Santiago v. Craigbrand Realty Corp.

268 A.D.2d 28, 706 N.Y.S.2d 87, 2000 N.Y. App. Div. LEXIS 3274
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMarch 28, 2000
StatusPublished
Cited by1 cases

This text of 268 A.D.2d 28 (Santiago v. Craigbrand Realty Corp.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Santiago v. Craigbrand Realty Corp., 268 A.D.2d 28, 706 N.Y.S.2d 87, 2000 N.Y. App. Div. LEXIS 3274 (N.Y. Ct. App. 2000).

Opinions

OPINION OF THE COURT

Friedman, J.

In Calvanese v Calvanese (93 NY2d 111, cert denied sub nom. Callahan v Suffolk County Dept. of Social Servs., — US —, 120 S Ct 323), the Court of Appeals held that a Medicaid lien filed pursuant to Social Services Law § 104-b may be satisfied out of the entire proceeds of a Medicaid recipient’s personal injury settlement, not just that portion of the settlement allocated to past medical expenses. The question before us is whether Calvanese is also applicable where the Department of Social Services (DSS) seeks to enforce a Medicaid lien against the settlement proceeds of a person under 21 years of age. We conclude, as the Appellate Division, Third Department, did in Gold v United Health Servs. Hosps. (261 AD2d 67), that DSS has an unfettered right of recoupment notwithstanding Social Services Law § 104 (2), which limits recovery when dealing with a person under the age of 21.

This appeal arises from an action commenced on behalf of the infant plaintiff against defendants Craigbrand Realty Corp. and Jeffrey Brand for injuries allegedly sustained in 1989 as a result of lead poisoning. The action was ultimately settled for $140,000, with the expectation that the amount remaining after deduction of attorney’s fees and costs would be placed in a supplemental needs trust (see, EPTL 7-1.12).

The difficulty with this plan was that DSS asserted a lien of $12,857.06, based upon payments made for medical care rendered to the infant plaintiff from 1989 through 1990. Plaintiffs therefore moved, before submission to Supreme Court of a final infant’s compromise order and a funding of the trust, for an order declaring the lien void. They argued pursuant to Social Services Law § 104 (2) and the Court of Appeals decision [30]*30in Baker v Sterling (39 NY2d 397) that DSS only had a right to recover those settlement sums that were allocated to past medical expenses. As no portion of the settlement was allocated to medical expenses, plaintiffs claimed that the lien should be extinguished. DSS, on the other hand, asserted that Baker was not controlling and that its lien could be enforced against the entire settlement without regard to any allocation of the settlement funds. Supreme Court agreed with plaintiffs, determining, without benefit of a hearing, that no portion of the settlement represented recovery for past medical expenses, and extinguished the lien. This was error.

Resolution of the issue presented by this appeal requires an examination of the controlling statutory framework in conjunction with an analysis of a trilogy of cases decided by the Court of Appeals, namely, Baker v Sterling (supra), Cricchio v Pennisi (90 NY2d 296), and Calvanese v Calvanese (supra).

The statutory backdrop begins with Social Services Law § 104 (1), which provides that “[a] public welfare official may bring [an] action or proceeding against a person discovered to have real or personal property * * * if such person * * * received assistance and care during the preceding ten years, and [the public welfare official] shall be entitled to recover * * * the cost of such assistance or care.” Subdivision (2) of the statute, however, limits the agency’s right to recover from certain beneficiaries, providing that “[n]o right of action shall accrue against a person under twenty-one years of age by reason of the assistance or care granted to him unless at the time it was granted the person was possessed of money and property in excess of his reasonable requirements, taking into account his maintenance, education, medical care and any other factors applicable to his condition.”

Subsequently, the Legislature, recognizing that DSS was often frustrated in its attempts to recover the proceeds of a personal injury suit, added Social Services Law § 104-b (see, Baker v Sterling, supra, at 402). This statute provides: “If a recipient of public assistance and care shall have a right of action, suit, claim, counterclaim or demand against another on account of any personal injuries suffered by such recipient, then the public welfare official for the public welfare district providing such assistance and care shall have a lien for such amount as may be fixed by the public welfare official not exceeding, however, the total amount of such assistance and care furnished by such public welfare official on and after the date when such injuries were incurred” (§ 104-b [1]).

[31]*31In the jurisprudential development of this subject, an initial issue to emerge from the statutory amalgam concerned the interplay of Social Services Law § 104 (2) with section 104-b. That issue was addressed by Baker.

In Baker, DSS, seeking to enforce a lien against the settlement proceeds of an infant, argued that the restriction imposed by Social Services Law § 104 (2) was inapplicable. This, it was urged, flowed from Social Services Law § 104-b which, in permitting DSS to assert a lien against the proceeds of a settlement, made no distinction between infants and adults. Thus, it was DSS’s position that section 104-b created a right of recoupment independent of section 104 and the infancy restriction contained therein (supra, at 403). The Court, disagreeing with DSS, concluded that section 104 (2) limited DSS’s right to recoupment.

In so concluding, the Court noted that section 104-b was purely procedural, that is, the lien authorized by the statute merely related to the remedy, rather than the right of recoupment (supra, at 405). This being so, “the scope of the remedy is governed by the terms of the statute creating the right,” which was section 104 with its restriction on recovery relating to infants (supra, at 405). Accordingly, notwithstanding the authority section 104-b granted to DSS to place a lien on a plaintiff's personal injury action, section 104 (2), which governed the right of recoupment, was controlling.

The significance of Baker finding section 104 (2) controlling was that it permitted DSS to recoup only those settlement sums attributable to past medical expenses. In this regard, since a personal injury award, as opposed to an award for medical expenses, simply compensates an infant for his loss by providing a fund to satisfy his anticipated needs occasioned by the injury, “ [b]y definition this fund can never be considered ‘money or property in excess of his reasonable requirements’ ” within the meaning of section 104 (2) (Baker v Sterling, supra, at 405-406). Stated otherwise, such a fund would not be subject to recoupment by DSS.

Thus, if Baker was the last word on the subject, the inescapable conclusion would be that Social Services Law § 104 (2) bars enforcement of DSS’s lien in this case where no part of the settlement was attributable to past medical expenses. Baker was not, however, the last word on the subject as both the Legislature and courts have found a repeated need to revisit this area.

Subsequent to the Court’s decision in Baker, the Legislature enacted Social Services Law § 366 (4) (h) (1) and § 367-a (2) (b) [32]*32(L 1981, ch 319, § 1 [as renum by L 1985, ch 42, § 17], § 2). Pursuant to section 366 (4) (h) (1), a recipient of medical assistance from DSS is required to assign to DSS the right to seek reimbursement from a responsible third party.

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Bluebook (online)
268 A.D.2d 28, 706 N.Y.S.2d 87, 2000 N.Y. App. Div. LEXIS 3274, Counsel Stack Legal Research, https://law.counselstack.com/opinion/santiago-v-craigbrand-realty-corp-nyappdiv-2000.