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Alaska Native Tribal Health Consortium v. Settlement Funds Held For or to be Paid on Behalf of E.R. (01/30/2004) sp-5775
Alaska Native Tribal Health Consortium v. Settlement Funds Held For or to be Paid on Behalf of E.R. (01/30/2004) sp-5775
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
ALASKA NATIVE TRIBAL )
HEALTH CONSORTIUM, d/b/a ) Supreme Court No. S-10662
ALASKA NATIVE MEDICAL )
CENTER, ) Superior Court No.
) 3AN-01-09666 CI
Appellant, )
) O P I N I O N
v. )
) [No. 5775 - January 30, 2004]
SETTLEMENT FUNDS HELD FOR )
OR TO BE PAID ON BEHALF OF )
E.R., a minor, by and through his )
legal guardian, MARTHA RIDLEY, )
)
Appellee. )
________________________________)
)
ALASKA NATIVE TRIBAL )
HEALTH CONSORTIUM, d/b/a ) Supreme Court Nos. S-10696/10785
ALASKA NATIVE MEDICAL )
CENTER, ) Superior Court No.
) 3AN-01-10138 CI
Appellant/ )
Cross-Appellee, )
)
v. )
)
SETTLEMENT FUNDS HELD FOR )
OR TO BE PAID ON BEHALF OF )
DAVID W. WARDEN, )
)
Appellee/ )
Cross-Appellant. )
________________________________)
Appeal in File No. S-10662 from the Superior
Court of the State of Alaska, Third Judicial
District, Anchorage, John Reese, Judge.
Appeal in File Nos. S-10696/10785 from the
Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Eric T.
Sanders, Judge.
Appearances: Peter J. Aschenbrenner,
Aschenbrenner Law Offices, Inc., Fairbanks,
for Appellant/Cross-Appellee Alaska Native
Tribal Health Consortium. J. Mitchell
Joyner, Law Office of J. Mitchell Joyner,
Anchorage, for Appellee E.R. Robert A.
Rehbock, Rehbock & Rehbock, Anchorage, for
Appellee/Cross-Appellant David W. Warden.
Before: Bryner, Chief Justice, Matthews,
Fabe, and Carpeneti, Justices. [Eastaugh,
Justice, not participating.]
FABE, Justice.
I. INTRODUCTION
In this consolidated appeal1 we address whether the
Alaska Native Tribal Health Consortium (the Consortium) can
enforce a health care provider lien on settlement proceeds
received by Alaska Native patients from third-party tortfeasors.
If we determine that such a lien can be enforced, the principal
question that follows is whether the lien must be reduced by a
pro rata share of the patients attorneys fees. These questions
arise in two cases that share similar factual backgrounds. Each
case involves an Alaska Native who was treated as a patient at
the Alaska Native Medical Center (ANMC) for injuries caused by
third-party tortfeasors. ANMC, run by the Consortium, treats
Alaska Natives for free. The Consortium recorded hospital liens
on the settlements that two patients, Warden and E.R., obtained
from their respective tortfeasors. Both patients attorneys
disputed the validity of the liens. In both cases, the superior
court concluded that the health care provider lien is valid and
should be paid in full, less a pro rata share of the patients
attorneys fees and costs incurred in obtaining the recovery.2
Because the Consortium has a federal right to enforce a statutory
health care provider lien, and because it would be unjustly
enriched if it did not pay a pro rata share of attorneys fees, we
affirm the superior courts determination in both cases. We hold
that the Consortiums statutory health care provider lien is
enforceable and is subject to a pro rata reduction for attorneys
fees and costs.
II. FACTS AND PROCEEDINGS
A. The Consortiums Claim to Settlement Funds Obtained on
Behalf of David W. Warden
On February 15, 2000, David Warden, an Alaska Native,
was injured in a motor vehicle accident with Mary Copley, who was
insured by Allstate Insurance Company. Warden received medical
treatment from ANMC for injuries to his back and neck between
February 15, 2000 and March 8, 2001.
Shortly after the accident, Warden engaged counsel
Robert Rehbock and entered into a contingency fee agreement
entitling Rehbock to a percentage of any recovery. Allstate
entered into negotiations with Warden, seeking to minimize its
obligation by emphasizing Wardens pre- and co-existing
conditions. Allstate declined to enter any settlement agreement
unless there was full and final release of all parts of the
claim. The Consortium did not respond to Allstates efforts to
obtain medical records and information concerning the care Warden
received, only providing such documentation after further efforts
by Warden and Rehbock.
On May 3, 2001, the Consortium recorded a health care
providers lien pursuant to AS 34.35.450-.482 for $8,947.22, the
alleged value of services provided to Warden. Copies of the
recorded lien were forwarded by certified mail to Allstate and
its insured, Mary Copley. The transmittal letter to Allstate
included a request that ANMC be named as the payee on any check
issued arising out of the accident. The Consortium provided a
copy of the lien to Warden, who apprised Allstate of the lien
claim and continued to seek recovery for all claims.
On August 3, 2001, Allstate settled with Warden for
$24,947.22 to cover all losses and to release all claims against
Copley and Allstate. Out of this amount, Allstate issued a
separate settlement check on the same day for $8,947.22 made
payable to Rehbock Rehbock & Wittenbrader In Trust for David
Warden, and ALASKA Native Medical Center. The same day, Rehbock
informed the Consortium that he proposed to turn over two-thirds
of the total check for that lien and receive the remaining one-
third for his fees but that he would not disburse any of the
disputed lien to my client or for my fee pending our resolution
of the dispute. The Consortium therefore declined to endorse the
check, and the disputed funds were placed with the court and
then, by stipulation, held in Rehbocks trust account. Rehbock
has at this point only taken for his fee one-third of the non-
disputed funds.
The Consortium filed a complaint in superior court on
September 9, 2001 against Settlement Funds Held for or to be Paid
on Behalf of David W. Warden seeking to foreclose its lien under
AS 34.35.480. Wardens answer admitted that the Consortium
rendered medical services to Warden and had recorded a lien for
$8,947.22, but challenged the validity of the lien. The parties
filed cross-motions for summary judgment, with the Consortium
moving to foreclose its lien and with Warden arguing that the
Consortium could not assert a lien because Warden was entitled to
free treatment at ANMC, or in the alternative, that the
Consortiums lien recovery should be reduced by the percentage in
the contingency fee agreement between Warden and Rehbock.
Without elaborating on its reasoning, the superior court held
that the Consortium was entitled to foreclose its lien and was
entitled to the full amount less its pro rata share of the
attorneys fees and costs Warden incurred to obtain the settlement
proceeds from Allstate.
The Consortium appeals the pro rata reduction of its
lien recovery. Warden cross-appeals the superior courts ruling
that the Consortium was entitled to foreclose on its lien.
B. The Consortiums Claims to Settlement Funds Obtained on
Behalf of E.R.
In December 1999 E.R., a minor, suffered second- and
third-degree burns on his feet and legs when he was placed in a
bathtub of scalding water. As an Alaska Native, E.R. was
entitled to free medical services at the Alaska Native Medical
Center, a facility operated by the Consortium. E.R. was treated
on first an inpatient and then an outpatient basis, with his last
treatment occurring on August 11, 2000. On October 25, 2000, the
Consortium filed a health care providers lien pursuant to AS
34.35.450-.482 for $30,081.65 for the services provided to E.R.
J. Mitchell Joyner represented E.R., through his parent
Martha Ridley, in a suit against Richard Knowles, who owned the
property on which E.R. was injured. On March 26 and 27, 2001,
Joyner apparently called and then wrote to the Consortium
offering to settle the lien claim for $5,000 in light of Joyners
assertion that the lien was deficient on its face. On March 30,
2001, E.R. moved under Alaska Civil Rule 90.2 for approval of a
settlement agreement to resolve its claim against Knowles for
$95,000. That motion specifically addressed the Consortium lien,
declaring that the lien was unenforceable. The superior court
approved the settlement on April 2, 2001. Notice of the approval
was sent to counsel for Knowles, who was insured by State Farm.
Following the superior courts approval, Joyner drew
from the $95,000 settlement his attorneys fees of $31,666 (the
one-third contingency fee agreed upon with Ridley) and roughly
$9,260 in costs. On April 3, 2001, Joyner advised the Consortium
of the settlement and explained that, given E.R.s challenge of
the liens validity, Joyner would hold the $30,081.65 in his trust
account until the disputed matter was resolved.
In August 2001 the Consortium filed a complaint in
superior court against Settlement Funds Held for or to be Paid on
Behalf of E.R. seeking to foreclose on its lien. E.R.s answer
denied the liens validity, and in a motion for summary judgment,
argued that the lien was invalid because it was filed in an
untimely manner, more than the ninety days after the last service
provided by a physician, required by AS 35.34.460. In the
alternative, E.R. asserted that if the lien was valid, then the
amount owed to the Consortium should be subject to a pro rata
reduction for the cost incurred in obtaining the recovery from
Knowles. The Consortium also moved for summary judgment.
In May 2002 the superior court rendered its decision
and entered judgment. The court ruled that [f]ederal law and
decisions indicate that the Consortiums lien was valid, declared
that any attack by Joyner on the lien was denied because of his
conflict of interest in advocating the lien while pursuing a
settlement yet later challenging it, and held that the Consortium
was entitled to 100% of its liened amount, $30,081.65, less a
proportionate share of the costs and attorney fees incurred.
The Consortium did not seek a stay of the decision, and
the trust funds were disbursed to E.R. and the Consortium in
accordance with the courts order. Joyners trust account thus
currently contains no settlement funds.
The Consortium appeals the superior courts ruling that
its recovery should be reduced by a proportionate share of
Joyners attorneys fees and costs.
III. DISCUSSION
To resolve the questions appealed, we must first
consider both the rights of the Alaska Native Tribal Health
Consortium and the rights of Alaska Native patients who seek a
judgment or settlement for injuries treated by ANMC without cost.
We must decide whether federal and state law allow the Consortium
to enforce a health care provider lien on settlement proceeds
from third-party tortfeasors when the patient personally owed
nothing to the Consortium. Warden argues that Alaska Native
patients are federally entitled to free health care and should
not have to satisfy the Consortiums claim from the proceeds of
their personal injury recovery. The Consortium contends that
because Warden negotiated a separate settlement on behalf of the
Alaska Native Medical Center, the full amount of the proceeds did
not belong to Warden. The Consortium further asserts that
Congress federalized its state rights to insurance-funded
recoveries from tort actions under 25 U.S.C. 1621e(a), and that
AS 34.35.450 is the state mechanism that actualizes this federal
right. If the Consortiums health care provider lien is
enforceable, we must then decide whether the lien should be
reduced by a pro rata share of attorneys fees expended to obtain
the settlement proceeds. We will assess each of the parties
arguments following the standard of review.
A. Standard of Review
We review grants of summary judgment de novo.3 [We]
may consider any argument ascertainable from the record, even if
the superior court did not rule on it, when reviewing the summary
judgment order.4 We similarly apply our independent judgment
when reviewing questions of statutory interpretation and must
adopt the rule of law that is most persuasive in light of
precedent, reason, and policy. 5
B. The Consortium Is Entitled To Enforce Its Health Care
Provider Lien.
We must first consider whether federal law allows
enforcement of the Consortiums health care provider lien. Warden
charges that enforcement of the Consortiums lien would violate
federal law. Warden argues that 25 U.S.C. 1621u entitles him to
free medical services and that requir[ing] him to satisfy [the
Consortium] claim from the proceeds of his personal injury
recovery violates that statute. That statute states, in relevant
part, that [a] patient who receives contract health care services
that are authorized by the [Indian Health] Service shall not be
liable for the payment of any charges or costs associated with
the provision of such services.6
The Consortium maintains that 1621u concerns payment
arrangements for fee-for-service health care providers, such as
Providence or Alaska Regional Hospitals, but does not address
tribal health contractors like the Consortium who are under
contract with the Secretary of Health and Human Services. The
Consortiums interpretation is bolstered by 25 U.S.C. 1621r,
which also uses the term contract health services to mean private
contract health services providers.7
We note at numerous points below that Warden as an
Alaska Native does have a federal right to free care.8 This
federal right, however, is not violated by enforcement of the
Consortiums lien. All of Wardens federal claims, as well as
Wardens claim that the Alaska Legislature did not intend (even
assuming it could constitutionally do so) to disenfranchise
Native Beneficiaries of the advantage to them of obtaining free
care and pocketing the money they save, fail because they rest on
the same core fallacy, namely that all of the settlement funds
are Wardens and that satisfying the lien from the recovery
essentially reduces his damages and makes him pay for his medical
care.9
As the Consortium argued below, however, the settlement
fund does not belong to Warden because the settlement is not
composed entirely of his funds; he negotiated for a separate
settlement with Allstate and a separate check for ANMC, so only
the funds not subject to the Consortiums lien are Wardens, and
thus the Consortiums lien takes nothing from Warden to which he
is entitled.10
Warden also contends that the Consortiums lien
diminishes Wardens cause of action and his damages, in violation
of 25 U.S.C. 1621e(d), which states that [n]o action taken by .
. . a tribal organization to enforce the right of recovery . . .
shall affect the right of any person to any damages. We agree
with the Consortiums argument that 1621e(d) merely protects a
patients right to sue and prevents a tribal health contractor
from giving to the tortfeasor a complete release of all claims.
Enforcement of the Consortiums lien does not affect Wardens right
to damages, but rather just the amount of damages.
We determine that federal law does not prohibit and in
fact specifically provides for enforcement of the Consortiums
health care provider lien to the same extent a nongovernmental
provider is entitled to enforce such a lien under state law. The
Consortium correctly argues that in 25 U.S.C. 1621e(a), Congress
federalized the Consortiums state rights to insurance-funded
recoveries from tort actions. Under this federal statute, a
tribal organization providing health services has the right to
recover reimbursement from third parties for reasonable expenses.
This right is enforceable to the same extent that the law
entitles a nongovernmental provider or an individual to recover
from third parties if the individual had been required to pay and
did pay for services. Section 1621e(a) provides that
a tribal organization shall have the right to
recover the reasonable expenses incurred by .
. . a tribal organization in providing health
services . . . to any individual to the same
extent that such individual, or any
nongovernmental provider of such services,
would be eligible to receive reimbursement or
indemnification for such expenses if
(1) such services had been provided by a
nongovernmental provider, and
(2) such individual had been required to pay
such expenses and did pay such expenses.
The Consortium correctly contends that 1621e(a) strips [Warden]
of a federal defense to [the Consortiums] state lien foreclosure
action. The Consortiums rights to lien foreclosure under federal
law should equal the rights that a nongovernmental provider of
health services could exercise under state law. We conclude that
under 25 U.S.C. 1621e(a), the Consortium has a federal right to
enforce a statutory health care provider lien to the same extent
that state law allows a nongovernmental provider to enforce such
a lien.
The state statute creating the hospital lien here is AS
34.35.450(a). The Consortium asserts that AS 34.35.450 is the
state statutory mechanism by which the Consortiums federal rights
are actualized in terms of rights in recoveries funded by third-
party liability insurance carriers, and indemnity, or health
insurance contracts. Alaska Statute 34.35.450(a) provides as
follows:
An operator of a hospital in the state . . .
who furnishes service to a person who has a
traumatic injury has a lien upon any sum
awarded to the injured person or the personal
representative of the injured person by
judgment or obtained by a settlement or
compromise to the extent of the amount due
the hospital . . . for the reasonable value
of the service furnished before the date of
judgment, settlement, or compromise, together
with costs and reasonable attorney fees that
the court allows, incurred in the enforcement
of the lien. AS 34.35.450 34.35.480 do not
apply to a claim, right of action, or money
accruing under AS 23.30 (Workers Compensation
Act).
Warden argues that state law does not create an enforceable lien
where another paid for the medical services and the Native
American beneficiary owed the hospital nothing. Warden asserts
that a hospital lien cannot exist without an underlying debt,
pointing to the language in AS 34.35.450(a) providing for a lien
to the extent of the amount due the hospital . . . for the
reasonable value of the service furnished. (Emphasis added.)
This language is in contrast to AS 34.35.450(b), which allows the
hospital a lien on the amount that an insurer has contracted to
pay for the sum incurred for hospitalization of its insured.11
Because Warden, as an Alaska Native, owed the Consortium nothing
for his medical services, Warden thus claims that the Consortium
could not assert a lien under state law.
The flaw in Wardens reasoning is that AS 34.35.450(a)
does not specify that the amount due the hospital has to be due
from the patient personally. The language can also be read as
allowing the amount due the hospital . . . for the reasonable
value of the service furnished to mean that the hospital can
recover the amount of expense it incurred from any sum . . .
obtained by a settlement with a tortfeasor or insurer.
The Consortium persuasively argues that federal law
makes clear that Warden does not personally have to owe it
anything for a debt to arise from his receipt of free medical
services, citing the Alaska federal district court opinion in
Yukon-Kuskokwim Health Corp. v. Trust Insurance Plan of Southwest
Alaska.12 The Yukon-Kuskokwim Health Corporation (YKHC), like the
Consortium, administered health care services to Alaska Natives
through operation of a hospital under a contract with the
Department of Health and Human Services.13 YKHC provided health
care to Alaska Natives insured by the Trust Insurance Plan of
Southwest Alaska (TIPSA), a trust composed of several
southwestern Alaska employers with high numbers of Native
employees that provides group insurance to those employees.14 For
reasons similar to Wardens arguments here, TIPSA routinely denied
claims submitted by YKHC for services provided to those Alaska
Natives. That is, TIPSA based these denials on the fact that the
Alaska Natives had no legal obligation to pay for health services
received from government contractors like YKHC.15 Yet, when
Congress passed the Indian Health Amendments of 1992, it amended
the Indian Health Care Improvement Act, 25 U.S.C. 1621e(a), to
expressly provide tribal organizations with a right of recovery
to collect the reasonable costs of health care provided to Native
Americans and Alaska Natives from third-party insurers.16
Following passage of the amendments, YKHC filed suit against
TIPSA under 25 U.S.C. 1621e to recover the reasonable cost of
health care provided to Alaska Native TIPSA beneficiaries.17 In
upholding the retroactivity of the amendments, the district court
noted that the amendments to 1621e(a) effectively amended TIPSAs
insurance policy, which had excluded coverage for medical
services where Alaska Natives were not legally required to pay
for the services, by requiring assumptions that the health care
recipient received care at a nongovernmental hospital, that he
was required to pay, and that he had paid for the medical
services.18 The discussion of federal law in Yukon-Kuskokwim thus
provides strong support for the Consortiums assertion that Warden
did not need to have an actual amount due.
Furthermore, the language of 25 U.S.C. 1621e(a) quoted
earlier supports the Consortiums position. Unlike AS
34.35.450(a), but very much like .450(b), that federal statute
states that the Consortium, as a tribal organization, has the
right to recover the reasonable expenses incurred . . . in
providing health services . . . to any individual to the same
extent as that individual or a nongovernmental health provider
could receive reimbursement if such individual had been required
to pay such expenses and did pay such expenses. (Emphasis
added.) Again, this language seems to clearly indicate that
Warden did not have to personally owe the Consortium anything for
it to have a right of recovery of the expenses it incurred in
treating him.19 We conclude that, given the federal law and
decision discussed above, AS 34.35.450(a) does not require Warden
to personally owe anything to the Consortium in order for the
hospital to assert a lien.
Raising another federal argument, Warden attacks the
validity of the lien on the ground that the Consortium seeks to
be paid twice. Warden charges that the Consortium seeks to be
paid once from Wardens recovery and a second time from the Indian
Health Funds that paid for Wardens medical services in the first
place. Warden points to 25 U.S.C. 1621f, which provides that
any reimbursements that a tribal organization recovers are
retained by the organization and do not affect the amount of
funding it receives from the Indian Health Service.20
The Consortium counters that it is not seeking to be
paid twice, since it uses the funds it recovers to replace
federal grant funds that have diminished in importance as a
source of financial support for the institution. The Consortium
further notes that this description of its funding and its use of
recovered funds, supported by affidavit, was uncontested below
and relied on by the superior court in approving the Consortiums
lien. We agree with the Consortiums position.
We conclude that the Consortium is not seeking to be
paid twice; rather it is seeking to recover its costs in caring
for Warden. As the Consortium convincingly argued below, the
Consortium incurred expenses in treating Warden, in that portions
of its federal funding were used to pay the providers who treated
Wardens injuries. Furthermore, the Consortium correctly points
out that 25 U.S.C. 1621f supports its argument, as it indicates
that the Consortium may seek recoveries via state tort and
insurance systems and use these funds to carry out its programs.
We will next consider Wardens charge that the
Consortiums lien notice was deficient and failed to conform to
state law. The Consortiums lien notice contains one clause that
is not in the statute, extending its lien to any money or
reimbursement due or owing or to be paid or payable under any
contract providing for indemnity or compensation for sum(s)
incurred for hospitalization . . . from any entity or
organization including Allstate Insurance Company. While this
clause essentially covers circumstances in which AS 34.35.450(b)
might apply, Warden alleges that the Consortiums notice
erroneously extends the lien not just to a company with a
contract to pay for its insureds hospitalization, as envisioned
by .450(b), but also to the tortfeasors insurer.
We determine that Wardens claim of deficient notice
fails for two reasons. First, this clause is not relevant to the
current case because the lien in this case is authorized under AS
34.35.450(a) and the corresponding section in the Consortiums
lien notice involving recovery from settlement funds, not under
AS 34.35.450(b). Second, as the Consortium argued below, its
lien form is substantially similar to the statutory form in AS
34.35.465, which is all that is required by AS 34.35.460.
The last challenge by Warden we consider on the issue
of the liens validity is his claim that the Consortium cannot
foreclose upon a lien against an unnegotiated settlement check.
Warden argues that AS 34.35.450 provides for a lien only against
settlement proceeds, whereas Allstate merely tendered a
negotiable instrument promising to pay the parties.21 Warden
maintains that Allstate offered to discharge the Consortiums and
Wardens demands in exchange for their acceptance of the check.
But the Consortium refused to endorse the check, and Warden
contends that the Alaska statutes do not provide for a lien
against a promise for payment in a conditional negotiable
instrument. In other words, Warden argues that [u]ntil the check
was paid there can be no lien foreclosure because there has been
no payment or release to or from Warden and tortfeasor.
The Consortium counters that at the moment of
settlement, Allstate was contractually obligated to fund the
settlement, so no reason exists why AS 34.35.450 would not
operate to attach the Consortiums lien to that obligation. The
Consortium argues that it has rights to the liened funds under AS
34.35.450 whether the funds were in Allstates account after the
release was delivered but prior to the check being written,
whether the settlement check was drawn but unendorsed, or whether
the funds were in Rehbocks trust account.
We agree with the Consortium. Wardens argument is
overly technical and unpersuasive. The settlement funds exist;
they were first placed with the court and then, by stipulation,
endorsed and held in Rehbocks trust account pending resolution of
the dispute. Allstate and Warden agreed on a settlement and
release of all claims, contractually obligating Allstate to pay
$24,947.22 and obliging Warden to indemnify Allstate and Copley
from any suits or claims brought by holders of liens or
subrogated interests to recoup medical expenses. Alaska Statute
34.35.450(a) applies to any sum . . . obtained by a settlement;
this language would cover the sum that Allstate was contractually
obligated to provide in the settlement. Accordingly, we conclude
that the Consortium could foreclose on its lien against the
settlement.
C. The Consortiums Suit Is Not Moot.
Although E.R. did not cross-appeal the issue of the
liens enforceability, an additional issue that arises in E.R. is
the claim that the Consortiums health care provider lien is now
moot. E.R. contends that the Consortiums appeal is against a
party that no longer exists, since the settlement funds held for
or to be paid on behalf of E.R. have been disbursed in accordance
with the superior courts order and are in the possession of E.R.
and his custodian, who are not parties to this action. E.R.
therefore argues that the Consortium can gain nothing in pursuing
this appeal, since even if the Consortium prevails, there are no
settlement funds in the trust account to disburse to the
Consortium. And E.R. and his mother, who have the funds but are
not parties, would not be bound by a decision in this appeal and
would be under no obligation to turn over any portion of the
personal injury proceeds to the Consortium. As such, E.R.
maintains that this appeal is moot.22
The Consortium makes several counter arguments, the
most compelling of which is that it has a right to restitution
under the Restatement of Restitution 74, which provides that
a person who has conferred a benefit upon
another in compliance with a judgment, or
whose property has been taken thereunder, is
entitled to restitution if the judgment is
reversed or set aside, unless restitution
would be inequitable or the parties contract
that payment is to be final; if the judgment
is modified, there is a right to restitution
of the excess.[23]
We have concluded above that the Consortium is
entitled to enforce its statutory health care provider lien under
federal and state law. We further determine that Restatement 74
enables the Consortiums right to restitution to be given effect
under a trust theory. Joyner, as trustee of the former
settlement fund, must disburse to the Consortium any recovery
stemming from this opinion.
D. The Consortiums Lien Is Subject to a Pro Rata Reduction
for Attorneys Fees and Costs.
1. Federal and state statutes are ambiguous on the
issue of a pro rata reduction of the Consortiums
lien, therefore, relevant policy considerations
should be applied.
We turn now to the question of whether the Consortiums
health care provider lien must be reduced by a pro rata share of
the patients attorneys fees. The Consortium makes a variety of
statutory arguments in attempting to establish that its lien is
not subject to a pro rata reduction for attorneys fees and costs,
but none of the statutes clearly prohibits such a reduction. As
the New Mexico Supreme Court reasoned, the ambiguity of statutory
provisions requires the court to defer to equitable
considerations to determine whether to reduce the lien by a pro
rata share.24 And in Cooper v. Argonaut Insurance, we took
equitable considerations into account in our analysis of
ambiguous statutory language, looking to the probable legislative
intent to conclude that the statute should be read to require
proration of attorneys fees to avoid unjust enrichment.
The most significant statutory argument raised by the
Consortium involves AS 34.35.475. The Consortium maintains that
AS 34.35.475(a)(3) directs the attorney to be paid from the gross
settlement, with the remaining funds first going to satisfy liens
in full and then going to the patient. Alaska Statute 34.35.475
provides:
(a) A person or insurer is liable to a
hospital, physician, or nurse, in the amount
that the hospital, physician, or nurse is
entitled to receive, for 180 days after the
date of a payment to the injured person, the
heirs of the injured person, personal
representatives, or the attorney of them,
when the person or insurer
(1) receives a copy of notice of lien,
or the lien is recorded as provided in AS
34.35.460 and 34.35.465;
(2) makes the payment after receipt of
notice or the recording of the lien as
compensation for the injury suffered; and
(3) does not pay the hospital,
physician, or the licensed special nurse for
the reasonable value of the services rendered
to the injured person and claimed in the
notice of lien, or so much of the value of
the services as can be satisfied out of a
judgment, settlement, or compromise, after
paying the attorney fees, costs, and expenses
incurred in connection with it.
(b) The hospital, physician, or nurse
has a cause of action, during the 180 days,
against the person or insurer.
(Emphasis added.) The purpose of this statute, as the Consortium
admits, is to provide for continuing liability against persons or
insurers if, after receiving notice of a hospital lien, they have
paid the injured person for that persons injuries but the
hospital lien goes unsatisfied.25
The Consortium interprets the emphasized language in AS
34.35.475 above as implying that the attorney will pay himself
off the top of the gross settlement, therefore preventing a claim
by the client against a nonclient for a pro rata reduction. In
E.R., the Consortium notes that the gross settlement was $95,000,
which is enough for attorneys fees ($31,666), costs ($9,261.16),
the Consortiums lien ($30,081.65), and $23,991.19 remaining for
E.R.
However, in Cooper, we determined that similar language
in AS 23.30.015(g) dictating that an employee shall pay to its
employer out of any third-party recovery all amounts paid by the
employer or the workers compensation carrier insofar as the
recovery is sufficient after deducting all litigation costs and
expenses could be construed in two divergent ways: (1)
requiring a deduction from the amount reimbursed to the employer
for litigation expenses attributable to its share of the
recovery, a pro rata reduction, or (2) requiring a deduction of
all litigation expenses from the total recovery with the
remainder going to reimburse the employer.26 We acknowledged that
grammatically the disputed phrase lends itself more to the second
construction, but held that the first alternative more accurately
conforms to the legislative intent.27 Therefore, we conclude
that, given our previous decision in Cooper, the language of AS
34.35.475 is ambiguous.28
Upon finding the law ambiguous, we concluded in Cooper
that the statute should be read to require proration of attorneys
fees to ensure there is not unjust enrichment.29 In a case quite
similar to this one, the New Mexico Supreme Court interpreted a
statute entitling a hospital that provided services to an
accident victim to assert a lien upon that part of the judgment,
settlement or compromise going, or belonging to such patient,
less the amount paid for attorneys fees, court costs and other
expenses necessary thereto in obtaining the judgment, settlement
or compromise.30 New Mexicos statute thus contains language
similar to that of AS 34.35.475. Because the court determined
that the statute was silent on the issue of apportionment of
expenses to the lienholder, the court looked to the relevant
policy considerations to determine the most equitable result.31
We agree with the approach followed by the New Mexico Supreme
Court: Absent other evidence of legislative intent, the silence
or ambiguity of statutory provisions on the issue of apportioning
attorneys fees requires us to refer to equitable considerations.
The Consortiums second statutory argument involves AS
34.35.455, which also lacks clarity on the issue of apportioning
attorneys fees. That statute, entitled Limitation on extent of
lien, states:
Except as otherwise provided, a lien under AS
34.35.450 34.35.480 may not be allowed for
hospitalization or the services of a
physician or licensed special nurse furnished
after a settlement is made by or on behalf of
the person causing the injury unless the
settlement is made within 20 days from the
date of the injury. A lien is not allowed
for necessary attorney fees, costs, and
expenses incurred by the injured person in
securing a settlement, compromise, or
judgment.
(Emphasis added.) The Consortium contends that this statutory
language is clear in forbidding an injured person, or that
persons attorney, from making a claim on a hospitals liened funds
to pay for a portion of attorneys fees and costs. The Consortium
asserts that the first sentence of the statute limits the
hospitals rights, while the second speaks to the injured person.
The Consortium contends that the Legislature was protecting the
health care providers rights by limiting the rights of an injured
party to reduce the lien.
But the meaning of AS 34.35.455 is far from clear, as
E.R. correctly notes. First, section .455 is included in article
12 of AS 34.35, which addresses liens for hospitals, physicians,
and nurses; this leads one to the conclusion that whatever
language is contained in that statute applies to limitations on
hospital liens, not liens by injured parties. Second, the
initial language of the enactment, prior to the 1963 amendment,
provided that [n]o lien shall be allowed against any sum for
necessary attorney fees, costs and expenses incurred by the
injured party in securing a settlement, compromise or judgment.32
E.R. argues that these facts allow for two different
interpretations of AS 34.35.455, requiring us to look at the
statutory language, history, and purpose.33 The language of the
previous enactment could mean what the Consortium says it does,
or it is possible that the purpose of the statutory language is
to limit the extension of hospital liens to the attorneys fees
and costs incurred by the injured party; in other words, the
statute could merely be prioritizing an attorney lien over a
hospital lien. Given the language of the previous enactment, and
the context, location, and title of the statute, the latter
interpretation is more plausible. We determine that the statute
is at best unclear, and most likely limits the Consortiums
rights, not the rights of the injured parties or their attorneys.
In its third statutory challenge to a pro rata
reduction of its lien, the Consortium contends that under AS
34.35.450(a) the reduction would leave its lien unsatisfied. In
Warden, the Consortium essentially contends that a reduction in
its lien, for the purpose of allowing Rehbock to pay more
settlement funds to Warden, would leave the lien unfulfilled.
The Consortium looks to the language of AS 34.35.450(a), which
grants the hospital a lien upon any sum . . . obtained by a
settlement, and argues that any settlement funds transferred from
Rehbock to Warden would still be settlement funds subject to the
lien.
The Consortium similarly argues in E.R. that the
superior court erred in allowing a lien reduction to increase
E.R.s recovery and that Joyner cannot pay more settlement funds
to his client by transferring his claim to attorneys fees and
costs. The Consortium notes that AS 34.35.450(a) gives it a lien
upon any sum . . . obtained by a settlement, and that any
settlement funds transferred by Joyner to E.R. would therefore
still be subject to the Consortiums lien. The Consortium thus
essentially argues that a lien reduction would leave its lien
unfulfilled and would subject Knowles, the owner of the property
on which E.R. was injured, and his insurer to double liability
under AS 34.35.475.
But in Martinez, the New Mexico Supreme Court has
addressed and rejected a similar assertion that pro rata
reduction for attorneys fees would leave the lien unsatisfied and
still in effect as to the balance due:
The Hospitals argument, however, is based on
the false premise that the lien is not paid
in full. The lien is satisfied from the net
proceeds of the settlement or judgment
pursuant to the Act. Under our holding
today, the Hospital then has a responsibility
to pay its proportionate amount of attorneys
fees incurred in obtaining the net proceeds,
either out of the net proceeds or from some
collateral source. In essence, it is as if
the Hospital employed an attorney to secure
payment from the patient; the Hospital might
recover the full amount of the payment but
its net benefit would be reduced by legal
fees that would not be reimbursed absent a
statutory or contractual right to those fees.
Thus, there is no deficiency and the lien
would not remain in effect.[34]
The New Mexico courts reasoning is persuasive and applicable to
both Warden and E.R. We determine that the Consortiums lien is
satisfied from the net proceeds of the judgment or settlement,
and the Consortium has a responsibility to pay its proportionate
share of attorneys fees incurred in obtaining the net proceeds.
The last statutory challenge we review on the issue of
a reduction of the lien by a pro rata share of attorneys fees
involves a federal statute. The Consortium claims that 25 U.S.C.
1621e(c) prohibits state law from prevent[ing] or hinder[ing] the
right of recovery of . . . a tribal organization under [25 U.S.C.
1621e(a)], and that reducing the Consortiums lien would violate
this statute.
We disagree with the Consortium. Reducing the lien
would not violate the right of recovery, it would merely
influence the amount that can be recovered; more accurately, it
would simply require the Consortium to pay the lawyers who
implemented its right of recovery.35 As with AS 34.35.450(a), the
situation is analogous to the Consortium filing suit itself,
making a full recovery, and then paying its attorneys their fees
the right of recovery would not be hindered, but the attorneys
must be paid for their work.
2. Equitable considerations allow for a pro rata
reduction.
Federal and state statutes do not provide a clear
answer as to whether the Consortiums statutory health care
provider lien can be reduced by a pro rata share of the attorneys
fees expended to acquire settlement proceeds; therefore, we
follow the approach of Cooper and the New Mexico Supreme Court
and apply equitable considerations. Rehbock and Joyner each
argue that the Consortium would obtain a windfall if it recovered
on its lien but received its legal services at the expense of
Warden and E.R. They are thus each making what amounts to an
unjust enrichment argument. Under Alaska law, to establish that
pro rata reduction of the Consortiums lien is necessary to avoid
unjust enrichment, Warden and E.R. must each show that (1) either
they or their attorneys conferred a benefit upon the Consortium;
(2) the Consortium appreciated the benefit; and (3) it would be
inequitable for the Consortium to accept and retain the benefit
without paying Rehbock or Warden the value thereof.36
At times, the Consortium implies that Rehbock and
Joyner conferred no benefit upon it all that Rehbock offered the
Consortium was the opportunity to litigate the Consortiums lien
with him at the same time that Rehbock was defending his claim to
have rendered legal services to the Consortium. [The Consortium]
only got any money from Joyner by litigating against him. The
Consortium points our attention to the fact that after eight
months of disputing [the Consortiums] lien, Joyner then claimed
to have benefited [the Consortium].
We conclude that the Consortiums argument is misplaced.
If the Consortium felt burdened by the litigation dispute over
the validity of the lien, it could have moved for Civil Rule 82
attorneys fees once it prevailed on that issue. But the
litigation expenses that the Consortium incurred while defending
the lien do not negate the labor and funding that Rehbock and
Joyner contributed in asserting a cause of action against the
third-party tortfeasors. The benefit conferred was that the
Consortium did not pay anything for the legal services Rehbock
and Joyner rendered in securing the funds that would be used to
satisfy the Consortiums lien. Rehbock and Joyner thus each
benefited the Consortium, and the Consortium appreciated those
benefits. We must next consider whether it would be unjust to
allow the Consortium to benefit without paying for its share of
the legal fees and costs.
As noted above, in Cooper v. Argonaut Insurance Cos.,
we interpreted a workers compensation statute with language
similar to AS 34.35.475 to allow for a pro rata reduction for
attorneys fees and costs.37 Part of our reasoning was that the
Legislature did not intend the employers compensation carrier to
secure a windfall profit at the employees expense, noting that
when the carrier recovers from a third-party tort-feasor as a
result of the employees suit, the recovery is an unexpected
return because the premium paid by the employer is normally based
on a projected injury loss without regard to possible third-party
claims.38 We declared that requiring an employer or compensation
carrier to pay its pro rata share for the recovery of the
unexpected funds prevents the entire burden of the litigation
[from being] borne by the employee. The carrier would take the
benefit of both the employers premium and the employees
litigation effort. This would result in the carriers unjust
enrichment.39 We also cited with approval a California Supreme
Court decision requir[ing] the passive beneficiaries to bear a
fair share of the costs.40
Rehbock and Joyner each argue that the Consortium
should bear its share of the costs to prevent Warden and E.R.
from incurring the full cost of recovery and letting the
Consortium receive a windfall. The Consortium argues that Cooper
is not applicable here. The Consortium maintains that Cooper
does not support an attorneys right to claim attorneys fees and
costs from a nonparty that is claiming a hospital lien. The
Consortium further notes that hospital liens have a different
legislative history, purpose, and set of circumstances than
workers compensation. 41
The Consortiums distinctions do not undermine the
applicability of the reasoning of Cooper to this case. The
issues of preventing a carrier from securing a windfall at the
employees expense, preventing the entire burden of the litigation
from being borne by the injured plaintiff, preventing unjust
enrichment, and requiring passive beneficiaries to share in the
costs of recovery are all equitable considerations that translate
well to this case. The fact that the Consortium, unlike the
compensation carrier, expects to recover from third parties does
not alter the equitable considerations involved in determining
whether the Consortium should have to pay its share of the costs
of obtaining that recovery.
Again, we conclude that the New Mexico Supreme Court
decision in Martinez v. St. Joseph Healthcare System is
instructive here. As noted above, that court interpreted a
statute similar to AS 34.35.475, determined it to be ambiguous,
and thus looked to the relevant policy considerations to
determine the most equitable result.42 Instead of following other
jurisdictions decisions, the New Mexico court chose to follow its
own analogous rulings and so looked to a workers compensation
decision in which the New Mexico Court of Appeals held that an
employer and a worker were to apportion the legal expenses
necessary to obtaining a judgment against a third-party
tortfeasor, on the grounds of fundamental fairness.43 The court,
therefore, looked to its own version of Cooper.
The New Mexico court concluded that in hospital lien
cases the common-fund doctrine most appropriately defines the
duties and liabilities of the parties and provides the most
fundamental fairness.44 The court explained:
In hospital lien cases, the hospitals right
to assert a lien, and its right to recovery
based on that lien, depend by statute on the
obtaining of a judgment or settlement. The
proceeds of that judgment or settlement
operate as a fund, and, without the fund, the
hospital has nothing upon which to assert a
lien under the Act. By seeking payment from
the fund in reliance on the lien, the
hospital directly receives the benefits of
the work done by the patients attorney.
Further, as in [the Court of Appeals case],
the estate bore the initial expenses and
risks of litigation. Because of this, it
would be fundamentally unfair to allow the
Hospital to collect on its lien without
paying its prorated share of the legal
expenses.[45]
The New Mexico courts reasoning is again persuasive and
applicable to this case.46
In the past, we have examined the common fund doctrine
and its purpose of preventing unjust enrichment. The doctrine
holds that a litigant or a lawyer who recovers a common fund for
the benefit of persons other than himself or his client is
entitled to a reasonable attorneys fee from the fund as a whole. 47
The doctrine is implicated any time one litigants success
releases well-defined benefits for a limited and identifiable
group of others.48 An underlying rationale of the doctrine is to
prevent unjust enrichment: As explained by the United States
Supreme Court, persons who obtain the benefit of a lawsuit
without contributing to its cost are unjustly enriched at the
successful litigants expense. 49
We determine that application of the common fund
doctrine here is appropriate for the same reasons we described
in Edwards v. Alaska Pulp Corporation:
The primary reasons for applying the common
fund doctrine to this case are to prevent
unjust enrichment and provide reasonable
compensation to class counsel. In this case,
the plaintiffs lawyers created a fund that
would not otherwise exist. The fund contains
a specified amount, and it benefits a limited
community. . . . Thus the doctrine allows
fees to be spread among those benefited by
the suit in proportion to the benefits they
received. Without application of the
doctrine in this case, the funds
beneficiaries would receive a clear benefit
from the efforts of the plaintiffs attorneys
whose work created the fund, while those
attorneys would not be sufficiently
compensated. We conclude that the facts in
this case give rise to the unjust enrichment
or free rider concerns that the common fund
doctrine is intended to address, and that
application of the doctrine to this case is
appropriate.[50]
Other jurisdictions have established notice and intent
prerequisites for the application of the common fund doctrine as
it relates to pro rata reduction of attorneys fees.51 We decline
to apply these prerequisites to the cases at hand, and instead
follow the reasoning adopted by the New Mexico Supreme Court and
our previous decision in Edwards. We conclude that it would be
unfair to allow the Consortium to collect on its health care
provider lien without paying a pro rata share of attorneys fees
when, without the common fund created by the plaintiffs lawyers,
the Consortium would have nothing upon which to enforce its lien.
The Consortium is ready and willing to take the benefits of the
common fund; therefore, it must also pay a fair share of the
expenses used to obtain the fund.
The Consortium disputes the relevance of the benefit it
receives, claiming that both Rehbock and Joyner were officious
intermeddler[s] who conferred incidental benefits on the
Consortium and thus cannot appeal to claims of unjust enrichment.
The Consortium also contends that because no contract existed
between it and Rehbock, any benefits he conferred upon the
Consortium were gratuitous and do not require restitution.52 The
Consortium maintains that Rehbock did not engage in active
representation on the Consortiums behalf, but rather was working
for his own client in conducting the settlement as he did, making
the Consortium merely an incidental beneficiary. In support of
this assertion, the Consortium cites to the Washington Supreme
Court decision in Lynch v. Deaconess Medical Center, which held,
in part, that the fact that Deaconess eventually recovered this
amount [that it was owed] is only an incidental benefit derived
from Mr. Lynchs services to his client.53
We decline to follow the reasoning of the Washington
Supreme Court, instead we adopt the approach of the New Mexico
Supreme Court in Martinez which also explicitly rejected the
hospitals claim that it was merely an incidental beneficiary of
the lawyers services for his client:
We do not agree that the benefit the hospital
receives from the judgment or settlement is
merely incidental. If the attorney for the
patient does not secure a judgment or
settlement, the hospital has nothing to which
it may attach its lien. At that point, the
hospital/patient relationship truly is
nothing more than a creditor/debtor
relationship, and the hospital must use its
own legal resources to recover its funds. In
contrast, if the patients attorney secures a
judgment or settlement (as the attorney did
in this case), the hospital recovers money
due without expending its legal resources.
If we did not allow division of the legal
costs, hospitals would be encouraged to sit
back and reap the rewards of anothers labor
at that partys expense. We do not believe
that is consistent with public policy in New
Mexico.[54]
Distinguishing indirect beneficiaries such as mortgage holders or
utility companies that are paid by customers who have secured
recoveries, the court observed that providers that have contract
assignment, subrogation, or statutory lien rights . . . have a
recognized interest in the accumulation of a fund from a specific
source and receive a direct benefit from the attorneys labor.55
Again, we conclude that the New Mexico Supreme Courts reasoning
is persuasive: The Consortium benefited directly, not
incidentally.
The final policy argument we consider is the
Consortiums allegation that Rehbock and Joyner committed a
variety of ethical violations that should prevent them from
obtaining a pro rata fee from the Consortium. We conclude that
these ethical allegations lack a sound basis in both cases.
First, in Warden, the Consortium charges that
Ethics Opinion 92-3 requires an attorney in charge of settlement
funds containing a specific allocation for a third-party lien to
use the amount designated to satisfy the lien. Allstates check
was in payment of medical lien regarding David Warden for
treatment provided as a result of accident on 2/15/2000, was in
the exact amount of the Consortiums lien, and was made payable to
the order of Rehbock Rehbock & Wittenbrader in trust for David
Warden, and ALASKA Native Medical Center. The Consortium alleges
that Allstate intended the lien to be paid in full.
The Consortium further accuses Rehbock of now claiming
to be attorney for the Consortium, of being an unethical attorney
in segregat[ing] the funds in the settlement to make his own
claim to the funds without the nonclients consent, and of
switching sides mid-settlement [to] structure a forced exchange.
The Consortium also alleges that there is no evidence that
Rehbocks fee agreement with Warden was a fee-sharing arrangement
that would allow Rehbock to claim attorneys fees from the
Consortium, and thus that Rehbocks attempt to do so crosses the
line marked by Rule of Professional Conduct 1.8(f); he is now
demanding compensation for representing [another] client . . .
other than [the first] client. The Consortium cites to our
previous decisions that once a conflict of interest or ethical
violation is established, the attorney is prohibited from
collecting fees.56
The Consortiums claims of ethical violations are
without merit. Ethics Opinion 92-3 speaks of a valid assignment
or perfected lien and indicates that the attorney is obligated to
withhold and segregate those funds in question when disputes
arise. Rehbock thus correctly declares that Ethics Opinion 92-3
does not suggest that an attorney must pay the full amount of a
lien where there is a dispute regarding the liens validity,
amount, and susceptibility to pro rata reduction for fees, but
rather simply directs the attorney to allow the court to decide
the dispute. And the superior court did not err in invading the
settlement for a reduction for fees as the Consortium alleges.
Rehbock recognizes that Rule of Professional Conduct
1.15 clearly calls for him to keep separate the disputed joint
check, since the rule directs that if a dispute arises concerning
the interests of an attorney and a third-party property that is
in the attorneys possession, the attorney should keep the
property separate. Rehbock notes that the Allstate check was
payable to Warden and ANMC and thus required them to resolve
their dispute as to who was entitled to how much of it. We agree
with Rehbock that he handled the disputed check in accordance
with the Rules of Professional Conduct. None of the Consortiums
ethical allegations bear up under scrutiny.
Second, in E.R., the Consortium alleges that Joyner had
a conflict of interest because he was attempting to claim his own
fees from the settlement funds and because an attorney acts
unethically in asserting a claim to trust funds for which he or
she is trustee after his or her firm has been paid in full. The
Consortium also alleges that Joyners attempt to secure additional
fees for himself from the liened funds undercuts the statutory
lien and goes against Rule of Professional Conduct 1.8(f), as he
is now demanding compensation for representing [another] client .
. . other than [the first] client. The Consortium asserts that
Joyner could have refused to advocate the lien in the settlement
or could have negotiated with the Consortium (with E.R.s consent)
for the price of his advocacy, but that [w]aiting until after
settlement to claim more money is unethical. The Consortium
further maintains that Joyner violated Rule of Professional
Conduct 1.15(b) which requires an attorney, upon receiving funds
in which a third person has an interest, to promptly notify that
person and to promptly deliver to the . . . third person any
funds or other property that the . . . third person is entitled
to receive. The Consortium advances an argument similar to the
one asserted in Warden, citing to Alaskas general rule that once
a conflict of interest or ethical violation is established, the
attorney is prohibited from collecting fees.57
We determine that the Consortiums claims are inaccurate
for several reasons. First, Joyner was not attempting to secure
more fees for himself, as his fees had already been paid; rather,
he was seeking on behalf of his client to require the Consortium
to reimburse E.R. for a portion of E.R.s expenses. Second, the
only basis on which the superior court appears to have found a
conflict of interest was the fact that Joyner advocated the lien
in the settlement and then advocated against its validity
afterwards. But Joyners position on the liens behalf does not
amount to an unethical breach. Third, Joyner properly disclosed
the receipt of the funds into his trust account, gave notice that
there was a dispute over the amount that the Consortium was
entitled to receive, and informed the Consortium that the funds
would be held in trust until the dispute was resolved.58 We
conclude, therefore, that the Consortiums ethical allegations
against Joyner are unfounded.
IV. CONCLUSION
Because the Consortium has a federal right to enforce a
statutory health care provider lien to the same extent that a
nongovernmental medical provider has such a right under state law
and because the Consortium would be unjustly enriched if it
benefited from settlement proceeds without paying a share of the
attorneys fees that created the settlement, we AFFIRM the
superior courts determinations in both cases. We hold that the
Consortium can foreclose on its statutory health care provider
lien and that its recovery should be subject to a pro rata
reduction for its share of attorneys fees and costs.
_______________________________
1 These cases were not consolidated for briefing or
argument. We have consolidated them for purposes of the opinion
because they share similar factual backgrounds and raise similar
legal issues.
2 The Consortium appeals the reduction in both cases.
Only in Warden, however, did the patient file a cross-appeal of
the superior courts determination that the Consortium could
foreclose on its lien.
3 Bennett v. Weimar, 975 P.2d 691, 694 (Alaska 1999).
4 Jackinsky v. Jackinsky, 894 P.2d 650, 654 (Alaska
1995).
5 Jerue v. Millett, 66 P.3d 736, 740 (Alaska 2003)
(quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)).
6 25 U.S.C. 1621u(a) (2001).
7 Whenever possible, we construe each part or section
of a statute with every other part or section, to produce a
harmonious whole. Romann v. State, Dept of Transp. & Pub.
Facilities, 991 P.2d 186, 190 (Alaska 1999) (quoting Benner v.
Wichman, 874 P.2d 949, 957 (Alaska 1994)); see also Nystrom v.
Buckhorn Homes, Inc., 778 P.2d 1115, 1122 (Alaska 1989) (We are
supported in our conclusion concerning the meaning of the term
individual by reference to the usage of that term in other
sections of the lien law.).
8 See generally Yukon-Kuskokwim Health Corp. v. Trust
Ins. Plan of Southwest Alaska, 884 F. Supp. 1360 (D. Alaska
1994).
9 Warden also points to 25 U.S.C. 1681, which prohibits
the Indian Health Service from charging Indians with the economic
means to pay until Congress selects a policy for doing so, which
it has not yet done. Apart from sharing the same faulty root,
the Consortium correctly points out that 1681 is now omitted
from the United States Code, as it was an appropriations rider in
1996 that was never subsequently reenacted. See 25 U.S.C.A.
1681 (West 2003).
10 This reasoning also defeats another claim of Wardens,
namely that AS 34.35.450 (discussed below) does not create a new
right or cause of action against Warden or Wardens funds. Again,
enforcement of the Consortiums lien was not a new cause of action
against Warden or his funds since Warden negotiated for a
separate check for ANMC; thus, those funds are not Wardens.
11 Alaska Statute 34.35.450(b) provides:
When the person receiving hospitalization has
a contract providing for indemnity or
compensation for the sum incurred for
hospitalization, the hospital has a lien upon
the amount payable under the contract. The
party obligated to make reimbursement under
the contract may pay the sum due under it
directly to the hospital, and this payment is
a full release of the party making the
payment under the contract in the amount of
the payment.
12 884 F. Supp. 1360 (D. Alaska 1994).
13 Id. at 1362.
14 Id.
15 Id.
16 Id. at 1363.
17 Id.
18 Id. at 1368.
19 The Consortium also makes a less convincing state law
argument to support its position, pointing to AS 34.35.025, which
applies to several other types of liens and which authorizes
foreclosure actions against all parties personally liable . . .
and all other persons interested in the matter in controversy or
the property sought to be charged with the lien. The Consortium
argues that this statute shows that the legislature understood
the difference between defendants who are personally liable and
those with an interest in the property and yet included both as
possible parties, and that given AS 34.35.930s call for liberal
construction of the lien chapter, this means at least that the
acknowledgment of different types of defendants for one group of
lienholders provides an analogy for others. This other statute
only shows, however, that the Legislature recognized that not all
parties to lien foreclosure actions have to be persons personally
liable; it does not establish that someone who is personally
liable for the debt need not exist.
20 25 U.S.C. 1621f (2001) provides:
(a) . . . all reimbursements received or
recovered, under authority of this chapter, .
. . or any other provision of law, by reason
of the provision of health services by . . .
a tribe or tribal organization under a
contract pursuant to the Indian
Self-Determination Act . . . shall be
retained by . . . that tribe or tribal
organization and shall be available for the
facilities, and to carry out the programs, of
. . . that tribe or tribal organization to
provide health care services to Indians.
(b) The [Indian Health] Service may not
offset or limit the amount of funds obligated
to any service unit or any entity under
contract with the Service because of the
receipt of reimbursements under subsection
(a) of this section.
21 See AS 45.03.104(a).
22 See Ulmer v. Alaska Rest. & Beverage Assn, 33 P.3d 773,
776 (Alaska 2001) (A claim will be deemed moot if it has lost its
character as a present, live controversy. We have further held
that a case is moot if the party bringing the action would not be
entitled to any relief even if it prevails.) (internal quotations
and alterations omitted).
23 Restatement of Restitution 74 (1937).
24 Martinez v. St. Joseph Healthcare Sys., 871 P.2d 1363,
1365 (N.M. 1994).
25 The Consortium maintains that the public policy in
favor of settlements would be disrupted if the delegation of lien
funds from an insurance carrier to the plaintiffs attorney became
a source of contention. However, there will only be contention
as long as there is uncertainty, which this opinion should
resolve.
26 556 P.2d 525, 526 (Alaska 1976).
27 Id.
28 The Consortium also cites to Rhoad v. McLean Trucking
Co., 686 P.2d 483, 487 (Wash. 1984), a Washington workers
compensation case. However, that case not only involved an
unambiguous statute, id. at 485, it also explicitly noted that
our decision in Cooper provided for apportionment of fees and
thus was contrary to the rule in [Washington] that a statutory
right to reimbursement is not to be diminished absent an express
statutory provision. Id. at 487.
29 556 P.2d at 527-28.
30 Martinez v. St. Joseph Healthcare Sys., 871 P.2d 1363,
1365 (N.M. 1994) (quoting N.M. Stat. Ann. 48-8-1 (1978)).
31 Id.
32 Ch. 75, 2, SLA 1959 (emphasis added).
33 Municipality of Anchorage v. Suzuki, 41 P.3d 147
(Alaska 2002).
34 871 P.2d at 1368.
35 See State Farm Mut. Auto. Ins. Co. v. Geline, 179
N.W.2d 815, 820 n.5-9 (Wis. 1970) (citing to cases in other
jurisdictions awarding proportionate fees because holder of
subrogated interest did not participate in action but received
benefit of it, including Vignali v. Farmers Equitable Ins. Co.,
216 N.E.2d 827 (Ill. App. 1966), which it described as holding
that since such expenses would have been paid by the insurer if
it had initiated the action the result should have been the same
even if such recovery was secured by the insured).
36 See Bennett v. Artus, 20 P.3d 560, 563 (Alaska 2001).
37 556 P.2d 525, 526 (Alaska 1976).
38 Id. at 527.
39 Id.
40 Id. at 527 n.11 (citing Quinn v. State, 539 P.2d 761,
764-65 (Cal. 1975)). Although not addressing any equitable
underpinnings, we also addressed pro rata reductions in dicta in
Ruggles ex. rel Estate of Mayer v. Grow 984 P.2d 509, 512 (Alaska
1999). The present case differs from Ruggles in that the
Consortium is not an insurer and Warden was not its insured. But
as argued by the attorney in the companion E.R. case, since
Alaska Natives are entitled to free care at ANMC, the Consortium
could be seen as being like an insurer in that it must bear the
financial burden of providing health care notwithstanding any
likelihood of recovering from third parties. Ruggles might thus
provide additional jurisprudential support for requiring the
Consortium to bear its pro rata share of fees.
41 The Consortium points out, for instance, that workers
compensation carriers do not compute their premiums with third-
party recovery in mind, as opposed to the Consortiums funding
mechanism, which does. The Consortium also argues in Warden
(without citing any support) that letting Rehbock govern the
tortfeasor litigation and the settlement negotiation and
management is a Congressionally anticipated act of self-restraint
on the part of its tribal health contractors. This is not
conduct to be characterized disparagingly as free or easy riding.
42 Martinez v. St. Joseph Healthcare Sys., 871 P.2d 1363,
1365 (N.M. 1994).
43 Id. at 1366.
44 Id.
45 Id. at 1366-67 (citations omitted).
46 The only real difference is that the patients suit was
against her own insurer and not a tortfeasors, but as already
noted, the Consortium has the same right of recovery as an
individual does for reimbursement, so this distinction is not
meaningful.
47 Edwards v. Alaska Pulp Corp., 920 P.2d 751, 754 (Alaska
1996) (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478
(1980)).
48 Id. at 755.
49 Id. at 754 (quoting Boeing, 444 U.S. at 478); see also
Municipality of Anchorage v. Gentile, 922 P.2d 248, 267 (Alaska
1996).
50 920 P.2d at 756 (footnote and citation omitted).
51 See Oakley v. Firemans Fund of Wis., 470 N.W.2d 882,
887 (Wis. 1991); State Farm Mut. Auto. Ins. Co. v. Geline, 179
N.W.2d 815, 822 (Wis. 1970); In re Marriage of Meadows, 492
N.W.2d 656, 658 (Iowa 1992).
52 Restatement of Restitution 2 (1937) (A person who
officiously confers a benefit upon another is not entitled to
restitution therefor.); id. 112.
53 776 P.2d 681, 683 (Wash. 1989).
54 871 P.2d at 1367.
55 Id. at 1367-68.
56 In re Estate of Brandon, 902 P.2d 1299, 1317 (Alaska
1995) (In Alaska, the general rule has been that once a conflict
of interest or other ethical violation has been established, the
attorney is prohibited from collecting fees for his or her
services.).
57 Id.
58 Furthermore, even assuming that the superior courts
finding of a conflict of interest were correct, the finding would
not necessarily have precluded the court from wielding its
equitable powers to award fees to Joyner. See Bennett v. Artus,
20 P.3d 560, 563 (Alaska 2001) (holding that, even though trial
court condemned conduct of attorney who had a conflict of
interest, trial court could have permissibly concluded that
greater inequity would result by allowing opposing party to
retain benefit of attorneys uncompensated contributions).
