No. 1123 April Term, 1978, Appeal from the Order entered July 7, 1978, by the Court of Common Pleas of Allegheny County, Civil Action-Law, at No. G.D. 76-5760.
Kellen McClendon, Assistant Attorney General, Pittsburgh, for appellant.
No appearance entered nor briefs submitted for appellees.
Cercone, President Judge, and Wieand and Hoffman, JJ.*fn*
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In this appeal we are asked to decide whether the Commonwealth of Pennsylvania, which has made medical assistance payments to a minor welfare recipient and which claims reimbursement from the proceeds of a settlement achieved by its recipient with a third party tortfeasor, can be ordered by a court of competent jurisdiction to pay a proportionate part of the fees of counsel whose efforts achieved the settlement.
On April 13, 1974, Tracy L. Shearer, appellee, was struck and seriously injured by an automobile driven by John Henry Moore. From April 13, 1974, to April 26, 1974, the Department of Public Welfare (Commonwealth) paid to Allegheny General Hospital the sum of $1,703 as medical assistance payments for treatment of Tracy's injuries. From April, 1974 to October 18, 1976, the Commonwealth also paid Tracy's guardian and grandmother, Dolores Shearer, the sum of $1,977.77 as aid-to-dependent children assistance (A.D.C.).
Dolores Shearer filed a trespass action in her own right and on behalf of Tracy against John Henry Moore on March 17, 1976. The parties ultimately agreed to a settlement for $20,000, and the court below was requested to approve the
[ 277 Pa. Super. Page 73]
settlement and order distribution of the proceeds. The Commonwealth intervened and demanded reimbursement of all the moneys advanced to Tracy for her care following the accident. On December 22, 1976, the lower court denied the Commonwealth's claim for reimbursement of medical assistance payments and also the A.D.C. assistance. The Commonwealth appealed, and the Superior Court affirmed the denial of the claim for reimbursement of A.D.C. assistance without prejudice so that the Commonwealth might pursue other authorized means for collecting the claim. The record was remanded to the lower court, however, "for reconsideration of its order approving settlement of the suit against the third party so as to allow the Commonwealth's claim for medical assistance, with such deductions therefrom it decides reasonable in its discretion; . . ." See: Shearer v. Moore, 255 Pa. Super. 246, 386 A.2d 600 (1978). On remand, the lower court charged the Commonwealth its pro rata share of Tracy's attorney fees ($567.66) and expenses ($17.03), thus reducing the Commonwealth's recovery for medical expenses to $1,118.31. In the instant appeal, the Commonwealth contends that the lower court abused its discretion because such a deduction was not authorized by and is precluded by law.
It is not disputed that the Commonwealth has a right to obtain reimbursement for medical assistance payments from the assets of the recipient. This right of repayment is based not only upon statute, see The Support Law, Act of June 24, 1937, P.L. 2045, No. 397, § 4, as amended, 62 P.S. § 1974, but on common law principles as well. See: Commonwealth, Dept. of Public Assistance v. Schuylkill County, 361 Pa. 126, 62 A.2d 922 (1949); Reiver's Estate, 343 Pa. 137, 22 A.2d 655 (1941); Waits' Estate, 336 Pa. 151, 7 A.2d 329 (1939). The purpose of the repayment requirement is twofold: "The one [reason] rests on the basic principle that public assistance supplements resources and that whenever assistance is granted in lieu of the utilization of certain resources, the assistance should be repaid whenever these resources become available. The second reason relates to
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the financing of the program since reimbursement results in a recovery of money that is then available for redistribution as assistance, thereby reducing to this extent the need for additional tax revenues." Castleberry v. Commonwealth, Dept. of Public Welfare, 36 Pa. Commw. 480, 486-87, 387 A.2d 1360, 1363 (1978). See also: Charleston v. Wohlgemuth, 332 F.Supp. 1175, ...