Appeal from Superior Court of Pierce County. Docket No: 93-2-06830-7. Date filed: 11/04/94. Judge signing: Hon. Frederick W. Fleming.
Authored by Karen G. Seinfeld. Concurring: Carroll C. Bridgewater, David H. Armstrong.
The opinion of the court was delivered by: Seinfeld
SEINFELD, C. J. -- This case arises out of a two-vehicle collision in which Debra Patterson and her three children, passengers in Michael Hundley's vehicle, were injured. The Department of Social and Health Services (DSHS) paid the medical bills for Patterson and the children after obtaining their agreement to assign to DSHS their rights to any third party recovery. The trial court, however, applied equitable subrogation principles to deny DSHS its full subrogation rights. DSHS appeals this ruling. Patterson appeals the trial court's dismissal of her action against Hundley for failing to fasten the children's seatbelts properly. Finally, Hundley, who had filed cross-claims against the driver and passenger of the other vehicle, cross-appeals, raising evidentiary and equitable estoppel issues.
We conclude that the application of equitable subrogation principles in this context conflicts with state statute. Thus, we reverse the trial court ruling against DSHS. We further conclude that the trial court erred in relying on medical bills as proof of medical costs without requiring the plaintiff to show that the bills were reasonable and the treatment was necessary. Thus, we remand the matter for recalculation of damages. We affirm the balance of the trial court's rulings.
A head-on collision between David Horton's and Michael Hundley's vehicles resulted in injuries to Hundley, Patterson, her three minor children, and Vaughn Pol, Horton's passenger. Patterson applied to DSHS for help with her family's medical expenses. DSHS agreed to pay on the condition that Patterson assign to it the family's rights to recover damages from a liable third party. DSHS then asserted a statutory lien against any recovery Patterson might have from Horton.
Patterson, individually and on behalf of her children, filed a personal injury action against Horton, Hundley, and Pol. She also sought declaratory relief against DSHS. Pol and Hundley cross-claimed against Horton, and Hundley cross-claimed against Pol. Horton admitted liability, but his only asset, a $50,000 insurance policy, was insufficient to cover all alleged damages.
The trial court dismissed Patterson's action against Hundley, concluding that her action for damages against Hundley for failing to fasten the children's seatbelts did not state a claim upon which relief could be granted. But it granted Patterson's motion for partial summary judgment against DSHS, relying on equitable subrogation principles to effectively bar DSHS from recovering compensation for any of the medical services rendered to Patterson and her children.
Pol, the most seriously injured party, feared that a recovery in this action might jeopardize his eligibility for disability benefits. Thus, before trial he began negotiating his dismissal separately with Hundley and Patterson. During pretrial proceedings, Patterson and Pol mentioned to the court that Pol intended to stipulate to an "outright" dismissal of his claim against Horton in exchange for dismissal of Patterson's claims against him. *fn1 One week later, Patterson and Pol, without notice to Hundley, presented a stipulated order to the Judge who was overseeing their settlement conference. The order assigned Pol's right to recover from Horton to Patterson and her children and dismissed Pol's claim against Horton.
When Hundley learned of the order, he moved to vacate it on the basis of lack of proper notice. The assigned trial Judge refused to hear the motion and advised Hundley to take the matter up with the settlement conference Judge. The settlement conference Judge granted the motion to vacate but refused to rule on the validity of Pol's assignment of his claim to Patterson. Patterson and Pol then moved to dismiss Pol under CR 41, this time after giving Hundley proper notice. The assigned trial Judge granted this motion without objection.
Twenty-three days before trial, Patterson provided to opposing counsel the medical records she intended to introduce at trial. Hundley objected, asserting that Patterson had not complied with ER 904's 30-day notice requirement. Further, he argued that the documents were inadmissible absent evidence that the medical treatment and bills were necessary and reasonable.
Patterson subpoenaed the physicians, but when they objected to the subpoenas, Patterson called the records' custodians instead. The trial court, over Hundley's standing objection, admitted the challenged documents. *fn2 Following a bench trial, the trial court found Patterson, the children, Hundley, and Pol all without fault. It determined damages as follows: $41,000 for the children collectively; $47,500 for Patterson; $37,000 for Hundley; and $486,304.64 for Pol.
On appeal, DSHS contends that the trial court erred as a matter of law when it applied equitable subrogation principles to limit DSHS's statutory lien and subrogation rights. Patterson argues that the trial court erred when it dismissed her inadequate restraint claim against Hundley. Hundley asserts that the trial court erroneously (1) admitted the medical records; (2) entered the judgment dismissing Pol without ruling on the enforceability of Pol's assignment of his claim to Patterson; and (3) refused to hear arguments on his motion to vacate the stipulated order.