Legislative interpretationand judicial inconsistency at work This article appeared in the July 1999 issue of the
© 1999 Massachusetts Bar Association
David W.White-Lief is a partner with the Boston law firm of Breakstone, White-Lief& Gluck. He is chairman of the Massachusetts Bar Association CivilLitigation Section.
Two decisions handed down by the Massachusetts SupremeJudicial Court in early March demonstrate the wide variety of techniques usedby the court when interpreting statutes. Though separated by just one day, thetwo cases represent the opposite poles of statutory interpretation despiteclear statutory language in each case. Both cases yielded similar results: the insurers' arguments were accepted, and long standing practices in the field of personal injury were drastically altered.
The two cases were Pierce v. Christmas Tree Shops1 andDominguez v. Liberty Mutual Insurance Company.2 The Pierce case concerned theinterpretation of the medical lien statute, and the Dominguez case concernedthe interpretation of the personal injury protection statute.
NO IMAGINATION REQUIRED In Pierce, the court made short work of plaintiff'scontention that she was entitled to a reduction of a medical care lien underG.L. c. 111, § 70A-70D. The underlying facts were straightforward. Piercewas injured while shopping at the defendant's premises. She incurredsignificant medical bills, which were paid by her medical provider, HarvardPilgrim Health Care of New England. The case settled shortly before trial.
Difficulties arose when the medical insurer refused toaccede to plaintiff's request for a reduction of the lien. Plaintifffiled a motion in Superior Court for determination of the lien amount, and thejudge determined that HPHC should bear a proportional share of theattorney's fees, namely one-third as provided by the plaintiff'scontingent fee agreement.
Of course, this result was in harmony with common practiceamong plaintiffs and medical lien holders; plaintiff's counsel typicallyrequested and received reductions in the liens of insurers and hospitals. Thesereductions were in consideration of the work performed by plaintiff'scounsel, as well as in consideration of the fact that a compromise of the lienwas often the necessary ingredient to allow the case to settle, guaranteeingsome measure of satisfaction to all. Equitable principals were at work as well.Lien holders recognized that fees were incurred to recover on their behalf. Aswith workers' compensation liens3 and Medicare liens,4 which provide aspecific statutory framework for sharing attorney's fees, medical lienholders consistently recognized the equitable duty to share the burden ofcounsel fees.
The equitable considerations had no sway with the SJC.Instead, the court resorted to a very precise statutory interpretation of thelanguage of the statute. Finding no express provision for payment ofattorney's fees or costs, the court completely rejected plaintiff'sarguments for relief. The court also, in a portentous footnote, rejected thenotion that the subrogation clause in the insurance contract should be thebasis for relief. The court reasoned that, although subrogation is an equitabledoctrine, the contract is silent as to attorney's fees, leaving theplaintiff responsible for them.
The court's decision was a grave disappointment tothe plaintiffs' bar, and it upset decades of tradition and practice. Twonet results are obvious: plaintiffs will recover less, and cases will becomemore difficult to settle. But, at the same time, the basis for thecourt's unanimous decision was clear: both the contract and the statutewere silent on the matter of attorneys' fees and costs.
The court quoted a number of cases in support of itsmethod of statutory interpretation. "‘We cannot interpret a statuteso as to avoid injustice or hardship if its language is clear and unambiguousand requires a different construction' … ‘If the Legislaturehas intentionally omitted a provision from a statute, no court may thenreintroduce it.'"5 These standards would have seemed applicable toother matters pending before the court.
WHAT A DIFFERENCE A DAY MAKES After reading Pierce, one was left with the convictionthat our court would, at least, hew to a straightforward line regardinginterpretation of the plain language in insurance statutes. Instead, on thefollowing day the court delivered its opinion in Dominguez, in which itsubscribed to a completely different set of standards for statutoryinterpretation. Dominguez concerned the interpretation of the definitions inthe personal injury protection statute, G.L. c. 90, § 34A. Theplaintiff, Dominguez, was thevictim of an automobile accident. The first $2,000 of his medical bills wascovered, without question, by the PIP carrier, Liberty Mutual. The bill for thebalance was rejected by Liberty Mutual since it had not been submitted to thehealth maintenance organization, Harvard Community Health Plan. HCHP rejectedthe bill because the provider was outside of the group. Liberty Mutual thenrejected the bill, arguing the plaintiff was required to treat within his plan.
The statutory language in Section 34A, the section thatprovides definitions regarding the PIP statutes, is very simple and clear. Inpertinent part, in the subsection for the definition for "personal injuryprotection," it reads, "Nothing in this subsection shall beconstrued to compel a claimant to renew or maintain any policy of insurance inforce prior to receipt of the said tender, or to interfere in any way with theclaimant's choice of physician or course of medical treatment." Unfortunately,the majority of the court reasoned away the broad application of that sentence.
Instead of turning to the plain meaning of the sentence,the court looked first to the overall intent of the PIP statute, which thecourt determined was to control the costs of compulsory auto insurance. Thecourt next determined that there was a "mandate" that claimantsutilize existing health insurance for medical expenses that exceed the $2,000PIP limit. The court then determined that the word "subsection" inthe portion of Section 34A quoted previously applied only to the last threesentences of the paragraph in which it was found, rather then the entireparagraph, and rather than the entire logical subsection of Section 34Aconcerning the definition of "personal injury protection."Continuing, the court reasoned that any shifting of expenses to the PIP carrierwould "frustrate" the goal of the statute.6 The strained reasoning of the statute and its legislativehistory was certainly bad enough. But, the court did not end there. Themajority pronounced that Dominguez had failed to cooperate and deal in goodfaith with his insurance companies, and had violated the applicable law.7 There was a sharp dissent, authored by Justice Roderick L.Ireland, and joined by Justice Neil L. Lynch. As the dissent points out, thestatute was susceptible to a much more sensible reading, one that preserved theoverall statutory scheme of coordinating benefits, but also providing coveragefor all reasonable expenses, including expenses outside of the medical plan,incurred as a result of an automobile accident. The dissent also illustratedthe flaws in majority's assessment of the intent of the statute."The amendment was intended to stop insured parties from receiving doublerecoveries, not to complicate the insured party's ability to obtainpayment for medical-related expenses."8 The dissent also correctly realized the magnitude of theinjustice worked by the majority opinion. "Given the absence of notice topolicyholders to date, we should not permit our decision to deny coverage ofbenefits to policyholders for injuries already suffered and for medicaltreatment already received."9
The result is, again, a shock to the plaintiff'sbar. Roughly 10 years of practice regarding coordination of benefits was turnedon its head. There are many injustices worked by the result of the case. Thebiggest of these is that claimants with limited health insurance are left withthe most limited options for health care, while claimants with no healthinsurance have no limitations whatsoever on their choice of providers. Thedecision left an important question unanswered: How will bills for care outsideof the health plan be covered? In other words, if the health plan does notprovide coverage for a service, such as physical therapy, will the PIP carrierstill be obligated to cover that service? Arguments can be made either waybased on the language of Dominguez.
CONCLUSION These most recent cases demonstrate again thedetermination of the court to construe insurance statutes in a manner thatachieves the purpose of keeping insurance rates low. While this may be alaudable goal, it certainly constitutes an intrusion into the legislativearena. This is especially so where, as in Dominguez, the statutory language,nearly a decade of practice, and significant consumer interests militateagainst the court's conclusion. Sadly, once again, it is the unfortunatevictims of accidents who bear the burdens of the court's decisions.
END NOTES 1. 429Mass. 91 (1999).
2. 429Mass. 112 (1999).
3. G.L.c. 152, § 15.
4. 42C.F.R. § 411.37.
5. Pierceat 93, quoting (respectively) Rosenbloom v. Kokofsky, 373 Mass. 778, 780-781(1977), Bay State Gas Co. v. Local No. 273, Util. Workers Union, 415 Mass. 72,75 (1993).
6. Dominguezat 116-117.
7. Id.at 118.
8. Dominguezat 120, citing Creswell v. Medical W. Community Health Plan, Inc., 419 Mass.327, 329-330 (1995).
9. Dominguezat 120.