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Nacino v. Koller6/30/2003
*NOT FOR PUBLICATION *
I.
On October 21, 2002, this court granted the petition of Petitioner/Appellant-Appellee Gerry Nacino (Petitioner) for a writ of certiorari to review the decision by the Intermediate Court of Appeals (ICA) in Nacino v. Chandler, No. 23572 (Haw. Ct. App. Sept. 11, 2002) (ICA opinion). Therein, the ICA partially reversed the final judgment of the first circuit court that reduced the medical lien amount of the Department of Human Service (DHS or State) on Petitioner's tort recovery and held that DHS is entitled to recover the full amount of its lien for medical assistance payments made on Petitioner's behalf. We set forth our decision in order to clarify the law regarding Hawaii Revised Statutes (HRS) § 346-37, the statute involved. See State v. Hanson, 97 Hawaii 71, 73, 34 P.3d 1, 3 (2001) (affirming ICA opinion, but granting certiorari " n light of Defendant's objections, . . . to clarify the basis for upholding airport security searches"); Korsak v. Hawaii Permanente Med. Group, 94 Hawaii 297, 300, 12 P.3d 1238, 1241 (2000) (granting certiorari "to clarify several aspects of the ICA opinion").
II.
The facts are relatively undisputed. On March 15, 1996, Petitioner, while a passenger on a Honda moped, collided into a pick-up truck owned by the City and County of Honolulu (the City). Petitioner suffered severe permanent orthopedic injuries and serious brain damage.
On Petitioner's behalf, a guardian ad litem applied for assistance from DHS. Petitioner's application for DHS assistance included an assignment of rights, as required under HRS § 346-37(c) (Supp. 1997). DHS paid for all of Petitioner's medical care and treatment arising out of the damages from the accident. The medical lien applied by the State for expenses arising out of this medical care totaled $141,422.19.
A lawsuit was filed on Petitioner's behalf against the City and the driver of the moped, Troy Sunio. The State of Hawaii chose not to participate in the suit, even though it had a right to intervene pursuant to HRS § 346-37(c). It did transmit letters informing all the parties that the State held an assignment of rights in any recovery and it would seek reimbursement if any recovery was made.
Prior to trial, Petitioner's counsel hired many experts and apparently expended a substantial amount of money in discovery attempts. According to Petitioner, " here [were] significant weaknesses in [Petitioner's] case against the City." ICA opinion at 4; see also Petition at 2 ("liability was weak or non-existent"). The only witnesses to the accident were the driver and the passenger in the City pick-up truck, who both maintained that the moped was on the wrong side of the road and was speeding. Petitioner was unable to fully rebut these claims as his memory of the incident was limited, due to his injuries, and the driver of the moped had disappeared.
On March 6, 12 & 24, 1998, Petitioner's counsel sent letters to the Attorney General's office attempting to negotiate a waiver or a reduction of the amount of DHS's lien. The thrust of these letters was that reduction "might well make the difference between my client's agreement to settlement at the figure suggested by the City, or his decision to 'roll the dice' and go to trial, even though our chances of doing as well or better than the City's offer are slim." On March 25, 1998, Deputy Attorney General Michael S. Vincent drafted a letter in response and stated that federal regulations prevented the State from reducing or waiving a lien.
Thereafter, Petitioner accepted a $600,000.00 settlement offer from the City and placed the lien amount of $141,422.19 into an inte
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