Doe v. Vt. Office of Health Access, No. S0355-07 CnC (Toor, J., May 17, 2010)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
                                                     STATE OF VERMONT
                                                    CHITTENDEN COUNTY

                                                                    │
JOHN DOE                                                            │
 Plaintiff                                                          │
                                                                    │           SUPERIOR COURT
    v.                                                              │           Docket No. S0355-07 CnC
                                                                    │
VERMONT OFFICE OF HEALTH                                            │
ACCESS                                                              │
 Defendant                                                          │
                                                                    │

                 RULING ON CROSS MOTIONS FOR SUMMARY JUDGMENT

           Plaintiff John Doe1 sues the State of Vermont, Office of Vermont Health Access

(the State). He seeks a declaration that he has satisfied in full any and all rights of the

State to recover its lien for the reimbursement of sums paid by the State under the

Medicaid program for his medical care as a result of injuries he sustained in an

automobile accident and for which he received settlement funds from lawsuits. Plaintiff

further alleges that the State has recovered $72,859.70 above the amount of its legally

permissible lien, and requests that the State be directed to pay him that amount. The

State has filed a counterclaim, seeking, among other things, declaration that the State is

entitled to recover $506,810 in satisfaction of a lien it says it acquired in 2006 at the time

Plaintiff reached a settlement. The State has moved for summary judgment in that

amount. Plaintiff opposes the State’s motion, and has filed a cross-motion for summary

judgment seeking judgment in his favor in the amount of $72,859.70.

           Where, as here, both parties move for summary judgment, both are entitled to the

benefit of all reasonable doubts and inferences when the opposing party’s motion is being


1
 On October 16, 2007, this court (Katz, J.) granted permission to amend the complaint and change the case
name to John Doe v. State.
judged. Bixler v. Bullard, 172 Vt. 53, 57 (2001) (citing Toys, Inc. v. F.M. Burlington

Co., 155 Vt. 44, 48 (1990)).       The court must rule on each party’s motion “on an

individual and separate basis, determining, for each side, whether a judgment may be

entered in accordance with the Rule 56 standard.” 10A Wright, Miller & Kane, Federal

Practice and Procedure: Civil 3d § 2720. “Both motions must be denied if the court finds

that there is a genuine issue of material fact.” Id.

                                   I. Factual Background

       Both parties’ motions rest on the same basically undisputed core of facts, set forth

in this background statement. The parties have each filed statements of fact in support of

their motions; responses in opposition; and—due to a continuance granted pursuant to

V.R.C.P. 56(f)—the State has filed “additional material facts,” to which Plaintiff has filed

a response. The following facts are derived from the parties’ statements and from their

pleadings. Disputes are noted where appropriate.

       In 1992, at the age of nine, Plaintiff John Doe was injured and paralyzed in an

automobile accident, when the family car in which he was a back seat passenger left the

traveled portion of the New York State Thruway and went down an embankment. The

accident occurred on a portion of the Thruway that was designed to have guide rails to

prevent cars from going down the embankment in the event that they veered off the

traveled portion of the highway. The New York State Thruway Authority (NYSTA) had

contracted for that guide rail to be installed, but the guide rails were never installed on the

portion of the road where the accident occurred.

       Plaintiff had medical needs as a result of his injuries. On or about November 17,

1994, Plaintiff’s mother formally applied for Medicaid coverage for Plaintiff, and signed

an agreement with the State. The State says that under the agreement, Plaintiff’s mother

                                              2
agreed to assign to the State, through subrogation, Plaintiff’s rights to recover against

liable third parties. Plaintiff says this right of subrogation was only a limited right.

Plaintiff qualified for and began receiving Medicaid benefits from the State to assist in

paying for the medical care he required. The State has paid some but not all of John

Doe’s medical bills for items and services related to the injuries he sustained.

       As a result of the injuries he sustained in the 1992 accident, Plaintiff brought suit

in two New York state courts. He brought suit in New York Supreme Court against

various alleged third-party tortfeasors, not including NYSTA. He also brought suit in the

New York Court of Claims against NYSTA. On or about January 29, 2001, the State

informed Plaintiff that it had a legal claim against any award, judgment, or settlement

stemming from the 1992 accident. The State said that it would use the methodology in

42 C.F.R. § 411.37(c) to determine the net amount of its lien.

       On or about July 3, 2001, Plaintiff’s suit against third parties in the New York

Supreme Court settled for $8,750,000 (the 2001 settlement). As of that date, the State

had incurred approximately $894,893.11 in medical expenses on Plaintiff’s behalf.

Plaintiff and the State then exchanged a series of communications regarding Plaintiff’s

obligation to reimburse the State. On or about July 11, 2001, Plaintiff offered to settle

the State’s lien on the 2001 settlement for $500,000. On or about July 19, 2001, the State

rejected Plaintiff’s offer to settle the lien for $500,000. The State had calculated—using

the methodology in 42 C.F.R. § 411.37(c)—that the amount of its adjusted or net lien

with respect to the 2001 settlement was $572,699.59.

       On or about August 2, 2001, counsel for Plaintiff wrote to counsel for the State,

acknowledging the State’s July 19 letter, and noting that “[i]t is again disappointing that

the State refuses to make any compromise whatsoever . . . .”. Ex. 9 to State’s Mot. for

                                             3
Summ. J. at 1 (filed July 17, 2008). Using “final figures for expenses in connection with

the litigation to date” ($286,273.98), and incorporating the fact that counsel for Plaintiff

would not be receiving an attorney’s fee for the first $500,000 of the settlement proceeds,

Plaintiff used the “Medicaid TPL Worksheet” to calculate that the State’s net lien was

$594,209.03. Id.2 The letter concluded as follows: “If this calculation is acceptable,

please provide me with written confirmation that the state will accept that amount from

the total settlement proceeds, and will not seek further sums from the settling

defendants . . . or their insurers.” Id. at 2.

         On or about August 9, 2001, counsel for the State wrote to Plaintiff, stating: “At

this time my client agrees that the sum due to the State of Vermont for Medicaid

reimbursements is $594,209.03.” Ex. 11 to State’s Mot. for Summ. J. at 1 (filed July 17,

2008). The letter continued:

         Since the $594,209.03 was based on Medicaid claims paid out on behalf of
         [Plaintiff] as of June 22, 2001 and since the Department continues to pay
         out claims, it will seek reimbursement from defendants other than [the
         defendants in the New York Supreme Court action], to the extent that
         [Plaintiff] prevails in his actions against the remaining defendants,
         [NYSTA] and the San Juan Construction and Sales Company.

Id.

         On or about October 4, 2001, Plaintiff paid the State $594,209.03 from the

proceeds of the 2001 settlement.               By a letter dated October 12, 2001, the State

acknowledged receipt of Plaintiff’s payment of $594,209.03 and stated that the payment

satisfied the State’s liens against certain defendants (presumably the defendants in the



2
  Plaintiff’s calculation resulted in a figure that was higher than $572,699.59 primarily because the State’s
calculation yielding the $572,699.59 figure assumed attorney’s fees were one-third of the total $8.75
million settlement. Incorporating into Plaintiff’s calculation the fact that counsel for Plaintiff would not be
receiving an attorney’s fee for the first $500,000 of the settlement proceeds results in lower “procurement
costs” and ultimately a larger recovery for the State.

                                                      4
New York Supreme Court action), but not others (presumably NYSTA).               Plaintiff

continued to receive Medicaid benefits after the 2001 settlement.

       Plaintiff’s suit against NYSTA went to trial on the merits before the New York

Court of Claims. After trial, the court issued a decision dated September 20, 2004. The

court concluded that NYSTA was negligent, and that its negligence was a proximate

cause of Plaintiff’s injuries. Ex. 12 to State’s Mot. for Summ. J. at 3 (filed July 17,

2008). The Court of Claims concluded that Plaintiff’s damages were as follows:

       Past pain and suffering                 $1,000,000.00
       Past medical and care                   $2,903,636.00
               Total past damages:                    $3,903,636.00
       Future pain and suffering               $4,000,000.00
       Future medical and care                 $33,831,103.00
       Future loss of earnings                 $621,283.00
               Total future damages                   $38,452,386.00

       Total award to [Plaintiff]              $42,356,022.00

Id. at 58–59. The court noted that “[s]ince the amount of future damages awarded to

[Plaintiff] exceeds $250,000.00, a structured judgment is required.” Id. at 59. The court

ordered that “judgment will be held in abeyance pending a hearing pursuant to CPLR

Article 50-B at which time the offset of the $8,000,000.00 previously received in

settlement in Supreme Court will be applied.” Id. at 59–60. On or about October 19,

2005, the New York Court of Claims issued a “50-B judgment” which provided for

annuitization of the damages and annual increases in payments to address inflation. The

judgment allocated the sum of $2,903,636 for all of Plaintiff’s past medical expenses

from the date of injury forward to the date of trial.




                                              5
         On or about July 7, 2006, while NYSTA’s appeal was pending, Plaintiff reached a

settlement with NYSTA in the amount of $12,000,000 (the 2006 settlement).3 On or

about May 10, 2007, the parties entered a “Stipulation of Final Settlement” for that

amount.4 Between approximately July 3, 2001, when the first case was settled, and July

7, 2006, when the second case was settled, the State paid approximately $771,111 in

medical expenses for care extended to Plaintiff. The State claims a lien on the 2006

settlement in the amount of $506,810, reflecting the $771,111 minus the State’s share of

litigation expenses.5 It does not appear that either the 2001 settlement or the 2006

settlement allocated—as had the Court of Claims—what portions of the total damages

were for past medical care.

             II. The Medicaid Program and the State’s Right to Reimbursement

         To understand the dispute between the parties, it is necessary to briefly

summarize the legal mechanisms governing Medicaid payments made by states on behalf

of individuals who qualify for those payments, and the states’ right to be reimbursed for

those payments when the individual recovers against third parties.                          The Medicaid

program “provides joint federal and state funding of medical care for individuals who

cannot afford to pay their own medical costs . . . .” Ark. Dep’t of Health and Human


3
 The parties’ statements of fact do not mention the appeal from the Court of Claims’ judgment, but both
parties have acknowledged in their memoranda that an appeal was pending. See Pl.’s Opp’n at 5 (filed Oct.
23, 2008); Def.’s Reply at 2 (filed May 22, 2009).
4
  The court is not certain why, if the parties to the Court of Claims action settled in July 2006, they did not
enter into the stipulation until May 2007. The parties to this case do not dispute those dates, however, and
the court takes them as true for present purposes.
5
  The parties do not quite agree on how to perform the calculation of the State’s share of litigation
expenses, but their basic methodology appears to be the same. Plaintiff says the State’s share is 35.7% of
$711,000: $253,827. Pl.’s Reply at 9 (filed Aug. 12, 2009). The State says its share is $264,301 (or about
37.17% of $771,111.37). State’s Reply at 28 (filed May 22, 2009). Some of the difference comes from the
fact that Plaintiff apparently transposed a “1” for the “7” in the ten-thousands place, and also rounded to the
nearest thousand. In any case, as is clear from the discussion below, this difference is perhaps the least of
the parties’ legal or mathematical disputes.

                                                      6
Services v. Ahlborn, 547 U.S. 268, 275 (2006).                    “[T]he Federal Government pays

between 50% and 83% of the costs the State incurs for patient care, and, in return, the

State pays its portion of the costs and complies with certain statutory requirements . . . .”

Id. (footnote omitted).

         “One such requirement is that the state agency in charge of Medicaid . . . ‘take all

reasonable measures to ascertain the legal liability of third parties . . . to pay for care and

services available under the plan.’” Id. (quoting 42 U.S.C. § 1396a(a)(25)(A)). A state

participating in the Medicaid program is obligated to seek reimbursement from liable

third parties, and must have laws in effect:

         under which, to the extent that payment has been made under the State
         plan for medical assistance for health care items or services furnished to
         an individual, the State is considered to have acquired the rights of such
         individual to payment by any other party for such health care items or
         services.

Id. at 276 (quoting 42 U.S.C. § 1396a(a)(25)(H)).

         Like every other state, Vermont participates in the Medicaid program. See id. at

275 (all states participate); 33 V.S.A. § 1901–1910 (Medicaid). The pertinent statute as it

applies to this case6 reads as follows:

         (a) The agency [of human services] shall have a lien against a third party,
         to the extent of the amount paid by the agency, on any recovery for that
         claim, whether by judgment, compromise or settlement, whenever:
         (1) the agency pays medical expenses for or on behalf of a recipient who
         has been injured or has suffered an illness or disease as a result of
         negligence; and
         (2) the person asserts a claim against a third party for damages resulting
         from the injury, illness or disease.



6
  After this suit was filed in 2007, § 1910 was amended by 2007, No. 192 (Adj. Sess.), § 6.014. Because
the act did not specify a different effective date for § 6.014, that section became effective on July 1, 2008—
after this case began. 1 V.S.A. § 212. Thus the amendments to 33 V.S.A. § 1910 do not affect this case.
1 V.S.A. § 213. Subsequent citations to § 1910 are to its provisions before the 2008 amendments.


                                                      7
33 V.S.A. § 1910(a).7         Section 1910 further provides that “[w]henever the agency

recovers under the lien and that recovery is the result of an action initiated by a recipient,

the attorney for the recipient may withhold the agency’s pro rata share of reasonably

necessary costs and expenses incurred in asserting the claim” and that “[t]he attorney for

the recipient may negotiate an attorney fee with the agency.” Id. § 1910(i), (j). The final

two provisions of § 1910 are as follows:

        (k) In cases in which the agency’s lien equals or exceeds the amount of
        judgment or settlement, the agency shall reduce its claim by recognizing
        reasonable attorney fees and other reasonable costs of procurement of
        settlement. Additionally, the agency shall compromise its claim taking
        into consideration the nonmedical claims of the recipient.

        (l) In cases in which the court has determined the amount of recovery
        allocated for past medical expenses, the agency’s lien shall be limited to
        that amount.

                                           III. Discussion

        The parties agree that, under Ahlborn, the State is entitled only to recover from

amounts Plaintiff has recovered that are attributable to his past medical expenses. Their

views diverge, however, in several respects. First, they disagree over whether the court

should consider the 2001 settlement in calculating the past medicals. Second, they

disagree over whether the court can determine the allocation from the record before it, or

must hold a hearing to take evidence to determine the allocation. Third, they disagree

over the formula the court should use in doing its calculations.

        Here, there are two settlements with two sets of defendants in the underlying tort

actions—one reached before Ahlborn was decided and one after—neither of which

allocate or break out what portion of the total settlement amount represents medical


7
  Plaintiff does not argue that the Office of Vermont Health Access may not assert the agency’s lien, and
the court does not conclude otherwise.

                                                   8
expenses and what portion represents other damages like pain and suffering or lost

wages. Unlike Ahlborn, the parties in this case have not stipulated what portion of either

settlement constitutes reimbursement for medical expenses. However, the New York

Court of Claims issued an opinion prior to the second settlement which broke out

Plaintiff’s damages in detail. The court considers these circumstances below, addressing

the three disagreements identified above in the process.

                                            A. The 2001 Settlement

            According to the State, Plaintiff cannot “reopen” his 2001 payment of

$594,209.03. That payment, says the State, settled its lien on the 2001 settlement, and

plays no role in this case.

            According to Plaintiff, the State’s recovery in 2001 reached beyond his medical

expenses in violation of Ahlborn. Basically, Plaintiff would treat both the 2001 and 2006

settlements together for the purposes of his calculation—summing the Medicaid

payments, settlements, and procurement costs—and then use the New York Court of

Claims’ 2004 opinion to arrive at an allocation for the portion of the sum of both

settlements that constitutes reimbursement for medical payments.                          Under Plaintiff’s

calculation, the State is entitled to recover a total of $521,349.33, but has already

recovered $72,859.70 more than that.8



8
    Plaintiff details his calculation as follows:

            1.   Divide the amount awarded for past medical expenses under the 2005 Order,
                 $2,903,636, by the total award, $42,356,022 to determine the percentage of the total
                 award (6.855%) that was for past medical expenses.
            2.   Apply that percentage to the amount recovered through settlement, $20,750,000
                 ($8,750,000 (2001) + $12,000,000 (2006)), to determine the amount of the
                 settlement attributable to past medical expenses, or $1,422,469.
            3.   Determine the percentage of past medical expenses paid for by the State’s Medicaid
                 program. The total amount paid by the State is $1,666,604 or 57% of the past
                 medical expenses.                                    (footnote continued on next page)

                                                        9
         The first issue is whether Ahlborn requires this court to reopen and recompute the

value of the State’s lien after the 2001 settlement. The court concludes the answer is no.

As to that particular lien, Plaintiff and the State reached an agreement analogous to an

accord and satisfaction. An accord and satisfaction consists of three elements: “(1) the

claim is disputed; (2) the party offered to pay less than the amount allegedly due; and (3)

in full settlement of the claim, the other party accepted and retained the lesser amount

offered.” Roy v. Mugford, 161 Vt. 501, 513 (1994).

         Here, judging by the parties’ negotiations, there was a dispute over how much

Plaintiff should pay the State from the 2001 settlement proceeds. Plaintiff offered to pay

the State $594,209.03. Technically, that amount was not less than the amount allegedly

due, but equal to the amount due, since the State agreed that that represented the sum due

for Medicaid reimbursements. The State accepted the $594,209.03, settling its lien with

respect to the New York Supreme Court defendants. In short, in exchange for the State’s

agreement not to seek further sums from the settling defendants in the New York

Supreme Court action, Plaintiff paid the State $594,209.03.

         The court concludes this set of facts sufficiently establishes the elements of

accord and satisfaction. See Paopao v. Wash. Dep’t of Social and Health Services, 185

P.3d 640, 643–44 (Wash. Ct. App. 2008) (parties who settled a claim for reimbursement



         4.   Multiply the percentage of past medical expense paid by the State by the amount of
              settlement attributable to past medical expenses, 57% x $1,422,469 to determine the
              portion of recovered past medical expenses attributable to expenses paid by
              Medicaid, and, consequently, against which the State can lien, or $810,807.33.
         5.   Determine the State’s proportionate share of fees and expenses. Total costs and
              expenses were $7,401,367 or 35.7% of the total recovery. The State’s share is 35.7%
              of the $810,807.33 against which it can assert its lien or $289,458.
         6.   The State of Vermont is, therefore, entitled to recover a total of $521,349.33
              ($810,807.33 - $289,458), but already recovered $72,859.70 in excess of that amount
              in 2001.

Pl.’s Opp’n at 16 (filed Oct. 23, 2008).

                                                   10
of medical expenses from the amount plaintiff received from a third-party tortfeasor

arrived at an accord and satisfaction). Doran v. Missouri Department of Social Services

does not require a contrary result because the plaintiffs in that case did not negotiate with

the lienholder, and did not arrive at any agreement. No. 07-CV-04158-NKL, 2008 WL

4151617 at *5 (W.D. Mo. 2008). Doran did not involve the elements of dispute, offer,

and acceptance necessary for an accord and satisfaction.

       Having arrived at an agreement with the State in 2001, Plaintiff cannot now

invoke Ahlborn to retroactively undo that agreement. “Generally, only when a matter is

still pending, is case law given retroactive effect.” Paopao, 185 P.3d at 644 (citing

Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 752 (1995)). The matter of the 2001

settlement and lien was closed long before Ahlborn was decided. The rule announced in

Ahlborn does not apply to a dispute that was no longer pending by the time Ahlborn was

decided in 2006. See id. at 644–45.

                                 B. The 2006 Settlement

       The next issue is how to compute the State’s lien on the proceeds of the 2006

settlement, which—like the 2001 settlement—does not allocate damages. Both parties

have cited Bolanos v. Superior Court, 87 Cal.Rptr.3d 174 (Cal. Ct. App. 2008). The

court agrees with the Bolanos court’s observation that “a settlement that does not

distinguish between past medical expenses and other damages must be allocated between

these two classes of recoveries. Without such an allocation, the principle set forth in

Ahlborn, that the state cannot recover for anything other than past medical expenses,

cannot be carried into effect.” Bolanos, 87 Cal.Rptr.3d at 180; see also Espericuenta v.

Shewry, 79 Cal.Rptr.3d 517, 527 (Cal. Ct. App. 2008) (“[T]he Supreme Court’s

conclusion in Ahlborn that a state Medicaid agency can only lay claim to that portion of

                                             11
the settlement that represents payments for medical care has the practical effect of

requiring a record that distinguishes between the different categories of damages.”).

Thus the court turns to the issues of where to get the necessary allocation, and what to do

with it.

  1. Whether the Allocation Should Come from a Hearing or Instead from the Court of
                                  Claims’ Findings

           Plaintiff argues the requisite allocation can come from the New York Court of

Claims’ 2004 opinion.         Both Plaintiff’s original calculation, Opp’n at 16, and his

alternative calculation, Reply at 9 (filed Aug 12, 2009), use the Court of Claims’ figures

to arrive at an allocation. The State maintains that the Court of Claims’ ruling should not

be used to establish an allocation, and that instead a hearing is necessary to resolve the

allocation issue. State’s Reply at 13 (filed May 22, 2009). The State proffers the

affidavit of an attorney, Peter Joslin, to support its argument that the proper valuation of

the case is actually the settlement amount of $12 million rather than the $42,356,022

awarded by the Court of Claims. Ex. E to State’s Supplemental Opp’n, Aff. of Peter B.

Joslin at 13 (filed Oct. 29, 2009).

           The court recognizes that Plaintiff entered into a “Stipulation of Final Settlement”

with NYSTA after the Court of Claims entered its damages ruling, and that Plaintiff

recovered $12,000,000 based on that stipulation rather than the $42,356,022.00 in total

damages found by the Court of Claims.             The State’s position is basically that the

stipulation washed away all of the findings and allocations made by the Court of Claims,

and that what is left is an unallocated settlement of $12,000,000. Although the State

concedes that Ahlborn requires an allocation, the State’s position is that, because there is

no other way to arrive at such an allocation, the court must hold a hearing. See Lugo v.



                                               12
Beth Israel Med. Ctr., 819 N.Y.S.2d 892, 897–98 (N.Y. Sup. Ct. 2006) (“A court

determination is necessary to confirm the full value of the case and the value of the

various items of damages, including plaintiff’s injuries and how they compare to verdicts

awarded in other cases. The parties are also entitled to be heard on the fair allocation of

the settlement proceeds.”).

        The court concludes that, even though Plaintiff ultimately recovered based upon

the terms of his settlement, the Court of Claims’ ruling on damages can and should be

used in this case to arrive at the allocation that Ahlborn requires. By settling without the

State’s “advance agreement to an allocation,” Ahlborn, 547 U.S. at 288, Plaintiff

essentially adopted the Court of Claims’ allocation proportions. Furthermore, although a

hearing might not be an improper way to arrive at an allocation, it makes little sense to

duplicate the evidence presented and judicial effort expended in the Court of Claims

action. To hold an entirely new hearing at which this court would have to redo the same

analysis that was done in the Court of Claims would be a hugely wasteful allocation of

both judicial resources and those of the parties. There is no reason for this court to reject

the considered findings of a sister court that, as the State acknowledges, rendered its

decision after a trial on the merits.

        For these reasons, the court concludes that Attorney Joslin’s affidavit is not

relevant to the task at hand, nor does it raise a genuine issue of material fact. The

affidavit challenges the Court of Claims’ factual findings on various issues, and seeks to

convince this court of different conclusions. This court is, however, unwilling to retry

the merits of the case.

        To the extent the State contends that Lugo stands for the proposition that an

allocation hearing must be held in every case of this type, the court disagrees. In this

                                             13
case, unlike in Lugo, there is a court opinion that specifically allocated past medical

expenses as a portion of total damages. Ahlborn does not require a specific method for

determining the portion of a settlement that represents recovery of medical expenses.

Andrews v. Haygood, 669 S.E.2d 310, 313 (N.C. 2008); see also Lima v. Vouis, 94

Cal.Rptr.3d 183, 197 (Cal. Ct. App. 2009) (noting that trial court must make allocation

using a “fair and equitable methodology,” and that there may be more than one way to

make an appropriate allocation); Bolanos, 87 Cal.Rptr.3d at 181 (“What matters is that

past medical expenses are distinguished in the settlement from other damages on the

basis of a rational approach . . . .”). The court concludes it is both efficient and proper to

utilize the Court of Claims figures to arrive at the allocation Ahlborn requires.

       The court finds unpersuasive the State’s arguments that the particular

circumstances of this case require ignoring the Court of Claims’ opinion. First, the State

argues that the Court of Claims’ finding as to total damages is unreliable because that

figure is comprised largely of future damages, which, in turn, is anomalous because

NYSTA was precluded from offering its damages experts at trial. See State’s Reply at 20

(filed May 22, 2009). Plaintiff and NYSTA settled that case before any opinion was

issued on appeal, however, and this court has already concluded that by doing so Plaintiff

essentially adopted the Court of Claims’ allocation proportions. Second, it is true that

this case involves catastrophic injuries to a child. It might be reasonable to conclude that

a large factor in the 2006 settlement was the cost of future medical care, and therefore

that the assumption of the so-called “Ahlborn formula”—that on average, the settlement

will be influenced most directly by the amount of past medical expenses—is less likely to

apply. See Bolanos, 87 Cal.Rptr.3d at 181–82. Although plausible, this argument is

unpersuasive for the same reason articulated above: Plaintiff adopted the Court of

                                             14
Claims’ allocation proportions. Furthermore, as discussed below, the court concludes

that it need not use the Ahlborn approximation here.

          2. How to Use the Court of Claims’ Findings to Perform the Calculation

         Each party has presented two sets of calculations using the Court of Claims

figures to arrive at an allocation. First, the State argues that the Court of Claims found

past medical expenses to be $2.9 million—more than enough to cover the State’s claim of

$506,810.9 State’s Reply at 22 (filed May 22, 2009). Alternatively, using a pro rata

reduction, the State calculates that the amount of the 2006 settlement attributable to past

medical expenses is $822,636, and concludes that that figure also exceeds $506,810. See

id. at 26–28. As discussed above, Plaintiff’s first calculation sums the 2001 and 2006

settlements and concludes that the State is entitled to recover a total of $521,349.33, but

has already recovered $72,859.70 more than that. Alternatively, assuming that the 2001

lien payment could not be reopened, Plaintiff employs a pro rata reduction to conclude

that the State can at most recover approximately $130,000. See Pl.’s Reply at 9 (filed

Aug 12, 2009).

         The court rejects both sets of calculations. The State’s first calculation assumes

that Plaintiff’s recovery for past damages was not reduced at all in the 2006 settlement.

The court is unwilling to make that assumption; as stated above, the court concludes that

the allocation proportions in the Court of Claims’ opinion carry through to the 2006

settlement. The State’s second calculation comes closer, but fails to account for the fact
9
  Presumably the State arrives at that figure by following the procedure in 42 C.F.R. § 411.37(c), without
any kind of pro rata reduction based on the 2004 opinion of the New York Court of Claims, or any other
attempt to account for what portion of the 2006 settlement was allocated for medical expenses. The
procedure in 42 C.F.R. § 411.37(c) basically sets forth the following formula. The “Medicare recovery
amount” is equal to: P (1 – (C / S)), where P is the “Medicare payment”; C is the “procurement costs”; and
S is the “settlement payment.” The State apparently uses the following figures: P = $771,111.37; C =
$4,113,038; and S = $12,000,000. The result is a recovery of about $506,810. Although Plaintiff argues
that the regulation the State uses applies to Medicare rather than Medicaid, it is consistent with 33 V.S.A. §
1910 in that it reduces the recovery by a proportionate share of costs and fees.

                                                     15
that the past medical expenses found by the Court of Claims include the period before

July 3, 2001—for which the State has already recovered.10

        Plaintiff’s first calculation assumes it is possible to reconsider the 2001 lien; the

court has already determined otherwise. Plaintiff’s second calculation suffers from a

variety of problems, not least of which is that it begins by assuming that the pool of funds

available to satisfy the State’s lien is limited to the sum the State paid between July 3,

2001 and July 7, 2006. That assumption is untenable in light of the Ahlborn Court’s clear

statement that 42 U.S.C. § 1396k(b) requires “that the State be paid first out of any

damages representing payments for medical care before the recipient can recover any of

her own costs for medical care.” Ahlborn, 547 U.S. at 282. See also In re Matey, 213

P.3d 389, 393 (Idaho 2009). For this reason, the calculation the court performs below

does not attempt to account for the fact that the State did not pay all of Plaintiff’s medical

expenses.

        Neither of the two sets of calculations offered by the parties attempts to account

for the present value of the Court of Claims’ future damages findings. However, in its

most recent filings, the State argues that, even if it is proper to rely on the Court of

Claims decision, that decision does not establish the value of Plaintiff’s claims because it

does not calculate the present value of his claims for future economic damages. State’s

Supplemental Opp’n at 5 (filed Oct. 29, 2009). The State maintains that, to arrive at any

proportional percentage for the purposes of an allocation, present value calculations of

10
   The State concedes that the Court of Claims awarded damages from the point in time when Plaintiff’s
injury occurred, but argues that it “did so only in relation to plaintiff’s claims against [NYSTA].” Reply
at 13 (filed May 22, 2009). To the extent the State argues that the Court of Claims’ damages finding was
anything less than comprehensive, this court disagrees. The Court of Claims would not have mentioned an
offset for the $8 million received in settlement in Supreme Court if it were aggregating anything less than
all of Plaintiff’s damages. See Ex. 12 to State’s Mot. for Summ. J. at 60 (filed July 17, 2008) (noting that
the “offset” for $8 million received in Supreme Court would be applied at the “50-B” hearing).


                                                    16
future damages components must be performed. Id. at 9. Plaintiff says that present value

is irrelevant to the calculation because discounting a damage award to present value is

done only to determine the amount in which an annuity contract must be purchased in the

present to provide full value of future damages to the successful plaintiff. Pl.’s Reply at

11 (filed Dec. 31, 2009). The State replies that using the Court of Claims figures without

computing the present value of future damages would inflate the value of future damages

in relation to other damages, and that Plaintiff has failed to cite any authority for the

proposition that the undiscounted value of future damages can be used for purposes of

allocating a tort settlement. State’s Surreply at 10 (filed Jan. 13, 2010).

       The court concludes that a calculation relying on proportions gleaned from the

Court of Claims’ opinion need not account for present value. Initially, the court notes

that neither of the calculations the State advocates in its earlier filings includes this

additional step. E.g., State’s Reply at 27 (filed May 22, 2009) (dividing past medicals by

$42,356,022—the total damages found by the Court of Claims without any reduction for

present value). The State is changing course and raising new arguments very late in the

summary judgment process. This is less than fair, especially in a case as mathematically

complex as this one. See Ernst Haas Studio, Inc. v. Palm Press, Inc., 164 F.3d 110, 112

(2d Cir. 1999) (stating, although in the context of appellate briefing, that “new arguments

may not be made in a reply brief”).

       In any case, the court would still not perform a present value calculation on the

Court of Claims’ figures. The post-Ahlborn authorities this court has found, and those

cited by the parties, uniformly follow the general theme that a trial court must arrive at a

fair allocation. However, those authorities do not approach the present value question,

and certainly do not state that any allocation derived from a prior court ruling is unfair

                                             17
unless any future economic damages in that ruling are reduced to present value. The

court concludes that it is not unfair to derive an allocation by comparing past medicals to

the amount of total damages found by the Court of Claims without making a reduction

for present value.

        In light of all the above, therefore, and instead of using any of the parties’

calculations, the court computes the portion of the 2006 settlement allocable to medical

expenses between July 3, 2001 and July 7, 2006 as follows.11 The court begins by noting

that, while the Court of Claims did find total past medical expenses were $2,903,636, it

did not say what portion of that figure was for medical care during the period of interest

here: July 3, 2001 to July 7, 2006. The court concludes it is reasonable to approximate

that number by comparing the amount of medical expenses paid by the State from July 3,

2001 to July 7, 2006 ($771,111.37) to the total amount of medical expenses paid by the

State through July 7, 2006 ($1,666,004.48). That ratio is approximately 46%. The court

therefore concludes that approximately 46% of the $2,903,636 in total past medical

expenses was for the period July 3, 2001 to July 7, 2006—about $1,343,950.

        Thus the percentage of the total award ($42,356,022) attributable to medical

expenses for the period July 3, 2001 to July 7, 2006 is the ratio of $1,343,950 to

$42,356,022—about 3.17%.            Applying that percentage to the 2006 settlement

($12,000,000), the court concludes that the amount of the 2006 settlement attributable to

medical expenses for the period July 3, 2001 to July 7, 2006 is $380,758.14. The State

claims a lien on the 2006 settlement proceeds in the amount of $506,810. To the extent

that claim exceeds $380,758.14, Ahlborn prevents the State from recovering the excess.


11
  Like the “Ahlborn formula,” the court’s calculation is only an approximation, however the court
concludes that this approximation is sufficiently accurate to be workable.

                                               18
       Finally, the court pauses to consider the affirmative defenses Plaintiff asserts in

his reply to the State’s counterclaim. Plaintiff asserts the defenses of (1) estoppel; (2)

unjust enrichment; (3) illegality; and (4) setoff. In the course of the extensive briefing on

the present motion, Plaintiff has not specifically discussed any of these defenses. The

court concludes that, to the extent Plaintiff still asserts them, each defense is a

manifestation of the arguments Plaintiff has already articulated. E.g., estoppel would

presumably go to the question of the 2001 settlement, and the remaining theories speak to

the proper way to calculate the allocation and ultimately the State’s recovery.

                                           Order

       The State’s motion for summary judgment is granted in part and denied in part.

To the extent the State seeks dismissal of Plaintiff’s claim for $72,859.70, the State’s

motion is granted. Plaintiff’s cross-motion for summary judgment is denied. To the

extent the State seeks summary judgment on its claim for $506,810, the court concludes

that the State’s recovery is limited to $380,758.14, and the State is accordingly entitled to

summary judgment in that amount.

Dated at Burlington this           day of May 2010.


                                              ______________________________
                                              Helen M. Toor
                                              Superior Court Judge




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