Rathbun v. Health Net of the Northeast, Inc. ( 2015 )

******************************************************
The ‘‘officially released’’ date that appears near the
beginning of each opinion is the date the opinion will
be published in the Connecticut Law Journal or the
date it was released as a slip opinion. The operative
date for the beginning of all time periods for filing
postopinion motions and petitions for certification is
the ‘‘officially released’’ date appearing in the opinion.
In no event will any such motions be accepted before
the ‘‘officially released’’ date.
All opinions are subject to modification and technical
correction prior to official publication in the Connecti-
cut Reports and Connecticut Appellate Reports. In the
event of discrepancies between the electronic version
of an opinion and the print version appearing in the
Connecticut Law Journal and subsequently in the Con-
necticut Reports or Connecticut Appellate Reports, the
latest print version is to be considered authoritative.
The syllabus and procedural history accompanying
the opinion as it appears on the Commission on Official
Legal Publications Electronic Bulletin Board Service
and in the Connecticut Law Journal and bound volumes
of official reports are copyrighted by the Secretary of
the State, State of Connecticut, and may not be repro-
duced and distributed without the express written per-
mission of the Commission on Official Legal
Publications, Judicial Branch, State of Connecticut.
******************************************************
AMY RATHBUN ET AL. v. HEALTH NET
OF THE NORTHEAST, INC.
(SC 18928)
Palmer, Zarella, McDonald, Espinosa and Vertefeuille, Js.
Argued September 25, 2014—officially released March 10, 2015
Eric P. Smith, with whom, on the brief, were John
P. D’Ambrosio and Joel T. Faxon, for the appellants
(plaintiffs).
Linda L. Morkan, with whom, on the brief, was Theo-
dore J. Tucci, for the appellee (defendant).
Opinion
PALMER, J. The issue that we must resolve in this
certified appeal is whether General Statutes § 17b-265
(a),1 which provides in relevant part that the Depart-
ment of Social Services (department) ‘‘shall be subro-
gated to any right of recovery . . . that an applicant
or recipient of medical assistance . . . has against an
insurer or other legally liable third party . . . that is
. . . legally responsible for payment of a claim for a
health care item or service,’’ authorizes the department
or its designated assignee to seek reimbursement from
a Medicaid recipient for medical costs that the recipient
has recovered from a liable third party. After the named
plaintiff, Amy Rathbun, and the daughter of the plaintiff
Tanequa Brayboy were injured in separate motor vehi-
cle accidents, the defendant, Health Net of the North-
east, Inc. (Health Net), which administered the Medi-
caid program for the state of Connecticut and was the
designated assignee of the department’s rights under
§ 17b-265, paid for medical care that Brayboy’s daughter
and Rathbun received as a result of their injuries. Both
plaintiffs brought civil actions against the persons who
had caused the injuries. Thereafter, pursuant to § 17b-
265, Health Net, acting through its agent, The Rawlings
Company, LLC (Rawlings), sought to recover from the
plaintiffs amounts that the plaintiffs had recovered from
the respective tortfeasors as reimbursement for the pay-
ments made by Health Net for the medical care provided
to Brayboy’s daughter and Rathbun. The plaintiffs then
brought this action seeking, among other things, a
declaratory judgment that § 17b-265 (a) does not autho-
rize Health Net to seek reimbursement from them but
requires it to seek recovery directly from the liable third
parties. Both the plaintiffs and Health Net filed motions
for summary judgment as to the declaratory judgment
count, and the trial court granted Health Net’s motion
and denied the plaintiffs’ motion. After the plaintiffs
withdrew the remaining counts of their complaint, and
the trial court rendered judgment for Health Net, the
plaintiffs appealed to the Appellate Court, which
affirmed the trial court’s judgment. Rathbun v. Health
Net of the Northeast, Inc., 133 Conn. App. 202, 215, 35
A.3d 320 (2012). We then granted the plaintiffs’ petition
for certification to appeal, limited to the following issue:
‘‘Did the Appellate Court properly conclude that . . .
§ 17b-265 permitted [Health Net] to bring an action
against the plaintiffs to recover its collateral source
payments?’’ Rathbun v. Health Net of the Northeast,
Inc., 304 Conn. 905, 38 A.3d 1201 (2012). We answer
the certified question in the affirmative and, therefore,
affirm the judgment of the Appellate Court.
The opinion of the Appellate Court sets forth the
following procedural history and facts, which were stip-
ulated to by the parties and accepted by the trial court.
‘‘Under the Medicaid Act (Medicaid); 42 U.S.C. § 1396
et seq. [2012]; federal financial assistance is provided
to states that choose to reimburse the costs of medical
care to the economically disadvantaged. States may
choose contractors to provide or to arrange for services
under the state Medicaid plan, which is known as Medi-
caid managed care. The state of Connecticut partici-
pates in the Medicaid program and has authorized the
department . . . to administer the program within the
state. The department is authorized to award ‘contracts
for Medicaid managed care health plans’ under General
Statutes § 17b-28b.
‘‘The department contracted with [Health Net]
directly and through its predecessors from 1995 through
2008 regarding the administration of the Medicaid man-
aged care program. The contract provided that ‘[t]he
[d]epartment hereby assigns to [Health Net] all rights to
third party recoveries from Medicare, health insurance,
casualty insurance, workers’ compensation, tortfea-
sors, or any other third parties who may be responsible
for payment of medical costs for [Health Net’s] mem-
bers.’ The contract limited [Health Net’s] right to recov-
ery to the amount that [it] paid toward the cost of its
member’s care. The contract required [Health Net] to
make efforts to determine the legal liability of third
parties for health care services provided to Medicaid
enrollees, and to ‘pursue, collect, and retain any
[money] from [third-party] payers for services to
[Health Net’s] members under this contract . . . .’ The
contract further provided that [Health Net] could assign
‘the right of recovery to [its] subcontractors and/or net-
work providers.’
‘‘[Health Net] contracted with [Rawlings] . . . to
pursue recoveries for medical treatment provided to
[Health Net’s] members in instances [in which] there
was potential for [third-party] liability. When Rawlings
became aware that a member was injured by a third
party, it typically notified the injured member and the
third party that [Health Net] had a right to recover
medical expenses paid on the member’s behalf.
‘‘Rathbun was a member of [Health Net’s] Medicaid
managed care plan. [Health Net] paid $2982.93 for medi-
cal treatment [rendered in connection with] Rathbun’s
injuries stemming from a motor vehicle accident that
occurred on July 24, 2006. Rathbun retained legal coun-
sel to pursue potential tort claims against the driver of
the other vehicle involved in the accident. Rawlings
notified Rathbun’s counsel, as well as the [driver’s]
insurer, that [Health Net] had a claim for repayment of
the medical benefits it [had] paid on Rathbun’s behalf
for injuries sustained in the motor vehicle accident.
Rathbun’s counsel sent a check in the amount of
$2982.93 to [Health Net] in satisfaction of [Health
Net’s] claim.
‘‘Kay’ Anah Brayboy, the daughter of Tanequa Bray-
boy, was a member of [Health Net’s] Medicaid managed
care plan. On July 4, 2007, Kay’ Anah [Brayboy] was
struck by a motor vehicle and subsequently died as a
result of her injuries. [Health Net] paid $13,541.45 for
medical treatment [rendered in connection with] Kay’
Anah Brayboy’s injuries from the accident. Tanequa
Brayboy retained legal counsel to pursue possible tort
claims against the driver of the motor vehicle that struck
her daughter. Rawlings notified Tanequa Brayboy’s
counsel that [Health Net] had a claim for repayment for
medical benefits paid on behalf of Kay’ Anah Brayboy in
connection with the motor vehicle accident. [Tanequa]
Brayboy subsequently retained new counsel, and Raw-
lings reissued its notice of claim letter to the attention
of [Tanequa] Brayboy’s new counsel. To date, [Health
Net] has not been reimbursed for the cost of medical
care provided to Kay’ Anah Brayboy.
‘‘The plaintiffs brought a putative class action against
[Health Net] on November 26, 2008. The plaintiffs filed
a second amended complaint, dated May 7, 2009, which
[included] four counts, a putative class action, breach
of the duty of good faith and fair dealing, conversion
and a count seeking a declaratory judgment. The declar-
atory judgment count sought a declaration of the plain-
tiffs’ rights and obligations to reimburse [Health Net]
pursuant to Connecticut statutes, regulations and con-
tract. Both [the plaintiffs and Health Net] filed motions
for summary judgment on the declaratory judgment
count on June 15, 2009. On August 21, 2009, the court
granted [Health Net’s] motion for summary judgment
and denied the plaintiffs’ motion for summary judg-
ment.2
‘‘In its memorandum of decision, the [trial] court con-
cluded that the department had assigned its statutory
recovery right to [Health Net]. The court noted that
under . . . § 17b-265 (a), the department has the right
to be subrogated to any right of recovery that the Medi-
caid [recipient] may have against a third party. Relying
on § 17b-265 (b), which provides that the department
may assign its right to subrogation to a designee or
health care provider participating in the Medicaid pro-
gram, the court concluded that the department properly
assigned its statutory rights to [Health Net]. The court
also concluded that, under Connecticut law, [Health
Net], as the assignee of the department, was not
required to bring a separate action against [a third-
party] tortfeasor to recover the medical expenses
expended on behalf of the Medicaid [recipient]. Further,
the court found that [Health Net’s right to] reimburse-
ment was limited to the amount of Medicaid funds
expended by [Health Net] and identified as part of any
settlement or judgment.’’ (Footnote altered.) Rathbun
v. Health Net of the Northeast, Inc., supra, 133 Conn.
App. 204–207.
The plaintiffs then appealed to the Appellate Court,
claiming that Health Net was prohibited by General
Statutes § 52-225c, the antisubrogation statute, from
recovering from the plaintiffs the costs of medical care
that the plaintiffs had recovered from responsible third
parties. Section 52-225c provides in relevant part:
‘‘Unless otherwise provided by law, no insurer or any
other person providing collateral source benefits as
defined in section 52-225b shall be entitled to recover
the amount of any such benefits from the defendant or
any other person or entity as a result of any claim or
action for damages for personal injury or wrongful
death regardless of whether such claim or action is
resolved by settlement or judgment. . . .’’ Specifically,
the plaintiffs claimed that Health Net’s recovery of these
amounts was not ‘‘otherwise provided by law’’ within
the meaning of § 52-225c because § 17b-265 allowed
Health Net to recover only directly from the liable third
parties, not from them, and the only other provision
that allows a lien to be placed on the proceeds of a
legal action brought by a Medicaid recipient, General
Statutes § 17b-94 (a),3 confers lien rights only on the
state. See Rathbun v. Health Net of the Northeast, Inc.,
supra, 133 Conn. App. 207. The Appellate Court con-
cluded that the state had assigned the subrogation rights
conferred by § 17b-265 (a) to Health Net pursuant to
§ 17b-265 (b); id., 210; and that those subrogation rights
included the right to seek reimbursement directly from
the plaintiffs for amounts that they had received for
medical costs from responsible third parties. See id.,
213–14. Accordingly, the Appellate Court affirmed the
judgment of the trial court. Id., 215.
On appeal to this court, the plaintiffs renew their
claim that the right of subrogation created by § 17b-
265 (a) and assigned to Health Net pursuant to § 17b-
265 (b) does not include the right to seek reimburse-
ment from them for amounts that they had recovered
from liable third parties but includes only the right
to recover directly from the liable third parties. They
contend that allowing Health Net to seek reimburse-
ment from them pursuant to § 17b-265 (a) effectively
converts the right to subrogation created by that provi-
sion into a lien right, in contravention of the intent of
the legislature to confer lien rights exclusively on the
state and to limit the amount of the lien to no greater
than 50 percent of the amount recovered by the Medi-
caid recipient from the responsible third party, less the
costs of the action, as provided in § 17b-94 (a). We are
not persuaded by the plaintiffs’ claim.
Our review of the trial court’s decision to grant Health
Net’s motion for summary judgment is plenary. See, e.g.,
Plato Associates, LLC v. Environmental Compliance
Services, Inc., 298 Conn. 852, 862, 9 A.3d 698 (2010).
Similarly, whether § 17b-265 authorizes an assignee of
the department’s statutory subrogation right to seek
reimbursement for amounts paid to a Medicaid recipi-
ent by a responsible third party is a question of statutory
interpretation over which we also exercise plenary
review. See, e.g., id. ‘‘When construing a statute, [o]ur
fundamental objective is to ascertain and give effect to
the apparent intent of the legislature. . . . In other
words, we seek to determine, in a reasoned manner,
the meaning of the statutory language as applied to the
facts of [the] case, including the question of whether
the language actually does apply. . . . In seeking to
determine that meaning, General Statutes § 1-2z directs
us first to consider the text of the statute itself and its
relationship to other statutes. If, after examining such
text and considering such relationship, the meaning of
such text is plain and unambiguous and does not yield
absurd or unworkable results, extratextual evidence of
the meaning of the statute shall not be considered. . . .
When a statute is not plain and unambiguous, we also
look for interpretive guidance to the legislative history
and circumstances surrounding its enactment, to the
legislative policy it was designed to implement, and to
its relationship to existing legislation and common law
principles governing the same general subject matter
. . . .’’ (Footnote omitted; internal quotation marks
omitted.) Picco v. Voluntown, 295 Conn. 141, 147, 989
A.2d 593 (2010).
Before addressing the specific language of § 17b-265,
it is helpful to provide an overview of the relevant
legal landscape. ‘‘The federal [M]edicaid statutes place
a priority on state reimbursement of [M]edicaid funds
and require that participating states have a recovery
policy to effectuate such reimbursement. For states that
elect to participate in the [M]edicaid program, title 42
of the United States Code, § 1396a (a) (25) (A), man-
dates that the state’s plan for medical assistance must
provide . . . that the [s]tate or local agency adminis-
tering such plan will take all reasonable measures to
ascertain the legal liability of third parties . . . to pay
for care and services available under the plan . . . .
[42 U.S.C. § 1396a (a) (25) (A) (2012).] Moreover, in
any case where such a legal liability is found to exist
after medical assistance has been made available on
behalf of the individual and where the amount of reim-
bursement the [s]tate can reasonably expect to recover
exceeds the costs of such recovery, the [s]tate or local
agency will seek reimbursement for such assistance to
the extent of such legal liability . . . . 42 U.S.C.
§ 1396a (a) (25) (B) [2012]. To facilitate reimbursement,
participating states also are required to adopt laws
under which, to the extent that payment has been made
under the [s]tate plan for medical assistance for health
care items or services furnished to an individual, the
[s]tate is considered to have acquired the rights of such
individual to payment by any other party for such health
care items or services . . . . 42 U.S.C. § 1396a (a) (25)
(H) [2012]. Furthermore, [with respect to] reimburse-
ment, title 42 of the United States Code, § 1396k (a),
sets forth conditions that a state [M]edicaid participa-
tion plan must meet, which include the requirement
that [M]edicaid recipients . . . assign to the state any
rights [that] they may have to payment of medical care
from third parties: For the purpose of assisting in the
collection of medical support payments and other pay-
ments for medical care owed to recipients of medical
assistance under the [s]tate plan approved under this
subchapter, a [s]tate plan for medical assistance shall
. . . (1) provide that, as a condition of eligibility for
medical assistance under the [s]tate plan to an individ-
ual . . . the individual is required . . . (A) to assign
the [s]tate any rights . . . of the individual . . . to
support (specified as support for the purpose of medical
care by a court or administrative order) and to payment
for medical care from any third party; (B) to cooperate
with the [s]tate . . . [ii] in obtaining support and pay-
ments (described in subparagraph [A]) for himself . . .
and (C) to cooperate with the [s]tate in identifying, and
providing information to assist the [s]tate in pursuing,
any third party who may be liable to pay for care and
services available under the plan . . . . [42 U.S.C.
§ 1396k (a) (1) (A), (B) (ii) and (C) (2012).] Section
1396k further provides: Such part of any amount col-
lected by the [s]tate under an assignment made under
the provisions of this section shall be retained by the
[s]tate as is necessary to reimburse it for medical assis-
tance payments made on behalf of an individual with
respect to whom such assignment was executed (with
appropriate reimbursement of the [f]ederal [g]overn-
ment to the extent of its participation in the financing
of such medical assistance), and the remainder of such
amount collected shall be paid to such individual. 42
U.S.C. § 1396k (b) [2012]; see also 42 C.F.R. §§ 433.145
and 433.146 [2014].
‘‘The state . . . has elected to participate in the
[M]edicaid program, and, therefore, is obligated to com-
ply with federal requirements. See General Statutes
§§ 17b-2 (6) and 17b-260; see also Arkansas Dept. of
Health & Human Services v. Ahlborn, 547 U.S. 268,
275–78, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006);
Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S. Ct.
2633, 69 L. Ed. 2d 460 (1981). Accordingly, the legisla-
ture has adopted a statutory scheme that provides three
ways for the state to seek reimbursement of [M]edicaid
funds paid to recipients, namely, by an assignment of
rights, a right of subrogation and a lien. [Section] 17b-
265 [b] requires that [M]edicaid recipients in Connecti-
cut, as a condition of eligibility, assign to the state the
right to reimbursement from third parties for medical
expenses. Under § 17b-265 [a], the department . . . is
subrogated to any right of recovery that a recipient
has against a third party for reimbursement. [General
Statutes §§] 17b-93 and 17b-94 provide that the state
may assert a lien to effectuate the state’s reimbursement
of [M]edicaid funds. . . .
‘‘The federal statutes illustrate that Congress has
mandated that [M]edicaid be a payer of last resort . . .
and that the state is required to seek reimbursement of
[M]edicaid funds. The language of the relevant federal
[M]edicaid statutes, however, does not dictate the
method that states must employ to effectuate that goal.’’
(Citation omitted; emphasis in original; footnotes omit-
ted; internal quotation marks omitted.) State v. Peters,
287 Conn. 82, 89–93, 946 A.2d 1231 (2008).
With this background in mind, we turn to the text of
§ 17b-265. The statute provides in relevant part: ‘‘In
accordance with 42 [U.S.C. §] 1396k, the [d]epartment
. . . shall be subrogated to any right of recovery or
indemnification that an applicant or recipient of medi-
cal assistance or any legally liable relative of such appli-
cant or recipient has against an insurer or other legally
liable third party . . . for the cost of all health care
items or services furnished to the applicant or recipient,
including, but not limited to, hospitalization, pharma-
ceutical services, physician services, nursing services,
behavioral health services, long-term care services and
other medical services, not to exceed the amount
expended by the department for such care and treat-
ment of the applicant or recipient. . . .’’ General Stat-
utes § 17b-265 (a). Because the plaintiffs do not dispute
that the department has assigned all of its rights under
§ 17b-265 (a) to Health Net pursuant to § 17b-265 (b),
the issue that we must address is the scope of the
department’s rights under the statute.4
The plaintiffs contend that the language of § 17b-265
(a) providing that the department ‘‘shall be subrogated
to any right of recovery . . . that [a] . . . recipient of
medical assistance . . . has against an insurer or other
legally liable third party’’ clearly and unambiguously
grants to the department only the right to step into the
recipient’s shoes and to initiate proceedings against
persons other than the recipient. Although we agree
with the plaintiffs that the statute clearly and unambigu-
ously confers at least this right, we do not agree that
the statute clearly and unambiguously limits the depart-
ment’s rights in this way. Rather, it is unclear whether
the department’s statutory right to subrogation against
a legally liable third party under § 17b-265 (a) includes
the right to seek reimbursement of amounts paid by a
legally liable third party to the Medicaid recipient,
which, as we discuss subsequently in this opinion, is
included in the common-law right of subrogation. We
therefore look to extratextual sources that are relevant
to our resolution of the issue.
We first consider common-law principles governing
the doctrine of subrogation. ‘‘In its simplest form, subro-
gation allows a party who has paid a debt to step into
the shoes of another (usually the debtee) to assume his
or her legal rights against a third party to prevent that
party’s unjust enrichment. . . . The common-law doc-
trine of legal or equitable subrogation therefore enables
an insurance company that has made a payment to its
insured to substitute itself for the insured and to pro-
ceed against the responsible third party.’’ (Citation
omitted; internal quotation marks omitted.) Fireman’s
Fund Ins. Co. v. TD Banknorth Ins. Agency, Inc., 309
Conn. 449, 455, 72 A.3d 36 (2013).
‘‘The object of [legal or equitable] subrogation is the
prevention of injustice. It is designed to promote and
to accomplish justice, and is the mode [that] equity
adopts to compel the ultimate payment of a debt by
one who, in justice, equity, and good conscience, should
pay it. . . . Subrogation further promotes equity by
preventing an insured from receiving more than full
indemnification as a result of recovering from both the
wrongdoer and the insurer for the same loss, which
would unjustly enrich the insured.’’ (Citation omitted;
internal quotation marks omitted.) Id., 456.
Moreover, ‘‘[it] is well established that an insurer’s
[common-law] right to subrogation . . . includes a
claim against any judgment secured by the insured
against the party at fault for the amount paid by the
insurer in satisfaction of the insured’s damage claim
under the policy.’’ Automobile Ins. Co. v. Conlon, 153
Conn. 415, 419, 216 A.2d 828 (1966); accord Sargeant
v. International Union of Operating Engineers, Local
Union 478 Health Benefits & Ins. Fund, 746 F. Supp.
241, 245–56 (D. Conn. 1990); see also Continental Ins.
Co. v. Connecticut Natural Gas Corp., 5 Conn. App. 53,
59, 497 A.2d 54 (1985) (‘‘[t]he principle that an insurer
[that] has paid a claim for property destroyed through
the fault of a third person may, in certain circumstances,
be reimbursed out of the funds received by the insured
in satisfaction of his claim against the third person,
is generally recognized’’); Amica Mutual Ins. Co. v.
Barton, 1 Conn. App. 569, 574, 474 A.2d 104 (1984)
(‘‘The subrogation right [conferred by General Statutes
(Rev. to 1983) § 38-325 (c)] does not preclude the
insurer from seeking reimbursement from an insured
who has pursued his rights and effected a settlement
or judgment. To hold otherwise would be to enrich
unjustly an insured by allowing him to retain a benefit
at the expense of another.’’); 22 E. Holmes, Appleman
on Insurance (2d Ed. 2003) § 141.3, p. 433 (if insured
recovers insurer’s subrogation from liable third party,
it must reimburse insurer); 16 L. Russ & T. Segalla,
Couch on Insurance (3d Ed. 2005) §§ 222:81 and 222:83,
pp. 222-120, 222-122 through 222-123 (discussing dis-
tinction between insurer’s rights to subrogation and
reimbursement from insured and noting that some juris-
dictions treat them as same right); 16 L. Russ & T.
Segalla, supra, § 222:83, p. 222-123 (‘‘if an insurer paid
an insured the full amount of his or her claim and the
insured then recovers from a third party, the insured
must reimburse the insurer any amount recovered in
excess of his or her own claim, as the right to subroga-
tion . . . is designed to compel discharge of obligation
by one who in equity should bear the loss’’). These
authorities provide strong support for the conclusion
that the right to subrogation conferred on the depart-
ment by § 17b-265 (a) includes the right to seek reim-
bursement from a Medicaid recipient who has recov-
ered damages for medical costs from a third party.
This conclusion also is supported by the legislative
policy underlying § 17b-265. As we have explained, in
order to conserve the public fisc, the state Medicaid
program is intended to be a payer of last resort. State
v. Peters, supra, 287 Conn. 93. To this end, Congress has
made it unmistakably clear that, to the extent possible,
states should not use Medicaid funds to pay for a recipi-
ent’s medical services if a third party has been deemed
responsible for those costs, and the state must seek
reimbursement of amounts for which the third party is
liable to the full extent of such liability.5 See 42 U.S.C.
§ 1396a (a) (25) (A) (2012) (state’s plan for medical
assistance must provide ‘‘that the [s]tate or local agency
administering such plan will take all reasonable mea-
sures to ascertain the legal liability of third parties . . .
to pay for care and services available under the plan’’);
42 U.S.C. § 1396a (a) (25) (B) (2012) (‘‘in any case where
such a legal liability is found to exist after medical
assistance has been made available on behalf of the
individual . . . the [s]tate or local agency will seek
reimbursement for such assistance to the extent of such
legal liability’’); see also State v. Peters, supra, 89 (in
interest of maximizing state reimbursement of Medicaid
funds, federal Medicaid statutes require participating
states to have recovery policy to effectuate such reim-
bursement). Although the United States Supreme Court
never has directly addressed a claim that a participating
state may not seek reimbursement directly from the
Medicaid recipient of amounts that the recipient has
recovered from a third party, it has assumed that ‘‘a
[s]tate can fulfill its obligations under the federal third-
party liability provisions by requiring an ‘assignment’
of part of, or placing a lien on, the settlement that a
Medicaid recipient procures on her own.’’ (Emphasis
added.) Arkansas Dept. of Health & Human Services
v. Ahlborn, supra, 547 U.S. 280 n.9; see also State v.
Peters, supra, 94–95 (‘‘[The] language [in the legislative
history of the federal Medicaid statutes] clearly permits
states to pursue reimbursement directly from a third
party, but it does not logically follow, from its silence,
that it precludes states from seeking reimbursement by
other methods . . . . Instead, we read this language
to require that the state . . . obtain reimbursement
from a liable third party, regardless of method, and [that
it] do so directly from a third party unless a beneficiary
already has collected from that party . . . .’’ [Empha-
sis added.]).6
We recognize that Ahlborn and Peters involved state
statutes that, unlike § 17b-265, expressly conferred the
right to place a lien on amounts recovered by a Medicaid
recipient from a liable third party and did not involve
a statutory right to subrogation. See Arkansas Dept. of
Health & Human Services v. Ahlburn, supra, 547 U.S.
278 (Arkansas statute, Ark. Code Ann. § 20-77-307 [c]
[2001], provided that, when Medicaid recipient recov-
ered amounts from liable third party, automatic assign-
ment of recipient’s right to recover from third party was
considered to be statutory lien on amounts recovered);
State v. Peters, supra, 287 Conn. 92, 96–100 (construing
§ 17b-94). We can perceive no reason, however, why
the state can not comply with federal third-party liability
requirements by enacting a subrogation statute that
incorporates common-law subrogation principles,
including the principle that an insurer may seek reim-
bursement from an insured for costs recovered from a
third party for which the insurer already has paid.
Indeed, there is no reason to believe that Congress
contemplated that there would be any circumstances
under which a Medicaid recipient who recovers from
a liable third party for the cost of medical services for
which the Medicaid program has paid should be entitled
to keep that windfall. The plaintiffs in the present case
do not dispute that § 17b-265 was intended to meet
the state’s obligations under federal law. See Maher v.
Freedom of Information Commission, 192 Conn. 310,
317–18, 472 A.2d 321 (1984) (‘‘[although] [s]tate partici-
pation in the Medicaid program is . . . entirely
optional . . . a state must comply with the require-
ments of [the federal Medicaid statutes] once it elects
to participate’’). Thus, because the Appellate Court’s
interpretation was consistent both with common-law
principles of subrogation and with federal Medicaid law
mandating that participating states recover from liable
third parties to the full extent of their liability, we con-
clude that that court correctly determined that § 17b-
265 confers authority on Health Net, as the department’s
assignee, to seek reimbursement from the plaintiffs for
medical costs that the plaintiffs recovered from the
liable third parties.7
In support of their claim to the contrary, the plaintiffs
contend that the fact that the legislature has limited
the state’s right to recovery under § 17b-94 in various
ways, and has chosen not to impose these limitations
on the right to subrogation conferred by § 17b-265, indi-
cates that the legislature did not intend to allow the
department or its designated assignee to seek reim-
bursement from a Medicaid recipient pursuant to § 17b-
265, because the legislature could not have intended to
give the assignee a greater right to reimbursement from
Medicaid recipients than the state. We do not find this
contention persuasive. As we have explained, in order
to participate in the federal Medicaid program, the state
must comply with all of the requirements of 42 U.S.C.
§ 1396a (a) (25) and 42 U.S.C. § 1396k (a) (1) (A), includ-
ing the requirement that the state seek reimbursement
for Medicaid assistance to the full extent of a third
party’s liability. It is highly questionable whether § 17b-
94—which is not specifically a Medicaid statute but
applies to numerous state public assistance programs
in addition to the Medicaid program—would comply
with these federal provisions because it does not autho-
rize the state to seek reimbursement of the full amount
of third party liability in every case, but caps the state’s
recovery at 50 percent of the Medicaid recipient’s pro-
ceeds less the expenses of the lawsuit.8 Thus, far from
supporting the plaintiffs’ position, the fact that § 17b-
94 limits the extent of the state’s recovery supports the
conclusion that § 17b-94 was not intended to be the
sole or exclusive means by which the state can fulfill
its obligation under federal law to seek reimbursement
from a Medicaid recipient, and that the legislature
intended that § 17b-265—which, unlike § 17b-94, is
exclusively a Medicaid provision, and which places no
limits on the extent of the state’s right to recover medi-
cal costs for which a third party is liable—would autho-
rize the department or its designated assignee to seek
reimbursement from Medicaid recipients for medical
costs that the recipients recover from liable third par-
ties.9 We further note that the purpose of limiting the
state’s lien rights under § 17b-94 was ‘‘to give an incen-
tive to the beneficiary to prosecute his or her cause of
action [against liable third parties], thus benefiting the
beneficiary and, possibly, the state . . . .’’ State v.
Marks, 239 Conn. 471, 479, 686 A.2d 969 (1996). It was
important for the legislature to provide such an incen-
tive because § 17b-94 does not authorize the state to
bring actions directly against third parties who are liable
to the beneficiaries of the enumerated state public assis-
tance programs. In contrast, § 17b-265 authorizes the
department to bring a claim directly against a third
party who is liable to a Medicaid recipient for medical
costs. Accordingly, there was no reason for the legisla-
ture to bar the department from seeking full reimburse-
ment from a Medicaid recipient pursuant to § 17b-265
and to require it to proceed pursuant to § 17b-94.
We acknowledge that this interpretation of § 17b-
265 tends to render § 17b-94 superfluous as applied to
Medicaid recipients, because the state ordinarily will
have no reason to seek reimbursement from a Medicaid
recipient pursuant to § 17b-94 when the department or
its designated assignee can seek full reimbursement of
medical costs that a Medicaid recipient recovers from
a liable third party pursuant to § 17b-265. As between
an interpretation that renders § 17b-94 superfluous as
applied to Medicaid recipients and an interpretation
that would prevent the state from complying with its
obligations under federal law, however, we conclude
that the former is more reasonable.
In support of their position, the plaintiffs cite a num-
ber of cases that hold that an insurer is prohibited from
seeking subrogation against its own insured. See, e.g.,
Allstate Ins. Co. v. Palumbo, 296 Conn. 253, 269 n.10,
994 A.2d 174 (2010) (if tortfeasor, who was insured’s
fiance´, had been added as insured to insurance policy,
‘‘the [insurer] would not have been able to bring an
action against him, as he would be the [insurer’s] own
insured’’), citing Home Ins. Co. v. Pinski Bros., Inc.,
160 Mont. 219, 226, 500 P.2d 945 (1972); New Haven v.
Ins. Co. of Pennsylvania, United States District Court,
Docket No. 3:10-CV-02047 (JCH) (D. Conn. March 8,
2012) (‘‘[t]he well-established [antisubrogation] rule
prevents an insurer from acquiring a subrogation right
against its own insured’’). As Health Net notes, however,
those cases merely stand for the proposition that ‘‘no
subrogation exists against the insured . . . whose neg-
ligence caused the loss.’’ (Emphasis added; internal quo-
tation marks omitted.) Home Ins. Co. v. Pinski Bros.,
Inc., supra, 226; see also id. (‘‘it is axiomatic that [an
insurance company] has no subrogation rights against
the negligence of its own insured’’ [emphasis added;
internal quotation marks omitted]); id. (‘‘by definition,
subrogation exists only with respect to rights of the
insurer against third persons to whom the insurer owes
no duty’’ [emphasis added]); J. Fischer, ‘‘The Presence
of Insurance and the Legal Allocation of Risk,’’ 2 Conn.
Ins. L.J. 1, 5 (1996) (‘‘What happens if the insured was
the person who caused the loss? If the insured’s loss
engendering conduct violates a term of the insurance
contract, the insurer has a policy defense. But if the
insured loss occurs under circumstances that deny the
insurer a policy defense, the insurer is generally barred
from seeking reimbursement of monies paid.’’). In other
words, when an insurer compensates the victim of an
insured’s negligence for his or her losses pursuant to the
insurance policy, the insurer cannot then seek recovery
against the insured, because doing so would deprive
the insured of the very benefit for which he or she has
contracted. It does not follow from this principle that,
when the insurer has paid expenses on behalf of an
insured who then recovers payment for those same
expenses from a third party, the insurer is barred from
seeking reimbursement from the insured. Allowing the
insurer to seek recovery from the insured under these
circumstances is in no way inequitable or inconsistent
with the basic purpose of insurance, namely, to protect
the insured from the risk of loss. See State v. Peters,
supra, 287 Conn. 97 n.20 (when state recovers funds
from Medicaid recipient, recipient ‘‘has already
received the full benefit of that which [the state] now
receives’’ [internal quotation marks omitted]). Accord-
ingly, the cases on which the plaintiffs rely have no
application to the present case.
The plaintiffs also claim that cases standing for the
proposition that an insurer may seek reimbursement
from its insured for money that the insured has recov-
ered from the wrongdoer are inapposite because they
involve equitable subrogation and this case involves the
statutory right of subrogation created by § 17b-265. As
we have indicated, however, in determining the scope
of the right created by § 17b-265, we consider common-
law principles governing the same general subject mat-
ter. We can perceive no reason why the legislature
would have intended that the right to subrogation under
§ 17b-265, unlike the right to subrogation under the
common law, would exclude the department’s right to
reimbursement from Medicaid recipients, thereby pro-
viding a windfall to those recipients in violation of fed-
eral Medicaid law governing third-party liability in this
context.10 We also reject the plaintiffs’ claim that the
cases on which Health Net relies are inapplicable
because they were decided before § 52-225c, the anti-
subrogation statute, became effective in 1985. See Pub-
lic Acts 1985, No. 85-574, § 3 (P.A. 85-574) (effective
October 1, 1985).11 Section 52-225c merely provides that
an insurer may not seek reimbursement for amounts
paid as a result of a claim for damages for personal
injury or wrongful death ‘‘[u]nless otherwise provided
by law . . . .’’ Nothing in the statute suggests that,
when an insurer is authorized by statute to pursue a
subrogation claim, the scope of the right to subrogation
is any different from the scope of that right under the
common law.
The plaintiffs further contend that it is inappropriate
to rely on the equitable principles that underlie the
doctrine of subrogation to determine the scope of § 17b-
265 because nothing in the record supports the conclu-
sion that it would be inequitable to prohibit Health
Net from seeking reimbursement from the plaintiffs.
Specifically, they claim that ‘‘the Appellate Court’s equi-
table findings rest on the wholly unsupported factual
assumption that [the] plaintiffs (and all similarly situ-
ated Medicaid [recipients]) will obtain a ‘double recov-
ery’ unless they pay Health Net, out of any settlement
proceeds recovered from third-party tortfeasors, the
full amount that Health Net paid for medical expenses
relating to [the plaintiffs’] underling injuries.’’ In addi-
tion, the plaintiffs contend that the equities weigh in
their favor because ‘‘Health Net’s business practice is
knowingly and deliberately to decline to exercise its
statutory subrogation rights against third parties so that
it can force [the] plaintiffs to bear its costs of collection
. . . [and] use its insureds as its uncompensated collec-
tion agents.’’ (Citations omitted; emphasis in original.)
The factual issue of whether these specific plaintiffs,
or other similarly situated plaintiffs, will or will not
receive a double recovery if Health Net is barred from
seeking reimbursement from them has no bearing on
the proper interpretation of § 17b-265, which is the sole
issue that is before us in this appeal. The plaintiffs did
not claim before the trial court or on appeal to the
Appellate Court that, even if § 17b-265 authorizes Health
Net to seek reimbursement from Medicaid recipients
for medical costs that they recover from liable third
parties, Health Net should not be allowed to seek reim-
bursement from the plaintiffs because they did not
recover medical costs from their respective tortfea-
sors.12 With respect to the plaintiffs’ claim that Health
Net is unfairly using them as ‘‘uncompensated collec-
tion agents,’’ they have cited no authority for the propo-
sition that an insurer has no right to seek reimburse-
ment from an insured for amounts that the insurer could
have recovered directly from a liable third party. More-
over, a Medicaid recipient would have no reason to
bring a claim against a liable third party solely for medi-
cal costs, as the recipient is automatically deemed to
have assigned the right to recover such costs to the
department or its assignee by operation of § 17b-265
(b). See State v. Peters, supra, 287 Conn. 97 n.20 (‘‘[Med-
icaid] [r]ecipients are under no compulsion to under-
take . . . a recovery [against a liable third party], and
if they do so, it is with knowledge of the assignment
[of the right to such recovery to the department or its
designated assignee]. The existence of [the state’s right
to reimbursement] is simply a factor to be considered
when a recipient determines whether it is economically
feasible to pursue a tort recovery.’’ [Internal quotation
marks omitted.]); cf. Mitchell v. Coney Island Site 4A-
1 Houses, Inc., New York Supreme Court, Docket No.
48910/97 (N.Y. Sup. May 20 2002) (‘‘[the] court is not
persuaded by the [Medicaid recipient’s] characteriza-
tion that [the state’s] recoupment [of medical costs] is
akin to a free ride at the expense of the [Medicaid
recipient]’’). The plaintiffs have not explained why, if a
Medicaid recipient decides to bring a claim for damages
other than medical costs, it would be significantly more
burdensome for the recipient to seek medical costs
as well, and then to reimburse the department or its
assignee, than it would be if the department or its
assignee brought its own claim against the third party
or intervened in the recipient’s action against the liable
third party. Indeed, the primary effect of requiring
Health Net to bring its own claim against the third party
would be to cause unnecessary litigation. See Amica
Mutual Ins. Co. v. Barton, supra, 1 Conn. App. 574 (if
insurers were barred from seeking reimbursement from
insureds for amounts recovered from third parties,
‘‘[i]nsurers would rush to sue [liable third parties] in
order to preserve their subrogation rights . . . causing
unnecessary litigation’’).
Having concluded that the Appellate Court correctly
determined that § 17b-265 authorizes Health Net to seek
reimbursement from the plaintiffs and other similarly
situated persons for amounts that they recover from
liable third parties for medical costs, we need not dwell
on the plaintiffs’ argument that Health Net had no
authority to impose a lien on their property pursuant
to § 17b-94. We note, however, that Health Net concedes
this point and never has claimed otherwise. To the
extent that the plaintiffs contend that the right to bring
a claim against a Medicaid recipient pursuant to § 17b-
265 is the effective equivalent of a lien right and, there-
fore, that this application of the statute is inconsistent
with and preempted by the antilien provision set forth
in 42 U.S.C. § 1396p (a) (1) (2012),13 we decline to
address this contention because the plaintiffs raised it
for the first time in their reply brief.14 See, e.g., Calcano
v. Calcano, 257 Conn. 230, 244, 777 A.2d 633 (2001)
(claims cannot be raised for first time in reply brief).
We note, however, that, even if this application of § 17b-
265 is the effective equivalent of a lien—an issue on
which we express no opinion—the United States
Supreme Court has held that the provisions of 42 U.S.C.
§ 1396a (a) (25) and 42 U.S.C. § 1396k (a) (1) (A), which
require Medicaid recipients to assign to the state any
claims against liable third parties for medical costs,
create an exception to the antilien provision of 42 U.S.C.
§ 1396p (a). Arkansas Dept. of Health & Human Ser-
vices v. Ahlborn, supra, 547 U.S. 284.
The judgment of the Appellate Court is affirmed.
In this opinion the other justices concurred.
1
General Statutes § 17b-265 provides in relevant part: ‘‘(a) In accordance
with 42 [U.S.C. §] 1396k, the Department of Social Services shall be subro-
gated to any right of recovery or indemnification that an applicant or recipi-
ent of medical assistance or any legally liable relative of such applicant or
recipient has against an insurer or other legally liable third party . . . that
is, by statute, contract or agreement, legally responsible for payment of a
claim for a health care item or service, for the cost of all health care items
or services furnished to the applicant or recipient, including, but not limited
to, hospitalization, pharmaceutical services, physician services, nursing ser-
vices, behavioral health services, long-term care services and other medical
services, not to exceed the amount expended by the department for such
care and treatment of the applicant or recipient. . . .
‘‘(b) An applicant or recipient or legally liable relative, by the act of the
applicant’s or recipient’s receiving medical assistance, shall be deemed to
have made a subrogation assignment and an assignment of claim for benefits
to the department. The department shall inform an applicant of such assign-
ments at the time of application. Any entitlements from a contractual
agreement with an applicant or recipient, legally liable relative or a state
or federal program for such medical services, not to exceed the amount
expended by the department, shall be so assigned. Such entitlements shall
be directly reimbursable to the department by third party payors. The Depart-
ment of Social Services may assign its right to subrogation or its entitlement
to benefits to a designee . . . . This subsection shall not be construed to
affect the right of an applicant or recipient to maintain an independent
cause of action against such third party tortfeasor. . . .’’
Section 17b-265 has been amended several times since the underlying
events in this case occurred. See Public Acts 2012, No. 12-119, § 5; Public
Acts 2011, No. 11-61, § 126; Public Acts 2011, No. 11-44, § 84; Public Acts
2010, No. 10-179, § 78; Public Acts 2009, No. 09-8, § 5; Public Acts, Spec.
Sess., June, 2007, No. 07-2, § 20. Because the parties do not contend that
these amendments are relevant to this appeal, we refer to the current revision
of the statute for convenience.
2
‘‘Following the [trial court’s] granting of the motion for summary judg-
ment in favor of [Health Net] on the [declaratory judgment] count of the
complaint, the plaintiffs withdrew [the remaining] counts . . . of the com-
plaint on September 16, 2010.’’ Rathbun v. Health Net of the Northeast, Inc.,
supra, 133 Conn. App. 206 n.2.
3
General Statutes § 17b-94 (a) provides in relevant part: ‘‘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 pro-
gram, temporary family assistance program or state-administered general
assistance program, subject to subsections (b) and (c) of section 17b-93
. . . 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 . . . after payment of all expenses connected with the
cause of action, whichever is less . . . .’’
Although § 17b-94 (a) was amended in 2011; Public Acts 2011, No. 11-44,
§ 71; that amendment has no bearing on the merits of this appeal. We
hereinafter refer to the current revision of the statute for convenience.
4
In their brief to this court, the plaintiffs assert that ‘‘[t]he legal issue in
the present case concerns the right of a private [managed care organization]
(Health Net) to recover its cost of health benefits, which it has paid out to
medical providers on behalf of a Medicaid beneficiary . . . under circum-
stances [in which] a third party is legally liable to pay . . . damages to
the beneficiary in connection with the injuries giving rise to the medical
expenses.’’ (Emphasis in original.) The plaintiffs also indicate that the con-
tract between Health Net and the department is ‘‘ambiguous’’ as to the scope
of the right that was assigned to Health Net, thereby suggesting that the
department may not have assigned all of its statutory rights to Health Net.
The plaintiffs’ legal analysis, however, focuses exclusively on the proper
interpretation of § 17b-265, not on the language of the contract. To the
extent that the plaintiffs assert that the scope of Health Net’s subrogation
rights is narrower than the scope of the rights conferred on the department
by § 17b-265, any such claim has not been adequately briefed, and, therefore,
we decline to address it.
5
The plaintiffs contend that this public policy consideration has no appli-
cation in the present case because ‘‘any recoveries [that] Health Net obtains
from Medicaid recipients are not deposited in the public treasury but rather
are kept by Health Net.’’ As we have indicated, however, the scope of Health
Net’s rights under § 17b-265 is identical in scope to the department’s rights.
In other words, if the department has a right to reimbursement from Medicaid
recipients who have recovered medical costs from liable third parties, Health
Net also has that right, regardless of whether its exercise of the right actually
results in a reduction in the cost of the Medicaid program to taxpayers.
Consequently, this fact has no bearing on the proper construction of the
statute.
6
In Peters, the named defendant, James Peters, a Medicaid recipient,
among other defendants, contended that, under § 17b-94, the state either
could seek recovery directly from the liable third party or could place a
lien on funds that he had recovered from the third party, subject to a
reduction in the amount of reimbursement to compensate Peters for attor-
ney’s fees and costs. See State v. Peters, supra, 287 Conn. 86–87. Although
the court in Peters was not construing § 17b-265, it stated in dictum that,
‘‘to obtain reimbursement when a third party is liable for a recipient’s medical
expenses that the state has paid, [the department, on behalf of] the state
may pursue those claims against the third party directly pursuant to the
assignment and subrogation scheme [created by § 17b-265] or, alterna-
tively, indirectly by placing a lien on personal injury judgments or settlements
obtained by a [M]edicaid recipient from a liable third party [pursuant to
§ 17b-94].’’ (Emphasis added.) Id., 92–93. We reject the plaintiffs’ suggestion
that this statement in Peters supports their claim in the present case. As
we have indicated, it does not follow from the fact that the department may
pursue claims against a liable third party directly pursuant to § 17b-265 that
it may not pursue reimbursement from the Medicaid recipient. We further
note that, although Peters involved the proper interpretation of § 17b-94,
the court’s reasoning and its analysis of federal Medicaid law governing
third-party liability apply equally to § 17b-265.
7
A number of other state courts have reached the same conclusion with
respect to the analogous statutory scheme of the respective state. See, e.g.,
Cricchio v. Pennisi, 90 N.Y.2d 296, 307, 683 N.E.2d 301, 660 N.Y.S.2d 679
(1997) (‘‘[b]ecause the injured Medicaid recipient has assigned its recovery
rights to [the New York Department of Social Services (DSS)], and DSS is
subrogated to the rights of the beneficiary [pursuant to state statute] . . .
the settlement proceeds [recovered by the recipient] are resources of the
third-party tortfeasor that are owed to DSS’’ [citations omitted]); see also
Roberts v. Total Health Care, Inc., 349 Md. 499, 513, 709 A.2d 142 (1998)
(reaching same conclusion with respect to Maryland statute); Hedgebeth v.
Medford, 74 N.J. 360, 365, 378 A.2d 225 (1997) (under New Jersey statute
providing that state ‘‘ ‘shall be subrogated to the rights of the individual for
whom medical assistance was made available,’ ’’ state may seek recovery
against Medicaid recipient for amounts recovered from liable third party).
8
For example, if a hypothetical Medicaid recipient recovered medical
costs in an action against the recipient’s health insurer for the cost of medical
care for which the Medicaid program already has paid, under § 17b-94, the
state would be able to recover only 50 percent of ‘‘the proceeds received
by [the recipient] . . . after payment of all expenses connected with the
cause of action . . . .’’ General Statutes § 17b-94 (a). In addition, it is ques-
tionable whether § 17b-94 is in compliance with federal Medicaid law
because it does not limit the state’s right to reimbursement to amounts
recovered by a Medicaid recipient for medical costs but allows the state to
seek reimbursement for any damages recovered by a Medicaid recipient in
an action against a third party. See Arkansas Dept. of Health & Human
Services v. Ahlborn, supra, 547 U.S. 284–85 (under 42 U.S.C. § 1396a [a] [25]
and 42 U.S.C. § 1396k [a] [1] [A], state’s right to reimbursement is limited
to liable third party’s payments to recipient for medical care). In contrast,
§ 17b-265 (a) provides that the department may recover only from a liable
third party who is ‘‘legally responsible for payment of a [recipient’s] claim
for a health care item or service’’ but does not otherwise limit the extent
of the department’s right to reimbursement of medical costs.
To be sure, we indicated in State v. Peters, supra, 287 Conn. 82, that § 17b-
94 was intended to comply with federal Medicaid law, and, therefore, the
meaning of the statute was informed by the relevant federal laws. See id.,
91–95 (considering whether federal Medicaid law required state to pursue
liable third party directly for purposes of determining whether § 17b-94
embodied that requirement). We now recognize, however, that, because,
unlike § 17b-265, § 17b-94 was not intended to embody federal Medicaid
law, the scope and meaning of § 17b-94 should not be determined primarily
by reference to that law. Nevertheless, to the extent that § 17b-94 applies
to Medicaid recipients, any such application must be consistent with federal
Medicaid law, that is, its application may be preempted by federal law to
the extent that it deprives a Medicaid recipient of a right to which he or
she is entitled under federal law. See, e.g., Persico v. Maher, 191 Conn. 384,
393, 465 A.2d 308 (1983) (state law that is inconsistent with federal Medicaid
requirements is void); see also Martin ex rel. Hoff v. Rochester, 642 N.W.2d
1, 18 (Minn. 2002) (state statute allowing state to place lien on amounts
recovered by Medicaid recipient from liable third party for medical costs
was preempted by federal Medicaid law to extent that state statute author-
ized state to recover more from recipient than he or she recovered from
liable third party), cert. denied sub nom. Minnesota v. Martin ex rel. Hoff,
539 U.S. 957, 123 S. Ct. 2668, 156 L. Ed. 2d 655 (2003). Accordingly, although
the court in Peters properly could have considered federal Medicaid law to
determine whether the state’s application of § 17b-94 to the defendant in
that case was consistent with that law, to the extent that the court considered
federal Medicaid law to determine the scope and meaning of § 17b-94, it
was improvident to do so. We note, however, that our determination in
Peters that the state is entitled to seek reimbursement from a Medicaid
recipient pursuant to § 17b-94 and that the state is not required to reduce
the amount of reimbursement pro rata to compensate the recipient for
attorney’s fees and costs is fully supported by the plain language of that
statute. See State v. Peters, supra, 97.
9
Of course, the state may seek reimbursement from a Medicaid recipient
pursuant to § 17b-94 if it does so in a manner that is consistent with federal
Medicaid law. We conclude only that the § 17b-94 does not provide the
exclusive means to pursue recovery from a Medicaid recipient.
10
The plaintiffs contend that, even if an insurer can seek reimbursement
from an insured under the common law, that common-law principle sheds
no light on the scope of the right created by § 17b-265 because the state
had no right under the common law to recover public assistance payments
from a beneficiary of such assistance. Even if we were to assume that the
state had no such right under the common law, federal Medicaid law, with
which § 17b-265 was intended to comply, not only permits but clearly
requires the state to recover from Medicaid recipients amounts that they
have recovered from liable third parties for medical costs. Accordingly, it
is more reasonable to conclude that the legislature intended that § 17b-265
would incorporate common-law subrogation principles than to conclude
that it intended the statute to incorporate, to the maximum extent possible,
the common-law principle that the state has no claim against recipients of
state and federal aid.
11
Although P.A. 85-574, § 3, was effective on October 1, 1985, a subsequent
amendment to P.A. 85-574, § 3, in 1986; see Public Acts 1986, No. 86-338,
§ 6; rendered the antisubrogation statute applicable to insurance contracts
issued, reissued or renewed on or after October 1, 1986. See General Statutes
(Rev. to 1987) § 52-225c.
12
The plaintiffs contend that this issue was raised at trial and is reviewable
by this court. They note that, during argument on the parties’ respective
motions for summary judgment, the plaintiffs’ attorney stated: ‘‘I just want
to put on the record here that there’s absolutely no evidence that either of
the two plaintiffs . . . actually recovered medical benefits. And, in fact, if
. . . [a] jury [in the actions against the liable third parties] had awarded
medical expenses as part of the verdict, [the] trial judge would probably
have reduced the [verdict] by the amount of this money because there was
no subrogation actually brought by Health Net. . . . [T]he only right to
collect this money would be Health Net’s right. . . . [Health Net has] an
assignment from the state to subrogate. If [it does not] exercise that right,
how can the plaintiff[s] actually recover this money.
‘‘So there’s no evidence here that these settlements incorporated medical
expenses at all. I just don’t want that to be assumed somehow that they
collected medical expenses. There’s no evidence to that effect, and I would
argue [that] there would [be] absolutely no legal entitlement for any of these
plaintiffs to have claimed medical expenses that were paid by Health Net.’’
Thereafter, the trial court ordered the parties to submit briefs on the
following question: ‘‘How, if at all, does the [United States] Supreme [Court’s
decision] in [Arkansas Dept. of Health & Human Services v. Ahlborn, supra,
547 U.S. 268] relate to the facts presented here insofar as the portion of
any settlements that represent Medicaid expenses are not separately set
forth in such settlements?’’ In Ahlborn, the United States Supreme Court
held that the claim of a state agency administering a Medicaid program to
the proceeds of a Medicaid recipient’s settlement with a liable third party
is limited to the amount that the recipient recovered for the costs of medical
care. See Arkansas Dept. of Health & Human Services v. Ahlborn, supra,
284. In response to the trial court’s order, Health Net submitted a brief in
which it contended that the plaintiffs had alleged no facts that would support
the finding of an Ahlborn violation. The plaintiffs submitted a brief in which
they contended that Ahlborn ‘‘should not impact the particular issues raised
in the plaintiffs’ complaint. In particular, the plaintiffs . . . are limiting their
challenge to the right of private parties to assert the state’s § 17b-94 statutory
lien rights.’’ The plaintiffs further contended that ‘‘[t]he holding in Ahlborn
may represent another rationale as to why [Health Net] should not recover
its ‘lien,’ but this [issue] is not currently before the court.’’ The plaintiffs
did not ask the trial court to address the Ahlborn issue if it concluded that
Health Net was entitled to seek reimbursement from them, they did not
include any facts relating to this issue in the joint statement of stipulated
facts, they did not submit any affidavits or other documents with their brief
indicating that they had not recovered medical costs from the respective
liable third parties, and they made no such claim in their complaint. The
trial court ultimately determined, as a matter of law, that, under Ahlborn,
Health Net’s right to reimbursement from the plaintiffs was ‘‘limited to the
amount of Medicaid funds paid and identified as part of any settlement.’’
The court made no factual findings, however, as to whether the amounts
that Health Net had recovered from Rathbun and sought to recover from
Tanequa Brayboy exceeded the amounts that the plaintiffs had recovered
for medical costs. The plaintiffs made no claim in their appeal to the Appel-
late Court that the trial court improperly failed to make factual findings on
this issue or that the case should be remanded to the trial court for resolution
of the issue. We therefore reject the plaintiffs’ claim that we may and should
address this fact bound issue in the present appeal.
We also reject the plaintiffs’ argument that, as a matter of law, they could
not have recovered medical costs from the liable third parties because they
had assigned their rights to such recovery to Health Net. The plaintiffs
have cited no authority for the proposition that an insured is categorically
prohibited from recovering amounts paid by the insurer from the liable third
party. Indeed, the very statute at issue in the present case expressly provides
that it ‘‘shall not be construed to affect the right of an applicant or recipient
to maintain an independent cause of action against [a] third party tortfeasor.’’
General Statutes § 17b-265 (b); see also Arkansas Dept. of Health & Human
Services v. Ahlborn, supra, 547 U.S. 287–88 (Medicaid recipient who settled
claim against tortfeasor did not violate duty to cooperate with state in
pursuing liable third party when state agency had intervened in action against
tortfeasor and asked to be apprised of proceedings but did not ask to be
involved in settlement negotiations); Arkansas Dept. of Health & Human
Services v. Ahlborn, supra, 280 n.9 (parties and court assumed ‘‘that a [s]tate
can fulfill its obligations under the federal third-party liability provisions by
requiring an ‘assignment’ of part of, or placing a lien on, the settlement that
a Medicaid recipient procures on her own’’ [emphasis added]); State v.
Peters, supra, 287 Conn. 97 n.20 (existence of assignment to department ‘‘is
simply a factor to be considered when a recipient determines whether it is
economically feasible to pursue a tort recovery’’ [internal quotation marks
omitted]); Shawnee Fire Ins. Co. v. Cosgrove, 86 Kan. 374, 377–78, 121 P.
488 (1921) (insurer has right to enjoin insured from settling case against
liable third party for less than amount paid by insurer, but insurer can
acquiesce in litigation and settlement subject to insurer’s right to reim-
bursement).
Finally, we emphasize that Health Net has not appealed from the trial
court’s ruling that it is entitled to reimbursement only for the amounts that
the plaintiffs recovered from the liable third parties for medical costs, and
nothing in this opinion prevents the plaintiffs or other similarly situated
persons from claiming in future proceedings concerning Health Net’s reim-
bursement claims that the amounts sought exceed the amounts that were
recovered from the liable third parties for medical costs. Indeed, it is reason-
able to conclude that the plaintiffs’ attorney was merely attempting to pre-
serve the right to raise this issue in future proceedings when he argued to
the trial court that there was no evidence that the plaintiffs had recovered
such costs.
13
Title 42 of the 2012 edition of the United States Code, § 1396p (a) (1),
provides in relevant part: ‘‘No lien may be imposed against the property of
any individual prior to his death on account of medical assistance paid or
to be paid on his behalf under the State plan . . . .’’
There are certain exceptions to the general rule that are not relevant for
purposes of this appeal. See 42 U.S.C. § 1396p (a) (1) (A) and (B) (2012).
14
The plaintiffs contend in their brief that, as a matter of statutory interpre-
tation, § 17b-265 authorizes Health Net to seek reimbursement exclusively
from a liable third party, and the only other statute authorizing a lien on
funds that are recovered by a Medicaid recipient from a liable third party,
§ 17b-94, does not vest Health Net with such authority. The plaintiffs also
claim that federal law prohibits Health Net from seeking reimbursement
from them in an amount greater than they recovered for medical costs
from the liable third parties. They do not claim, however, that, if § 17b-
265 authorizes Health Net to seek reimbursement from them, it effectively
authorizes the imposition of a lien and, therefore, is preempted by the
antilien provision of 42 U.S.C. § 1396p (a) (1).