Preview:

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IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o---
GERRY NACINO, Petitioner/Appellant-Appellee
vs.
LILLIAN KOLLER,1 Director, Department of Human Services,
State of Hawai#i, Respondent/Appellee-Appellant
NO.  23572
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CIV. NO.  99-3297)
JUNE  30,  2003
LEVINSON, AND ACOBA, JJ., AND CIRCUIT JUDGE SIMMS,
ASSIGNED BY REASON OF VACANCY; AND MOON, C.J.,
DISSENTING, WITH WHOM NAKAYAMA, J., JOINS
OPINION OF THE COURT BY ACOBA, J.
I.
On October  21,  2002, this court granted the petition of
Petitioner/Appellant-Appellee Gerry Nacino  (Petitioner) for a
writ of certiorari to review the decision by the Intermediate
1
Pursuant  to  Hawai#i  Rules  of  Appellate  Procedure  Rule  43(c)(1),
Lillian  Koller,  the  current Director  of  the  Department  of  Human  Services,  has
been  substituted  for  Susan  M.  Chandler,  the  Director  at the  time  this  case  was
decided  by  the  first  circuit court.




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Court of Appeals2  (ICA) in Nacino v. Chandler, No.  23572  (Haw.
Ct. App. Sept.  11,  2002)  (ICA opinion).    Therein, the ICA
partially reversed the final judgment of the first circuit court3
that reduced the medical lien amount of the Department of Human
Service  (DHS or State) on Petitioner’s tort recovery and held
that DHS is entitled to recover the full amount of its lien for
medical assistance payments made on Petitioner’s behalf.    We set
forth our decision in order to clarify the law regarding Hawai#i
Revised Statutes  (HRS)  §  346-37, the statute involved.    See State
v. Hanson,  97 Hawai#i  71,  73,  34 P.3d  1,  3  (2001)  (affirming ICA
opinion, but granting certiorari  “[i]n light of Defendant’s
objections,  .  .  . to clarify the basis for upholding airport
security searches”); Korsak v. Hawaii Permanente Med. Group,  94
Hawai#i  297,  300,  12 P.3d  1238,  1241  (2000)  (granting certiorari
“to clarify several aspects of the ICA opinion”).
II.
The facts are relatively undisputed.    On March  15,
1996, Petitioner, while a passenger on a Honda moped, collided
into a pick-up truck owned by the City and County of Honolulu
2
Associate  Judge  Corinne  K.A. Watanabe  authored  the  opinion  and  was
joined  by  Chief  Judge  James S.  Burns  and  Associate  Judge Daniel  R.  Foley.
3
The  Honorable  Allene  R.  Suemori  presided.
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(the City).    Petitioner suffered severe permanent orthopedic
injuries and serious brain damage.
On Petitioner’s behalf, a guardian ad litem4 applied
for assistance from DHS.    Petitioner’s application for DHS
assistance included an assignment of rights,5 as required under
HRS  §  346-37(c)  (Supp.  1997).6    DHS paid for all of Petitioner’s
4
At  some  point  the  guardian  ad  litem  order  was  set  aside as
Petitioner  made  a  partial  recovery  and  was  capable  of  making  decisions  on  his
own  behalf.
5
The  assignment  of  rights  agreement  provided,  in  part,  that:
ASSIGNMENT  OF  RIGHTS:    I  understand  that  as  a  condition of
eligibility  for  financial  assistance,  I  am  assigning  to the
State  of  Hawaii  any  rights  to  child  support  that  I  may  have
from  another  person,  for  myself  or  any  person  for  whom  I am
applying  or  receiving  assistance.    This  assignment  includes
rights  to  support  from  previous  as  well  as  present  and
future  support.    Such  payments  will  be  used  to  reimburse the
State  up  to  the  amount  of  assistance  granted.    As  a
condition  of  eligibility  for financial  assistance  I
understand  that  by  applying, I  am  assigning  to  the  State of
Hawaii  my  rights  to  any  third  party  payments  for  medical
care.    I  will  cooperate  in  obtaining  third  party  payments.
6
HRS  §  346-37(c)  states:
If  the  department  has  provided  medical  assistance  or
burial  payment  to  a  person  who  was  injured,  suffered  a
disease,  or  died  under  circumstances  creating  a  tort  or
other  liability  against  a  third  person, the  department  shall
have  a  right  to  recover  from the  third  person  an  amount not
to  exceed  the  costs  of  medical  assistance  or  burial  payment
furnished  or  to  be  furnished by  the  department.    The
department  shall  as  to  this right  be  subrogated  to  any  right
or  claim  that  a  claimant,  defined  in  subsection  (k),  has
against  the  third  person  for special  damages to  the  extent
of  the  costs  of  medical  assistance  or  burial  payment
furnished  or  to  be  furnished by  the  department.
To  enforce  its  rights,  the  department  may  intervene  or
join  in  any  action  or  proceeding  brought  by  a  claimant
against  the  third  person  who is  liable.    If  the  action  or
proceeding  is  not  commenced within  six  months  after  the
first  day  on  which  medical  assistance  or  burial  payment is
furnished  by  the  department in  connection  with  the  injury,
disease,  or  death  involved, the  department  may  institute and
prosecute  legal  proceedings against  the  third  person  who is
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medical care and treatment arising out of the damages from the
accident.    The medical lien applied by the State for expenses
arising out of this medical care totaled  $141,422.19.
A lawsuit was filed on Petitioner’s behalf against the
City and the driver of the moped, Troy Sunio.7    The State of
Hawai#i chose not to participate in the suit, even though it had
a right to intervene pursuant to HRS  §  346-37(c).    It did
transmit letters informing all the parties that the State held an
assignment of rights in any recovery and it would seek
reimbursement if any recovery was made.
Prior to trial, Petitioner’s counsel hired many experts
and apparently expended a substantial amount of money in
discovery attempts.    According to Petitioner,  “[t]here  [were]
significant weaknesses in  [Petitioner’s] case against the City.”
ICA opinion at  4; see also Petition at  2  (“liability was weak or
non-existent”).    The only witnesses to the accident were the
driver and the passenger in the City pick-up truck, who both
maintained that the moped was on the wrong side of the road and
was speeding.    Petitioner was unable to fully rebut these claims
6
(...continued)
liable  for  the  injury,  disease,  or  death,  in  a  state  court,
either  alone  (in  its  own  name  or  in  the  name  of  a  claimant)
or  in  conjunction  with  the  claimant.
(Emphases  added.)
7
According  to  Petitioner,  Mr. Sunio  failed  to  respond  to all
notices  regarding  the  litigation.    Thereafter,  all  litigation  and  settlement
efforts  were  directed  towards  the  City.
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as his memory of the incident was limited, due to his injuries,
and the driver of the moped had disappeared.
On March  6,  12 &  24,  1998, Petitioner’s counsel sent
letters to the Attorney General’s office attempting to negotiate
a waiver or a reduction of the amount of DHS’s lien.    The thrust
of these letters was that reduction  “might well make the
difference between my client’s agreement to settlement at the
figure suggested by the City, or his decision to  ‘roll the dice’
and go to trial, even though our chances of doing as well or
better than the City’s offer are slim.”    On March  25,  1998,
Deputy Attorney General Michael S. Vincent drafted a letter in
response and stated that federal regulations prevented the State
from reducing or waiving a lien.
Thereafter, Petitioner accepted a  $600,000.00
settlement offer from the City and placed the lien amount of
$141,422.19 into an interest-bearing account.    On June  25,  1998,
Petitioner requested an administrative hearing, pursuant to HRS
§  346-37(g)  (1993),8 to resolve the dispute over the amount owed
8
HRS  §  346-37(g)  states  as  follows:
In  the  event  that  there  is  a dispute  between  the
claimant,  the  claimant’s  agent,  or  the  claimant’s  attorney,
and  the  department  concerning  the  existence  of  the  lien or
the  amount  of  the  lien,  the claimant,  the  claimant’s  agent,
or  the  claimant’s  attorney  may  request  in  writing  a  hearing
on  the  dispute.    After  receipt  by  the  department  of  such a
written  request,  the  department  shall  conduct  an
administrative  hearing  within  a  reasonable  period  of  time.
The  provisions  of  chapter  91 shall  apply  to  such  a  hearing.
Funds  sufficient  to  extinguish  the  lien  rights  of  the
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to the State.    The administrative hearings officer eventually
ruled that he lacked  “equity jurisdiction” to reduce the amount
owed to DHS and awarded the full amount of the lien to the State.
The  facts  show  that  the  State  established  a  Medicaid  lien
pursuant  to  [HRS  §]  346-37  in  the  amount  of  $141,422.19 for
medical  assistance  provided  [Petitioner]  for  his  injuries
suffered  in  the  March  15,  1996  accident  which  he  received
$600,000.00  from  the  [City] to  settle  a  personal  injury law
suit.    DHS  rules  and  statutes  do  not  require  that  the  State
discount  its  Medicaid  lien  the  same  percent  that
[Petitioner]  discounted  the value  of  his  personal  injury
lawsuit  and  settled  for  which  was  significantly  less  than
his  actual  damages  because  of  liability  problems.    Even  if
it  would  be  fair  and  equitable  for  DHS  to  discount  its
Medicaid  lien,  a  DHS  hearing officer  does  not  have  equity
jurisdiction  to  make  such  a determination.
(Emphasis added.)
On August  31,  1999, Petitioner filed a notice of appeal
to the court.    After hearing oral arguments, on February  7,  2000,
the court ordered the case remanded to the DHS hearings officer
so  that  an  evidentiary  hearing  can  take  place  and  findings
of  fact  drafted  on  whether  or  not  special  damages  were
awarded.    If  special  damages were  awarded,  [DHS]  would  still
have  a  right  of  reimbursement  from  [the  City]  under  the
doctrine  of  subrogation.
On February  16,  2000, Petitioner and DHS filed a joint motion for
reconsideration of the February  7,  2000 order, in which they
stated that remand was not necessary, it was undisputed that no
portion of the  $600,000.00 was denominated special damages, and
the court should decide the amount payable to the State:
[The  settlement]  provides  that  the  case  settled  for  600
thousand  dollars;  and  that  there  was  no  portion  of  the  600
8
(...continued)
department  shall  be  either  retained  by  the  person  or  entity
served  with  the  notice  of  lien,  or  shall  be  paid  to  the
department  pending  its  decision.
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thousand  dollars  that  was  denominated  special  damages.
While  no  portion  of  the  settlement  has  been  identified  as
special  damages,  there  is  no dispute  that  the  DHS  lien  is  to
be  satisfied  from  the  settlement  proceeds.    Rather  the
dispute  is  as  to  the  amount DHS  should  be  reimbursed  or is
otherwise  entitled.
Both  parties  agree  that  this court  can  and  should  decide
now,  without  remand,  the  substantive  issues  briefed  and
argued  by  the  parties,  the  bottom  line  of  which  is  whether
the  State  is  entitled  to  receive  any  portion  of  the
settlement,  and  if  so,  how  much.
(Emphases added.)
On April  14,  2000, the court granted the motion for
reconsideration and held that the total damages suffered was four
million dollars, of which the settlement constituted fifteen
percent of the total damages.    The court then ordered that the
State should recover only fifteen percent of its lien, or
$21,213.33.
On appeal, the ICA held that the court erred when it
reduced DHS’s lien.    See ICA opinion at  28.    Thus, the ICA
vacated that portion of the court’s July  7,  2000 final judgment
that concluded that DHS shall be reimbursed a reduced amount and
remanded the case for entry of an amended final judgment for the
entire amount of the lien.
III.
The issues raised by Petitioner in his application for
a writ of certiorari are not substantially different from those
which he raised before the ICA.    Petitioner argues that the ICA
erred in holding that DHS has a priority in payment, i.e., that
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DHS may be reimbursed completely to the extent of its medical
lien before Petitioner may be compensated for his damages.    In
addition, he contends that the assignment of rights to DHS was an
adhesionary contract, and thus invalid.
IV.
HRS  §  346-37(e)  (Supp.  1997) provides that DHS  “shall
have a lien in the amount of the costs of medical assistance
.  .  . against the proceeds from special damages or burial payment
made against the proceeds from special damages awarded in a suit
or settlement.”                                                         (Emphases added.)    In addition, the assignment
of rights provides that Petitioner assigns his  “rights to any
third party payments for medical care.”                                 (Emphasis added.)
Accordingly, it was seemingly necessary to establish the amount
of  “special damages” and the payments made by the State for
“medical care.”
Relying upon this court’s decision in Peters v
Weatherwax,  69 Haw.  21,  731 P.2d  157  (1987), the ICA concluded
that it was unnecessary to determine the amount of special
damages.    In Peters, the plaintiff was involved in an automobile
accident.    See id. at  23,  731 P.2d at  159.    The State paid for
the plaintiff’s medical expenses, similar to the case at hand.
See id.    Thereafter, the plaintiff sued another party for damages
arising out of the accident.    See id.    The State moved to
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intervene, but before the court would allow it to be a party to
the proceedings, the parties reached a settlement and executed a
“Release and Indemnity Agreement[.]”    Id. at  24-25,  731 P.2d at
160.    The settlement expressly stated that the sum of  $255,000
given  “represent[ed] GENERAL DAMAGES only.”    Id.
On appeal, this court looked to the meaning of the word
“subrogated” as it is used in HRS  §  346-37(c)9.    See id. at  26-
27,  731 P.2d at  161.    In common law, this court found subrogation
to be  “‘the substitution of another person in the place of a
creditor in relation to the debt.’”    Id.  (quoting Kapena v.
Kaleleonalani,  6 Haw.  579,  583  (1885)).    It was concluded that
“[t]he substitute is put in all respects in the place of the
party to whose rights he  [or she] is subrogated.”    Id.    In light
of the DHS’s right of subrogation, this court held that a party
such as a plaintiff may not waive the right to special damages,
thus avoiding a DHS lien, simply by designating an entire
settlement as representing general damages.    See id. at  28,  731
P.2d at  162.    Also, this court held that under the common law
theory of restitution, a court has the authority to prevent the
unjust enrichment that would result in favor of the defendants
from such a waiver.
Unjust  enrichment  in  this  instance  could  only  be  prevented
if  the  State  is  allowed  to  assert  its  claim  for  special
damages.    Otherwise, the  defendants  may  have  discharged
their  tort  liability  for  less  than  what  was  just  in  the
9
See  supra  note  6.
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circumstances  at  the  expense of  the  State;  and  it  would  then
be  unjust  for  them  to  retain the  benefit  of  the  State’s
assumption  of  the  obligation to  pay  the  accident  victim’s
medical  bills.
Id.  (emphasis added).
Citing Peters, the ICA reasoned that,  “since settlement
of a claim by a medical assistance recipient for  ‘general
damages’ only was held in Peters not to defeat DHS’s statutory
lien under HRS  §  346-37, we fail to see how settlement by
[Petitioner] of his claim for damages, without specifying whether
the damages are general or special, can operate to defeat DHS’s
lien.”    ICA’s opinion at  28.
It is arguable that the ICA erred in this
determination.    See HRS  §  346-37(c)  (“[t]he department shall have
a right to recover from the third person an amount not to exceed
the costs of medical assistance” and the department shall have a
right to subrogation against a third person for  “special
damages”10  (emphasis added)).    The import of Peters is that a
10
In  addition,  the  legislative history  of  HRS  §  346-29  suggests  that
the  legislature  found  the  distinction  between  special  and  general  damages
significant:
Your  Committee  agrees  with  the  intent  of  the  bill  that
the  department  be  subrogated to  any  right  or  claim  that a
claimant  has  against  a  third person  to  the  extent  of  the
amount  of  medical  assistance or  burial  payment  furnished by
the  department.
However,  your  Committee  feels  that  such  subrogation
should  be  limited  to  rights or  claims  for  special  damages
and  not  include  rights  or  claims  for  general  damages.
Your  Committee  finds  that  the  nature  of  the  claims  for
medical  assistance  or  burial payments  are  as  a  special
damages  and  that  it  would  be inequitable  to  allow  the
department  to  be  subrogated to  the  extent  of  claims  for
general  damages.    General  damages  include  damages  for  pain
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determination as to whether  “the defendants  .  .  . have discharged
their tort liability[, including liability for special damages,]
for less than what was just in the circumstances at the expense
of the State[,]”  69 Haw. at  29,  731 P.2d at  162, may be necessary
to ascertain what is due and owing to DHS.    However, any error in
this regard is harmless under the particular circumstances of
this case, inasmuch as Petitioner waived the requirement that the
proportion of the settlement attributable to special damages be
ascertained on remand.
For, following the court’s order to remand to the
hearings officer for further findings, Petitioner and DHS filed a
joint motion for reconsideration expressly stating that remand
was not necessary, and that,  “[w]hile no portion of the
settlement has been identified as special damages, there is no
dispute that the DHS lien is to be satisfied from the settlement
proceeds.    Rather the dispute is as to the amount DHS should be
reimbursed or is otherwise entitled.”                                                      (Emphasis added.)    Thus,
Petitioner conceded that the State’s lien might be satisfied from
the settlement amount in general.    Hence, the ICA’s conclusion
10
(...continued)
and  suffering,  loss  of  limbs and  physical  disability
incurred,  while  special  damages  would  include  medical
payments  and  burial  payments made.    Your  Committee  feels
that  such  subrogation  should be  limited  to  similar  claims
against  third  parties  as  are reflected  in  special  damage
claims.
Sen.  Stand.  Comm.  Rep.  No.  894-80,  in  1980  Senate  Journal,  at  1449  (emphasis
added).
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that a designation of special damages was unnecessary was not
error under the conditions agreed to in the parties’ motion for
reconsideration.
V.
A.
The heart of Petitioner’s argument is that, under
principles of equity, the State should receive only a pro rata
share of the recovery from a third-party tortfeasor.    In support
of this argument, Petitioner cites to several cases analyzing the
Federal Medical Care Recovery Act  (FMCRA),  42 U.S.C.A.  §  2651
(Supp.  1998), which contains several provisions similar to HRS
§  346-37.    See, e.g., Commercial Union Ins. Co. v. United States,
999 F.2d  581,  589  (D.C. Cir.  1993); Cockerham v. Garvin,  768 F.2d
784,  787  (6th Cir.  1985).    For instance, in Commercial Union, the
court held that the governmental claim in recovering its expenses
does not have priority over the injured party’s claim.    See  999
F.2d at  586.    The Commercial Union court explained that  “there is
nothing in  [FMCRA’s] language to suggest that the Government’s
claim has a priority over the employee’s.”11    Id.    Moreover,
11
The  language  cited  by  the Commercial  Union court,  28  U.S.C.  §
2651(a),  states:
[T]he  United  States  shall  have  a  right  to  recover  from
[third  parties]  the  reasonable  value  of  the  care  and
treatment  [paid  for  by  the  Government] and  shall  as  to  this
right  be  subrogated  to  any  right  or  claim  that  the  injured
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section  2652(c), which is substantially similar to HRS  §  46-
37(j), states that  “[n]o action taken by the United States in
connection with the rights afforded under this legislation shall
operate to deny to the injured person the recovery for that
portion of his  [or her] damage not covered hereunder.”
The ICA observed, however, that the FMCRA does not
contain a provision similar to HRS  §  346-37(e), which grants to
the State  “a lien in the amount of the costs of medical
assistance  .  .  . made against the proceeds from special damages
awarded in a suit or settlement” to the injured party.    Also, the
FMCRA does not contain a provision requiring that a settling
third party satisfy the lien before distributing settlement
proceeds:
If  a  notice  of  lien  is  properly  served  upon  the  third  person
under  subsection  (c),  the  third  person’s  agent  or  attorney,
or  upon  the  third  person’s  insurance  company,  as  provided  in
subsection  (f), it  shall  be  the  responsibility  of  the  third
person  to  satisfy  the  lien  prior  to  disbursing  any  of  the
proceeds  to  the  claimant’s  attorney.
HRS  §  346-37(e)  (emphasis added).    The ICA, thus, distinguished
the cases cited by Petitioner on the ground that,  “[u]nlike the
FMCRA, the clear and unambiguous language of HRS  §  346-37, when
construed as a whole and in conjunction with  42 U.S.C.  §  1396 et.
11
(...continued)
or  diseased  person  .  .  .  has against  such  third  person to
the  extent  of  the  reasonable value  of  the  care  and  treatment
so  furnished  or  to  be  furnished.
Commercial  Union,  999  F.2d  at  586  (emphases in  original).
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seq., establishes a priority that the medical assistance lien be
paid to DHS before the recipient of the medical assistance is
reimbursed.”    ICA opinion at  28.12
Petitioner argues that the ICA’s decision would render
HRS  §  346-37(j) a nullity because DHS would be allowed to recover
its lien in full, potentially leaving a claimant with nothing.
HRS  §  346-37(j) states that  “[n]o action taken by  [DHS] in
connection with the rights under this section shall deny to the
claimant the recovery for that portion of the claimant’s damage
not covered under this section.”    It appears, and Petitioner does
not contend otherwise, that  “section” refers to HRS  §  346-37 in
its entirety, as subsection  (j) is otherwise silent.
In our view, HRS  §  346-37(j) prohibits DHS’s action
with respect to any portion of the claimant’s damages that is
“not covered under this section[,]” i.e., HRS  §  346-37.    This
means that DHS cannot interfere with a claimant’s rights of
recovery unless HRS  §  346-37 allows otherwise.    In that regard,
HRS  §  346-37 permits the DHS to recover its costs for medical
assistance through a lien on special damages.    See HRS  346-37(e)
12
HRS  §  346-37(e)  also  provides  that  “regardless  of  who  institutes
legal  proceedings  or  seeks  other  means  of  recovering,  the  department shall
have  a  lien  in  the  amount  of the  costs  of  medical  assistance  or  burial
payment[.]”                                                                                    (Emphasis  added.)    HRS  §  346-37(f)  provides that  the  notice  of
lien  shall  state  that  “the  claimant’s  attorney shall  pay  the  amount  of  the
lien  from  the  proceeds  of  any  judgment,  settlement,  or  compromise  based  on  the
incident  or  accident[.]”                                                                     (Emphasis  added.)    Personal  liability  is  imposed  on
any  “person  failing  to  satisfy  the  lien  as  required  .  .  .  although  able  to  do
so  from  the  proceeds  of  the suit  or  settlement.”    HRS  §  346-37(i).
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(“the department shall have a lien in the amount of the costs of
medical assistance  .  .  .  [from] proceeds from special damages
awarded in a suit or settlement”).    So construed, HRS  §  346-37(j)
grants the State recovery of its costs for medical assistance
from special damages and does not limit the State to accepting a
pro rata share of Petitioner’s recovery.    We note further,
however, that while HRS  §  346-37 does not obligate DHS to agree
to a pro rata reduction of its lien for medical assistance
payments, HRS  §  346-37(e) permits the DHS discretion to settle or
compromise its subrogation or lien rights under HRS  §  346-37.
(“This section is not intended to restrict or diminish the right
of the department to settle or compromise its subrogation or lien
rights provided herein.”).    In this case, DHS apparently decided
to forego such a course.13    To the extent the ICA’s
interpretation regarding priority of payments conflicts with this
view, we clarify it.    Accordingly, as Peters held, a settling
plaintiff cannot waive recovery of special damages, but the State
is entitled to and may recover its medical assistance expenses
from the special damages obtained.
B.
Finally, Petitioner argues that, under Peters, this
13
Whether  this  was  dictated  by federal  statute  or  otherwise  is  not
conclusively  established  in the  record.
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court stated that the State  “steps into the shoes” of a claimant
and accordingly the State cannot collect a larger percentage of
the total potential damages than what Petitioner collects, i.e.,
if a petitioner receives fifteen percent of his or her damages in
a settlement, then correspondingly the State can only receive
fifteen percent of its lien.    Petitioner’s argument, however, is
inconsistent with the reasoning applied in Peters.    The  “steps
into the shoes” statement meant that a party could not waive its
rights to special damages, as such action would deprive the State
of its statutory right to subrogation.    Similarly, here,
Petitioner could not have chosen to reduce the State’s lien by
accepting a reduced settlement.    There is no indication from the
holding in Peters, or in HRS  §  346-37, that such a result was
contemplated or intended.
VI.
Petitioner also argues that the assignment of rights is
an adhesion contract and thus unenforceable.    This court has held
that an adhesion contract  “is a form contract created by the
stronger of the contracting parties” and the terms  “unexpectedly
or unconscionably limit the obligations and liability” of the
weaker party.    Leong v. Kaiser Found. Hosp.,  71 Haw.  240,  247,
788 P.2d  164,  168  (1990)  (quoting Robin v. Blue Cross Hosp.
Serv., Inc.,  637 S.W.2d  695,  697  (Mo.  1982)  (citations omitted));
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see also Brown v. KFC Nat’l Mgmt. Co.,  82 Hawai#i  226,  247,  921
P.2d  146,  167  (1996).    Here, the assignment of rights does not
unfairly advantage the State, as the intent of the assignment is
to merely recover expenses paid for medical damages.    As the ICA
noted, Petitioner
was  not  forced  to  apply  for medical  assistance  benefits from
DHS.    Moreover,  he  paid  nothing  in  order  to  receive  such
benefits.    Since  his  medical assistance  benefits  were  paid
for  by  the  federal  and  state taxpayers,  Congress  and  the
legislature  clearly  had  a  significant  interest  in  ensuring
that  the  public  fisc  [sic]  be  reimbursed  if  [Petitioner]
were  able  to  collect  damages from  a  third  party  for  the
injuries  that  led  to  [Petitioner’s]  need  for  medical
assistance  benefits  from  DHS.
ICA opinion at  10.
Moreover, the assignment of rights appears to track the
language of HRS  §  346-37, as it allows the State to recover money
only  “up to the amount of assistance granted.”    It is
questionable whether voiding the assignment of rights contract
would have any impact upon the State’s right to collect pursuant
to HRS  §  346-37, inasmuch as the statute must be deemed to be
controlling.
VII.
With the foregoing clarification, we affirm the ICA’s
September  11,  2002 opinion.
Howard Glickstein for
petitioner/appellant-
appellee, on the writ.
17

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