State Health Plan for Teachers & State Employees v. Barnett

744 S.E.2d 473, 227 N.C. App. 114, 2013 WL 1882284, 2013 N.C. App. LEXIS 468
CourtCourt of Appeals of North Carolina
DecidedMay 7, 2013
DocketNo. COA12-999
StatusPublished
Cited by2 cases

This text of 744 S.E.2d 473 (State Health Plan for Teachers & State Employees v. Barnett) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Health Plan for Teachers & State Employees v. Barnett, 744 S.E.2d 473, 227 N.C. App. 114, 2013 WL 1882284, 2013 N.C. App. LEXIS 468 (N.C. Ct. App. 2013).

Opinion

CALABRIA, Judge.

[115]*115Eugene W. Ellison (“Ellison”) appeals the trial court’s order granting summary judgment in favor of The State Health Plan for Teachers and State Employees (“State Health Plan” or “plaintiff’). We affirm.

I. Background

On 3 September 2007, Jennifer Barnett (“Barnett”) sustained injuries in an automobile accident caused by a third party. Plaintiff provided Barnett, a State Health Plan member, with $73,075.43 in benefits for the treatment of her injuries. Ellison, an attorney, represented Barnett and three other individuals who were also riding in the vehicle with Barnett in their personal injury claims against the third-party driver. On 24 October 2007, the claims of all four of Ellison’s clients were collectively settled for $100,000.00. Barnett received $70,000.00 in the settlement, minus $14,000.00 in attorney’s fees, $9,386.50 in medical expenses, and $222.98 in rental car expenses. Thus, Ellison ultimately disbursed $43,390.52 to Barnett. Upon receipt of those funds, Barnett executed a “Summary of Disbursements” which puiported to “releas [e] the Law Office of Eugene W. Ellison from any further obligation as to the medical bills or liens from any insurance providers.” Ellison informed Barnett that plaintiff had a lien on her settlement funds, but she directed him not to disburse any proceeds to it.

Plaintiff sent Ellison and Barnett multiple letters requesting satisfaction of the amount owed to plaintiff pursuant to plaintiff’s right of subrogation under N.C. Gen. Stat. § 135-45.15. However, neither party disbursed any settlement proceeds to plaintiff.

On 30 August 2010, plaintiff initiated an action against Barnett and Ellison in McDowell County Superior Court seeking to recover $28,000.001 in satisfaction of its lien. Plaintiff filed a motion for summary judgment on 20 October 2011. On 2 April 2012, Barnett filed a voluntary petition for Chapter 13 bankruptcy and the proceedings against her were automatically stayed. On 15 May 2012, the trial court granted plaintiff’s summary judgment motion and ordered Ellison to reimburse plaintiff in the amount of $28,000.00. Ellison appeals.

II. Summary Judgment

Ellison argues that the trial court erred by granting plaintiff’s motion for summary judgment. Specifically, he contends that N.C. Gen. Stat. § 135-45.15 does not authorize the recovery of settlement proceeds [116]*116directly from an attorney who represents a State Health Plan member in a personal injury action. We disagree.

“Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows that ‘there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.’ ” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008)(quoting Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)). N.C. Gen. Stat. § 135-45.15 provides that

(a) The [State Health] Plan shall have the right of subrogation upon all of the Plan member’s right to recover from a liable third party for payment made under the Plan, for all medical expenses, including provider, hospital, surgical, or prescription drug expenses, to the extent those payments are related to an injury caused by a liable third party. The Plan member shall do nothing to prejudice these rights. The Plan has the right to first recovery on any amounts so recovered, whether by the Plan or the Plan member, and whether recovered by litigation, arbitration, mediation, settlement, or otherwise.
(d) In no event shall the Plan’s lien exceed fifty percent (50%) of the total damages recovered by the Plan member, exclusive of the Plan member’s reasonable costs of collection as determined by the Plan in the Plan’s sole discretion. ... Notice of the Plan’s lien or right to recovery shall be presumed when a Plan member is represented by an attorney, and the attorney shall disburse proceeds pursuant to this section.

N.C. Gen. Stat. § 135-45.15 (2009).2 Thus, under this statute, the State Health Plan is authorized to recover up to one-half of the total damages, less attorney’s fees, recovered by a Plan member from a third party. Moreover, the statute explicitly requires an attorney representing a Plan member to “disburse proceeds pursuant to this section.” Id. The question before this Court is whether Ellison’s failure to do so in the instant case made him liable for satisfying plaintiff’s hen against Barnett under the statute.

[117]*117“Issues of statutory construction axe questions of law, reviewed de novo on appeal.” McKoy v. McKoy, 202 N.C. App. 509, 511, 689 S.E.2d 590, 592 (2010). Our appellate courts have not previously interpreted N.C. Gen. Stat. § 135-45.15. However, there are several cases which have interpreted an analogous statute, N.C. Gen. Stat. § 44-50.

N.C. Gen. Stat. § 44-50 requires any person who receives settlement funds, including an attorney, to “retain out of any recovery or any compensation ... received ... a sufficient amount to pay the just and bona fide claims for any drugs, medical supplies, ambulance services, services rendered by any physician, dentist, nurse, or hospital, or hospital attention or services, after having received notice of those claims.” N.C. Gen. Stat. § 44-50 (2011). Thus, this statute places an affirmative duty on an attorney for an injured party to retain the full amount of a medical provider’s lien before disbursing settlement proceeds. Our Supreme Court has acknowledged that an attorney who violates this duty is subject to legal liability for the amount of the lien under the statute. See N.C. Baptist Hospitals, Inc. v. Mitchell, 323 N.C. 528, 532, 374 S.E.2d 844, 846 (1988)(agreeing with the defendant’s argument that “N.C.G.S. § 44-50 provides the only mechanism by which to obtain funds from an attorney who has received them for a client in satisfaction of a personal injury claim.”); see also IHangle Park Chiropractic v. Battaglia, 139 N.C. App. 201, 205, 532 S.E.2d 833, 836 (2000)(permitting medical provider to seek enforcement of its lien against an injured party’s attorney using N.C. Gen. Stat. § 44-50 where the attorney was on notice of the lien but chose to pay the entire settlement amount directly to his client.).

The plain language of N.C. Gen. Stat. § 135-45.15 similarly places a duty upon an injured party’s attorney to direct settlement funds recovered by an injured State Health Plan member to plaintiff in satisfaction of its statutory hen. By establishing this duty, the statute necessarily also creates a cause of action by which the State Health Plan may enforce its lien under the statute against an attorney who violates its requirements by failing to disburse his Ghent’s settlement proceeds in accordance with the statute. See Mitchell, 323 N.C. at 532, 374 S.E.2d at 846. Since it is undisputed that Elhson failed to comply with the requirements of N.C. Gen. Stat.

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744 S.E.2d 473, 227 N.C. App. 114, 2013 WL 1882284, 2013 N.C. App. LEXIS 468, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-health-plan-for-teachers-state-employees-v-barnett-ncctapp-2013.