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Nacino v. Chandler8/30/2002
t "constituted fifteen percent (15%) of the total damages suffered" by Nacino. The circuit court then reduced DHS's statutory lien to fifteen percent (15%) of $141,422.19 and determined that DHS was only entitled to be reimbursed the reduced amount, $21,213.33, for its medical assistance expenses on Nacino's behalf. For the following reasons, we conclude that the circuit court erred in reducing the amount of DHS's lien.
First, since settlement of a claim by a medical assistance recipient for "general damages" only was held in Peters not to defeat DHS's statutory lien under HRS § 346-37, we fail to see how settlement by Nacino of his claim for damages, without specifying whether the damages are general or special, can operate to defeat DHS's lien.
Second, in applying for medical assistance benefits from DHS, Nacino expressly agreed to assign to DHS, from any moneys recovered by him as a result of the moped accident, "a sum of money equal to that paid by DHS for hospital, medical and other similar expenses necessitated by said accident or incident." Nacino also agreed that if he were paid directly any compensation for injuries received in the moped accident, he would reimburse DHS for the amount of medical costs paid on his behalf. Nacino was thus contractually obligated to reimburse DHS for its entire statutory lien.
Nacino argues that any such obligation amounts to an unenforceable contract of adhesion because he had no alternative but to accept DHS's terms in order to receive medical assistance benefits. However, Nacino was not forced to apply for medical assistance benefits from DHS. Moreover, he paid nothing in order to receive such benefits. Since his medical assistance benefits were paid for by the federal and state taxpayers, Congress and the legislature clearly had a significant interest in ensuring that the public fisc be reimbursed if Nacino were able to collect damages from a third party for the injuries that led to Nacino's need for medical assistance benefits from DHS.
Third, other jurisdictions with statutory provisions similar to HRS § 346-37, as it existed at the time of this lawsuit, have concluded that a state's entire lien must be satisfied from the proceeds of a settlement. In Calvanese v. Calvanese, 93 N.Y.2d 111, 710 N.E.2d 1075, 688 N.Y.S.2d 479, for example, the New York Court of Appeals was called upon to decide whether the entire amount of a personal injury settlement was available to satisfy a medicaid lien, or just that portion specifically allocated to past medical expenses. The settlement proceeds in that case had been allocated to the appellant's pain and suffering, then transferred to a supplemental needs trust for the appellants' behalf. In holding that the entire amount should be reimbursed to the state, the court reasoned:
Nowhere in the elaborate statutory scheme governing this area of the law . . . is the agency's right of recovery restricted in this manner. A State that has furnished Medicaid acquires the rights of recipients "to payment by any other party for such health care items or services," and must "retain" from the recovery an amount "as is necessary to reimburse it for medical assistance payments made on behalf of an individual" (42 U.S.C. § 1396a ; § 3968k ).
New York's assignment, subrogation and lien provisions effectuate these Federal mandates by imbuing the Department with broad authority to pursue any amount of third party reimbursement to which the appellants are entitled. As a condition of eligibility for Medicaid, all applicants and recipients must "assign to the appropriate social services official or the department * any benefits which are available to him or her individually from
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