Houghton v. Dep't of Health

2005 UT 63
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Paul Houghton and Billie 	No. 20030931
Henderson, individually and
each as representative of a
class; and Damian Henderson,
Wayne Rubens, Ron Roes, and
Susan Roes, who are other
members of these classes,
similarly situated,
Plaintiffs and Appellants,
v.
Department of Health; The
Office of Recovery Services;
The Department of Human Services;
The State of Utah; Rod L. Betit,
Director of the Department of
Health and Director of Department
of Human Services; Emma Chacone,
Executive Director of the Office
of Recovery Services; and John 	F I L E D
Does 1-50 and Jane Does 1-50,
Defendants and Appellees. 	September 27, 2005
---
Third District, Salt Lake
The Honorable Anthony B. Quinn
No. 950907491
Attorneys: 	Robert B. Sykes, Alyson Carter, Robert J. Fuller,
Salt Lake City, for plaintiffs
Mark L. Shurtleff, Att’y Gen., Brent A. Burnett,
Asst. Att’y Gen., Salt Lake City, for defendants
---
PARRISH, Justice:

1 At all times relevant to this action, subsection (1) of
section 26-19-5 provided:
(1) 	(a) When the department provides or
becomes obligated to provide medical
assistance to a recipient because of an
injury, disease, or disability that a third
party is obligated to pay for, the department
may recover the medical assistance directly
from that third party.
(b) The department’s claim to recover
medical assistance provided as a result of
the injury, disease, or disability is a lien
against any proceeds payable to or on behalf
of the recipient by that third party. 	This
lien has priority over all other claims to
the proceeds, except claims for attorney’s
fees and costs authorized under Subsection
26-19-7(4).
Utah Code Ann. § 26-19-5(1) (1998).
This subsection was amended in 2004 and now reads as
follows:
(1) 	(a) When the department provides or
becomes obligated to provide medical
assistance to a recipient that a third party
is obligated to pay for, the department may
(continued...)
No. 20030931 	2
¶1 	In 1995, plaintiffs filed suit against the Department
of Health, the Office of Recovery Services, the State of Utah,
and individual defendants (collectively, the “State”), seeking
the return of monies paid to the State from settlements or
judgments entered on plaintiffs’ behalf. 	After several years of
protracted motion practice and two appeals to this court,
plaintiffs now appeal the district court’s interlocutory order
limiting the scope of discovery. 	The district court based its
order on its interpretation of Utah case law. 	Because we
conclude that the district court erred in its interpretation, we
reverse and remand.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 	As a result of injuries they sustained in separate
accidents, plaintiffs Paul Houghton, Billie and Damien Henderson,
and Wayne Rubens each received Medicaid assistance to pay their
medical bills. 	After plaintiffs sought compensation for their
injuries from potentially liable third parties, the State,
pursuant to section 26-19-5 of the Utah Code (the “lien
statute”), 1 placed reimbursement liens on any settlement or

1 (...continued)
recover the medical assistance directly from
that third party.
(b) Any claim arising under Subsection
(1)(a) or Section 26-19-4.5 to recover
medical assistance provided to a recipient is
a lien against any proceeds payable to or on
behalf of the recipient by that third party.
This lien has priority over all other claims
to the proceeds, except claims for attorney’s
fees and costs authorized under Subsection
26-19-7(4).
Id. § 26-19-5(1) (Supp. 2004). 	Because the 1998 version of
section 26-19-5 was applicable at all times relevant to this
action, all subsequent references to this section are to the 1998
version.
2 In 2004, the Utah Legislature repealed the Utah
Governmental Immunity Act, sections 63-30-1 to -38, enacting in
its place sections 63-30d-101 to -904. 	Act of Mar. 3, 2004, ch.
267, 2004 Utah Laws 1171. 	In so doing, the legislature
acknowledged its intent that all “injuries alleged to be caused
by a governmental entity that occurred before July 1, 2004, be
governed by the provisions” of the former Act. 	Id. § 48, at
1215. 	Because the injuries alleged by plaintiffs in this case
occurred prior to July 1, 2004, the former Act governs and all
references in this opinion are to that Act.
3 	No. 20030931
judgment proceeds in order to recover the Medicaid assistance it
had paid on plaintiffs’ behalf.
¶3 	Alleging that the lien statute violated federal law,
plaintiffs filed a notice of claim with the State pursuant to the
provisions of the Utah Governmental Immunity Act (the “Immunity
Act”). 2 	The notice stated that plaintiffs “intend[ed] to bring a
class action” to recover “the money [the State] took illegally by
liening their property . . . plus any interest, costs and
attorneys fees.” 	Plaintiffs attached to their notice a draft
complaint, which sought the return of all “monies . . . illegally
and unlawfully taken” and “attorneys fees as allowed by law.”
¶4 	On October 27, 1995, plaintiffs filed suit against the
State, alleging that the lien statute was illegal because it
violated federal law prohibiting the filing of liens against the
property of living Medicaid recipients. 	On December 18, 1995,
plaintiffs moved to certify their suit as a class action, and on
January 29, 1996, the district court granted the motion,
certifying two classes of plaintiffs. 	Class I consisted of

No. 20030931 	4
Medicaid recipients with third-party liability claims who
received settlements or judgments from liable third parties from
which the State’s reimbursement liens were paid. 	Class II
plaintiffs were identical to Class I plaintiffs with the
exception that Class II plaintiffs had “retained counsel and
actually filed actions or made claims through attorneys[] against
the liable third parties.”
¶5 	After plaintiffs filed a notice of deposition and
request for document production, the State moved to disqualify
plaintiffs’ attorneys, asserting that their representation of
plaintiffs gave rise to a conflict of interest in violation of
rule 1.9 of the Utah Rules of Professional Conduct because
plaintiffs’ attorneys had previously represented the State in
personal injury actions brought by Medicaid recipients. 	In
addition, the State sought a protective order to delay discovery
pending the resolution of its motion to disqualify. 	The district
court granted both motions. 	Plaintiffs petitioned this court for
permission to file an interlocutory appeal, which we granted. 	In
that appeal, we reversed the district court, holding that
plaintiffs’ counsel did not violate rule 1.9 of the Utah Rules of
Professional Conduct. 	Houghton v. Dep’t of Health, 962 P.2d 58,
63 (Utah 1998). 	On remand, the district court reinstated
plaintiffs’ counsel.
¶6 	In late 1998, this court issued two opinions affirming
the validity of the lien statute. 	See S.S. v. State, 972 P.2d
439, 442 (Utah 1998); Wallace v. Estate of Jackson, 972 P.2d 446,
448 (Utah 1998). 	Arguing that those opinions completely disposed
of plaintiffs’ claims, the State moved for judgment on the
pleadings. 	While plaintiffs conceded that S.S. and Wallace
gutted their challenge to the validity of the lien statute, they
maintained the viability of their other claims. 	The district
court granted the State’s motion for judgment on the pleadings on
all of plaintiffs’ claims except their claim seeking the State’s
contribution to their attorney fees.
¶7 	Undeterred, the State filed another motion directed at
plaintiffs’ claim for attorney fees. 	The State argued that it
was entitled to summary judgment on that claim because the named
plaintiffs either never incurred attorney fees or already had
been compensated by the State for its share of fees. 	Plaintiffs
opposed the State’s motion and also sought reconsideration of the
district court’s ruling disposing of their other claims.
Plaintiffs argued that, in addition to their claim for attorney
fees, they should be allowed to proceed with their claim seeking
to invalidate the priority status of the State’s lien.

5 	No. 20030931
¶8 	The district court disposed of both motions in an order
dated November 13, 2000. 	It denied plaintiffs’ motion for
reconsideration, citing this court’s decision in State ex rel.
Office of Recovery Services v. McCoy, 2000 UT 39, 999 P.2d 572,
and it granted the State’s motion for summary judgment, declaring
that “no issues related to a named plaintiff or class
representative remain unresolved.”
¶9 	Plaintiffs again appealed to this court, arguing that
the district court erred in (1) granting the State’s motion for
judgment on the pleadings with respect to their claim challenging
the validity of the lien’s priority status, and (2) granting the
State’s motion for summary judgment on the Class II plaintiffs’
claims for attorney fees.
¶10 	In Houghton v. Department of Health, 2002 UT 101, 57
P.3d 1067, we affirmed the district court’s grant of judgment on
the pleadings, holding that “the priority lien on Medicaid
recipients’ third-party settlement proceeds did not violate
federal law.” 	Id. ¶ 9. 	However, we reversed the summary
judgment on the Class II plaintiffs’ claim for attorney fees and
remanded the case to the district court for further proceedings
on that claim. 	Id. ¶ 10.
¶11 	On remand, the Class II plaintiffs moved to compel
discovery. 	Again, the State fired up its motion machine. 	It
moved to dismiss without prejudice the Class II plaintiffs’
remaining claim for attorney fees, arguing that the district
court lacked subject matter jurisdiction over that claim because
plaintiffs had failed to comply with the Immunity Act. 	In the
alternative, the State argued that the district court should
compel plaintiffs to add a new Class II representative because
none of the named representatives could assert a valid claim for
attorney fees. 	The State also moved to stay all discovery
pending the district court’s resolution of its motion to dismiss,
which the district court denied. 	Thereafter, plaintiffs moved to
add additional Class II representatives, and the State responded
by filing an additional motion to dismiss. 	The State asserted
that the district court lacked jurisdiction over those additional
plaintiffs sought to be named as Class II representatives, as
well as all other unnamed Class II plaintiffs, because the notice
of claim filed with the State had not specifically listed them.
Additionally, the State moved for a protective order, arguing
that plaintiffs’ discovery requests were overly broad and unduly
burdensome, and sought protected information. 	The district court
granted plaintiffs’ motion to add Class II representatives and
denied the State’s motions to dismiss. 	The State then moved to
decertify the class.

No. 20030931 	6
¶12 	On November 3, 2003, in an order disposing of the
remaining motions before it, the district court (1) denied
plaintiffs’ motion to compel discovery, (2) granted the State’s
motion for a protective order, limiting the discovery that
plaintiffs could seek, and (3) delayed a decision on the State’s
motion for decertification of the class until after the parties
completed the discovery allowed under the terms of the protective
order.
¶13 	The district court based its November 3, 2003 order on
the holding of McCoy, which, it declared, “is found in the last
sentence of paragraph 18 of that case.” 	That sentence reads:
We therefore conclude that under subsection
(4), when the State elects to recover
directly from a recipient who has expressly
excluded the State’s claim from any attempt
to recover from a third party, the State must
pay the attorney fees incurred in procuring
the State’s share of the settlement proceeds.
McCoy, 2000 UT 39, ¶ 18. 	The district court accordingly limited
the scope of discovery to that which was necessary to identify
Medicaid recipients falling within its interpretation of the
holding of McCoy. 	On November 21, 2003, plaintiffs petitioned
for permission to appeal the district court’s interlocutory
discovery order, arguing that the district court’s interpretation
of McCoy was erroneous. 	We granted plaintiffs’ petition on
January 15, 2004, and have jurisdiction pursuant to Utah Code
section 78-2-2(3)(j) (2002).
ANALYSIS
¶14 	Plaintiffs argue that the district court erred in
interpreting the holding of State ex rel. Office of Recovery
Services v. McCoy, 2000 UT 39, 999 P.2d 572. 	Contrary to the
district court’s interpretation, plaintiffs maintain that McCoy
requires the State to pay its fair share of attorney fees in all
instances where the State obtains its lien reimbursement from the
proceeds of a settlement or judgment procured through the efforts
of a Medicaid recipient’s private attorney. 	Before we reach this
issue, however, we must address the preliminary arguments raised
by the State. 	Specifically, the State contends that (1) we
cannot address plaintiffs’ claims because we lack subject matter
jurisdiction to do so; and (2) assuming we have jurisdiction, we
should nevertheless decline to further interpret McCoy because
doing so would constitute an impermissible advisory opinion.

7 	No. 20030931
I. 	SUBJECT MATTER JURISDICTION
¶15 	The State contends that we lack subject matter
jurisdiction over this case because plaintiffs failed to comply
with the Immunity Act. 	Specifically, the State argues that
plaintiffs’ notice of claim was deficient because it did not list
all of the Class II plaintiffs and did not include a specific
request for attorney fees under section 26-19-7 of the Utah Code.
¶16 	Before reaching the substance of the State’s
jurisdictional claim, we must determine whether that claim falls
within the scope of this interlocutory appeal. 	Although it is
generally true that the issue of subject matter jurisdiction “is
a threshold issue,” which can be raised at any time and must be
addressed before the merits of other claims, Hous. Auth. v.
Snyder, 2002 UT 28, ¶ 11, 44 P.3d 724, this is not the case in
the context of an interlocutory appeal. 	On interlocutory appeal,
we review only those specific issues presented in the petition.
See State v. Lusk, 2001 UT 102, ¶ 32, 37 P.3d 1103 (refusing to
address a question because it was “beyond the scope of review for
which we granted Lusk’s petition for this interlocutory appeal”).
Thus, we are not compelled to review subject matter jurisdiction
if that issue was neither included in the petition for
interlocutory appeal nor the subject of a cross-petition. 	See
Mercury Mktg. Techs. of Del., Inc. v. State ex rel. Beebe,
No. 03-1382, 2004 Ark. LEXIS 447, at *13-14 (Ark. July 1, 2004)
(declining to address “whether the circuit court erred in finding
that it had subject-matter jurisdiction over the action, because
this went beyond the scope of the interlocutory appeal”).
Nevertheless, because the issue of subject matter jurisdiction
will always bear some relationship to the interlocutory orders
presented for review, we retain the discretion to address subject
matter jurisdiction on interlocutory appeal in those cases where
we deem it appropriate. 	Where we decline to do so, the parties
may appeal the issue of subject matter jurisdiction once a final
decision has been rendered, as mere denial of a petition for
interlocutory appeal does not necessarily act as a judgment on
the merits, see Mountain States Tel. & Tel. Co. v. Atkin, Wright
& Miles, 681 P.2d 1258, 1263 (Utah 1984), and “‘challenges to
subject matter jurisdiction . . . cannot be waived,’” Chen v.
Stewart, 2004 UT 82, ¶ 34, 100 P.3d 1177 (quoting Barnard v.
Wassermann, 855 P.2d 243, 248 (Utah 1993)).
¶17 	Because of the lengthy procedural history in this case,
we believe that it is appropriate to address the issue of subject
matter jurisdiction at this stage, even though it is not within
the scope of the petition for interlocutory appeal. 	Accordingly,

3 This court has recognized that equitable claims are not
governed by the notice of claim provisions of the Immunity Act.
For example, in El Rancho Enterprises, Inc. v. Murray City Corp.,
565 P.2d 778, 780 (Utah 1977), we noted that “an equitable claim
may be brought without the necessity of first presenting a claim
for damages.” 	See also Am. Tierra Corp. v. City of W. Jordan,
840 P.2d 757, 760 (Utah 1992) (holding that equitable claims are
“exempt from the filing requirements and time limits imposed by
the . . . Immunity Act”); Jenkins v. Swan, 675 P.2d 1145, 1154
(Utah 1983) (“[E]quitable claims . . . are exempt from the notice
requirements.”). 	Thus, a plaintiff asserting an equitable claim
is not bound by the notice requirements of the Immunity Act.
No. 20030931 	8
we exercise our discretion to review the issue of whether
plaintiffs complied with the Immunity Act, thereby vesting the
district court with subject matter jurisdiction over their claims
against the State.
¶18 	The Immunity Act, sections 63-30-1 to -38 of the Utah
Code, “grants the state and its political subdivisions ‘broad,
background immunity’ from injuries that result due to the
exercise of a governmental function.” 	Wheeler v. McPherson, 2002
UT 16, ¶ 10, 40 P.3d 632 (quoting Hall v. State Dep’t of Corr.,
2001 UT 34, ¶ 18, 24 P.3d 958). 	The Act waives this immunity for
certain claims and specifies the procedures that claimants must
follow in order to maintain an action against the State or its
political subdivisions. 	See Utah Code Ann. §§ 63-30-4 to -13
(1997). 	In Wheeler, we reasoned that, “‘[w]here the government
grants statutory rights of action against itself, any conditions
placed on those rights must be followed precisely.’” 	2002 UT 16,
¶ 11 (quoting Hall, 2001 UT 34, ¶ 23). 	Accordingly,
“[c]ompliance with the Immunity Act is a prerequisite to vesting
a district court with subject matter jurisdiction over claims
against governmental entities.” 	Id. ¶ 9.
¶19 	The State alleges two deficiencies in plaintiffs’
notice of claim. 	First, the State contends that the notice
failed to sufficiently articulate the claim for attorney fees
that plaintiffs now seek. 	Second, the State contends that the
notice was ineffective because it did not identify by name all of
the plaintiffs to this action. 	Plaintiffs disagree, asserting
that their notice was sufficient. 	Alternatively, plaintiffs
argue that they were not required to comply with the notice of
claim requirements because their claims are equitable in nature. 3
Because we conclude that plaintiffs’ notice of claim satisfied
the requirements of the Immunity Act, it is unnecessary for us to
address whether plaintiffs’ claims are, in actuality, equitable.

9 	No. 20030931
¶20 	Section 63-30-11 of the Immunity Act provides that
“[a]ny person having a claim for injury against a governmental
entity . . . shall file a written notice of claim with the entity
before maintaining an action.” 	Utah Code Ann. § 63-30-11(2).
The notice must contain “(i) a brief statement of the facts;
(ii) the nature of the claim asserted; and (iii) the damages
incurred by the claimant so far as they are known.” 	Id.
§ 63-30-11(3)(a). 	The purpose of the notice “is to ‘provide[]
the governmental entity an opportunity to correct the condition
that caused the injury, evaluate the claim, and perhaps settle
the matter without the expense of litigation.’” 	Pigs Gun Club,
Inc. v. Sanpete County, 2002 UT 17, ¶ 10, 42 P.3d 379 (quoting
Larson v. Park City Mun. Corp., 955 P.2d 343, 345-46 (Utah 1998))
(alteration in original). 	To ensure that this purpose is
fulfilled, we have repeatedly required strict compliance with the
notice of claim provisions. 	For example, in Wheeler, “we
reiterate[d] . . . that the Immunity Act demands strict
compliance with its requirements to allow suit against
governmental entities. 	The notice of claim provision,
particularly, neither contemplates nor allows for anything less.”
2002 UT 16, ¶ 13 (emphasis added).
¶21 	Although we have mandated strict compliance with the
notice of claim procedures, we have not required that such
notices “‘meet the standards required to state a claim for
relief.’” 	Peeples v. State, 2004 UT App 328, ¶ 11, 100 P.3d 254
(quoting Behrens v. Raleigh Hills Hosp., Inc., 675 P.2d 1179,
1183 (Utah 1983)). 	Rather, a plaintiff need only include “enough
specificity in the notice to inform as to the nature of the claim
so that the defendant can appraise its potential liability.”
Yearsley v. Jensen, 798 P.2d 1127, 1129 (Utah 1990). 	Applying
this standard, we conclude that plaintiffs’ notice of claim
satisfied the requirements of the Immunity Act with respect to
both its description of the claims and its identification of the
plaintiffs.
¶22 	First, we conclude that plaintiffs satisfied the
requirement to “set forth . . . the nature of the claim
asserted,” Utah Code Ann. § 63-30-11(3)(a)(ii), thereby affording
the State an opportunity “to appraise its potential liability,”
Yearsley, 798 P.2d at 1129. 	Plaintiffs attached a draft
complaint to their notice. 	The draft included several statements
that sufficiently communicated plaintiffs’ claim for attorney
fees. 	For example, the draft complaint requested “attorneys’
fees as may be provided by law.” 	Because plaintiffs seek
recovery of attorney fees under section 26-19-7 of the Utah Code,
they are seeking recovery of attorney fees “as may be provided by
law.” 	Additionally, although plaintiffs’ draft complaint focused

No. 20030931 	10
heavily on the issue of the lien statute’s constitutionality, it
also sought relief for “monies . . . [that] were illegally and
unlawfully taken.” 	Because plaintiffs may be entitled to
contribution from the State for attorney fees under section
26-19-7, any retention of those fees by the State would
constitute “monies illegally and unlawfully taken.”
¶23 	Moreover, plaintiffs should not be penalized because
their notice of claim failed to accurately predict future
developments in the law. 	When plaintiffs filed their notice, the
question of the lien statute’s constitutionality had yet to be
decided. 	Because plaintiffs were challenging the validity of the
State’s entire lien, it was unnecessary for them to also include
a separate claim seeking recovery of only their attorney fees.
The fact that this court subsequently upheld the lien statute’s
constitutionality should not bar plaintiffs’ attempt to recover a
portion of the funds they originally sought. 	We therefore
conclude that plaintiffs’ notice of claim was sufficient to
communicate the nature of the claim they now assert.
¶24 	We similarly conclude that plaintiffs’ notice of claim
was not deficient even though it did not expressly include the
name of each potential Class II plaintiff. 	Relying on our
holding in Pigs Gun Club, 2002 UT 17, the State asserts that a
notice of claim must contain the name of each individual
plaintiff. 	In Pigs Gun Club, we declared that “[section
63-30-11] itself clearly requires any person filing suit against
a governmental agency to file a notice of claim. 	In other words,
each plaintiff’s name must be on the notice of claim.” 	Id. ¶ 10
(citation omitted). 	Unlike this case, however, Pigs Gun Club was
not a class action. 	That distinction is significant because
interpreting the notice of claim provision to require
identification of every potential plaintiff in a class action
lawsuit would nullify our class action rule, which provides that
“[o]ne or more members of a class may sue or be sued as
representative parties on behalf of all.” 	Utah R. Civ. P. 23(a)
(emphasis added). 	Nothing in the Immunity Act suggests that the
State declined to waive immunity from class action lawsuits.
Accordingly, we hold that a claim providing notice of a possible
class action lawsuit satisfies the requirements of the Immunity
Act if it is filed by a class representative on behalf of
potential class members. 	Cf. Moreno v. Bd. of Educ., 926 P.2d
886, 892 (Utah 1996) (holding that the notice of claim filed by a
guardian in a wrongful death action, even though erroneously
filed on the guardian’s own behalf, was sufficient to preserve
the parent’s claim because the guardian was legally authorized to
file a claim on behalf of the parent). 	The notice of claim in
this case met that requirement. 	It was filed by the claimants

11 	No. 20030931
“individually and . . . as representative[s] of a class.”
Because plaintiffs’ notice of claim complied with the
requirements of the Immunity Act, we hold that we possess subject
matter jurisdiction over their claims against the State.
II. 	ADVISORY OPINION
¶25 	Plaintiffs sought interlocutory review of the
protective order entered by the district court. 	On appeal,
however, plaintiffs do not restrict their arguments to the scope
of the protective order. 	Rather, they assert that “a number of
other questions have arisen regarding [our opinion in McCoy, 2000
UT 39] that should be resolved to avoid further appeals.” 	The
State contends that the district court correctly applied the
McCoy decision when fashioning the protective order and that
plaintiffs’ request for additional guidance in interpreting McCoy
calls for an impermissible advisory opinion.
¶26 	We repeatedly have declined invitations to issue
advisory opinions. 	In State v. Ortiz, 1999 UT 84, 987 P.2d 39,
we declared:
“This court will not issue advisory opinions
or examine a controversy that has not yet
sharpened into an actual or imminent clash of
legal rights and obligations between the
parties thereto. 	Where there exists no more
than a difference of opinion regarding the
hypothetical application of a piece of
legislation to a situation in which the
parties might, at some future time, find
themselves, the question is unripe for
adjudication.”
Id. ¶ 3 (quoting State v. Herrera, 895 P.2d 359, 371 (Utah 1995)
(further quotations omitted)); see also Provo City Corp. v.
Thompson, 2004 UT 14, ¶ 22, 86 P.3d 735 (“We have observed on
many occasions that this court is not inclined to issue mere
advisory opinions.” (internal quotations omitted)). 	An opinion
is not merely advisory, however, if it will, in fact, have a
“meaningful effect” on the parties. 	See Thompson, 2004 UT 14,
¶ 22. 	The opinion we are asked to render in this case would have
such an effect.
¶27 	The scope of the protective order entered by the
district court was dependent on its interpretation of McCoy.
After limiting discovery to issues relevant to class
certification, the district court defined the scope of
permissible discovery, stating that “[p]laintiffs may thereby

4 For example, plaintiffs ask us to opine as to whether the
State’s obligation to pay “its fair share of a recipient’s
attorney fees [is] dependent upon the degree of cooperation by
the recipient.” 	They further ask whether the State should be
required to “pay a fair share of a recipient’s attorney fees if
it hires its own attorney.”
5 The State argues persuasively that it should not be forced
to pay fees to private attorneys for obtaining Medicaid
(continued...)
No. 20030931 	12
pursue the identification of recipients who fall within the
holding of the McCoy case as construed by this Order.”
Clarifying the holding of McCoy will have the effect of either
expanding or contracting the scope of discovery and will define
the composition of the class. 	Thus, our opinion will have a
“meaningful effect” on the parties.
¶28 	Although we are obliged to decide whether the
protective order was grounded upon the correct interpretation of
McCoy, we agree with the State that plaintiffs have asked us to
address other issues that do not bear upon the scope of the
protective order. 4 	Because it would be inappropriate for us to
address all of the hypothetical “related questions” posed by
plaintiffs, we will restrict our opinion to the appropriate scope
of the protective order, addressing the related questions only to
the extent that they have a bearing on the scope of that order.
Indeed, it would be premature for us to opine as to plaintiffs’
entitlement to attorney fees in all of the fact scenarios
contemplated by their questions when discovery has yet to reveal
whether those scenarios are even present in this case.
¶29 	Before addressing the scope of the protective order, we
pause to note that the apparent confusion in this area of the law
and the number of situations unaddressed by the Medicaid lien
statute cry out for legislative attention. 	This is especially so
given the frequency with which this court has been confronted
with disputes regarding application of the lien statute.
¶30 	It is clear that the State has a legitimate and
definite interest in obtaining reimbursement of funds paid to
Medicaid recipients. 	This interest would appear to be furthered
by a scheme in which private attorneys have an incentive to seek
recoveries benefitting the State. 	However, without a definitive
set of parameters defining the terms and conditions under which
private attorneys will be compensated for their efforts, those
attorneys will have little or no incentive to seek recoveries
benefitting the State. 5 	Consequently, the State, the Medicaid

5 (...continued)
reimbursement in those cases where the State could have secured
the reimbursement itself with little or no effort. 	On the other
hand, plaintiffs argue persuasively that the State often refuses
to compensate the attorneys of Medicaid recipients in cases where
the State’s reimbursement is entirely attributable to the efforts
of private attorneys and where the State would not otherwise have
obtained a recovery. 	Plaintiffs assert that it is fundamentally
unfair to allow the State a “free ride” in such situations and
that the “free ride [will] be the last ride when attorneys
discover there is no incentive to take a recipient’s case if all
proceeds are taken by the State.”
13 	No. 20030931
recipients, and the private attorneys who represent them would
all benefit from definable rules and a clear expression of policy
in this area.
¶31 	The legislature, with its ability to “provide a forum
for full discussion and consideration of the pros and cons of the
problems involved, and to enact into law those policies which, in
[its] judgment, will best serve the common welfare,” Stoker v.
Stoker, 616 P.2d 590, 592 (Utah 1980) (Crockett, C.J.,
dissenting), is the appropriate body to undertake this task.
Furthermore, because the legislature, unlike this court, is not
constrained to address a single case at a time, it is able to
devise a comprehensive scheme, providing predictability and
appropriate incentives to the State, the Medicaid recipients, and
their private attorneys. 	We hope the legislature will do so.
III. 	DID THE DISTRICT COURT ERRONEOUSLY INTERPRET McCOY?
Citing our holding in McCoy, the district court ruled
that plaintiffs were entitled to recover attorney fees from the
State only in cases where “the State elects to recover directly
from a recipient who has expressly excluded the State’s claim
from any attempt to recover from a third party.” 	State ex rel.
Office of Recovery Servs. v. McCoy, 2000 UT 39, ¶ 18, 999 P.2d
572. 	The protective order entered by the district court limited
discovery accordingly. 	Plaintiffs contend that the district
court’s ruling on this issue was erroneous. 	Specifically, they
assert that they are entitled to recover attorney fees from the
State in any case where the State obtained a lien reimbursement
through the efforts of a recipient’s private attorney. 	The State
counters that attorney fees may be recovered only in those cases
where (1) the recipient requested consent, (2) the recipient
excluded from his or her claim the amount of the State’s lien,
and (3) the State failed to seek reimbursement from the liable

No. 20030931 	14
party and elected instead to obtain reimbursement directly from
the Medicaid recipient.
¶32 	Interpreting case law presents a question of law.
State ex rel. Office of Recovery Servs. v. Streight, 2004 UT 88,
¶ 6, 108 P.3d 690. 	Accordingly, we review the district court’s
interpretation of our ruling in McCoy for correctness. 	Id.
¶33 	Plaintiffs’ entitlement to attorney fees in Medicaid
lien cases is governed by section 26-19-7 of the Utah Code, which
provides:
(1)(a) A recipient may not file a claim,
commence an action, or settle, compromise,
release, or waive a claim against a third
party for recovery of medical costs for an
injury, disease, or disability for which the
department has provided or has become
obligated to provide medical assistance,
without the department’s written consent.
. . . .
(4) The department may not pay more than
33% of its total recovery for attorney’s
fees, but shall pay a proportionate share of
the costs in an action that is commenced with
the department’s written consent.
Utah Code Ann. § 26-19-7(1), (4) (1998).
¶34 	In McCoy, we were asked to consider whether the
defendant, an attorney hired by a Medicaid recipient to recover
damages for an injury he sustained in a slip and fall, was
entitled to attorney fees from the State under section
26-19-7(4). 	2000 UT 39, ¶¶ 2-3, 13. 	Before initiating any claim
or suit against the liable third party, McCoy requested consent
from the State to bring a claim on its behalf. 	Id. ¶ 3. 	The
State refused. 	Id. 	Thereafter, McCoy filed a claim against the
liable third party, expressly excluding the State’s claim for the
medical assistance it had provided. 	Id. ¶¶ 3-4. 	The liable
third party agreed to settle the claim and paid the Medicaid
recipient. 	Id. ¶ 5. 	The State then filed suit against McCoy to
recover its lien from the settlement proceeds held in trust by
McCoy. 	Id. ¶ 6. 	McCoy resisted, arguing that because he had
excluded the State’s claim, the State was not entitled to any
proceeds that he obtained. 	Id. ¶ 11.

15 	No. 20030931
¶35 	This court rejected McCoy’s argument, holding that the
Utah Medical Benefits Recovery Act, Utah Code Ann. §§ 26-19-1 to
-19 (1998) (amended 2004), entitled the State to the proceeds and
superseded any efforts by McCoy to insulate his client’s recovery
from the State’s reach. 	McCoy, 2000 UT 39, ¶ 12. 	Thus, to the
extent McCoy attempted to utilize his exclusion of the State’s
claim as a tactic to avoid satisfying the State’s lien, this
court rejected that tactic. 	We did, however, allow McCoy to
recover a proportionate share of his attorney fees from the
State, reasoning that McCoy had “followed the requirements of the
Act” by asking for the State’s consent. 	Id. ¶ 18.
¶36 	The State asserts that the district court was correct
in limiting the holding of McCoy to the last sentence of the
eighteenth paragraph, where we declared:
We therefore conclude that under subsection
(4), when the State elects to recover
directly from a recipient who has expressly
excluded the State’s claim from any attempt
to recover from a third party, the State must
pay the attorney fees incurred in procuring
the State’s share of the settlement proceeds.
Id. (emphasis added).
¶37 	Contrary to the State’s assertion, this language does
not constitute McCoy’s holding of general application. 	When read
in the context of the opinion as a whole, it is apparent that
this language constitutes only the ruling, or the application of
the general holding to the specific facts of the case. 	See
Black’s Law Dictionary 1334 (7th ed. 1999) (“[I]n common usage
‘legal ruling’ . . . is a term ordinarily used to signify the
outcome of applying a legal test when that outcome is one of
relatively narrow impact. 	The immediate effect is to decide an
issue in a single case.” (internal quotations omitted)). 	We
acknowledged as much in McCoy, in the sentences immediately
preceding the passage now cited by the State as the “holding,”
when we stated:
We see no justification for so limiting the
relatively broad reach of subsection (4) in
the case before us. 	In fact, it would be
inherently unfair not to award attorney fees
to McCoy, who has followed the requirements
of the Act in securing a recovery on behalf
of his client. 	We therefore conclude that
under subsection (4), when the State elects

No. 20030931 	16
to recover directly from a recipient who has
expressly excluded the State’s claim from any
attempt to recover from a third party, the
State must pay the attorney fees incurred in
procuring the State’s share of the settlement
proceeds.
Id. (emphasis added). 	In short, our specific ruling in McCoy was
based on the fact that the State sought to recover its lien
directly from the recipient after McCoy had requested, and was
denied, consent and after the recipient had excluded the State’s
claim from his efforts to obtain a recovery. 	Id. ¶¶ 3, 6.
¶38 	In this case, we are asked to clarify the holding of
McCoy as it relates to the scope of a discovery order concerning
potential class members. 	Under such a circumstance, there is no
need to restrict discovery to the class of cases that present
fact patterns identical to the one presented in McCoy. 	In a
context where few, if any, facts have been developed, it is
necessary to reach beyond the narrow, fact-specific ruling of
McCoy and apply its broader, more general holding. 	Doing
otherwise would artificially and illogically restrict discovery
and, concomitantly, the size of the potential class. 	Until the
facts surrounding the claims of each potential class member have
been developed, it will be impossible for the court to assess
whether they fall within the general holding of McCoy.
¶39 	In an effort to define the appropriate scope of the
protective order, we return to the underpinnings of our decision
in McCoy. 	In McCoy, we concluded that the State was obligated to
pay a proportionate share of the plaintiff’s attorney fees
because the plaintiff complied with section 26-19-7 of the
Medicaid lien statute. 	Id. ¶ 18. 	We based this conclusion on
the fact that McCoy had requested consent to pursue the State’s
claim.
¶40 	Our reliance on this factor was mandated by the terms
of the lien statute, which prohibits a Medicaid recipient from
seeking recovery of funds advanced by the State without the
State’s written consent. 	Utah Code Ann. § 26-19-7. 	Where
Medicaid recipients failed to comply with the statute, they were
not entitled to a contribution from the State for their attorney
fees. 	The lien statute fails to address, however, the State’s
obligation to pay its fair share of attorney fees in those cases
where consent was requested from, but denied by, the State and
the State nevertheless elects to obtain its recovery from the
proceeds obtained through the efforts of a Medicaid recipient’s
attorney. 	Accordingly,

17 	No. 20030931
[i]n McCoy, on grounds of fairness, we
interpreted the statute to imply an
obligation on the part of the State to pay
fees where the attorney acted in compliance
with the statute, requesting consent to
pursue an action and then preserving the
State’s independent right to recover by
excluding the State’s claim from any action
filed on behalf of the injured party.
Streight, 2004 UT 88, ¶ 13. 	This holding “struck a balance
between the State’s interest in protecting itself from collusive
efforts to place otherwise reimbursable funds beyond its reach
and the interest of private attorneys in being compensated for
obtaining recoveries benefitting the State.” 	Id.
¶41 	The question left open by our decision in McCoy, and
our subsequent decision in Streight, is whether the State’s
obligation to pay its fair share of attorney fees is limited to
cases exactly like McCoy, where the recipient expressly excluded
the State’s claim and the State recovered its lien directly from
the proceeds paid to the Medicaid recipient. 	In its effort to
limit its obligation to such cases, the State relies on language
from McCoy suggesting that the State is not obligated to pay
attorney fees if it elects to recover its lien directly from the
liable third party. 	See McCoy, 2000 UT 39, ¶¶ 18-19. 	In so
arguing, however, the State overemphasizes the particular
language at the expense of the underlying principle.
¶42 	In McCoy, we noted that, “[h]aving elected not to
recover directly from the third party . . . , the State not only
incurred a responsibility to pay attorney fees, but also
effectively reduced [the recipient’s] net recovery.” 	Id. ¶ 18
n.5. 	The phrase “recover directly from the third party” was used
to identify those cases where the State recovered its lien
independent of the recipient’s settlement and thereby did not
reduce the amount recovered by the recipient. 	That language was
not intended to encompass situations in which the State’s lien
was paid directly from the settlement proceeds obtained through
the efforts of the recipient’s attorney. 	After refusing to
consent to representation by the recipient’s attorney, the State
should not be free to recover its lien from the settlement or
judgment obtained through the efforts of the recipient’s attorney
without incurring the obligation to pay its fair share of
attorney fees.

No. 20030931 	18
¶43 	Moreover, the State’s obligation for fees should not be
dependent upon whether the State obtained its reimbursement
directly from the Medicaid recipient or whether it was able to
arrange for payment directly from the liable third party.
Permitting the State to circumvent any obligation for attorney
fees by arranging for payment directly from a liable third party,
even though the settlement or judgment from which the lien is
paid was procured through the efforts of the recipient’s
attorney, would sanction the State’s abrogation of its
responsibility to recover its lien “by relying on Medicaid
recipients to act, usually unwittingly, on the State’s behalf.”
Streight, 2004 UT 88, ¶ 21 (Durham, C.J., dissenting). 	Such a
result would defeat the equitable basis for our ruling in McCoy.
See id. ¶ 13 (majority opinion).
¶44 	Additionally, relieving the State of its obligation to
pay its fair share of attorney fees simply because the Medicaid
recipient failed to expressly exclude the State’s claim would
similarly defeat the equitable basis of our ruling in McCoy. 	In
fact, the Medical Benefits Recovery Act does not impose an
express exclusion requirement on those who wish to proceed with
their own claims after the State has denied them permission to
press the State’s claim on its behalf. 	The Act provides:
A recipient may not file a claim,
commence an action, or settle, compromise,
release, or waive a claim against a third
party for recovery of medical costs for an
injury, disease, or disability for which the
department has provided or has become
obligated to provide medical assistance,
without the department’s written consent.
Utah Code Ann. § 26-19-7(1)(a).
¶45 	Read in isolation, this language might conceivably be
understood to imply an express exclusion requirement on the basis
that such an exclusion would be necessary to preserve the State’s
claim. 	Significantly, however, this section of the Act further
states that, “[i]f the recipient proceeds without the
department’s written consent as required by Subsection (1)(a),
the department is not bound by any decision, judgment, agreement,
or compromise rendered or made on the claim or in the action,”
id. § 26-19-7(2)(a) (emphasis added), and that “[t]he department
. . . retains its right to commence an independent action against
the third party,” id. § 26-19-7(2)(b) (emphasis added). 	The Act
thus contemplates that a Medicaid recipient may proceed with an
independent action in cases where the State denies consent to

19 	No. 20030931
include the State’s claim. 	However, the Act imposes no express
obligation on the Medicaid recipient to expressly exclude the
State’s claim in such cases. 	Instead, section 26-19-7 itself, by
its plain language, serves to preserve the State’s claim against
a third party whether or not the Medicaid recipient expressly
excludes the State’s claim from his own action or negotiations,
putting the third party on notice that, in the absence of the
State’s written consent, the State will not be bound by any
representations made by a Medicaid recipient as to whether the
State’s claim is included, nor will the State be bound by any
release of claims signed by a Medicaid recipient.
¶46 	We do not interpret this court’s opinion in McCoy as
mandating a contrary conclusion. 	The language in McCoy that
might be read to suggest that the express exclusion is necessary
to preserve the State’s claim appears in a footnote, which
refutes the State’s argument that McCoy was not entitled to
attorney fees because he failed to cooperate with the State.
2000 UT 39, ¶ 18 n.4. 	Had we recognized in that footnote that
the State’s claim was preserved regardless of McCoy’s express
exclusion, our conclusion would have been the same. 	In McCoy,
this court stressed that “it would be inherently unfair not to
award attorney fees to McCoy” where he had not only requested and
been denied the State’s consent, but had also taken the
additional step of excluding the State’s claim. 	Id. ¶ 18. 	As we
have explained, however, this exclusion was entirely unnecessary
to preserve the State’s claim, and principles of fairness thus
demand that the State pay its share of attorney fees whether or
not the Medicaid recipient’s attorney expressly excludes the
State’s claim. 	Indeed, we noted in McCoy that the express
exclusion itself leads to an unfair result whenever the State
chooses, as it may, to recover its paid expenses from the
proceeds gained through the efforts of the Medicaid recipient’s
attorney rather than through its own independent action. 	In such
a situation, the State receives the money to which it is
entitled, but the Medicaid recipient’s net recovery is
effectively reduced by that amount, and the liable third party
entirely escapes responsibility for what it should have paid to
the State. 	See id. ¶ 18 n.5; id. ¶ 22 (Durham, J., concurring).
¶47 	In Streight, 2004 UT 88, this court distinguished the
facts of the case before it from the facts in McCoy, partly on
the basis that the attorney for Streight, unlike McCoy, had not
expressly excluded the State’s claim from the action that he
filed. 	See id. ¶¶ 10, 13. 	However, the court’s concern in
Streight, more broadly described, was that an attorney has
“[complied with the Act by] request[ing] consent and has done
nothing to prejudice the State’s right to recover its Medicaid
payments.” 	Id. ¶ 9. 	To date, this court has yet to analyze

No. 20030931 	20
whether a Medicaid recipient’s failure to expressly exclude the
State’s claim necessarily prejudices the State’s right to
recover. 	We now do so and conclude that it does not.
¶48 	The statutory scheme enacted by the legislature grants
the State maximum flexibility in recovering its Medicaid
expenses. 	It allows the State to
(1) take action directly against the third
party, for which the State pays its own
expenses; (2) grant consent to recipients
seeking to pursue the State’s claim, whereby
the State’s recovery will be reduced by
reasonable attorney fees and, if any, its
proportionate share of the costs of an
action; or (3) refuse consent and proceed
against the recipient after the recipient
recovers from the third party, in which case
the State’s recovery shall be reduced by
reasonable attorney fees.
McCoy, 2000 UT 39, ¶ 19. 	Because the State’s flexibility is in
no way reduced by a Medicaid recipient’s failure to expressly
exclude the State’s claims from his own negotiations or
complaint, there is no justification for requiring express
exclusion as a prerequisite to the State’s obligation to pay its
share of attorney fees. 	Indeed, imposing such a requirement
would serve only to benefit a liable third party at the expense
of the Medicaid recipient. 	We accordingly hold that the State’s
obligation to pay its share of attorney fees is not dependent
upon whether the recipient expressly excluded the State’s claim
but, rather, is dependent upon whether the recipient requested
consent and whether the State’s recovery was attributable to the
efforts of the recipient’s attorney.
¶49 	Accordingly, in all cases where the State satisfies its
lien from proceeds procured through the efforts of a private
attorney, the State is responsible for its proportionate share of
attorney fees if the recipient or his attorney requested consent
from the State. 	This is so regardless of whether the State
satisfies its lien from funds recovered by the recipient or
whether it recovers directly from a liable third party.
Moreover, in those cases where a settlement or judgment is
obtained through the efforts of a private attorney, any claim by
the State that it recovered its lien through its own efforts will
be subject to scrutiny. 	The State will not be able to establish
that it recovered its lien through its own efforts simply by
showing that it sent notification of its lien to potentially

21 	No. 20030931
liable third parties with the expectation that they will pay the
State directly from the settlement proceeds generated through the
efforts of a recipient’s private attorney. 	To avoid paying its
fair share of attorney fees after it has refused to grant
consent, the State must demonstrate that its lien was paid wholly
independent of the settlement or judgment procured by the
recipient’s private attorney.
IV. 	SCOPE OF DISCOVERY ORDER
¶50 	We now turn to the scope of the discovery order. 	The
district court limited discovery to that which “relates solely to
the class issues” and authorized plaintiffs to “pursue the
identification of recipients who fall within the holding of the
McCoy case.” 	Because the district court adopted an erroneously
narrow view of our holding in McCoy, it necessarily follows that
it unduly restricted the scope of discovery. 	We accordingly
remand this case to the district court with instructions to
modify the scope of the discovery order consistent with this
opinion.
CONCLUSION
¶51 	The district court erred in limiting McCoy to its
narrow, fact-specific ruling. 	Under the general holding of
McCoy, the State is obligated to pay its share of a recipient’s
private attorney fees if either (1) the State consents to the
recipient’s request to represent its interest; or (2) the State
satisfies its lien from proceeds procured through the efforts of
a recipient’s private attorney in those cases where the recipient
requested, but was denied, consent. 	We remand the case to the
district court with instructions to modify the scope of the
discovery order accordingly.
---
¶52 	Chief Justice Durham, Associate Chief Justice Wilkins,
Justice Durrant, and Judge Orme concur in Justice Parrish’s
opinion.
¶53 	Having disqualified himself, Justice Nehring does not
participate herein; Court of Appeals Judge Gregory K. Orme sat.