Opinion
No. CV 08-5021216S
April 4, 2011
MEMORANDUM OF DECISION RE MOTION FOR ATTORNEYS FEES AND COSTS
Plaintiff's counsel seeks an award of attorneys fees pursuant to General Statutes § 52-400c as a result of the additional efforts he claims he has had to undertake after verdict in order to secure the payment of a judgment in favor of his client, plus costs. That statute, in pertinent part, permits the court, in its discretion, to award an attorneys fee "that is reasonable and necessary for the enforcement of rights pursuant to a post-judgment procedure that is held on a claim or defense that the court determines was made for the purpose of harassment or solely for the purpose of delay." The court appreciates the fact that plaintiff's counsel has indeed had to undertake far more than the usual post-judgment activity in order to secure his client's judgment. On the basis of the evidence presented, however, the court cannot conclude that the actions of the defense that occasion this motion were "made for the purpose of harassment or solely for the purpose of delay," and the motion must therefore be denied.
This case, however, raises an important question about the rights and responsibilities of parties to a civil action when faced with certain state statutory liens. For that reason, and the fact that the situation that led to this motion, or, at least, some variant of it, is capable of repetition, the court will discuss the reasoning behind its ruling in some detail.
The underlying facts are not in serious dispute. A jury returned a verdict in favor of the plaintiff on August 27, 2010, in the amount of $8,894.73. Following a collateral source hearing, that award was reduced to $4,894.73, and the court also awarded costs in the amount of $533.73. Approximately a month after the verdict, the defendant's insurer received notice of a Texas child support lien against the proceeds of the plaintiff's recovery. Although plaintiff's counsel assured both defense counsel and the insurance adjuster that all liens would be the plaintiff's responsibility, the insurer refused to issue a check to the plaintiff and his attorney. The insurer initially forwarded plaintiff's counsel a check made payable to "Carbutti Law Firm and Office of Attorney General Special Collections Unit and Mathis McBride" in the incorrect amount of $4,894.73, thereby both adding a payee and omitting the award for costs. Plaintiff's counsel refused to accept the check, based both on the incorrect amount and the inclusion of the attorney general as a payee. Numerous telephone calls and correspondence followed. Finally, on December 27, 2010, some three months after the verdict, the insurer, at last satisfied that the lien had been resolved, issued a check for the full amount of the jury award plus costs, made payable to the plaintiff and his attorney only.
Pointing to the insurer's failure to make any offer at all until the beginning of jury selection, and only a nominal amount even then, the plaintiff argues that the failure to issue a check promptly to the correct payees and in the correct amount is a reflection of a pattern of harassment and perhaps an indication of intentional delay. The defendant counters first, that failure to include costs was a mere clerical error; and, second, that, having been placed on notice of the child support lien, its inclusion of the attorney general as a payee was only doing what was necessary to protect itself from any claim against it being made by the State of Texas. Defense counsel acknowledges, however, that no legal research was done to support the conclusion that the check should be made payable to the attorney general's office as well as the plaintiff and his counsel, and she further acknowledges that the plaintiff at all times was willing to sign a release that included his taking full responsibility for any outstanding liens, including the lien in question.
Despite these facts, as well as the defense's having taken a "no-pay" position throughout the proceedings leading up to and through the trial, there is no basis for the court to conclude that the intent of the defense in delaying the issuance of the final check was to harass the plaintiff. Furthermore, the plaintiff has not established that the failure to include costs in the check was anything other than an oversight.
As for the claim that the insurer withheld the check solely for purposes of delay, and although one can appreciate the plaintiff's annoyance at the delay, the court has no basis for concluding that the actions of the defendant, his attorney or his insurer were undertaken "solely" for the purposes of delay. To the contrary, and although neither the defendant nor its insurer was specifically alleged this in the course of these proceedings, the insurer was statutorily obligated to withhold the funds upon its notification of the support arrearage. In Torres v. Kunze, 106 Conn.App. 802, 945 A.2d 472 (2008), a case that had been cited by neither party to this case, the defendant's insurer had settled the plaintiff's claim prior to the institution of a lawsuit. After the release had been signed, however, the insurer, Geico, learned of the existence of a child support lien and refused to make the payment until it had received notice that the lien had been satisfied. The plaintiff then brought suit against both the alleged tortfeasor and Geico. The latter moved for summary judgment on the ground that Geico was required by General Statutes § 52-362d(d) to withhold the plaintiff's settlement funds once it became aware of plaintiff's status as child support obligor. The trial court granted that motion, and the Appellate Court affirmed the decision.
"[General Statutes §] 52-362d applies when orders of support are to be paid to the state by and through the Title IV-D agency and the obligor owes past due support of $500 or more. In such circumstances, the state is provided with a one hundred percent lien on any property, real or personal, in which such person has an interest. This statute is separate and distinct from [General Statutes] § 17b-93, and any § 17b-93 lien would be in addition to a lien for past due support obligations. Moreover, § 52-362d(d) and (e) were adopted as one component of a comprehensive child support enforcement plan mandated by Title IV-D of the Social Security Act, 42 U.S.C. Section 651 et seq. . . . It was part of the legislature's effort to satisfy the requirement of the Child Support Enforcement Amendments of 1984 . . . to establish . . . statutory procedures for withholding from income amounts payable as support, . . . for imposing liens against real and personal property for amounts of overdue support . . ." (Citations omitted; internal quotation marks omitted.) State v. Moreland, 47 Conn.Sup. 583, 587-88, 817 A.2d 767 [ 33 Conn. L. Rptr. 626] (2003).
The inclusion of the Attorney General as payee, however, raises a question that is worthy of additional comment, as this course of action went beyond merely withholding the funds as mandated by General Statutes § 52-362d(d). Insurers are rightly concerned about the consequences of settling or paying judgments in cases in which there may be outstanding liens. Examples of governmental liens potentially affecting judgment awards or settlement amounts abound. In Connecticut, individuals receiving state aid through the departments of social services, children and families, mental health and addiction services, and developmental services, may be liable to the state for the amount of assistance received or the cost of care provided. Moreover, individuals who have been sentenced by a court of this state to serve a jail or prison term may be liable for the cost of their incarceration. See Alexander v. Commissioner of Administrative Services, 86 Conn.App. 677, 678-79, 862 A.2d 851 (2004) ("Pursuant to General Statutes § 18-85a, the state of Connecticut is authorized to assess inmates for the costs of their incarceration"). Likewise, federal programs, such as Medicare, often provide statutory mechanisms for government claims against the proceeds of a cause of action brought by a program beneficiary.
"[The department of administrative services] is the state agency charged with administration and enforcement of the state's statutory liens for reimbursement of public assistance as set forth in . . . General Statutes § 17b-93 and 17b-94. The state's claim for reimbursement of public assistance benefits from proceeds of a cause of action of a beneficiary of aid, provided in § 17b-94, is limited to 50 percent of the net proceeds of a cause of action. Administrative services' collections and revenue enhancement department is charged with the administration and enforcement of administrative liens for reimbursement of public assistance." State v. Moreland, supra, 47 Conn.Sup. 585-86.
General Statutes § 17b-94(a) provides: "In the case of causes of action of beneficiaries of aid under the state supplement program, medical assistance program, aid to families with dependent children program, temporary family assistance program or state-administered general assistance program, subject to subsections (b) and (c) of section 17b-93, or of a parent of a beneficiary of the aid to families with dependent children program, the temporary family assistance program or the state-administered general assistance program, the claim of the state shall be a lien against the proceeds therefrom in the amount of the assistance paid or fifty per cent of the proceeds received by such beneficiary or such parent after payment of all expenses connected with the cause of action, whichever is less, for repayment under said section 17b-93, and shall have priority over all other claims except attorneys fees for said causes, expenses of suit, costs of hospitalization connected with the cause of action by whomever paid over and above hospital insurance or other such benefits, and, for such period of hospitalization as was not paid for by the state, physicians' fees for services during any such period as are connected with the cause of action over and above medical insurance or other such benefits; and such claim shall consist of the total assistance repayment for which claim may be made under said programs. The proceeds of such causes of action shall be assignable to the state for payment of the amount due under said section 17b-93, irrespective of any other provision of law. Upon presentation to the attorney for the beneficiary of an assignment of such proceeds executed by the beneficiary or his conservator or guardian, such assignment shall constitute an irrevocable direction to the attorney to pay the Commissioner of Administrative Services in accordance with its terms, except if, after settlement of the cause of action or judgment thereon, the Commissioner of Administrative Services does not inform the attorney for the beneficiary of the amount of lien which is to be paid to the Commissioner of Administrative Services within forty-five days of receipt of the written request of such attorney for such information, such attorney may distribute such proceeds to such beneficiary and shall not be liable for any loss the state may sustain thereby."
General Statutes § 18-85b(a) provides in relevant part: "In the case of causes of action of any person obligated to pay the costs of such person's incarceration under section 18-85a and regulations adopted in accordance with said section brought by such person within twenty years from the date such person is released from incarceration, the claim of the state shall be a lien against the proceeds therefrom in the amount of the costs of incarceration or fifty per cent of the proceeds received by such person after payment of all expenses connected with the cause of action, whichever is less, for repayment under said section, and shall have priority over all other claims, including any lien of the state for repayment of public assistance, except (1) attorneys fees for the cause of action, (2) expenses of suit, (3) costs of hospitalization connected with the cause of action by whomever paid over and above hospital insurance or other such benefits, and, for such period of hospitalization as was not paid for by the state, physicians' fees for services during any such period as are connected with the cause of action over and above medical insurance or other such benefits, (4) child support obligations pursuant to subsection (d) of section 17b-93, (5) restitution or payment of compensation to a crime victim ordered by a court of competent jurisdiction, and (6) payment of a civil judgment rendered in favor of a crime victim by a court of competent jurisdiction; and such claim shall consist of the total amount of the costs of incarceration under section 18-85a and regulations adopted in accordance with said section.
The proceeds of such causes of action shall be assignable to the state for payment of the amount due under section 18-85a, and regulations adopted in accordance with said section, irrespective of any other provision of law. The state's lien shall constitute an irrevocable direction to the attorney for such person to pay the Commissioner of Correction or the commissioner's designee in accordance with its terms, except if, after written notice from the attorney for such person informing the commissioner or the commissioner's designee of the settlement of the cause of action or judgment thereon and requesting the amount of the lien to be paid to the commissioner or the commissioner's designee, the commissioner or the commissioner's designee does not inform such attorney of the amount of the state's lien within forty-five days of receipt of the written request of such attorney for such information, such attorney may distribute such proceeds to such person and shall not be liable for any loss the state may sustain thereby."
See, e.g., 42 U.S.C.A. § 1395y(b)(2)(B)(ii).
Thus, it is altogether appropriate that insurers make certain that the terms of the releases signed by plaintiffs absolve them from any liability for any liens that are a plaintiff's responsibility. Some insurers, however, including the insurer in this case, have tried to avoid this risk by including the lien holder's name on the settlement or judgment check. Because of the practical difficulties such an approach creates, including the problem of trying to find an actual person to endorse the check on the lien holder's behalf, this approach is, at a minimum, unsatisfying.
Notably, the express language of § 17b-94(a) provides only for liability of a beneficiary's attorney.
Moreover, and perhaps more important, there is no authority for an insurer's insistence that it protect a governmental agency's lien by making that agency a co-payee on a check tendered in payment of a judgment or settlement. To the contrary, the recent case of Zaleppa v. Seiwell, 9 A.3d 632 (Pa.Super. 2010), stands for the proposition that, absent express authorization, private parties may not assert the interests of the government (in that case, Medicare) in a post-trial motion or any phase of litigation. Generally, putting an agency's name on a check as a co-payee is neither authorized nor required under federal or state law, and, quite obviously, it is not an efficient way to resolve personal injury lawsuits. See, e.g., Tomlinson v. Landers, United States District Court, Docket No. 3:07-cv-1180-J-TEM (M.D.Fla., April 24, 2009) (holding that there is no requirement that Medicare be made a payee on a check).
Moreover, the addition of a governmental agency as a co-payee on an award check would interfere with the rights and obligations of the parties to an action by preventing full satisfaction of an underlying judgment. Zaleppa v. Seiwell, supra, 9 A.3d 640. While an insurer has a responsibility to assure that governmental agency liens are taken into account, such responsibility is generally discharged by obtaining a written commitment by the plaintiff, either in a release document or in an independent document, to be responsible for the payment of all such liens, unless there is specific statutory authorization to do something else, as is the case with General Statutes § 52-362d(d). See Riccardi v. Strunk, Superior Court, judicial district of New London, Docket No. CV 08 5008671 (January 22, 2010, Cosgrove, J.) (where plaintiff subject to Medicare lien settled personal injury action, "[n]othing in the [settlement and release] agreement [indicated] that the plaintiff [was] obligated to accept a check comprising a portion of the settlement made out to payees other than the plaintiff and his attorney").
"Judgment is defined as the law's last word in a judicial controversy, it being the final determination by a court of the rights of the parties upon matters submitted to it in an action or proceeding." (Internal quotation marks omitted.) Citicorp Vendor Finance, Inc. v. Premier Support Services, Inc., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 04 0286362 (April 26, 2006, Shluger, J.) (citing Black's Law Dictionary (6th Ed. 1990)). "The satisfaction of a judgment refers to compliance with or fulfillment of the mandate thereof . . . There is realistically no substantial difference between the words `paid' and `satisfied' in the judgment context . . ." (Citations omitted.) Mazziotti v. Allstate Ins. Co., 240 Conn. 799, 807, 695 A.2d 1010 (1997).
Notwithstanding the logical appeal of Zaleppa, particularly as applied to the foregoing lien provisions, Torres makes clear that child support liens are different. Parties to a settlement or judgment have an affirmative statutory obligation to withhold payment upon notification of a support arrearage, and the situation is no different when, as here, the lien arises in another state. Moreover, the fact that a payor learns about the lien on its own, rather than having been put on notice by the IV-D agency, is also immaterial. Even where parties have entered into a valid settlement agreement, releasing the settling payor from liability for any outstanding liens of the payee, "Section 52-362d(d) requires . . . a party notified of a claimant's child support arrearages withhold payment to that claimant. Although the statute provides that a IV-D agency may notify any person having authority to distribute amounts to a support obligor to withhold distribution of such amounts, it does not prohibit payors from acquiring this information through alternative means." Torres v. Kunze, supra, 106 Conn.App. 808. In other words, the obligation to withhold payment is not dependent on the payor's having received a directive from the IV-D agency. Even if it discovers the existence of the support obligation as the result of its own inquiries, it is still required to withhold payment until the lien has been satisfied.
The fact that the support lien originated in Texas is immaterial. Error! Main Document Only. General Statutes § 52-362d(d) specifically states that [w]henever an order of the Superior Court or a family support magistrate of this state, or an order of another state that has been registered in this state, for support of a minor child or children is issued and such payments have been ordered through the IV-D agency, and the obligor against whom such support order was issued owes overdue support under such order in the amount of five hundred dollars or more . . . such agency, person, institution or entity shall withhold delivery or distribution of any such benefits, amounts, assets or funds until receipt of further notice from the IV-D agency. (Emphasis added.)
This case reinforces the importance of all counsel making themselves aware of the existence of any liens well in advance of trial or settlement.
For all these reasons, the court can not conclude from the evidence presented that the defendant, its attorney or the insurer undertook the aforementioned course of action for purposes of harassment, nor can it conclude that it was undertaken solely for the purpose of delay. Thus, the court finds no statutory basis for awarding attorneys fees, and the motion is denied.