Andrews ex rel. Andrews v. Haygood

655 S.E.2d 440

• Court: Court of Appeals of North Carolina
• Decided: January 15, 2008
• Docket: No. COA06-1670.
• Status: Published

Opinions

HUNTER, Judge.

Katelyn Andrews ("Katelyn") was injured at birth. Katelyn, through her Guardian ad Litem, brought suit against her doctors and the hospital at which she was delivered for medical malpractice. Katelyn's parents also brought suit against the same parties and on the same allegations in their individual capacities, with an additional claim of negligent infliction of emotional distress. Katelyn and her parents ("plaintiffs") eventually entered into settlement agreements with the parties. After the trial court approved the agreements and established a settlement account, Charlie D. Brown ("trustee") was named trustee and the agreements were made confidential upon the trial court's order.

Katelyn is a North Carolina Medicaid recipient due to the injuries she sustained at birth. The North Carolina Division of Medical Assistance ("DMA") therefore moved to intervene. North Carolina, through the DMA, had paid $1,046,681.94 for her medical services through 10 October 2005. Under N.C. Gen.Stat. § 108A-57 (2005), the DMA moved for reimbursement from the settlement account. The trial court granted DMA's motion and ordered that trustee pay the amount requested by DMA. Trustee now appeals to this Court. After careful consideration, we affirm the ruling of the trial court.

Trustee presents the following issues for this Court's review: (1) whether the trial *442court erred in concluding that our Supreme Court's decision in Ezell, N.C. Dep't of Health & Human Servs. v. Grace Hosp., 360 N.C. 529, 631 S.E.2d 131 (2006), is controlling and the United States Supreme Court's decision in Arkansas Dep't of HHS v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), is not¹; (2) whether the trial court erred in finding that the DMA has a "lien" on the settlement account as opposed to a "claim" on it; and (3) whether the trial court erred in finding that the DMA is a "beneficiary" of the settlement account as opposed to a "claimant" of the account.

Because all of trustee's assignments of error relate to the trial court's conclusions of law, we review those decisions de novo.² Medina v. Division of Soc. Servs., 165 N.C.App. 502, 505, 598 S.E.2d 707, 709 (2004). We now turn to trustee's arguments.

I.

This case involves the application of N.C. Gen.Stat. §§ 108A-57 and 59(a) (2005). Under section 59(a), Medicaid recipients, by accepting medical assistance, are "deemed to have made an assignment to the State of the right to third party benefits[.]" In other words, the state and county providing the medical benefits are "subrogated to all rights of recovery, contractual or otherwise, of the beneficiary of this assistance[.]" N.C. Gen. Stat. § 108A-57(a). The state is entitled to receive funds from third party benefits up to the amount of the Medicaid payments so long as the payment does not exceed "one-third of the gross amount obtained[.]" N.C. Gen. Stat. § 108A-57(a). Trustee argues that the DMA is only entitled to the settlement funds that Katelyn received as compensation for medical expenses and not, for example, any settlement funds paid by the third parties due to her pain and suffering. We disagree.

Our Supreme Court definitively addressed this issue in Ezell, which is binding on this Court. Mahoney v. Ronnie's Road Service, 122 N.C.App. 150, 153, 468 S.E.2d 279, 281 (1996) ("it is elementary that we are bound by the rulings of our Supreme Court").

Judge Steelman's dissent in Ezell was adopted per curiam by our Supreme Court. Ezell, 360 N.C. 529, 631 S.E.2d 131. In that case, Judge Steelman stated that "[o]ur cases have consistently rejected attempts by plaintiffs to characterize portions of settlements as being for medical bills or for pain and suffering in order to circumvent DMA's statutory lien." Ezell v. Grace Hosp., Inc., 175 N.C.App. 56, 65, 623 S.E.2d 79, 85 (2005) (Steelman, J., dissenting), dissent adopted per curiam, 360 N.C. 529, 631 S.E.2d 131. Moreover, the "DMA's right of subrogation under N.C. Gen.Stat. § 108A-57(a) is broad rather than narrow." Id. at 66, 623 S.E.2d at 85. In the Ezell dissent, which was adopted by the Supreme Court, Judge Steelman concluded that the DMA was subrogated to the entire amount of the settlement, subject only to the one-third limitation found in N.C. Gen. Stat. § 108A-57(a), irrespective of whether some of the settlement amount was intended to account for pain and suffering and not medical damages. Id. Such being the case here, it is immaterial that some of plaintiffs' settlement funds might have been attributed to something other than medical damages. Accordingly, the trial court did not err in subrogating the settlements, subject to the one-third statutory limitation, if applicable, to the DMA.

Trustee asks this Court to apply a recent United States Supreme Court decision to interpret our state statutes. In that case, the United States Supreme Court determined that a state's ability to recover its Medicaid lien was limited to that pro-rata portion of the settlement representing compensation for past medical expenses only, not the entire settlement. Ahlborn, 547 U.S. at *443___, 126 S.Ct. 1752, 164 L.Ed.2d at 474. The Court, however, was interpreting an Arkansas statute, not a North Carolina statute. The North Carolina Supreme Court opinion in Ezell was handed down on 30 June 2006, which was after the United States Supreme Court's opinion in Ahlborn, decided on 1 May 2006. Thereafter, a petition for rehearing was filed with our Supreme Court in Ezell on 4 August 2006. Our Supreme Court denied the petition, which set out arguments based on Ahlborn, on 14 December 2006. Ezell, 361 N.C. 180, 641 S.E.2d 4 (2006) (unpublished). Although we recognize that the Arkansas statute discussed in Ahlborn is similar to the one at issue here, it is well settled that "`the construction of the statutes of a state by its highest courts is to be regarded as determining their meaning[.]'" Champion Fibre Co. v. Cozad, 183 N.C. 600, 607, 112 S.E. 810, 813 (1922) (quoting Board of Sup'rs of Carroll Co. v. U.S., 18 Wall. 71, 85 U.S. 71, 21 L.Ed. 771 (1873)). "Moreover, this Court has no authority to overrule decisions of our Supreme Court and we have the responsibility to follow those decisions `until otherwise ordered by . . . [our] Supreme Court.'" Dunn v. Pate, 106 N.C.App. 56, 60, 415 S.E.2d 102, 104 (1992) (citation omitted), reversed on other grounds, 334 N.C. 115, 431 S.E.2d 178 (1993). That not being present here, trustee's arguments as to this issue are rejected.³

II.

Trustee next argues that the trial court erred in characterizing the DMA's interest in the settlement account as a "lien" as opposed to a "claim." We disagree.

Several of this Court's decisions have referred to the state's and/or county's interest under N.C. Gen Stat. § 108A-57 in a settlement or judgment as a "lien." See Campbell v. N.C. Dep't of Human Res., 153 N.C.App. 305, 569 S.E.2d 670 (2002); Payne v. N.C. Dept. of Human Resources, 126 N.C.App. 672, 486 S.E.2d 469 (1997); N.C. Dept. of Human Resources v. Weaver, 121 N.C.App. 517, 466 S.E.2d 717 (1996). Moreover, the statute itself uses the phrase "medical lien" as an alternative way of describing third parties' "medical subrogation rights[.]" N.C. Gen.Stat. § 108A-57(a). Accordingly, trustee's assignments of error as to this issue are rejected.

III.

Trustee next argues that the trial court erred in determining that the DMA is a "beneficiary" of the settlement account as opposed to a "claimant." We agree that the trial court improperly characterized the DMA as a beneficiary but do not find the error to warrant a remand.

"A beneficiary is `a person who receives benefits[;]' while the definition of benefit includes `payment made under insurance, social security, welfare, etc.'" Campbell, 153 N.C.App. at 307, 569 S.E.2d at 672 (quoting Oxford Encyclopedic English Dictionary 132 (Judy Pearsall and Bill Trumble, eds., 1995)). Accordingly, the "beneficiary" under N.C. Gen.Stat. § 108A-57(a) is the person receiving the Medicaid benefits, be it actual funds or the medical services that have been paid by DMA on behalf of the recipient. Id. In the instant case, the DMA was paying plaintiffs, the beneficiaries. Thus the DMA is not the beneficiary, but a claimant.

It is well settled, however, that "verdicts and judgments will not be set aside for harmless error, or for mere error and no more." In re Ross' Will, 182 N.C. 477, 478, 109 S.E. 365, 365 (1921). Instead, trustee must show "not only that the ruling complained of was erroneous, but that it was material and prejudicial, amounting to a denial of some substantial right." Id. The rationale being that "appellate courts will not encourage litigation by reversing judgments for slight error, or for stated objections, which could not have prejudiced the rights of appellant in any material way." Id. Trustee has failed to establish how such a technical *444error would require a remand. Accordingly, trustee's arguments as to this issue are rejected.

IV.

In summary, we hold that the trial court did not err in subrogating the settlements, subject to the one-third statutory limitation, if applicable, to the DMA. We also hold that the trial court did not err in characterizing the DMA's claim on the settlement account as a "lien." Finally, we conclude that a remand would not be appropriate in this case even though the trial court incorrectly labeled the DMA as a "beneficiary" of the settlement accounts.

Affirmed.

Judge JACKSON concurs.

Judge WYNN dissents in a separate opinion.

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Trustee also raises the issue of whether the trial court erred in finding that no further hearing or evidence would be necessary to determine the amount to be paid to DMA and, another claimant, United Health Care. Addressing those issues, however, is dependent upon this Court finding in favor of trustee on issue one.

4. Ezell v. Grace Hospital, Inc., 175 N.C.App. 56, 623 S.E.2d 79 (2005), rev'd per curiam, 360 N.C. 529, 631 S.E.2d 131, reh'g denied, 361 N.C. 180, 641 S.E.2d 4 (2006).

Some of the challenged conclusions by the trial court are labeled as "findings of fact" but are actually legal conclusions. Accordingly, we treat them as conclusions of law. See Zimmerman v. Appalachian State Univ., 149 N.C.App. 121, 131, 560 S.E.2d 374, 380 (2002) (conclusions of law are reviewed de novo regardless of how they are labeled).

Also rejected is trustee's argument that the trial court erred in denying his motion for further hearing as the trial court was under no obligation to make an accounting of those funds in the settlement account attributable to medical expenses. For the same reason, we also reject trustee's arguments that the trial court erred by not addressing any potential claims that United Healthcare could have against the settlement account.