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Hendricks-Pearce v. State, Department of Corrections

Supreme Court of Alaska

April 25, 2014

ANITA HENDRICKS-PEARCE, as Personal Representative of the Estate of DEWELL W. PEARCE, Appellant,
v.
STATE OF ALASKA, DEPARTMENT OF CORRECTIONS, Appellee

Page 31

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Eric A. Aarseth, Judge. Superior Court No. 3 AN-08-09147 CI.

Ted Stepovich, Law Office of Ted Stepovich, Anchorage, for Appellant.

Dale W. House, Senior Assistant Attorney General, Anchorage, and Michael C. Geraghty, Attorney General, Juneau, for Appellee.

Before: Fabe, Chief Justice, Winfree, Maassen, and Bolger, Justices. [Stowers, Justice, not participating]. FABE, Chief Justice, with whom MAASSEN, Justice, joins, dissenting.

OPINION

Page 32

BOLGER, Justice.

I. INTRODUCTION

A prisoner recovered a medical malpractice judgment against the State of Alaska Department of Corrections. But when DOC paid the judgment, it deducted the expenses it had incurred for unrelated medical care

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provided to the prisoner by outside providers. DOC then brought an action seeking a declaratory judgment that DOC had the statutory right to reimbursement from the prisoner for medical expenses incurred on his behalf. In this appeal, the prisoner's estate argues that only prisoners with access to the specified funding sources listed in the statute are liable for the cost of outside medical care. But we conclude that the statute entitles DOC to reimbursement from a prisoner regardless of whether the medical care is provided inside the prison or made available through an outside provider. We also conclude that the common fund doctrine does not require DOC to share the cost of the prisoner's attorney's fees for the medical malpractice action.

II. FACTS AND PROCEEDINGS

A. Legal Framework

The State has a statutory and constitutional obligation to provide necessary medical care to all prisoners regardless of their ability to pay.[1] Although the State provides medical care through DOC employees and contractors (in-house medical care), some medical conditions require treatment by outside providers (outside medical care).[2] Alaska Statute 33.30.028 sets out the prisoner's responsibility for medical expenses incurred during incarceration.[3] DOC has also adopted a regulation, 22 AAC 05.121, that outlines the prisoner's responsibility for payment for these services, with particular focus on the co-payment system.

B. Prior Litigation And First Appeal

Most of the underlying facts of this case have already been reviewed by this court in State, Department of Corrections v. Hendricks-Pearce. [4] Dewell Pearce was a prisoner from 1994 to 2008.[5] During his incarceration the State provided Pearce medical care for several conditions; [6] the State paid $147,494.94 to outside medical providers. While in custody, Pearce sued the State for medical malpractice and was awarded a $369,277.88 judgment against the State in 2008.[7] The State paid part of the judgment in May 2008, but withheld $140,847 as reimbursement for medical expenses that were unrelated to the injuries giving rise to the malpractice suit.[8] In July 2008 the State filed an action for declaratory relief regarding its right to reimbursement.

The parties disputed whether the State was entitled to reimbursement from Pearce.[9] Because Pearce had been released before the

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State filed its declaratory judgment action, the parties disagreed on whether AS 33.30.028 applied to former prisoners after their release from custody.[10] The superior court determined that AS 33.30.028 did not apply to former prisoners.[11] It therefore dismissed the State's suit and ordered the State to pay Pearce $140,847 (the amount the State had withheld from the original medical malpractice judgment) plus interest.

On appeal, this court reversed the superior court's ruling.[12] We stated that " [t]he primary goal of AS 33.30.028 is reducing medical costs" [13] and observed that " preventing the State from collecting from prisoners to the fullest extent possible would contravene the statute's cost-saving purpose." [14] We therefore held that for the purposes of AS 33.30.028 the term " prisoner" includes former prisoners.[15]

This court remanded two separate issues -- then not yet ruled upon -- to the superior court: (1) whether AS 33.30.028 entitles the State to reimbursement for the cost of outside medical care from a prisoner without the funding sources identified in AS 33.30.028(a); [16] and (2) whether the State's recovery, if allowed, was subject to a claim for attorney's fees and costs under the common fund doctrine.[17]

C. Remand And Subsequent Appeal

1. The parties' arguments

On remand, both parties moved for summary judgment. Each offered a distinctly different interpretation of AS 33.30.028. Pearce argued that the statute allows reimbursement for the cost of outside medical care only from the specified funding sources identified in subsection .028(a). Pearce's reading of the statute rested on two distinctions: the first distinction related to the type of medical care at issue (whether it was in-house or outside), and the second distinction compared-prisoners with access to the specified funding sources listed in subsection .028(a) to those without.

Pearce argued that the statute distinguishes between two types of medical care -- care " provided" by DOC (in-house medical care) and care " made available" by DOC (outside medical care) -- and that under subsection .028(b), prisoners who lacked the .028(a)-specified funding sources are required to pay only for care " provided to them by the department." Pearce therefore concluded that only prisoners with access to those specified funding sources were liable for the cost of outside medical care " made available" to them. Pearce contended that his reading of the statute was supported by the DOC regulation concerning prisoner co-payments. Pearce also argued that his attorney's fees should be deductible from any recovery made by the State under the common fund doctrine.

The State argued that liability for the cost of outside medical care is imposed on all prisoners under AS 33.30.028, regardless of access to the .028(a)-specified funding sources, and that the legislative history does not support a distinction between medical care " provided" and care " made available." It contended that the statute itself made no distinction between in-house and outside medical care and that the regulation cited by Pearce was irrelevant to the statutory interpretation question because that regulation concerned co-payments rather than reimbursement.[18] Finally, the State argued that any recovery it made was not subject to a pro rata reduction for attorney's fees.

2. The superior court's analysis

The superior court ruled in favor of DOC on both issues. It determined that

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AS 33.30.028 entitled DOC to reimbursement for the costs of outside medical care from prisoners like Pearce who lacked the specified funding sources identified in subsection .028(a). It determined that subsection .028(a) identified two categories of medical care -- that " provided" and that " made available" to the prisoner. But the court concluded that subsection .028(a) assigned financial liability for both categories of care to the prisoner. The court determined that the distinction between care " provided" and care " made available" is relevant only in subsection .028(b), which requires some level of payment for care only when the care is " provided to [the prisoner] by the department." [19]

Turning to the legislative history of the statute, the court found that subsection .028(b) was intended to deter prisoners' frivolous use of medical care, rather than to limit a prisoner's liability under subsection .028(a). The court also found that the legislative record reflected the legislature's intent to grant the State the ability to recover the full cost of medical care " if at some point in the present or future the prisoner had sufficient funds."

The superior court also ruled that the common fund doctrine was not applicable because Pearce and his attorney did not confer a benefit upon the State through the medical malpractice lawsuit. It therefore concluded that DOC's recovery was not subject to a pro rata reduction for attorney's fees and awarded judgment against Pearce's estate ...


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