Beecher Carlson Ins. Serv. v. Catechis ( 2023 )

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1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 Opinion Number: _____________
3 Filing Date: March 9, 2023
4 No. A-1-CA-38334
5 BEECHER CARLSON INSURANCE
6 SERVICES, LLC and CALIFORNIA
7 MEDICAL GROUP INSURANCE
8 COMPANY RISK RETENTION GROUP,
9 Plaintiffs-Appellants,
10 v.
11 JENNIFER A. CATECHIS, as Superintendent
12 of Insurance for the State of New Mexico,
13 Defendant-Appellee.
14 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
15 Francis J. Mathew, District Court Judge
16 Madison, Mroz, Steinman, Kenny & Olexy, P.A.
17 William C. Madison
18 Gregory D. Steinman
19 Albuquerque, NM
20 for Appellants
21 Office of Superintendent of Insurance
22 R. Alfred Walker, Associate General Counsel
23 Santa Fe, NM
24 for Appellee
1 OPINION
2 HENDERSON, Judge.
3 {1} The memorandum opinion filed on March 2, 2023, is hereby withdrawn, and
4 this opinion is substituted in its place, based on the March 8, 2023, order granting
5 the motion to publish. Plaintiffs Beecher Carlson Insurance Services, LLC (Beecher)
6 and California Medical Group Insurance Company Risk Retention Group (CRRG)
7 (collectively, Plaintiffs) appeal the district court’s dismissal of their declaratory
8 judgment claim against New Mexico Interim Superintendent of Insurance, Jennifer
9 A. Catechis (Defendant). 1 Plaintiffs filed a complaint for declaratory judgment
10 asking the district court to construe Section 41-5-25 of the Medical Malpractice Act
11 (the Act), NMSA 1978, §§ 41-5-1 to -29 (1976, as amended through 2021), to
12 require that the Office of the Superintendent of Insurance (OSI) accept a late-
13 tendered surcharge and recognize CRRG’s insured, DaVita Medical Group New
14 Mexico, LLC (DaVita), as a qualified health care provider from June 1, 2017 through
15 December 23, 2017.
1
John Franchini was the named defendant below. However, Mr. Franchini’s
tenure as Superintendent and custodian of the Patient Compensation Fund (PCF)
ended on December 31, 2019, after this appeal was filed. Jennifer A. Catechis is now
the current Interim Superintendent and custodian of the PCF. See NMSA 1978, §
59A-2-2.1(F) (2013, amended 2020). Pursuant to Rule 12-301(C)(1) NMRA, Ms.
Catechis is automatically substituted as Defendant and the proceedings in this matter
shall be pursued in her name for the duration of her tenure as Interim Superintendent.
1 {2} The request for declaratory judgment was combined with an appeal from a
2 decision by OSI, following a hearing, refusing to accept the surcharge and refusing
3 to retroactively recognize DaVita as a qualified health care provider during the
4 relevant 2017 period. The district court first dismissed the declaratory judgment
5 claim with prejudice, and then upheld OSI’s decision on appeal. Plaintiffs now
6 appeal solely from the district court’s dismissal of their declaratory judgment claim,
7 arguing that they are entitled to a de novo interpretation of the Act. Finding no error,
8 we affirm the district court’s dismissal of Plaintiffs’ declaratory judgment claim.
9 DISCUSSION
10 {4} We note at the outset that the issue before us is limited. Plaintiffs appeal only
11 from the district court’s dismissal of their declaratory judgment claim. When
12 Plaintiffs filed that claim, however, they also appealed to the district court OSI’s
13 final order from an administrative hearing, which encompassed the same issues. The
14 district court affirmed OSI’s determination. Plaintiffs have not filed a petition for
15 certiorari seeking review of the district court’s decision on their administrative
16 appeal. They have instead filed only a direct non-discretionary appeal from the
17 dismissal of their declaratory judgment claim. See Victor v. N.M. Dep’t of Health,
18 2014-NMCA-012, ¶ 18, 316 P.3d 213 (requiring litigants seeking review of a district
19 court’s decision when it has exercised both its appellate and original jurisdiction to
20 “pursue an appeal by filing a Rule 12-505 [NMRA] petition to address issues
2
1 stemming from the exercise of the district court’s appellate jurisdiction, and a direct
2 appeal to address issues stemming from the exercise of the district court’s original
3 jurisdiction” (internal quotation marks and citation omitted)). Therefore, we limit
4 our review only to the district court’s dismissal of Plaintiffs’ declaratory judgment
5 claim.
6 Declaratory Judgment
7 {5} It was not error for the district court to dismiss Plaintiffs’ declaratory
8 judgment claim.2 Plaintiffs’ complaint sought a declaration that Section 41-5-25 of
9 the Act did not prevent Defendant from accepting the late surcharge and recognizing
10 DaVita as a qualified health care provider from June 2017 to December 2017, and
11 ordering Defendant to do so. Plaintiffs explain that the purpose of their claim was to
12 obtain de novo review of the Act, without any deference to Defendant’s
13 interpretation and implementation of it. This approach circumvented the typical
14 administrative process, a tactic which New Mexico courts have repeatedly looked at
15 with disfavor.
16 {6} “The district court is vested with broad discretion to grant or refuse claims for
17 declaratory relief.” Headen v. D’Antonio, 2011-NMCA-058, ¶ 6, 149 N.M. 667, 253
Defendant contends that Plaintiffs lack standing to sue for declaratory
2
judgment. In this case, where the district court dismissed the claim at the pleading
stage, we need not address Defendant’s contention, because even if we were to
assume, without deciding, that Plaintiffs have standing, their claim was still
appropriately dismissed.
3
1 P.3d 957 (internal quotation marks and citation omitted). Our review is thus limited
2 to whether the district court abused that discretion. Id. “[E]ven when we review for
3 an abuse of discretion, our review of the application of the law to the facts is
4 conducted de novo. Accordingly, we may characterize as an abuse of discretion a
5 discretionary decision that is premised on a misapprehension of the law.” Harrison
6 v. Bd. of Regents of Univ. of N.M., 2013-NMCA-105, ¶ 14, 311 P.3d 1236 (internal
7 quotation marks and citations omitted).
8 {7} A declaratory judgment action may be appropriate for challenging
9 administrative decisions “when the matter at issue (1) is purely legal, (2) requires no
10 specialized agency fact-finding, and (3) there is no exclusive statutory remedy.” New
11 Energy Econ., Inc. v. Shoobridge, 2010-NMSC-049, ¶ 12, 149 N.M. 42, 243 P.3d
12 746. However, our Supreme Court has cautioned against using declaratory judgment
13 claims to review administrative actions
14 if such an approach would foreclose any necessary fact-finding by the
15 administrative entity, discourage reliance on any special expertise that
16 may exist at the administrative level, disregard an exclusive statutory
17 scheme for the review of administrative decisions, or circumvent
18 procedural or substantive limitations that would otherwise limit review
19 through means other than a declaratory judgment action.
20 Smith v. City of Santa Fe, 2007-NMSC-055, ¶ 15, 142 N.M. 786, 171 P.3d 300. And
21 even if the issue in the case was purely legal, our Supreme Court has “held that a
22 party who initiated the appeals process in an administrative action could not use a
23 declaratory judgment action to circumvent the requirements of an administrative
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1 appeal.” New Energy Econ., Inc., 2010-NMSC-049, ¶ 12. These limitations “on the
2 use of the declaratory judgment action respect the role of each branch of government
3 in the constitutional scheme and the administrative processes put in place by the
4 Legislature.” Id. ¶ 14.
5 {8} Here, Plaintiffs sought to circumvent those limitations by foreclosing
6 necessary fact-finding by OSI and discouraging the district court’s reliance on
7 Defendant’s administrative expertise. First, although Plaintiffs construe the issue in
8 this case as a purely legal one—an interpretation of the Act—that is far from true.
9 Even though the parties stipulated to facts during administrative proceedings, each
10 of their recitations of those facts differ on appeal. Some facts are still being argued
11 over, such as whether Plaintiffs’ failure to collect the necessary surcharge was a
12 “ministerial” error, or whether Plaintiffs in fact collected the surcharge but failed to
13 transmit it to Defendant. The parties also engage in lengthy disagreements over
14 OSI’s prior practices under the Act regarding accepting late surcharges. These
15 factual disputes and contentions are integral to this case, and thus a declaratory
16 judgment claim—a tool Plaintiffs concede they used in order to avoid determinations
17 during the administrative process—improperly circumvents the requirements of an
18 administrative appeal.
19 {9} Second, even if this case was limited to a purely legal question, “[w]hen an
20 agency addresses a question of law by construing or applying a particular statute,
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1 courts will grant some deference to legal determinations that fall within agency
2 expertise.” Chavez v. Mountain States Constructors, 1996-NMSC-070, ¶ 21, 122
3 N.M. 579, 929 P.2d 971. Plaintiffs do not dispute that OSI has expertise in
4 determining and collecting the appropriate surcharge due under the Act—it is the
5 only entity that does so. See § 41-5-25. Defendant is accordingly owed some
6 deference, of course while being mindful that courts “are not bound by the agency’s
7 interpretation and . . . may substitute [their] own independent judgment for that of
8 the agency if the agency’s interpretation is unreasonable or unlawful. Albuquerque
9 Bernalillo Cnty. Water Util. Auth. v. N.M. Pub. Regul. Comm’n, 2010-NMSC-013,
10 ¶ 51, 148 N.M. 21, 229 P.3d 494 (omission, internal quotation marks, and citation
11 omitted). Plaintiffs make it abundantly clear that the purpose of their declaratory
12 judgment claim was to avoid any deference that may have been owed to OSI’s
13 interpretation of the Act. In doing so, their use of a declaratory judgment action falls
14 squarely within the warning enunciated in Smith. See 2007-NMSC-055, ¶ 15. Thus,
15 we conclude that it was not error for the district court to dismiss Plaintiffs’
16 declaratory judgment claim and instead hear the case under its appellate jurisdiction.
17 {10} The only justification Plaintiffs offer to convince us that they should have
18 been permitted to pursue their declaratory judgment claim is that procedural due
19 process entitles them to de novo review of the statute, without any deference to the
20 agency. However, procedural due process requires sufficient review by the judiciary
6
1 of “whether the litigant received a fair hearing and whether the law was correctly
2 applied.” Bd. of Educ. of Carlsbad Mun. Schs. v. Harrell, 1994-NMSC-096, ¶ 49,
3 118 N.M. 470, 882 P.2d 511. Plaintiffs have provided us with no reason to believe
4 their declaratory judgment claim entitles them with even greater procedural due
5 process than that typically owed under an administrative appeal. And Plaintiffs have
6 not appealed from the district court’s decision to affirm the administrative
7 proceedings such that they could argue that review was insufficient. Therefore, given
8 all the reasons laid out above, we conclude that the district court did not abuse its
9 discretion by dismissing Plaintiffs’ declaratory judgment claim.
10 CONCLUSION
11 {11} For the reasons set forth above, we affirm the district court’s order dismissing
12 Plaintiffs’ declaratory judgment claim.
13 {12} IT IS SO ORDERED.
14 ____________________________________
15 SHAMMARA H. HENDERSON, Judge
16 WE CONCUR:
17 ________________________________
18 JACQUELINE R. MEDINA, Judge
19 ________________________________
20 JANE B. YOHALEM, Judge
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