By David White
Two
decisions handed down by the Supreme Judicial Court in early March, 1999,
demonstrate the wide variety of techniques used by the court when
interpreting statutes. Though separated by just one day, the two cases
represent the opposite poles of statutory interpretation despite clear
statutory language in each case. Both cases yielded similar results: The
insurers' arguments were accepted, and longstanding practices in the field
of personal injury were drastically altered.
The
two cases were Pierce v. Christmas Tree Shops, 429 Mass. 91 (1999)
and Dominguez v. Liberty Mutual Insurance Company, 429 Mass. 112
(1999). The Pierce case concerned the interpretation of the medical
lien statute, and the Dominguez case concerned the interpretation of
the personal injury protection statute.
No
Imagination Required. In Pierce, the court made short work
of plaintiff's contention that she was entitled to a reduction of a medical
care lien under G.L. c. 111, § 70A-70D. The underlying facts were
straightforward. Ms. Pierce suffered personal injury while shopping at the defendant's
premises as a result of the defendant's negligence. She incurred significant medical bills, which were paid by her
medical provider, Harvard Pilgrim Health Care of New England. The case
settled shortly before trial.
Difficulties arose when the medical insurer refused to accede to plaintiff's
request for a reduction of the lien. Plaintiff filed a motion in Superior
Court for determination of the lien amount, and the judge determined that
HPHC should bear a proportional share of the attorney's fees, namely
one-third as provided by the plaintiff's contingent fee agreement.
Of
course, this result was in harmony with common practice among plaintiffs and
medical lien holders; plaintiff's counsel typically requested and received
reductions in the liens of insurers and hospitals. These reductions were in
consideration of the work performed by plaintiff's counsel, as well as in
consideration of the fact that a compromise of the lien was often the
necessary ingredient to allow the case to settle, guaranteeing some measure
of satisfaction to all. Equitable principals were at work as well. Lien
holders recognized that fees were incurred to recover on their behalf. As
with workers' compensation liens (G.L. c. 152, § 15) and Medicare liens 42
C.F.R. § 411.37, which provide a specific statutory framework for
sharing attorney's fees, medical lien holders consistently recognized the
equitable duty to share the burden of counsel fees.
The
equitable considerations had no sway with the Supreme Judicial Court.
Instead, the court resorted to a very precise statutory interpretation of
the language of the statute. Finding no express provision for payment of
attorney's fees or costs, the court completely rejected plaintiff's
arguments for relief. The court also, in a portentous footnote, rejected the
notion that the subrogation clause in the insurance contract should be the
basis for relief. The court reasoned that, although subrogation is an
equitable doctrine, the contract is silent as to attorney's fees, leaving
the plaintiff responsible for them.
The
court's decision was a grave disappointment to the plaintiffs' bar, and it
upset decades of tradition and practice. Two net results are obvious:
Plaintiffs will recover less, and cases will become more difficult to
settle. But at the same time, the basis for the court's unanimous decision
was clear: Both the contract and the statute were silent on the matter of
attorneys' fees and costs. The court quoted a number of cases in support of
its method of statutory interpretation. "'We cannot interpret a statute
so as to avoid injustice or hardship if its language is clear and
unambiguous and requires a different construction' . . . 'If the Legislature
has intentionally omitted a provision from a statute, no court may then
reintroduce it.'" Pierce at 93, quoting (respectively) Rosenbloom
v. Kokofsky, 373 Mass. 778, 780-781 (1977), Bay State Gas Co. v.
Local No. 273, Util. Workers Union, 415 Mass. 72, 75 (1993). These
standards would have seemed applicable to other matters pending before the
court.
What
a Difference A Day Makes. After reading Pierce, one was
left with the conviction that our court would, at least, hew to a
straightforward line regarding interpretation of the plain language in
insurance statutes. Instead, on the following day the court delivered its
opinion in Dominguez, in which it subscribed to a completely
different set of standards for statutory interpretation. Dominguez
concerned the interpretation of the definitions in the Personal Injury
Protection statute, G.L. c. 90, § 34A. The plaintiff, Mr. Dominguez, was
the victim of an automobile accident. As a result of the car crash, she
incurred medical expeneses. The first $2,000 of his medical bills
was covered, without question, by the PIP carrier, Liberty Mutual. The bill
for the balance was rejected by the Liberty Mutual since it had not been
submitted to the health maintenance organization, Harvard Community Health
Plan. HCHP rejected the bill because the provider was outside of the group.
Liberty Mutual then rejected the bill, arguing the plaintiff was required to
treat within his plan.
The
statutory language in § 34A, the section which provides definitions
regarding the PIP statutes, is very simple and clear. In pertinent part, in
the subsection for the definition for "personal injury
protection," it reads, "Nothing in this subsection shall be
construed to compel a claimant to renew or maintain any policy of insurance
in force prior to receipt of the said tender, or to interfere in any way
with the claimant's choice of physician or course of medical
treatment." Unfortunately, the majority of the court reasoned away the
broad application of that sentence.
Instead of turning to the plain meaning of the sentence, the court looked
first to the overall intent of the PIP statute, which the court determined
was to control the costs of compulsory auto insurance. The court next
determined that there was a "mandate" that claimants utilize
existing health insurance for medical expenses that exceed the $2,000 PIP
limit. The court then determined that the word "subsection" in the
portion of § 34A quoted above applied only to the last three sentences of
the paragraph in which it was found, rather then the entire paragraph, and
rather than the entire logical subsection of § 34A concerning the
definition of "personal injury protection." Continuing, the court
reasoned that any shifting of expenses to the PIP carrier would
"frustrate" the goal of the statute. Dominguez at
116-117
The
strained reasoning of the statute and its legislative history was certainly
bad enough. The court did not end there. Instead, the majority pronounced
that Mr. Dominguez had failed to cooperate and deal in good faith with his
insurance companies, and had violated the applicable law. Id. at 118.
There
was a sharp dissent, authored by Justice Ireland, and joined by Justice
Lynch. As the dissent points out, the statute was susceptible to a much more
sensible reading, one that preserved the overall statutory scheme of
coordinating benefits, but also providing coverage for all reasonable
expenses, including expenses outside of the medical plan, incurred as a
result of an automobile accident. The dissent also illustrated the flaws in
majority's assessment of the intent of the statute. "The amendment was
intended to stop insured parties from receiving double recoveries, not to
complicate the inured party's ability to obtain payment for medical-related
expenses." Dominguez at 120, citing Creswell v. Medical W.
Community Health Plan, Inc., 419 Mass. 327, 329-330 (1995).
The dissent also correctly realized the magnitude of the injustice
worked by the majority opinion. "Given the absence of notice to
policyholders to date, we should not permit our decision to deny coverage of
benefits to policyholders for injuries already suffered and for medical
treatment already received." Dominguez at 120.
The
result is, again, a shock to the plaintiff's bar. Roughly ten years of
practice regarding coordination of benefits was turned on its head. There
are many injustices worked by the result of the case. The biggest of these
is that claimants with limited health insurance are left with the most
limited options for health care, while claimants with no health insurance
have no limitations whatsoever on their choice of providers. The decision
left an important question unanswered: How will bills for care outside of
the health plan be covered? In other words, if the health plan does not
provide coverage for a service, such as physical therapy, will the PIP
carrier still be obligated to cover that service? Arguments can be made
either way based on the language of Dominguez.
Conclusion.
These most recent cases demonstrate again the determination of the court
to construe insurance statutes in a manner which achieves the purpose of
keeping insurance rates low. While this may be a laudable goal, it certainly
constitutes an intrusion into the legislative arena. This is especially so
where, as in Dominguez, the statutory language, nearly a decade of practice,
and significant consumer interests militate against the court's conclusion.
Sadly, once again, it is the unfortunate victims of accidents who bear the
burdens of the court's decisions.
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