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Nacino v. Chandler8/30/2002
(Supp. 1998), which contains several provisions similar to HRS § 346-37. These cases concluded that under the FMCRA, which grants the federal government a substantive right to recover from third-party tortfeasors the costs of medical services rendered to injured veterans, the federal government is only entitled to its pro rata share of the recovery from the third-party tortfeasor. Seee.g., Commercial Union Ins. Co. v. United States, 999 F.2d 581, 589 (D.C. Cir. 1993) (concluding that because "the FMCRA is silent on the question of priority," and interpleader requires the court to apply equity, the insurance proceeds should be distributed "on a ratable basis, such that each claimant receives 'a share of the fund proportionate to their share of the total judgment figure'"); Cockerham v. Garvin, 768 F.2d 784, 787 (6th Cir. 1985) (holding that under the FMCRA, the government "seeks recovery only as a beneficiary of the [settlement recovery] fund, and therefore, equitable considerations apply"; where the government "passively has allowed the veteran to bear all the risk and costs of pursuing litigation" and the injured veteran "has accepted a discounted settlement for his claims of wage loss, pain and suffering, loss of future earning potential, and the like, it is not equitable to require full reimbursement for services the government was duty-bound to render").
We note, however, that although the FMCRA includes some provisions identical to HRS § 346-37, there is no FMCRA provision similar to HRS § 346-37(e) that grants to the federal government "a lien in the amount of the costs of medical assistance . . . made against the proceeds from special damages awarded in a suit or settlement" to the veteran. Furthermore, the FMCRA does not contain the following provision found in HRS § 346-37(e):
If a notice of lien is properly served upon the third person under subsection (c), the third person's agent or attorney, or upon the third person's insurance company, as provided in subsection (f), it shall be the responsibility of the third person to satisfy the lien prior to disbursing any of the proceeds to the third person to satisfy the lien prior to disbursing any of the proceeds to the claimant's attorney.
Unlike the FMCRA, the clear and unambiguous language of HRS § 346-37, when construed as a whole and in conjunction with 42 U.S.C. § 1396 et. seq., establishes a priority that the medical assistance lien be paid to DHS before the recipient of the medical assistance is reimbursed. Accordingly, the circuit court erred when it reduced the amount of DHS's statutory lien.
Accordingly, we vacate that portion of the Final Judgment of the circuit court that concluded that DHS shall be reimbursed the sum of $21,213.33 for "Medicaid costs" paid by DHS on Nacino's behalf. We remand this case for entry of an amended final judgment that provides that DHS shall be entitled to reimbursement of its entire lien amount from the proceeds of the settlement between Nacino and the City.
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