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Kahrs v. Sanchez2/25/1998
On August 1, 1997, this Court filed its opinion in this case. On August 26, 1997, the New Mexico Human Services Department (HSD) filed a motion for rehearing. Thereafter, this Court ordered Plaintiff to file a response to the motion for rehearing, which response was filed on October 17, 1997. We hereby deny HSD's motion, but we withdraw our opinion of August 1, 1997, and substitute this opinion in its place.
In this case we are called upon to interpret HSD's statutory right to reimbursement of medicaid expenditures from a medicaid recipient's claim against a third-party tortfeasor. See NMSA 1978, 27-2-28(G)(1)(b) (1995) (providing for assignment to HSD of right to recovery against tortfeasor); NMSA 1978, 27-2-23(B) (1969) (providing for subrogation of recipient's right to recover medical expenses from third party). Plaintiff is the recipient, and co-defendant Karen Sanchez (Sanchez) is the third-party tortfeasor. HSD contends that its right to reimbursement is controlled by Section 27-2-28(G) and that assignment by operation of law entitles HSD to full reimbursement regardless of the facts. We disagree and affirm the trial court's equitable reduction.
FACTUAL AND PROCEDURAL POSTURE
Medicaid is a federal and state-funded program administered by the states in accordance with federal law. See 42 U.S.C. 1396, 1396a (1994). HSD administers the Medical Assistance Program (medicaid) in New Mexico. See NMSA 1978, 27-2-12 (1993).
Plaintiff applied for medicaid on or about December 26, 1989. As an eligibility requirement, Plaintiff assigned to HSD his right to medical support and other third-party payments.
On May 7, 1994 Plaintiff sustained serious and permanent injuries when Sanchez's automobile collided with the motorcycle that Plaintiff was riding. As a result of the accident, HSD expended at least $35,871.85 for medical assistance on Plaintiff's behalf. Plaintiff alleged that he suffered over $500,000 in damages resulting from physical pain and mental anguish, physical impairment, and loss of earnings and earning capacity. Although Sanchez had liability insurance of $50,000, she was otherwise judgment proof.
HSD discovered that Sanchez was a potentially liable third-party when Sanchez's insurer contacted HSD to determine the amount of the medicaid claim. Thereafter, HSD notified Plaintiff's counsel of Plaintiff's assignment to HSD. On October 12, 1995 Plaintiff filed an action for personal injury against Sanchez, together with a claim for equitable reduction of HSD's claim for reimbursement.
Plaintiff moved for partial summary judgment on the basis that the claim was comparable to one raised under Section 27-2-23(B), which ), construed to be an equitable remedy. According to Section 27-2-23(B), "hen the department makes medical assistance payments in behalf of a recipient, the department is subrogated to any right of the recipient against a third party for recovery of medical expenses to the extent that the department has made payment."
HSD maintained that its claim was a legal remedy based on Section 27-2-28(G), which provides as follows:
By operation of law, an assignment to the human services department of any and all rights of an applicant for or recipient of medical assistance under the medicaid program in New Mexico or supplemental security income through the social security administration:
(1) is deemed to be made of: (a) any payment for medical care from any person, firm or corporation, including an insurance carrier; and (b) any recovery for personal injury , whether by judgment or contract for compromise or settlement[.]
Although the court granted Plaintiff's m
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