state-created
York,
(2nd
single
County
Suffolk,
as well as a
each from the
case
F.3d
Moreover,
Cir.1999).
Eighth
Eighth
Second and
Circuits.
state cases
did
Circuit
distinguished
rejected.
below and
Addi-
not
the issue before
court — the
address
tionally,
appeals spe-
validity
neither federal
of state medical assistance liens
court
cifically
provi-
addressed the
were
whether such liens
able to
satisfied
settlement,
preemption
only
part
sion or considered
of state laws.
out of the
entire
Doth,
Specifically,
the Second Circuit addressed the
attributable to medical
Further,
noted,
"general
previously
rule that the state
at
encumber
F.3d
recipient's
prior
a Medicaid
Doth did
not mention the anti-lien
death,”
but cited
York
New
version of
all. Id.
*22
distress,
key
the
that underlies
earnings,
grapple
of
issue
loss
ing, emotional
issue,
fact,
key
is the
analysis.
our
This
of
part
claims. The
other familiar tort
and
dis-
the
property
Specifically,
issue.
both
unas-
attributable
these
any settlement
why
gloss
sent
the cases cited
over
and
medi-
property
claims is the
the
signed
longer
of action
no
the
these causes
are
life,
his
during
and
recipient
cal assistance
recipi-
property of the medical assistance
right
has
to these claims
the state
no
hand,
analysis rec-
ent. On the other
our
assignment.
the
So while the other
under
required
ognizes the limited nature of
in their
courts are correct
conclu-
states’
Therefore,
assignment.
analy-
full
after a
for medical
recovery
expenses
that a
sions
sis,
of action
we conclude
the causes
property of a medical assistance
is not the
ex-
for other
medical
and claims
than
re-
they
part
of the
recipient,
ignore
there-
penses
proceeds
—and
for claims other than
covery or settlement
recipient
property
from—are the
are therefore un-
expenses.
medical
We
provi-
and therefore the federal anti-lien
analysis
Washing-
of the
persuaded
sion relevant.
on this issue.
ton and Utah courts
York,
Additionally,
cases from New
Equitable
C.
Considerations
Utah,
Washington cannot be relied
and
are also mindful of the state’s
We
problems
of other
in their
upon because
equitable argument
pre
that it needs
Cricchio,
analysis.
the New York court
assets.
serve and recover Medicaid
But
that New
apparently concluded
York’s
our
of the
us does
resolution
issue before
statutory analogue
the federal
ability
state’s
to recover
eliminate the
by the imposi
was not
provision
violated
expenses
parties
medical
when third
are
tion of a state lien because
state stat
Rather,
liable.
our conclusion leaves the
lien,
exception
yet
an
for the
ute created
intact and the state retains
scheme
explain
the court did not
how this state-
re
of medical assistance
exception
trump
could
created
the federal
ex
cipient’s right to recover for medical
Cricchio,
provision.
anti-hen
660 N.Y.S.2d penses
potentially
par
third
against
liable
But
The state uses Minnesota’s any recovery, regardless of its “la- recovery to support one-third scheme its Thus, bel.” even under the anal- dissent’s position. But rationale that same ysis, third-party recovery sys- Minnesota’s recipient would a medical allow tem is in jeopardy. guaranteed recovery a one-third receive to take away also would allow the state justice Our decision also does Hoff guarantee recipient and leave the with and recipients. other medical assistance nothing paid until the state had been back The state has Hoffs ex- Thus, by emphasizing in full. the reason- penses and should be entitled to reim- position, ableness its state fails to a bursement when third is liable for acknowledge logical consequences But, expenses. those in the words of now argument. its Gerry Chief Justice L. Alexander of the Court, Supreme note that Washington We also the dissent fails to “the fund consequence as a logical replenished only consider that should be from amounts reasoning, participation recipient its Minnesota’s in a Medicaid as reim- receives program may jeopardized. damage Medicaid be bursement for elements of in which responsibili- The current mechanism section the State has assumed 256B.042, Wilson, (Alexander, allowing ty.” a 10 P.3d at subd. one-third J., Here, guaranteed recovery to a plaintiff/reeipient dissenting). attempts the state in systems expenses is much the same as the Cali- to recover for medical from a Washington fornia were a that in- criticized settlement for cause of action important expenditures 28. It remember this case ks medical assistance unless the recovery, is not but designates about amount of rath- part a of a settlement for recovery. Contrary er the method of will expenses. not be implication holding our dissent that rely recipient’s "labeling” forced to on the drastically ability curtails the state's to recov- Rather, above, settlement noted amounts. er, participation recovery the state's active in independently the state has its own owned actually may efforts some cases increase its expenses against potentially claim for medical recovery. ultimate Under Minn.Stat. claim, parties. liable a third With such subd. is limited appropriate steps respect state must take two-thirds under the medical assis- expenses, assigned to its claim for medical lien, only tance if the is for even claim recov- lawsuit, initiating participat- whether that is ery holding, of medical our Under ing recipient, in a initiated lawsuit the state no such on has limitation Here, taking part negotiations. in settlement Rather, recovery. amount of its the state is part state is entitled to entitled to recover the full amount of the proceeds released because it assigned due claim medical liability, relying from further potentially parties. liable third solely subrogation rights. on lien and its assertion, Contrary to the dissent’s recovering state will not “shackled” from care), recover for medical suffering, earnings, loss of pain eluded and as such are personal property, Hoffs disfigure- earning potential, and loss of provi- protected by the federal is compensated ment —none of sion.31 through medical assistance. alone, Hoff belong to These claims It from the record what unclear relief or increase some provide part were claims or to recover possible through life that is quality of Martin, in her memoran- the settlements. medical care. and in of law to the district court her da
briefing erroneously character- appeal, *24 V. as izes the nature of the settlements for the for Hoffs claims and not state’s apply now these hold must We pleaded by for the state as facts of case. At claim Martin ings specific the this to (i.e., accident, the state’s impleader as- acquired plaintiff the Hoff the time of sticks,” signed expenses). claim for medical The represented all of “bundle of city specifi- agreement settlement with the rights against his to recover potential injuries. cally incorporated complaint the amended for his As a responsible those to receiving by purported encompass reference and condition of Martin, behalf, state, claims in the amended com- on Hoffs all stated claim plaint, one stick that which included Hoffs for the state assigned to separately and the specific right expenses to recover medical bundle —Hoffs expenses claim medical pleaded from those expenses responsible medical agreements injuries.30 At that the state. The settlement point, for Hoffs Tlougan’s right township with the and estate state became the sole owner Hoffs agree- third as the against any comprehensive to for were as recover city and not contain But Hoff own ment with the did retained remaining language clearly encompassed sticks in that ership of the the bun similar complaint. claims in say, right to his to recover for all the amended This dle—that is distress, question omission whether the pain suffering, and emotional dis calls into was disfigurement, earnings, pleaded by loss of and state’s claim Martin in- ability, in township To cluded with the earning capacity. loss of the extent settlement Tlougan’s But these settle- that Martin’s settlement the defen estate. larger agreements contain sufficient lan- dants was for this bundle of sticks do (the guage indicating tort action minus the to that the settlement was original bodily injury those in Martin's medical assis- and exclude from settle- application reads as damages tance follows: ments claims not recoverable un- or eligibility long compensation, as- der workers’ so as there As a condition sistance, See, assign the State I of Minnesota employer e.g., notice to or carrier. any rights Sanitation, available to me under automobile Naig Bloomington 258 N.W.2d any private coverage health care or 891, (Minn.1977); Lang 894 v. William Bros. rights payment for medical care from Co., Mfg. Boiler & 250 Minn. myself depen- any party my third or (1957);. no N.W.2d As we see rele- cooperate agree State dents. I with the analysis, vant for our we also rec- distinction legal brought against action a third in ognize divisibility of a medical expenses party of medical recipient’s against claims a third into subsistence. (assigned claims for (owned state) damages area, 31. In the workers' and claims for other compensation we recipient). long recognized compensation recipi- have ability ent's to settle claims for claims, in of the state’s al- Ultimately, satisfaction claims and claim. state’s straightfor- is not as of the though language part proceeds settlement at- agreement ward the settlement to payment tributable for medical ex- Therefore, city. upon penses belongs with the based our under as- below, of the conclude reading record we signment; proceeds remainder settlements with in- defendants belongs Hoff. all cluded and released claims remand; On spe- district court must complaint, including amended state’s cifically consider that the state’s claim was claim for medical expenses. part specifi- settlements must cally allocate the initially The state received as among nonassigned personal injury Hoffs signment Hoffs to recover for (excluding claims any recovery for medical expenses against any potentially care or expenses) and the state’s separate- defendants, parties, including liable ly claim owned for medical expenses. part but as settlements Here, important it is remember released from all further liabili defendants *25 settlement, this case involves a as and with ty. assignment of in Because the made settlements, all represents a compromise application the medical assistance and parties’ of the damages. claims and Had pleaded by virtue the claim of state’s Mar trial, this case to a gone jury would have impleader, tin state’s assigned on the claim been required damages to allocate the for expenses necessarily medical was among component the claims. This court- part of the The of the settlements. result approved settlement is no and different and the is that the settlements releases similarly should be allocated the court recovery expenses the state’s of de in of recognition the nature of the settle- for fendants medical care is now Hoffs compromise. ment as a Once the court proceeds. limited to the settlement There allocation, has part made that fore, part the state is entitled to that settlement proceeds represents pay- that represents settlements on expenses paid by for Hoffs medical expenses. its claim for medical state; the state must be to all awarded the are not to We able determine the proceeds belong settlement to Hoff. part record what pro- of settlement Reversed remanded. to nonassigned ceeds is attributable Hoffs personal injury part claims and what ANDERSON, A. RUSSELL Justice separately attributable to the state’s (dissenting). right owned to recover fact, appears In it that the I At respectfully district court dissent. the time Mar- determination. personal injury did not make such a Ac- tin of settled cause grant action on be- cordingly, against multiple district court’s defendants son, state, half at Martin’s motion to dismiss the state’s of her disabled her $600,000 any request, expended claim over to- proceeds to the settlement had was error. The court’s conclusion that wards his medical treatment. The proceeds public Hoffs and the payments were sole treatment supported by money and exclusive is not for that treatment continued. Yet property record, majority’s is that holding and therefore we must remand the effect of the to proceed- the district court further the state should not able to recover on ings por- and clarification the distribution of its lien for reimbursement of even a public money proceeds expended the settlement Hoffs tion of between right action sig- against the state’s in her cause of medical treatment. Given behalf, the on Hoffs expenditure party, disposed property nificant third she this belong here to settlement funds issue right the extent of medical to the public to to the and should be returned in her application when to necessary partially reimburse extent agreed apply all assistance benefits she Medicaid. third proceeds from liable assigned when she to the state contrary majority’s holding
The third-party payments. See Minn.Stat. law. The of the federal Medicaid purposes (2000). right subd. 6 majority construe federal purports dispose property long has consid- been interpret feder- statute a whole aspect ered inherent owner- light of the sur- al anti-lien sections, ship, Congdon Congdon, ultimately see 160 Minn. rounding but fails to 343, 363, (1924), adequately require- address the 200 N.W. and noth- law, recoup expenditures their ing ment that states in the federal or Medicaid parties. out of from liable including provision, suggests addition, contrary despite results dispose of a of action cause every other con- reached in court has im- through assignment state is case, presented in question sidered the paired. acknowledge majority fails even an made, Once broad was it to ambiguity that would allow defer to longer oper- the anti-lien was no agency charged day-to- *26 recipient’s ative the of ac- because causes day complex of statute. administration this (to expendi- tion the extent of the state’s Focusing provision, the anti-lien the on tures) longer no his and property,1 were princi- to the court allows subvert the conflict between state and law federal ple payor that should be the of Medicaid majority By the finds is irrelevant. look- jeopardizes and the state’s re- last resort ing pro- first and foremost at the anti-lien covery the any significant of of funds ex- of construing vision instead all provisions tended for of on payment medical together, majority the overlooks a con-
behalf Medicaid beneficiaries.
of the
that
pre-
struction
statute
avoids
provision
federal
Although the
emption problems.
broad,
must read related statutes in
we
the
This construction is consistent with
materia, keeping in mind
pari
pur
the
third-party recovery provisions requiring
poses
the entire federal scheme and the
recover
full
states to
the
amounts of their
strong presumption against preemption of
expenditures under Medicaid. The federal
Erlenbaugh v.
state law. See
United
prohibit a
on the recipient’s
statutes
States,
239, 243-44,
477,
93 S.Ct.
U.S.
during
lifetime,
property
recipient’s
(1972);
court
(2d
282,
County
174 F.3d
286
Suffolk,
becoming
to it
prior
settlement
on the
Cir.1999)
that,
the as-
(holding
recipient,
based
the Medicaid
scheme,
Wilson,
subrogation
signment and
irrelevant.”
provision] is
[anti-lien
satisfy
2;
first
its lien before
may
also
v.
1065 n.
see
Cricchio
31
future
permitting
expenses
states
to
comprehensive scheme
be considered
Doth,
available,
159
at
for
leaving compensation
liens.”
F.3d
place
pain
to
these
omitted).
(internal
suffering
marks
and
quotation
or
claims
available.
Thus,
at
Id.
659.
noted that
We
state’s
while
written,
clear
broadly
equally
subrogation
from the
to “all
right
portions
extends
action, ‘notwithstanding
federal Medicaid law is
of the cause of
entire context of
* * *
to
that the state must be able
or
principle
apportionment
care
recoup
spent
purports
it has
to dispose
portions
what
of
recipients.
for
subject
Medicaid
cause of action not
to subroga-
§ 256.37,
tion.’” Id. (quoting MinmStat.
to
Congress’
replenish
intent is
apparent
1).
K.S.,
In
subd.
we found this statute
funds,
preserve
providing
and
Medicaid
legislative
demonstrated a clear
intent that
support only when no other resources are
the purpose for which a settlement was
Budget
available. Consolidated Omnibus
received,
expenses
whether for medical
or
Act,
Rep.
Reconciliation
H.R. Conf.
No.
pain
suffering,
and
did not determine the
99-453,
(1985); Wilson,
at 542
10 P.3d at
availability of
purposes
those funds for
accomplish
1064. Federal
statutes
eligibility for medical assistance.
policy by requiring
recipient assign
Today
majority
at
N.W.2d
makes
recovery
the extent
a third
rights of
to
conclusion,
directly
opposite
holding
party’s liability and that states
retain
parsed
settlement funds must be
out
amount
under the
collected
according to purpose
and the state’s
4
first
reimburse Medicaid.
U.S.C.
recover
is limited to
its
those
(1994).
§ 1396k
To allow
recipients
as
labeled
for medical costs.
recovery by the state amounts
shield from
“pain
suffering”
labeled
other ele
Despite
highest
the fact that
courts
damage
ments
with
clear
conflicts
of two states
the opposite
reached
conclu
congressional
intent
Medicaid be the
than
majority,
sion
that reached
resort, and that
payor of last
the state be
despite
purposes
Medicaid
to recoup
expenditures
its
able
funds
to allow
law
the states to recover their
beneficiary
to which the
was entitled be
expenditures,
despite
previous
our
re
assignment.4
fore the
jection
parsing
portions
out
settle
purpose
ment fund
depending on
majority’s willingness
parse
out
received,
majority
it was
refuses
of Hoffs settlement
is also
“sticks”
ambiguity
éven an
acknowledge
previous
inconsistent with our
treatment of
respect
to the anti-hen
and the
they
eligibility
tort
relate
settlements
K.S.,
provisions.
In In re
These
Medicaid.
Welfare of
(Minn.1988),
provisions
ambiguity
we
least an
N.W.2d 653
addressed
create
respect
was an
the reach of the anti-hen
whether a tort settlement
available with
compel us
purposes
determining eligibili-
asset for
which should
to ac
provision,
ty
knowledge
rulings
agen
assistance.
that case an
of the federal
*29
this
cy charged
administering
amicus
a
of
com
curiae advocated
construction
with
U.S.A.,
that
v.
plex
the term “available
would al-
statute. See Chevron
Inc.
assets”
Council, Inc., 467
tort
portion
low
of a
settlement Natural Res.
U.S.
Def.
837, 843-44, 104
2778,
beneficiary
the
S.Ct.
(1984)
if a court
ambi
(holding that
made,
recovery
the
statute,
Finally,
must
when a
it
defer
guity
the
forth a distribution scheme
administrating
interpreta
Act sets
agency’s
to the
reasonable.)
to
Medicaid
requires
program
interpretation is
if that
tion
any
distributing
to
prior
be reimbursed
adjudications5 referenced
The two
recipient.
funds to the
While section
deference, as
are entitled to
majority
1912(a)
of
assignment only
refers to
interpretation of
agency’s
they reflect the
care,”
“payment for medical
the statuto-
provi-
and lien
scope
of
ry
contemplates
as
scheme
a whole
decision,
California
In the
sions.
might
greater
actual
interpretation of
upheld HCFA’s
Board
is,
and,
if it
that Medicaid should be
full
requiring
as
Medic-
Medicaid statutes
first.
the recipient
before
aid reimbursement
1504, p.
DAB No.
4.
third-party
pro-
any
collect
Servs.,
Health
DAB
Dep’t
ceeds. Cal.
Washington adjudication
The
involved
of
Human
of Health &
Servs.
(Dep’t
1504
No.
reduce
state law that allowed
state to
1995).
5,
thereby disapproved
Jan.
HCFA
if
of
the settlement
amount
its
allowing
practice
recipi-
of
of California’s
pay
not
to
all medi
amount was
sufficient
portions
third-party
to
set-
ents
retain
types
damages.
cal
and
represent payment
did not
tlements that
Servs.,
Dep’t Soc. & Health
Wash. State
The
care.
Board stated:
(Dep’t
DAB
1561
of Health & Human
No.
7, 1996).
directly
HCFA maintained
supported
Servs. Feb.
position
HCFA’s
that,
mandatory assignment pro
the Act.
under the
provisions
Recipi-
these
ents,
vision,
in full
eligibility, must
must be reimbursed
as a condition of
Medicaid
for medi- before the
receives
settle
assign
their
charged
Board
proceeds.
are then
with ment
The
concluded
cal care. States
seeking
reasonably
third-par
HCFA
responsibility
party
characterized
assignments.
ty recovery proceeds
payments
first as
recovery pursuant
to such
care,
required
stating, “[i]n
further
to seek as medical
cases where
are
States
i.e.,
has
for medi
possible,
much
to third
caused
need
reimbursement
letters,
agree
agency
respondent
majority
I
the various
directs
Of
materials
to,
ade-
us
one memorandum from HCFA
approvals
directives and
are
entitled
agency’s interpretation
quately
describes
they
because
do not
for
full deference
reflect
provision and is entitled to this
of the anti-lien
However,
adjudications.
mal
as the
rules or
A
lesser form deference.
1994 memoran-
Supreme
recently
has
United States
Court
regional
dum from the HCFA
administrator
clear,
made
Chevron
not eliminate a
did
state Medicaid
stated that liens
directors
ability
give
court's
lesser form of
some
against
against
valid
a tortfeasor's
agency interpretations appearing
deference to
litigation
set aside
settle
that are not
funds
forms, "given
'specialized experi
in other
recipient's property.
Health
Financ-
Care
investigations and
ence and broader
informa
ing
Regional
Letter
Administration
Identical
agency."
tion’
United States
available
1994).
(Sept.
No. 94-134
The memo acknowl-
218,
2164,
Corp.,
Mead
533
U.S.
121 S.Ct.
edges
interprets it
the anti-lien
(2001) (quoting
292
150 L.Ed.2d
Skid
apply
not to
recoveries from
Co.,
134, 139,
more v.
&
323 U.S.
Swift
tortfeasors because such funds are not
(1944)).
agency
S.Ct.
just appears as conflict unrestricted access to would have both recovery statutes third-party tween and enormous medical their settlements Relying on provision. anti-lien and the from those settlements. paid debts to be statutes of the Medicaid scheme overall they not have recipients, do As Medicaid is to be that Medicaid policy and the public paid has such debts because resort, resolves agency of last payor Therefore, their medical interpreting the conflict any perceived incurred the Medicaid has cases where assign to require recipients statutes to not unfair for recipients, it is “debt” any payments from the state complete reimburse- require HCFA to reim- purposes liable third liability funds. from these appellant Because bursing Medicaid. right she thereby disposed case, appellant In this p. DAB No. (to the ex- third-party recovery had in a $600,000 in debt for not have over does the anti- expenses paid), tent of the state Medic- expenses because operative. was not has for Hoffs program aid majority’s theory the under the care. Yet adju- agency majority dismisses the recovering any of its is shackled from addressing dications as designates appellant unless expenditures However, in each case provision. as for medi- out of a settlement payments was assignment provision argued that the suffering pain care, cal instead limited agency Whether the third-party adopt entirety these tortfeasor. in their 6. Rather than claims, majority I one-third adjudications as the view Minnesota’s board would agency’s adjudications for the cite these section subdivision recov- construction of the program of depriving federal Medicaid supporting ery provision its conclusion was not before dollars reimbursement repaid a medicaid public before should the court. agency not now before and is enjoys a settlement with the fruits of *31 against Thus, costs a lien damages. placing or other elements proceeds. of her settlement labeling majority appellant’s allows whether the to control damages items of STRINGER, (dissenting). Justice recoup expenditures. its can
government case, pay to state will continue In this join Russell A. I in the dissent Justice Troy Hoffs medical while for Anderson. insignifi- disposal has at her appellant third-party tortfea- funds from liable cant LANCASTER, (dissenting). Justice might satisfy that used sors A. join I in dissent of Russell Justice seems me both obligation. That result Anderson. in- contrary congressional and absurd tent. illustrate, adjudications agency
theAs government quick penalize
the federal recoup amounts
states failure expended government has
the federal majori- recipients.
behalf of Medicaid ty’s ruling jeopardizes partic- Minnesota’s FRASER, Respondent, R. Gerald program by in the mak- ipation Medicaid nearly it state to ing impossible v. responsible
recover Jayne FRASER, Appellant, James C. recipi- injuries and of Medicaid disabilities Fraser, Respondent, L. minimum, ruling re- ents. At will and quire pursue third-party the state to tort- notwithstanding the independently, feasors Marriage Fraser, In re the James L. specifically legislature fact that has Respondent, petitioner, attorney general allowed the initiate v. if prosecute independent action brought” by recipi- action has “no been Fraser, Jayne Appellant, C. 256.015, §§ ent. Minn.Stat. subd. (2000). extent, To subd. 3 Fraser, individually Gerald R. majority ruling contrary is further Revo- Trustee of the Gerald R. Fraser Moreover, legislative intent. while Trust, Respondent. cable Intervivos pursue third-party state can tortfeasors directly, nothing prevent recipi- would C6-01-812, Nos. C8-01-813. intervening ent from lawsuit and Appeals Court of Minnesota. labeling pain suffering so government’s recovery. as to thwart March congress Again, cannot be what or the legislature intended. hold,
I would consistent with the deci- interpreting
sions of other courts the fed- laws,
eral Medicaid that the federal Medic- preempt
aid law does not state law
cases where seeks reimburse- recipient’s
ment for a Medicaid