158
March 3, 2017 2nd am LARISA'S HOME CARE, LLC v. KAREN NICHOLS- SHIELDS S064120
March 3, 2017
2nd am
LARISA'S HOME CARE,
LLC
v.
KAREN NICHOLS-
SHIELDS
S064120
IN THE COURT OF APPEALS OF THE STATE OF OREGON
LARISA’S HOME CARE, LLC an Oregon Limited Liability Company,
Plaintiff-Respondent
v. KAREN NICHOLS-SHIELDS, the duly appointed Personal Representative of the Estate of Isabell Prichard, deceased,
Defendant-Appellant.
Washington County Circuit Court Case No. C124865CV
CA A154950
___________________________________________
APPELLANT’S CORRECTED OPENING BRIEF
___________________________________________
Appeal from the Judgment of the Circuit Court for Washington County
The Hon. Janelle F. Wipper, Judge ___________________________________________
Ross A. Day, OSB No. 002395 DAY LAW GROUP, PC 15055 SW Sequoia Parkway, Suite 170 Portland, OR 97224 Telephone: (503) 747-2705 E-mail: [email protected]
Attorney for Plaintiff-Respondent
Hafez Daraee, OSB No. 932484 LUBY/DARAEE LAW GROUP, PC 7455 SW Bridgeport Road, Suite 200 Tigard, OR 97224 Telephone: (503) 766-4772 E-mail: [email protected]
Attorney for Defendant-Appellant
Filed – March, 2014
March 18, 2014 11:06 AM
ii
TABLE OF CONTENTS
STATEMENT OF THE CASE .................................................................................................................... 6
A. Nature of the Action and Relief Sought ................................................................................................. 6
B. Nature of the Judgment to be Reviewed .............................................................................................. 6
C. Nature of the Court’s Jurisdiction ............................................................................................................ 6
D. Timeliness of Appeal ..................................................................................................................................... 6
E. Questions Presented on Appeal .............................................................................................................. 7
1. Did the trial court err in concluding that OAR 411-050-0435(1)(d) was not
applicable to the plaintiff’s claim? .................................................................................................................. 7
2. Did the trial court err in concluding that plaintiff had standing to challenge the
exclusive right the Oregon Department of Human Services (“DHS”) had to make
determinations regarding Isabell Prichard’s eligibility to receive Medicaid benefits? ........ 7
F. Summary of Arguments ................................................................................................................................ 7
G. Summary of Facts ........................................................................................................................................... 8
Plaintiff ...................................................................................................................................................................................... 8
Defendant ............................................................................................................................................................................... 8
Isabell Prichard .................................................................................................................................................................... 9
Richard Gardner .................................................................................................................................................................. 9
Department of Human Services, Seniors and People with Disabilities office .................................. 10
Material Events that occurred between April/May, 2007 and November 1, 2008 ......................... 11
1. First Assignment of Error ....................................................................................................................... 14
a. Preservation of Error ............................................................................................................................................ 14
b. Standard of Review .............................................................................................................................................. 14
c. Argument .................................................................................................................................................................... 15
iii
2. Second Assignment of Error ................................................................................................................ 21
a. Preservation of Error ............................................................................................................................................ 21
b. Standard of Review .............................................................................................................................................. 21
c. Argument .................................................................................................................................................................... 22
Elements of Unjust Enrichment .......................................................................................................................... 23
Plaintiff’s Argument ................................................................................................................................................... 24
Defendant was not unjustly enriched; plaintiff was paid in full ........................................................... 24
The Unjust Enrichment claim is a collateral attack on DHS Authority ........................................... 25
The Statute of Frauds precludes a claim for promissory estoppel or breach of contract
based on defendant’s voicemail ......................................................................................................................... 27
I. CONCLUSION ................................................................................................................................................... 28
Brief Length Certification ...................................................................................................................................... 29
Font Certification ...................................................................................................................................................... 30
Certificate of Service .............................................................................................................................................. 30
iv
TABLE OF AUTHORITIES Cases
Atkeson v. T&K Lands, LLC, 258 Or App 373, 309 P3d 188 (2013) ................................. 20
Emerson v. Kusano, 2014 WL 258853, 260 Or App 577, ___ P3d ___ (2014) .... 14, 22
F.D.I.C. v. Smith, 328 Or 420, 980 P2d 141 (1999) .................................................................... 20
Kazlauskas v. Emmert, 248 Or App 555, 275 P3d 171 (2012) ............................................. 23
Specialty Risk Services v. Royal Indemnity, 213 Or App 620, 165 P3d 300 (2007) 22, 23
Summer Oaks Ltd. Partnership v. McGinley, 183 Or App 645, 55 p3d 1100 (2002). ........................................................................................................................................................................... 23
Statutes
ORS 19.205(1) .................................................................................................................................................. 6
ORS 19.255(1) .................................................................................................................................................. 6
ORS 19.415 (3)(b) ................................................................................................................................. 14, 21
ORS 409.010 ................................................................................................................................................... 10
ORS 410.070 ................................................................................................................................................... 25
ORS 410.070(1) ............................................................................................................................................. 25
ORS 411.795(3) ............................................................................................................................................. 19
ORS 443.705 ................................................................................................................................................... 16
ORS 443.739 ................................................................................................................................................... 16
ORS 443.825 ................................................................................................................................................... 16
ORS Chapters 409-411 ................................................................................................................................ 7
Administrative Rules
OAR 411-001-0100 ...................................................................................................................................... 14
v
OAR 411-050-0435(1)(a) .......................................................................................................................... 14
OAR 411-050-0435(1)(d) ......................................................... 6, 12, 13, 14, 15, 16, 17, 20, 23, 27
OAR 411-050-400 through 490 ............................................................................................................. 15
OAR 461-140-0220(8) ................................................................................................................................ 18
OAR Chapter 411 et seq. ............................................................................................................... 6, 9, 28
Appellate Rules
ORAP 5.05(2)(a) ............................................................................................................................................ 29
ORAP 5.05(2)(b) ............................................................................................................................................ 29
ORAP 5.40(8)(c) ..................................................................................................................................... 13, 21
6
STATEMENT OF THE CASE
A. Nature of the Action and Relief Sought This is an appeal from the trial court’s judgment finding for plaintiff
on its claim for unjust enrichment.
B. Nature of the Judgment to be Reviewed
The judgment to be reviewed is the general judgment entered after
trial of the parties’ competing claims and counterclaims. The trial court,
sitting as the fact finder, found for plaintiff on its claims.
C. Nature of the Court’s Jurisdiction
Appellate Jurisdiction is based on ORS 19.205(1) and ORS
19.255(1).
D. Timeliness of Appeal
The judgment appealed from was entered on July 25, 2013. The
Notice of Appeal was filed and served on August 20, 2013, less than
thirty days from entry of judgment.
7
E. Questions Presented on Appeal
1. Did the trial court err in concluding that OAR 411-050-
0435(1)(d) was not applicable to the plaintiff’s claim?
2. Did the trial court err in concluding that plaintiff had standing
to challenge the exclusive right the Oregon Department of Human
Services (“DHS”) had to make determinations regarding Isabell
Prichard’s eligibility to receive Medicaid benefits?
F. Summary of Arguments
This appeal presents several issues of first impression under
Oregon law.
1. As a Medicaid authorized provider, plaintiff was subject to
the applicability of OAR Chapter 411 et seq., and ORS Chapters 409-
411. In rendering its decision, the trial court incorrectly concluded that
OAR 411-050-0435(1)(d) did not apply to this case.
2. The trial court incorrectly concluded that it could disregard
controlling case law, statutes and administrative rules, and thereby
impute Richard Gardner’s illegal activity to Ms. Prichard—under the
banner of “fundamental fairness”—in order to conclude that defendant
had been unjustly enriched. To reach this conclusion, the trial court
disregarded the fact that DHS has exclusive jurisdiction to administer the
8
Medicaid program, and further ignored that the trial court did not have
jurisdiction to make any Medicaid eligibility determination. The court did
not have jurisdiction to determine Ms. Prichard’s Medicaid eligibility,
especially since DHS had already concluded that she was Medicaid
eligible.
Defendant presented evidence and law at trial to show that plaintiff
could not prevail on its unjust enrichment claim.
G. Summary of Facts
The facts of this case are largely undisputed. The parties who
play a role in this appeal are:
Plaintiff
Plaintiff Larisa’s Home Care, LLC, is an Oregon limited liability
corporation. At all times material, plaintiff was an adult foster care
provider, licensed by, and under the supervision of the DHS Seniors and
People with Disabilities office (“SPD”). Tr. 163-164. Larissa Louka is
plaintiff’s sole member and its corporate designee. Tr. 162.
Defendant
Defendant Karen Nichols-Shields is the duly appointed personal
representative of the estate of Isabell Prichard, Ms. Nichols-Shield’s late
9
mother. Tr. 65. At all time material, defendant was a resident of
Gearhart, Oregon. Tr. 64.
Isabell Prichard
Isabell Prichard is the decedent whose estate’s personal
representative is the defendant in this appeal. Ms. Prichard started
having cognitive problems in 2001. Tr. 107. She was a resident of
Beaverton Rehab prior to April/May 2007. Tr. 71. In or around
April/May 2007, Ms. Prichard was forced to vacate Beaverton Rehab
because that facility could no longer provide her with the kind of care her
declining cognitive state required. Tr. 109. She was forced to find a
new facility that could provide for her needs. Tr. 109. Ms. Prichard’s
son, Richard Gardner, was referred to plaintiff as a possible location
where Ms. Prichard could move.
Richard Gardner
Richard Gardner is Isabell Prichard’s son and defendant’s brother.
Tr. 68. At all times relevant to this case, Mr. Gardner was a resident of
Beaverton, Oregon, and pursuant to Ms. Prichard’s Power of Attorney,
the only one of her three children with responsibility for her assets and
daily activities. ER 1-2.
10
Department of Human Services, Seniors and People with Disabilities office
DHS, and by extension the SPD office, is the state agency with
exclusive authority to create, manage and implement the rules and
regulations related to this state’s needs-based financial assistance to the
elderly and those with disabilities. ORS 409.010. This statute (ORS
409.010 et seq.) is the genesis of DHS’s exclusive authority to
determine eligibility criteria related to needs-based state assistance,
which includes implementing Medicaid funds granted to the State
through the federal government.
In order to accept Medicaid-eligible residents, adult foster care
providers, such as plaintiff, are required to complete the DHS application
and undergo rigorous background checks. If accepted, applicants must
sign a contract with the State of Oregon that, among other things,
requires compliance with OAR chapter 411. ER 3-6. At all times
material, and prior to accepting Ms. Prichard into its facility, plaintiff had
been qualified as a Medicaid-eligible service provider. Tr. 215-216.
In order to receive Medicaid benefits, the recipient must fill out an
application and provide certain information to DHS. Tr. 209. After
receipt of this application, DHS personnel investigate the applicant’s
eligibility. Tr. 209. If the state concludes that the applicant is Medicaid
11
eligible, the state agrees to provide the recipient with a monthly benefit
for living expenses, including housing, food and medical care. Tr. 209.
The total rate for monthly benefits and the portion the state will pay
through Medicaid or other needs-based programs, is established on a
case-by-case basis through direct discussions between the DHS case
worker assigned to the recipient and the care providers. Tr. 209. Once
the monthly benefit rate is established, the state will pay a portion and
the recipient of services will pay a portion. Tr. 209.
At all times material, Richard Gardner had applied for and had
qualified Ms. Prichard as Medicaid-eligible, prior to her entering plaintiff’s
facility as a resident. Tr. 256-258.
Material Events that occurred between April/May, 2007 and November 1, 2008
Ms. Prichard resided in plaintiff’s facility from April/May 2007 until
her death on November 1, 2008, from complications related to her age
and cognitive decline. Tr. 107-110. During these 18 months, the
monthly rate for her services as established by DHS was approximately
$2,000, which covered room, board and all necessary services. Tr. 210.
Of this $2,000 monthly rate, DHS Medicaid benefits paid approximately
$1,200 and Ms. Prichard paid about $800 from her social security
benefits. Tr. 206-207.
12
In contrast, during that same 18-month period, non-Medicaid
residents (Private Pay residents) paid plaintiff in excess of $5,000 per
month. Tr. 210. Other than the substantial difference in the monthly
rates it charged Private Pay residents, there were absolutely no other
differences in the quality or quantity of care or other benefits plaintiff
provided to its residents, regardless of whether those residents were
Medicaid-eligible or Private Pay individuals. Tr. 210-211.
After Ms. Prichard’s death, it was discovered that Richard Gardner
had embezzled all of his late mother’s assets. Defendant contacted law
enforcement officials who investigated and eventually charged Mr.
Gardner with a crime. Mr. Gardner ultimately pleaded guilty to having
committed a crime against his mother. As part of his sentence, Mr.
Gardner was ordered to pay a compensatory fine in the amount of
$195,7101 to his late mother’s estate. Tr. 268; ER 7-9. The amount of
the compensatory fine Mr. Gardner was ordered to pay was derived
through information defendant obtained at the request of the
Washington County District Attorney’s office. Tr. 114-116; ER 10-18. At
his sentencing hearing—to everyone’s surprise—Mr. Gardner paid the
1 Mr. Gardner borrowed the money to pay the compensatory fine from his employer.
13
entire balance of his compensatory fine in one lump-sum payment. Tr.
47, 268.
Sometime after Mr. Gardner paid his court-ordered compensatory
fine, plaintiff demanded the difference between the Medicaid rate that
had been paid to it and the Private Pay rate plaintiff claimed it should
have been paid—an amount in the approximate sum of $50,000.
Defendant rejected plaintiff’s demand. Plaintiff then filed a claim in the
probate estate that was also denied. Tr. 66-68. Plaintiff ultimately filed
the underlying case in Washington County, claiming defendant had been
unjustly enriched. ER 19-23.
Prior to trial, defendant filed a motion for summary judgment on
the basis that the applicable administrative rules (OAR 411-050-
0435(1)(d)) precluded plaintiff’s claims as a matter of law. ER 24-27.
The court denied the motion. ER 28-29.
Defendant again raised her defenses in her trial memorandum,
during opening statements and at the conclusion of the case. Tr. 50-53,
320-323. The court rejected defendant’s arguments and ruled in
plaintiff’s favor. Tr. 336.
H. Assignments of Error
14
1. First Assignment of Error
The trial court erred when it concluded that OAR 411-050-
0435(1)(d) did not apply or could be disregarded in an equitable
proceeding.
a. Preservation of Error
Defendant raised the applicability of OAR 411-050-0435(1)(d) in
her motion for summary judgment (ER 24-37), in her opening statement
(Tr. 50-53), during examination of witnesses (Tr. 151-157), in her closing
argument (Tr. 320-323) and by filing a timely appeal.
b. Standard of Review
Because the underlying claim was equitable in nature (unjust
enrichment), this court has discretion to review equitable cases de novo,
but only does so in exceptional cases. ORS 19.415 (3)(b); ORAP
5.40(8)(c); Emerson v. Kusano, 2014 WL 258853, 260 Or App 577, ___
P3d ___ (2014). Defendant respectfully requests that the Appellate
Court exercise its discretion here and to employ a de novo standard of
review because some of the legal issues presented are issues of first
impression. However, should this court conclude that this case is not
exceptional and therefore undeserving of de novo review, then the
standard of review is for errors of law. Id. at 581.
15
c. Argument
OAR 411-050-0435(1)(d) applies to all licensed adult foster care providers and precludes them from receiving any sums from Medicaid eligible residents, above or beyond the monthly sum established by DHS.
The Oregon Department of Human Services is tasked with the
administrative management of Oregon’s Medicaid programs. OAR 411-
001-0100. The Oregon Department of Human Services is also tasked
with issuing and regulating licensure of Adult Foster Home facilities.
See ORS 443.725(1); OAR 411-050 et seq. Although plaintiff was
required to be licensed as an adult foster care provider by DHS prior to
accepting any residents into its facility, becoming a Medicaid-eligible
facility was simply a discretionary business decision that is not required
as part of the initial licensing requirement to become an adult foster care
provider. Tr. 239.
To become a Medicaid-eligible provider, plaintiff was required to
undergo a complex qualification process that culminated with the
execution of an Adult Foster Home Contract with DHS. Tr. 238; ER 3-6;
see generally OAR 411-050-0435(1)(a).
Under the “STATEMENT OF WORK” section, The Adult Foster
Home Contract plaintiff executed provides:
16
“. . . . CONTRACTOR agrees to maintain standards described in SPD Administrative Rules 411-050-400 through 490, as applicable, and to comply with Oregon Revised Statutes 443.705 through 443.825.”
And, under the “CONSIDERATION and PAYMENT PROCEDURE”
section, that contract provides:
“CONTRACTOR agrees to accept the rate authorized by SPD plus the established room and board payment as payment in full, and will not charge the client any additional amounts for these services.”
Both of these contractual sections are based on OAR 411-050-
0435(1)(d), which states:
“The rate of compensation established by the Division is considered payment in full and licensees may not accept additional funds or in-kind payment.”
Finally, ORS 443.739, Right of Residents, provides:
* * *
“(16) be free of financial exploitation. The provider may not charge or ask for application fees or nonrefundable deposits and may not solicit, accept or receive money or property from residents other than the amount agreed for services.”
17
At trial, plaintiff’s principal, Larisa Louka, testified that plaintiff had
been paid 100% of the SPD established rate, including the portion Ms.
Prichard was required to pay, and that as of her death, plaintiff was not
owed any amount. Tr. 221. And, in 2011—nearly 3 years after Ms.
Prichard’s death—in connection with the criminal investigation into
Richard Gardner’s activities, Ms. Louka again affirmed that plaintiff was
not owed any money, during an interview with law enforcement. Tr.
223-225; ER 30-34.
Despite trial testimony, evidence and the above-cited authority, the
trial court concluded that OAR 411-050-0435(1)(d) was not applicable to
this case. Tr. 336.
Plaintiff did not present any evidence at trial, or argue in any way,
that OAR 411-050-0435(1)(d) did not or should not apply to it. Instead,
plaintiff presented two different theories in order to argue around the
complete legal bar OAR 411-050-0435(1)(d) presented to its unjust
enrichment claim, both of which were legally insufficient.
First, despite testifying that it had been paid in full, Ms. Louka
testified that it was simply “unfair” for plaintiff to be paid only SPD
Medicaid-rate when Ms. Prichard, through the nefarious actions of
18
Richard Gardner and Karen Nichols-Shields, should not have been
Medicaid eligible in the first place. Tr. 211-212.
Second, plaintiff took the position that OAR 411-050-0435(1)(d)
should not be considered because this statute only applies to Medicaid
eligible recipients of aid and since Ms. Prichard should not have been
Medicaid eligible to begin with, the court should not take this
administrative rule into account. ER 35-41.
Both of plaintiff’s theories, which are really the opposite sides of
the same coin, required some evidence that DHS had determined that
the Medicaid benefits provided to Ms. Prichard were fraudulently
obtained. What plaintiff proved at trial was that DHS has never made
any such determination regarding Ms. Prichard’s eligibility. Tr. 214-215.
The undisputed evidence at trial was that Ms. Prichard was a
Medicaid client while she was a resident in plaintiff’s facility. Tr. 172. At
trial, plaintiff admitted that it did not have any authority to make Medicaid
eligibility (or ineligibility) decisions. Tr. 214-215. Plaintiff further
admitted that that Medicaid eligibility decisions related to Ms. Prichard
rested solely with DHS. Tr. 209. Further, plaintiff and its expert both
conceded that they were not aware of any DHS investigation,
determination or conclusion that Ms. Prichard was ineligible to receive
19
Medicaid benefits or that she received Medicaid benefits through some
fraud attributable to her. Tr. 155, 213-214. In fact, plaintiff’s expert—a
lawyer who was an expert on Medicaid planning and current Oregon
laws—conceded that there was no private right of action to enforce the
Medicaid statutes under Oregon law. Tr. 157.
Defendant argued at trial that plaintiff was asking the court to
make a determination on DHS’s behalf that Ms. Prichard should not
have been Medicaid-eligible—a determination that was contrary to
DHS’s conclusion that Ms. Prichard was qualified to receive Medicaid
benefits. Tr. 320-321. Defendant pointed out that plaintiff’s claim
required the court to collaterally attack the DHS eligibility determination,
something the trial court could not do. Tr. 320-321.
And, perhaps most importantly, Richard Gardner’s undisputed trial
testimony was that when he applied for Medicaid benefits on Ms.
Prichard’s behalf, he had already spent all of his mother’s money on
himself. Tr. 278-279. This last point bears special mention because
ORS 411.795(3) expressly precludes DHS from recovering the amount
of any general assistance from the estate of a deceased recipient if the
need for aid resulted from a crime committed against the recipient. This
statute is aligned with OAR 461-140-0220(8) which provides that a
20
transfer of assets is not disqualifying within the context of eligibility to
receive state aid, if “[t]he client was a victim of fraud, misrepresentation
or coercion and legal steps have been taken to recover the asset.”
Finally, the trial court’s ruling was that Richard Gardner committed
the Medicaid fraud, not the defendant. Tr. 339. Indeed, the court
expressly ruled that Ms. Nichols-Shields had not engaged in any illegal
conduct. Tr. 339. This latter point is important because it is well settled
Oregon law that the illegal activities of an agent cannot be imputed to
the principal, if those actions were outside the course and scope of the
agency relationship. F.D.I.C. v. Smith, 328 Or 420, 429, 980 P2d 141
(1999) (recognizing “adverse inference” exception in context of agency
relationship); Atkeson v. T&K Lands, LLC, 258 Or App 373, 382-383,
309 P3d 188 (2013) (citing Restatement (Third) of Agency § 5.03
(2006)). The undisputed evidence at trial was that Ms. Prichard was not
cognitively capable of understanding what was going on around her. Tr.
279. As such she clearly could not have participated in or have known
what her son was doing. Moreover, the power of attorney she had
granted to her son clearly required Mr. Gardner to make decision for her
benefit. Tr. 274-276; ER 1-2. Mr. Gardner testified at trial that he was
told by the attorney who prepared the power of attorney that he could
21
use that document to spend his mother’s money on anything he wished,
including for his own personal benefit. Tr. 275.
All of the evidence and authority provided to the trial court clearly
established that OAR 411-050-0435(1)(d) was applicable to this case
and should have been enforced. The trial court erred when it concluded
that this administrative rule did not apply to this case. Tr. 336.
The trial court’s ruling should be reversed.
2. Second Assignment of Error
The trial court erred when it concluded that defendant had been
unjustly enriched.
a. Preservation of Error
Defendant raised the affirmative defense of Failure to State a
Claim in her answer (ER 42-44), moved for summary judgment against
plaintiff’s unjust enrichment claim (ER 25), raised the same points again
in her trial memorandum (ER 47-48), again during closing arguments
(Tr. 310) and filed a timely appeal.
b. Standard of Review
Because the underlying claim was equitable in nature (unjust
enrichment), this court has discretion to review equitable cases de novo,
but only does so in exceptional cases. ORS 19.415 (3)(b); ORAP
22
5.40(8)(c). Defendant respectfully requests that the Appellate Court
exercise its discretion here and to employ a de novo standard of review
because some of the legal issues presented are issues of first
impression. However, should this court conclude that this case is not
exceptional and therefore undeserving of de novo review, then the
standard of review is for errors of law. Emerson v. Kusano, 2014 WL
258853, 260 Or App 577, ___ P3d ___ (2014).
c. Argument
Unjust Enrichment is not available as a remedy if the recipient of the benefit was paid for the benefits conferred, or, if the recipient never received any benefits for which payment was required.
Plaintiff’s position at trial, simply stated, was: because unjust
enrichment is an equitable remedy, the trial court “should” disregard all
applicable legal concepts, administrative rules and statutes, and simply
do what ever it wanted under the theory of “fundamental fairness”. Tr.
298-300; ER 35-41.
The trial court incorrectly adopted plaintiff’s equitable arguments
and mistakenly relied on Specialty Risk Services v. Royal Indemnity,
213 Or App 620, 165 P3d 300 (2007) to justify its ruling. Tr. 337-338. In
this case, the court held that in order to divest the circuit court of
23
jurisdiction, the legislature must do so expressly or by creating
administrative procedures and remedies that by necessary implication
are intended to be exclusive. Id. at 625.
Elements of Unjust Enrichment
In order to prevail on its unjust enrichment claim, plaintiff was
required to plead and to prove: (1) that it conferred a benefit, (2) that the
recipient of the benefit was aware of it; and (3) under the circumstances
it would be unjust to allow the recipient to retain the benefits. Summer
Oaks Ltd. Partnership v. McGinley, 183 Or App 645, 654, 55 p3d 1100
(2002).
The inquiry does not stop at the elements, however. In addition to
satisfying the required elements of the claim, plaintiff must also establish
that it does not have an adequate remedy at law. Kazlauskas v.
Emmert, 248 Or App 555, 275 P3d 171 (2012). If an adequate legal
remedy exists, the court will not employ equitable principles to resolve a
dispute. Id. at 569-570.
Plaintiff did not satisfy this latter requirement; had plaintiff not sat
on its hands, it could have brought a direct fraud claim against Richard
Gardner because at least as of October 7, 2011, plaintiff had first-hand
knowledge of the criminal matter pending against Mr. Gardner. ER 30.
24
Plaintiff’s Argument
Plaintiff claims Prichard was unjustly enrichment because she was
not Medicaid eligible and thus, should not have been receiving Medicaid
benefits, but should have paid plaintiff its Private Pay rates. ER 19-23.
The difference between the DHS established Medicaid rate plaintiff was
paid and the Private Pay rate it claims it should have been paid—a
difference of approximately $50,000—is the amount plaintiff sought and
was awarded at trial. Tr. 338.
Defendant was not unjustly enriched; plaintiff was paid in full
Plaintiff’s unjust enrichment claim fails because plaintiff has been
paid the full Medicaid authorized sums for all services it rendered to Ms.
Prichard. The fact that plaintiff has been paid the full Medicaid allowed
sums was not disputed at trial. Tr. 211. Equally important is plaintiff’s
concession that Ms. Prichard has paid her portion of the Medicaid-
established rate for plaintiff’s services as well. Tr. 211.
And, as previously argued, OAR 411-050-0435(1)(d) deems
Medicaid payments received to be “payment in full” and expressly
prohibits plaintiff from accepting or demanding any additional funds or
in-kind payments.
25
The Unjust Enrichment claim is a collateral attack on DHS Authority
Plaintiff’s unjust enrichment claim is also a collateral attack on
DHS’s exclusive right to make eligibility determinations as it deems
appropriate; DHS is the final arbiter of eligibility for state needs-based
support, including Medicaid benefits. See ORS 410.070(1). Whether
plaintiff can challenge the DHS eligibility determination of a resident, as
an unrelated third-party, after Medicaid benefits have already been paid
to it and received by it, is an issue of first impression under Oregon law.
In order for the trial court to render the award that it did, that court
was required to reach one of two possible conclusions: (1) that Ms.
Prichard was not Medicaid eligible, or (2) that defendant had somehow
obtained benefits that should have then flowed through defendant, to
plaintiff. Both conclusions were wrong and unsupported by the
evidence.
As to the first argument, the court did not have jurisdiction to make
any eligibility determination regarding whether Ms. Prichard should have
received any benefits. The legislature vested this authority solely in
DHS. ORS 410.070; Tr. 211-215. And, as previously argued, plaintiff
never produced any evidence or testimony that DHS had made a
determination that Ms. Prichard was not Medicaid-eligible. The
26
undisputed facts at trial proved that Ms. Prichard was authorized by
DHS to receive Medicaid benefits while a resident in plaintiff’s facility,
that plaintiff was paid the full amount of the Medicaid established rate for
Ms. Prichard’s care, and that plaintiff’s claim is not for any past due
amounts. Tr. 200-201.
The second possible conclusion—that defendant obtained benefits
that should have flowed to plaintiff—is also without evidentiary support.
At trial, plaintiff argued that defendant had promised to pay it the
difference between the Medicaid rate and Private Pay rate. Tr. 188. In
support for this contention, plaintiff presented a recorded voicemail left
by Ms. Nichols-Shields, which plaintiff argued was a promise for
payment owed. Tr. 193-194.
Defendant’s testimony, however, established that while the district
attorney had sought information regarding the difference between
plaintiff’s Medicaid rate and Private Pay rate, it was the district attorney’s
conclusion that the difference between those two amounts could not be
included in the final compensatory fine amount. Tr. 114-118. In fact, the
amount of compensatory fine shown on the judgment of conviction (ER
7-9)—$195,710—is a dollar for dollar match to the restitution paperwork
Ms. Nichols-Shields submitted to the district attorney’s office. ER 10-18.
27
The paperwork that broke down the $195,710 figure does not include
the difference between the Medicaid and Private Pay rates. Tr. 114-118;
ER 10-18.
Had the compensatory fine Mr. Gardner paid included the
difference between the Medicaid rate and plaintiff’s Private Pay rate,
then a viable unjust enrichment claim would have existed against
defendant. The undisputed evidence at trial established that the amount
plaintiff sought and obtained from the court, was not included in the
compensatory fine amount Richard Gardner was ordered to pay.
Richard Gardner paying the entirety of his compensatory fine in one
payment did not unjustly enrich defendant.
The Statute of Frauds precludes a claim for promissory estoppel or breach of contract based on defendant’s voicemail
ORS 41.580 is the Statute of Frauds. That statutes provides:
“(1) In the following cases the agreement is
void unless it, or some note or memorandum thereof, expressing consideration, is in writing and subscribed by the party to be charged, or by the lawfully authorized agent of the party.
***
(b) an Agreement to answer for the debt, default or miscarriage of another;
28
(c) an Agreement by an executor or administrator to pay the debts of the testator or intestate out of the estate of the executor or administrator.
Plaintiff contends that defendant made certain oral promises or
representations which are tantamount to an agreement that plaintiff
should be paid the difference between the Medicaid rate and the Private
Pay rate. Any such oral promise or representation is subject to the
statute of frauds. As such, without a supporting written memoranda, the
trial court was not be able to enforce any oral agreement, as the same
would be “void” as a matter of law. To the extent plaintiff contends that
the voicemail defendant left for it constitutes a promise to pay the
difference between the Private Pay rates and the Medicaid Rates, it
must first satisfy the statute of frauds. Plaintiff cannot meet its burden
because there is nothing in writing to evidence any promise by
defendant to pay the amount plaintiff believes it is owed. Indeed,
plaintiff’s own testimony has established, time and again, that no
amounts are owed to it, and that it was paid the full Medicaid rate.
I. CONCLUSION OAR 411-050-0435(1)(d) is a complete bar to plaintiff’s claim(s).
As a licensed Medicaid-eligible service provider, plaintiff was
29
contractually obligated to comply with the administrative rules in OAR
chapter 411. Moreover, neither the plaintiff nor the trial court had the
legal authority to challenge DHS’s exclusive, legislatively mandated,
authority to make eligibility determinations, including arguing that Ms.
Prichard was not (or should not have been) eligible to receive state
Medicaid assistance. The undisputed evidence conclusively established
that DHS had never determined that Ms. Prichard had obtained benefits
illegally.
The trial court’s judgment should be reversed because of the legal
errors it made when it concluded that plaintiff had been unjustly
enriched.
DATED this 18th day of March, 2014.
/s/ Hafez Daraee __________________________
Hafez Daraee, OSB No. 932484 Attorney for Defendant
Brief Length Certification
30
I certify that (1) this brief complies with the word-count limitation in
ORAP 5.05(2)(b) and (2) the word count of this brief (as described in
ORAP 5.05(2)(a)) is 4,530.
Font Certification The font used in this brief is a proportional font and is not smaller
than 14 point type.
Certificate of Service I hereby certify that I served plaintiff’s counsel with a copy of
defendant’s Corrected Opening Brief and Excerpt of Record, through the
Court of Appeal’s E-File system, as well as by email to counsel’s last
known email address as provided in the Oregon State Bar’s electronic
directory, to wit:
Ross A. Day, OSB No. 002395 DAY LAW GROUP, PC 15055 SW Sequoia Parkway, Suite 170 Portland, OR 97224 Telephone: (503) 747-2705 E-mail: [email protected] Attorney for Plaintiff-Respondent
Dated this 18th Day of March, 2014. /s/ Hafez Daraee __________________________ Hafez Daraee, OSB No. 932484 Attorney for Defendant-Appellant
fa
IN TI{E COURT OF APPEALS OF TTTE STATE OF OREGON
LAzuSA'S HOME CARE, LLC, AN
Oregon limited liability company,
PlaintifÊRespondent,
V
KAREN NICHOLS-SHIELDS, the duly-appointed Personal Representative of theEstate of Isabell Prichard, deceased,
Defendant-Appellant.
Appellate Case No.: Al 54950
V/ashington County Circuit CourtCase No.: C124865CV
PLAINTIFF.RESPONDENT'S ANSWER BRIEF
On Appeal from the Judgment of the Circuit Courtin and for Washington County
The Honorable Janelle F. V/ipper, Judge
,)
Ross A. Day, OSB #002395; Matthew Swihart, OSB #132533Dev Lew GRour, PC15055 SW Sequoia Parkway, Suite 170Portland, Oregon 97224T:503-747-2705E : ross@daylawpc. com; matthew @daylawpc. com
Attorneys þr P I aintiffRespondent
Ijafez Daraee, OSB #932484Luev I Danaee Law Gnoup, PC7455 SW Bridgeport Road, Suite 200Tigard, OR97224Telephone: (503) 7 [email protected]
Attorney þr D efendant -App e I I ant
llday 2014
May 28, 2014 10:48 AM
I
1
TABLE OF'CONTENTS
TABLE OF CONTENTS
TABLE OF AUTHORITIES
PLAINTIFF-RESPONDENT' S ANS'WER BRIEF
I. CITATION STANDARDS
II. STATEMENT OF TFIE CASE
A. Nature of the Action, Nature of Judgment, Basis of Appellate
Jurisdiction, and Timeliness of Appeal
B. Questions Presented on Appeal
1. Whether the trial court correctly concluded that the Oregon
Administrative Rules did not bar Respondent from bringing its equitable
claim for unjust enrichment.
2. Whether the trial court correctly concluded that Appellant had been
unjustly enriched, where there were factual findings that fraud had been
committed, that Petitioner obtained benefits from Respondent, and that
Petitioner was aware of the benefit received.
C. Summary of Arguments
D. Material Facts
I
ilI
1
2
1
2
2
2
aJ
J
4
M. STANDARD OF REVIEV/ t2
I
11l:
IV. ANSWER TO FIRST ASSIGNMENT OF ERROR
A. Argument
Appellant was aware she received a benefit.
It would be unjust to allow Appellant to retain the benefit without
4. The Statute of Fraucls does not apply in this case
VI. CONCLUSION
CERTIFICATE OF COMPLIANCE
CERTIFICATE OF SERVICE
1. The ORS' and OAR's do not preclude, limit, or restrict Respondent's
unjust enrichment claim.
13
13
13
t6
2l
22
23
24
25
27
28
2. The rules and statutes suggest equitable remedies were intended by the
legislature
3. Appellant's agency arguments do not apply to this case.................... 18
V. ANSV/ER TO SECOND ASSIGNMENT OF ERROR I9
A. Argument t9
1. Appellant received a benefit.
2
aJ
requiring her to pay for it
SUPPLEMENTAL EXCERPT OF RECORD 29
111
TABLE OF'AUTHORITIES
CASES
Speciality Risk Services v. Royal Indemnity Co.,164P3d300,303 (Or.2007)..... .....12-14
Gutierrez v. Gutierrez,261 Ore. App. 410, 4ll, _P3d _ (Or. Ct. App. 2014).........12,20,22-24
Emerson v. Kusano,260 Ore. App. 577 , 581, _P3d _ (Or. Ct. App. 2014). . . ...12
Dept. of Human Services v. N.P.,307 P3d 444, 448 (Or. Ct. App. 2013). . . .. . . . ...12
Cron v. Zimmer,296p3ds67 (20t3)..... ........20
Farmer v. Groves,sss P2d I2s2 (Or. t976)...
Hughes v. Bembry,470P2d 151(Or. 1970).
STATUTES
oRS 1e.41s(3xb)
oRS 4rr.630(r-4)
oRS 4rr.7es(3)......
ADMINISTRATIVE RULES
OAR chapter 411 (generally)
20
.t6-17
20
t2
18
13, 15
OAR 4 I 1-050-061 5(3)(c) [previously, 41 1-050-0435] 18
I
a1V
t2
20
-l APPELLATE RULES
ORAP s.aO(8)(a-c)
SECONDARY SOURCES
Restatement of Restitution $ 1 [415] (1937)
)
J
1
1
PLAINTIFF'.RE SPONDENT'S ANSWER BRIEF'
Judge Wipper's ruling is reasonable, legally sufficient, and adequately
supported by the credible testimony and evidence on the record.
I. CITATION STANDARDS
1. Respondent, LARISA'S HOME CARE, LLC, an Oregon limited
liability company, will herein be referred to as "Respondent" or "LIJC".
2. Appellant, KAREN NICHOLS-SHIELDS, the duly-appointed
Personal Representative of the Estate of Isabell Prichard, deceased, will herein be
referred to as "Appellant" or "Mrs. Shields"
3. The Transcript on Appeal is cited herein as: [Tr. (Page):(Line)].
Excerpts of the Record are cited herein as: IER (Page)]
Supplemental Excerpts of the Record are cited herein as: ISER
6. Because it is not included in the Record, but filed with this Court,
Appellant's Opening Brief is cited herein as: [App. Br. (Page)].
7. The Oregon Administrative Rules (OARs) were renumbered in
September of 2013. Relevant to this case, OAR 41 1-050's subsections were
renumbered from the 400's to the 600's. For example, OAR 411-050-0435 is now
4
5
(Page)l
411-050-0615. In order to alleviate any confusion, and to ensure clarity and
I
2
, consistency between the parties' briefs, both rules are provided in the Table of
Authorities, with the old rule number used in the text.
II. STATEMENT OF THE CASE
A. Nature of the Action, Nature of Judgment, Basis of AppellateJurisdiction, and Timeliness of Appeal
Respondent filed its Complaint against Appellant on August 8th,2Ol2.
Appellant filed a motion for summary judgment on October 24th,2014. The Court
denied Appellant's motion. This case went to trial on June 12,2013. On July 1 1,
2013, the Court ruled in Respondent's favor on two of the three issues presented at
trial. On JuIy 25, 2013, a general judgment and money award was entered, in
which the trial court concluded that the Oregon Administrative Rules did not
prohibit Respondent from brining an equitable claim for unjust enrichment, that
Appellant was unjustly enriched to the detriment of Respondent, and that it would
be unfair to force Respondent to suffer said detriment.
Appellant timely appealed, and timely filed her Opening Brief. Respondent's
Response Brief was originally due on May 5, 2014, but an extension of time was
granted by the Court to May 29,2014.
B. Questions Presented on Appeal
Whether the trial court correctly concluded that the OregonAdministrative Rules did not bar Respondent from bringing itsequitable claim for unjust enrichment.
1
J
,)Whether the trial court correctly concluded that Appellant had beenunjustly enriched, where there were factual findings that fraud hadbeen committed, that Petitioner obtained benefits from Respondent,and that Petitioner was aware of the benefit received.
C. Summary of Arguments
1. Respondent's claim for relief is equitable. The Oregon Administrative
Rules do not bar an equitable claim for relief. Further, unless the legislature enacts
a statute intentionally replacing a recognized equitable remedy with an
administrative remedy, Respondent's claims in equity are not barred. The Oregon
Administrative rules do not provide (nor do they eliminate) any remedy for private
parties, such as those in Respondent's position, to recover compensation for
benefits received by a Medicaid recipient in cases of fraud or misrepresentation. It
is undisputed that no administrative remedies resolve this type of dispute.
Therefore, Respondent was permitted to bring its claim for equitable relief.
2. Respondent proved all elements of its unjust enrichment claim. The
trial court made factual findings that fraud was committed by Appellant's
representative, that Appellant received a benefit, and that Appellant was aware that
she received a benefit. The record contains evidence to support those factual
findings. Based on those findings of fact, the trial court legally and properly
concluded that it was unjust for Appellant to retain the benefit conferred without
compensation.
4
, D. Material X'acts
Plaintiff-Respondent, LARISA'S HOME CARE, LLC, an Oregon limited
liability company, provides adult foster care home services. [Tr. 162:11-13]
Isabell Prichard lived at Respondent's care home from June of 2007 [Tr.72:4-51,
until she passed away on November 1, 2008 [Tr. 68:10-11].
Ms. Prichard gave a power of attorney to her son Richard Gardner. [Tr.
248:17-19; ER 1-2]. Mr. Gardner, pursuant to his power of attomey, admitted Ms
Prichard into Respondent's care home. [Tr. 252:8-12].
In addition, Mr. Gardner also submitted an application for Medicaid
eligibility to the state of Oregon on behalf of Ms. Prichard. lTr.256:23-257:6; SER
2-121. Mr. Gardner misrepresented his mother's frnancial ability to pay for her
care. As Mr. Gardner testified:
Q: ... when you signed this application did you believe yourmother was actually eligible for Medicaid?
A: No.
[Tr. 258:3-6]
The Medicaid rate is substantially lower than the private pay rate. [TR.
210:7-10]. Therefore, Mr. Gardner's misrepresentations resulted in an effoneous
approval for Medicaid assistance, and a substantial discount of $48,477.00 to Ms.
Prichard's cost of care from Respondent. [Tr. I87:14-188:3; SER 1].
5
Mr. Gardner testified at trial that he and his sister, Karen Nichols-Shields,
the Appellant in this matter, conspired to transfer money out of their mother's
account to themselves in order to "spend down" and hide Ms. Prichard's assets in
order to qualiff her for Medicaid:r
a So these were all [...] drawn on your mother's account; is thatcorrect?
A: That is correct.
Okay. V/hat was the purpose of these transfers?
V/ell, the $11,000 ones, I'm trying to remember, starting in2002-I guess that's irrelevant. All of the $11,000 ones weresupposed to be for gifting to spend down my mother's qccor¿nt
so that money could be put away in case she needed it and sothat doctors and home care and everyone else would not get itall and that she would be able to go on Medicaid once all thatmoney was gone.
Q: Now, you said she would be able to go on Medicaid once allthat money was gone. Did you mean she'd be able to go onMedicaid once it was all gifted to-to you and your sister?
A: 'We11, basically, once it was no longer in her accounts.
Q: Okay. So once you moved-the purpose was once you movedthe money out of the accounts-out of her account, the purposewas then to qualiff her for Medicaid. That was the plan; is thatcorrect?
t The trial court never held that Defendant-Appetlant Nichols-Shields specificallycommitted any act of fraud or misrepresentation, and did not comment on her
conspiracy. However, the trial court did hold that Mr. Gardner, on behalf of Ms.Prichard, engaged in conduct intended to defraud Respondent.
a
A
6
ì A: That's correct.
Q: Okay. And whose plan was that? Who came up with this idea?
Well, the giftingpart of it was brought up to me by my sister-
[Appellant] Karen Shields?
--who said that-
Karen Shields; is that correct?
Yes, Karen Shields. That's correct.
... why $11,000?
Well, because I was told by Karen that $11,000 was the limitper person, so that you did not have to claim them on taxes.
Q: And then the plan was-after mom died then what wouldhappen to it?
We'd just split it up.
Who-and you say "we," do you mean you and your twosisters?
[...] yes.
Q: And didn't Mrs. Shields tell you that this plan or this scheme
was called spending down?
A: Yes.
A
a
A
a
A
a
A
tl
tl
A
a
A
,)lTr. 261 :12-263 :23 (emphøsrs added)1.
7
Respondent's expert, Garvin Reiter, Erq., testified that this type of scheme
would have to be reported to Medicaid and would have disqualified Ms. Prichard
from Medicaid. [Tr. 159:5-9].
Appellant did receive and accept the transfers resulting from her conspiracy.
IER 13-14; SER 15-211. Appellant's intention, based on the testimony presented at
trial and the evidence supporting her receipt of the funds IER 13-14; SER 15-211,
was to defraud Medicaid and defraud Respondent of the difference between the
appropriate private pay rafe and the lower Medicaid rate.2 [Tr.26l:21-262:12].
This is also evidenced by the fact that Mr. Gardner testified as follows:
And you understood that then by putting her in-by putting herin Larisa's Home Care and submitting the false Medicaidapplication that Larisa would be getting paid the Medicaid rateand not the private pay rate; is that correct?
A: That's correct.
Even though you knew that your mother was not eligible based
on what we talked about earlier on the Medicaid application,was not eligible for Medicaid; is that correct?
That is correct also.
Okay. So as you sit here today, do you think your mothershould've paid the private pay rate to Larisa's Home Care?
'Ho*ever, Mr. Gardner took the plan a step further than Appellant intended, and
took advantage of his position as power of attorney to convert a substantial amount
of Ms. Prichard's estate. In2011, Mr. Gardner was prosecuted and convicted ofcriminal mistreatment. This conviction stems from Mr. Gardner's deception and
unlawful taking of Ms. Prichard's property. State of Oregon v. Richard DuaneGardner, Wash. Co. Cir. Ct. No. CII2363CR.lref. ER 7-181.
a
a
A
a
8
A 'Well, as I sit here today, I realize that I listened to the wrong
people. I took their advice.3I made a huge mistake in doing so.
And that-no, I'vs-1've done it. I admitted it. I went to court.I went to jail. I paid my fines and restitution. I've doneeverything that I could do.
Q: ... do you believe that Larisa's Home Care should've been paidthe private pay rate and not the Medicaid rate?
A: Yes
lTr. 265 :3 -266:3 (emphasis added)l
Following Ms. Prichard's death, it was discovered that she had substantial
assets to pay for the care provided by Respondent, and should have been charged
by Respondent as a private pay resident at the higher private pay rate.lTr. 172:16-
173:51.
Appellant admitted that Respondent should have been paid at the private pay
rate, instead of the reduced Medicaid rate for the care Respondent provided to Ms.
Prichard. [Tr. 1 93 : 10- 194:12; SER 1]. Appellant also admitted to conspiring with
her brother, Mr. Gardner, to "spend down" Ms. Prichard's account, receiving and
accepting funds via fraudulent transfer, and even involving Appellant's husband
and third sibling in the conspiracy. [Tr. 72:22-83:131.
3 Based on the totality of his testimony, Mr. Gardner can only be referring toAppellant. At a minimum, Appellant is at least one of the people who directed and
benefited from Mr. Gardner' s illegal actions lr ef. Tr. 261 : 12-263 :231.
9
Appellant even went so far as attempting to seek these additional private pay
costs as restitution in the criminal proceedings. [Tr. 89:10-90:12; ER 7-18; SER
13-14]. Appellant worked with Respondent to determine the amount of money
Respondent was "shorted" as a result of the Medicaid fraud that occurred. As
Larisa Louka, CEO of Respondent, testified:
Q: So can you explain what exactly Exhibit 14-what thisrepresents?
A This represents the care provided for Isabell fPrichard] over thecourse of the year and a half that she was atmy facility andexplains what she would've been charged as a private payclient.
And then it takes into consideration that we were paid some ofthat by Medicaid and the amount that we were paid and thedifference that we should've had-been paid if she were notMedicaid eligible.
And what was the final total that you-the difference betweenthe private pay rate and the Medicaidrate that you calculated?
48,477.
And, again, why did you prepare this exhibit?
Karen [ShieldsJ had asked me to prepare this documentforrestitution, so she could pay us backþr the damages that werecaused.
So Mrs. Shields, did she tell you that she was going to try torecover for you the difference between the private pay rate and
the Medicaidrate?
a
^a
A
a
A: Yes.
10
And at any time while you were involved in this, did Mrs.Shields ever tell you that "Oh, guess what, you're not entitled tothe-to the difference between the Medicaid rate and theprivate pay rate?"
No. In fact, she called me quite a bit and talked about this, howunfair it was and how I needed to get paidþr this.
[Tr. 187:14-188:19 (emphasis added); rel SER 1].
Regarding the voicemail Appellant left Respondent [Tr. 193:10-194:12],
Respondent testified that she appropriately understood that Appellant, "was trying
to get in the dollar amount for the damages that were caused so I could get paid."
lTr.194:18-201.
There were other communications between Appellant and Respondent
regarding this, including emails, some of which were lost to Respondent when she
got married and changed her email address. lTr. 196:7-211.
Respondent subsequently made a claim on the estate of Isabell Prichard,
relying on promises made by Appellant that Respondent would be compensatecl for
the difference between what Ms. Prichard would have paid under a private pay
plan versus what Respondent received in Medicaid payments.l Respondent's claim
was denied by the personal representative of Ms. Prichard's estate, who happens to
be Appetlant, despite the factthat Appellant represented to the District Attorney in
t The State of Oregon also made a claim against Prichard's estate. The claim was
settled by the estate for roughly $35,000.00.
a
A
11
her brother's criminal trial that Respondent was owed approximately 548,477.00.
[sER 1].
Thereafter, Respondent filed the equitable action underlying this appeal,
claiming Ms. Prichard's estate was unjustly enriched as a result of the fraudulent
conduct undertaken on behalf of the estate by Appellant
The trial court determined this was an equity claim, not a statutory one, and
found in favor of Respondent and awarded Respondent $48,477.80. lTr.337:9-
338:25; ER 50-521. As the trial court stated in its ruling:
Through no fault of the plaintiff s own, she took Ms. Prichard in as aMedicaid resident because her personal representative clearlycommitted fraud.
It is no mistake that he did so. It is also no mistake that he-we knowthat she would have been able to pay and should have paid at the timebut for his fraud.
And, therefore, as a whole, there is no reason why, as we look at thiscase as a equitable one and fundamental fairness, that because of thatfraud, the fraud on the applications, the fraud on all the paperworkthat was presented, that the estate of Ms. Prichard should not now bebasically paying their debt.
They cannot now benefit from all that has come before to thisparticular point. It would be unfair for the plaintiff to be left holdingthe bag and to-and for the estate to now benefit from the fraud.
I do believe that the plaintiff has proven the unjust enrichment claim.And so I do find that they are entitled to the $48,477.80.
[Tr. 338:3 -338:25].
t2
III. STANDARD OF REVIEW
In Oregon, unjust enrichment is an equitable doctrine. Speciality Risk
Services v. Royal Indemnity Co.,164 P3d 300, 303 (Or. 2007). The Court of
Appeals, in its discretion, ffiây review equitable claims de novo only in exceptional
cases. ORS 19.415(3)(b); ORAP 5.a0(8)(c). However, requests for de novo review
are generally disfavored and require the appellant to "concisely state the reasons
why the court should do so." ORAP 5.a0(8)(a-c). Appellant has not stated any
reasons the Court should apply de novo review, besides a vague and unsupported
claim that somehow this unjust enrichment claim is a matter of first impression in
Oregon.
'Where a case is not exceptional, as in the instant case, the standard of review
is for effors of law. Gutierrez v. Gutíerrez,26l Ore. App. 4I0,4I1, _P3d _
(Or. Ct. App. 2014), citing, Emerson v. Kusano, 260 Ore. App . 577 ,581, _ P3d
_ (O.. Ct. App. 2014) ("We therefore review the trial court's legal conclusions
for errors of law and are bound by the trial court's factual findings if they are
supported by any evidence in the record."); Dept. of Human Services v. N.P.,307
P3d 444,448 (Or. Ct. App. 2013) ("[W]e view the evidence, as supplemented and
buttressed by permissible derivative inferences, in the light most favorable to the
trial court's disposition and assess whether, when so viewed, the record was legally
suffrcient to permit that outcome.").
13
IV. ANSWER TO FIRST ASSIGNMENT OF'ERROR
The trial court correctly concluded that the Oregon Administrative Rules did
not prohibit Respondent from bringing an equitable claim for unjust enrichment
against Appellant.
A. Argument
OAR chapter 411 does not bar Respondent's equitable claim. Respondent's
claim for unjust enrichment is an equitable, not a legal claim. Speciality Rìsk
Services v. Royal Indemnity Co.,164 P3d 300, 303 (Or. Ct. App. 2007). An
equitable claim is not barred by the administrative rules, unless the legislature
"created specific administrative remedies intended to resolve this particular kind of
dispute." Id. at305.
The ORS' and OAR's do not preclude, limit, or restrictRespondent's unjust enrichment claim.
There is nothing in the enabling legislation, or the administrative
regulations, that create a specific type of relief for claims similar to Respondent's.
In fact, Appellant spends a significant amount of time arguing Respondent does not
have any legal recourse for the damages it suffered.lsee, generally, App. Br. 15-
21]. This lack of a legal remedy was the basis for Respondent's unjust enrichment
As a general rule, in order to divest the circuit courts ofjurisdiction,the legislature must do so expressly. The legislature may also do so,
however, by creating administrative procedures and remedies that
1
claim
T4
"'by necessary implication"' are intended to be exclusive. t...]However, if a remedy at law preexists a statute creating an
administrative remedy, then the administrative remedy is exclusiveonly if, by enacting the statute, the legislature intended to replace or"negate" the previously recognized remedy. [. . .] "[I]f a statute whichprovides for a new remedy shows no intention to negate, eitherexpressly or by necessary implication, a pre-existing common lawremedy, the new remedy will be regarded as merely cumulative, ratherthan exclusive, with the result that aplaintiff may resort to either thepre-existing remedy or the new remedy."'
Id. at 303 (internal citations omitted).
In Specialty Rtsk Services, the plaintiff, an insurer, erroneously paid a
worker's compensation claim that should have been paid by the defendant insurer.
Id. at 302. When the defendant refused to reimburse the plaintiff, the plaintiff
1 brought a claim for unjust enrichment. Id. The defendant argued that the unjust
enrichment claim was barred because the legislature had divested subject matter
jurisdiction from the trial court and given it to the workers compensation system.
Id. This court disagreed, and concluded that it was not the legislature's intent to
divest the circuit courts ofjurisdiction, because worker's compensation statutes did
not furnish "a forum in which the merits of plaintiffls claims might have been
addressed." Id. at305
In the instant case, the trial court specifically found Specialty Risk Services
instructive. [Tr. 337:15-338:3]. The facts here are analogous to the facts in
Specialty Risk Services. Respondent does not have a forum in which the merits of
its claims might be addressed. As Appellant repeatedly argues, the Oregon
15
Administrative Rules do not provide a remedy for Respondent. lsee, generally,
App. Br. 15-2Il
Moreover, the Oregon Administrative Rules (OARs) do not eliminate a
private right of action in equity. See, generally, OAR Chapter 41 1 . The text of
rules reflects the legislature's intent (as well as the Department of Human
Service's intent) to control the contractual relationship between the Oregon
Department of Human Services and Adult Foster Home facilities. It does not
address claims that an Adult Foster Home facility (such as Respondent) would
have against a resident who fraudulently obtained reduced Medicaid rates (such as
Appellant).
Appellant argues the silence on the part of the OARs renders this case a
matter of first impression. This is simply not true, because no one is challenging
the OARs. They simply do not apply
Rather, the OARs' silence renders this case an equitable matter to be
determined by a trial court on the facts. Based upon the facts and testimony
presented attrial, the trial court properly found that the OARs do not apply, and
equity requires Appellant to compensate Respondent for its damages due to
Appellant's fraud.
t6
2. The rules and statutes suggest equitable remedies were intendedby the legislature.
Further, the applicable rules and statutes tend to suggest equitable remedies
are available and proper, by making the very behavior of Appellant and her brother
illegal
(1) A person may not knowingly obtain or attempt to obtain, for thebenefit of the person or of another person, any public assistance ormedical assistance to which the person or other person is notentitled under state law by means of:
(a) Any false representation or fraudulent device, or
(b) Failure to immediately notiff the Department of HumanServices or the Oregon Health Authority, if required, of thereceipt or possession of property or income, or of any otherchange of circumstances, which directly affects the eligibilityfor, or the amount of, the assistance.
(2) A person may not transfer, conceal or dispose of any money orproperty with the intent:
(a) To enable the person to meet or appear to meet anyrequirement of eligibility prescribed by state law or by rule ofthe department or the authority for any type of publicassistance or medical assistance; or
(b) Except as to a conveyance by the person to create a tenancy bythe entirety, to hinder or prevent the department or theauthority from recoverin g any part of any claim it may have
against the person or the estate of the person.
(3) A person may not knowingly aid or abet any person to violate anyprovision of this section.
(4) A person may no receive, possess or conceal any money orproperty of an applicant for or recipient of any type of public
l7
assistance or medical assistance with the intent to enable theapplicant or recipient to meet or appear to meet any requirement ofeligibility referred to in subsection(2)(a) of this section or, exceptas to a conveyance by the applicant or recipient to create a tenancyby the entirety, with the intent to hinder or prevent the departmentor the authority from recoverin g arry part of any claim it may haveagainst the applicant or recipient or the estate of the applicant orrecipient.
oRS 4rt.630
Based on the facts and testimony presented at trial, Appellant and her
brother violated all of the above provisions. Appellant coerced, conspired with, and
aided and abetted Mr. Gardner in fraudulently obtaining services and benefits for
Ms. Prichard, and Appellant received, possessed, and concealed Ms. Prichard's
) money with the intent of defrauding Medicaid and Respondent, in violation of
oRS 4tr.630(t-4).
ORS 4I1.630 makes it clear that the conduct of Appellant is against the
policy of the State of Oregon when it comes to public assistance to pay for long
term care costs. There is nothing in the Oregon statutes that prevent, or even hint at
preventing, Respondent from brining a claim in equity. To the contrary, the statute
demonstrates that fraudulent conduct aimed at taking advantage of public
assistance programs is contrary to the legislative intent and is fundamentally
unfair
18
Because this statute applies to the State of Oregon, it unfortunately does not
provide Respondent with an adequate remedy at law, thus rendering the underlying
equitable action the only avenue available to Respondent.
Further, the legislature provided for a resident to recover overpayments
made to a facility once they became Medicaid eligible. OAR 411-050-0615(3)(c).
Therefore, it is reasonable to infer the legislature would allow the reverse-that a
facility is entitled to recover the underpayment if a resident was not actually
Medicaid eligible. Also, the fact that ORS 4I1.795(3) specifically precludes only
the State of Oregon from recovering if the need for aid resulted from a crime
committed against the recipient, suggests the legislature intended to waive the
State's right to recovery only, and not bar private entities such as Respondent from
recovery
3. Appellant's agency arguments do not apply to this case.
Finally, Appellant's cases relative to the agency relationship between
Appellant, Mr. Gardner, and Ms. Prichard are irrelevant. Respondent is not seeking
a fraud claim or statutory violation based on Mr. Gardner's criminal conversion of
the money "spent down" as part of the conspiracy between Appellant and Mr
Gardner
Appellant spends significant time and energy trying to force this case into
some fraud claim only against Mr. Gardner, in an attempt to circumvent
t9
Appellant's role in defrauding Respondent. Respondent arguably wouldn't have
standing to sue Mr. Gardner for his conversion anyway, since his conversion
harmed the estate
It's Mr. Gardner and Appellant's Medicaid fraud that harmed Respondent.
The case underlying this appeal is about Appellanr's bad actions: her coercion,
conspiracy, and aiding and abetting Mr. Gardner in intentionally defrauding
Medicaid and, by extension, Respondent. It's about the estate and Appellant being
unjustly enriched, and Respondent being cheated out of the appropriate fee for
goods and services it provided in good faith
This case was never about recovering from Mr. Gardner under the criminal
statutes-that was the role of the estate and the State of Oregon. Rather,
Respondent is seeking equitable restitution for Appellant's knowing and active
participation in conspiring to deny Respondent the $48,770.80 it is rightfully owed.
The trial court properly determined Respondent was unjustly enriched by
Appellant's conduct, and correctly awarded Respondent its damages
V. ANSWER TO SECOND ASSIGNMENT OF ERROR
The trial court correctly concluded that Appellant was unjustly enriched.
A. Argument
"The elements of the quasi-contractual claim of unjust enrichment are (1) a
benefit conferred, (2) awareness by the recipient that she has received the benefltt,
20
and (3) it would be unjust to allow the recipient to retain the benefit without
requiring her to pay for it." Gutieruez v. Gutieruez,26I Ore. App. 410,414, _
P3d _ (Or. Ct. App. 2014), quoting, Cronv. Zimmer,296P3d 567 (2013). "The
first two elements are questions of historical fact, which we review for legally
sufficient evidence to support them. The third element presents a question of law,
which we review for legal error." Id.
In the context of an unjust enrichment claim, the Oregon Supreme
Court has defined a "benefit" broadly....
"A person confers a benefit upon another if [the person] gives to theother possession of or some other interest in money ,land, chattels, orchoses in action, performs services beneficial to or at the request ofthe other, satisfies a clebt or a duty of the other, or in any way adds tothe other's security or advantage. [The person] confers a benefit notonly where fthe person] adds to the property of another, but also
where fthe person] saves the other from expense or loss. The word'benefrt,'therefore, denotes any form of advantage."
Id. at 414-415, citing, Farmer v. Groves, 555 Pzd t252 (Or. 1976), quoting,
Restatement of Restitution $ 1 [415] (1937).
"Restitution is based on the theory that one party should not be unjustly
enriched at the expense of another. . . . In determining the amount of unjust
enrichment, doubts are resolved in favor of [...] the injured pafi." Id. at 4I4-4I5,
quoting, Farmer v. Groves, 555 P2d 1252 (Or. 1976), Hughes v. Bembry,470P2d
)
15 1 (Or. 1970) (internal quotation marks omitted).
2I
The facts in the record and the applicable unjust enrichment law establish all
of the elements necessary to sustain the f,rnding in favor of Respondent on its claim
for unjust enrichment.
1. Appellant received a benefit.
Ms. Prichard received the benefit of valuable services provided by the
plaintiff in the form of adult care services. Ms. Prichard, through her
representatives, misrepresented her ability to pay the private pay rate to
Respondent. As a result, Ms. Prichard and her estate unjustly benefitted from the
deception perpetrated on Respondent-not coincidentally-by the beneficiaries of
the estate.
The estate received a benefit in that, by paying less than the proper private
pay rate, there was ultimately more money in the estate, thus enriching it unjustly.
Appellant personally received the benefit of money from the checks written
to her by her brother as part of the conspiracy ancl spend-clown scheme to defraud
Medicaid and Respondent. Appellant also personally received the benefit of
profiting from the fraud she encouraged when the funds were returned to the estate
(after Mr. Gardner paid his restitution in full), which gave the estate more money
to distribute to its beneficiaries, of which Appellant is one.
The record demonstrates benefits were received by Ms. Prichard, her estate,
and Appellant, as a result of Appellant's conspiracy and spend-down scheme
22
Therefore, there is legally sufficient evidence to support Judge Wipper's ruling as
just and proper. Gutierrez,26l Ore. App. at 4I4.
2. Appellant was âware she received a benefit.
Appellant understood she received these benefits, and understood she had to
pay for them.
Appellant, both personally and as the personal representative for the estate,
was aware that defrauding Respondent would provide a benefit to the estate. This
is why she convinced her brother to break the law in her spend down scheme. This
is why she tried to include the money owed Respondent in the restitution claim in
order to attempt to enrich the estate (and ultimately herself).
The enrichment of the estate (and ultimately herself) was Appellant's goal,
because despite telling Respondent it was owed the money and she wanted to get it
for Respondent, she instead denied the claim made on the estate by Respondent,
forcing the underlying lawsuit. The record suggests that Appellant has been
singularly focused on obtaining as much money for herself as possible, at the
expense of her own mother, atthe expense of her brother's freedom and personal
cost, and atthe expense of Respondent.
The record clearly demonstrates that Respondent was fully aware of the
benefit to both the estate and her personally that arose out of defrauding
Respondent of the difference between the appropriate private pay rate and the
23
fraudulently obtained Medicaid rate. Therefore, there is legally sufficient evidence
to support Judge Wipper's ruling as just and proper. Gutierrez,26I Ore. App. at
4t4
It would be unjust to allow Appellant to retain the benefit withoutrequiring her to pay for it.
3.
)
If Appellant is not required to pay the amount of the judgment, the resulting
injustice would create a slippery slope, paving the way for other beneficiaries to
commit what amounts to Medicaid fraud, because beneficiaries would be able to
misrepresent to service providers like Respondent that a client is only "Medicaid
eligible", knowing that there is no consequences to such fraudulent conduct. At
worst, all a beneficiary would be required to pay back is the amount expended by
Medicaid-a substantially discounted care rate. The care providers (like
Respondent), who acted in good faith but were deceived by the misrepresentations
of ill-intentioned beneficiaries, would be left bearing the financial burden for
someone who has the means to pay the difference between the Medicaid rate and
the private pay rate.
Respondent was misled by Gardner's representations-made at the direction
and encouragement of Appellant-to both Respondent and the State of Oregon
Appellant received a benefit from Respondent, was aware of that benefit, and now
Appellant and the beneficiaries of Ms. Prichard's estate stand to unjustly benefit
from the fraud perpetrated against Respondent. It would be unjust to allow the
24
beneficiaries of Ms. Prichard's ss1¿1e-including Appellant-to benefit from
Appellant's bad actions.
Appellant has cited no law-and indeed there is no law-specifically
barring the type of unjust enrichment claim Respondent brought and won.
Appellant agrees there is no legal remedy to Respondent owed by Appellant and/or
the estate. Therefore, an equitable remedy is proper in this case, and is in fact the
only means by which Respondent could recover what was denied it by Appellant's
coercion, conspiracy, and aiding and abetting in the commission of a fraud against
Medicaid and, by extension, Respondent. Therefore, an unjust enrichment claim is
appropriate, and the elements were applied correctly by the Court. Judge Wipper
made no effor of law, and her ruling is just and proper. Gutierrez,26l Ore. App. at
4t4
4. The Statute of Frauds does not apply in this case.
Appellant argues that the Statute of Frauds is a bar to a promissory estoppel
or breach of contract claim. Whether or not this is true is irrelevant, because the
judgment on appeal only found in favor of Respondent's unjust enrichment claim,
and does not rely on any written or oral contract or quasi-contract created by
Appellant's multiple promises to pay. Therefore, Appellant's arguments relative to
the Statute of Frauds should be ignored as moot.
25
VI. CONCLUSION
Appellant coerced, conspired with, and aided and abetted her brother in
defrauding Medicaid and, by extension, Respondent. The evidence and credible
testimony on the record clearly demonstratethat, as a direct result of Appellant's
selfish desire to enrich herself at the expense of her brother's freedom and expense,
Medicaid's expense, and Respondent's expense, Respondent was damaged in the
amount of $48,477.00.
Appellant correctly argues that Respondent has no adequate remedy at law
for the damages it suffered as a result of Appellant's bad actions. Because neither
the Oregon Revisecl Statutes nor the Oregon Administrative Rules provide a
specific remedy for the type of damage Respondent suffered, Respondent's proper
recourse was through equity in the form of an unjust enrichment claim.
The trial court properly held that it was inequitable to allow Appellant to be
enriched by her fraud, deceit, and greed, and properly awarded Respondent the
damages it suffered as a result of Appellant's coercion, conspiracy, and fraud.
26
Judge Wipper's ruling is reasonable, legally sufficient, and adequately
supported by the credible testimony and evidence on the record. Therefore, the
decision of the trial court should be AFFIRMED.
RESPECTFULLY SUBMITTED this of May, 2014.
Dly L¡.w Gnour, PCAttorneys þr P I aintiff Respondent
L
A. Day, #002395Matthew Swihart, OSB #13253315055 SW Sequoia Parkway, Suite 170Portland, Oregon 97223T: 503 .747.2705F:503.624.2599E: [email protected] : matthe w @daylawpc. com
27
CERTIFICATE OF' COMPLIANCE
I HEREBY CERTIFY that:
Brief Length
Type Size
(1) This brief complies with the word-count limitation in ORAP
s.os(2xb).
(2) The word-count of this brief (as described in ORAP 5.05(2)(a)) is
5,836 words.
(3) The size of the type in this brief is Times New Roman 14 point font
for both the text of the brief and footnotes as required by ORAP
s.0s(4xÐ.
DATED this of May, 2014.
by:Ross A. Da No.002395tMatthew Swihart, OSB No. 132533
D¿.v L¡.w Gnour, PCAt t o rn ey s þr P I aint iff Re s p o ndent
28
CERTIFICATE OF' SERVICE
I HEfuEBY CERTIFYthattrue and correct copies of the foregoing
RESPONDENT'S ANSWER BRIEF were served this day of May,20l4, in
the following manner to:
via eFi and USHafez Daraee, Esq.Lusv I Danann Law GRour, PC7455 SW Bridgeport Road, Suite 200Tigard, Oregon 97224T: 503-620-3342F: 503-360-9635E: [email protected]
byWalker, Paralegal
Day L¡.w Gnour, PCAttorneys þr P I aintiff Respondent
29
SUPPLEMENTAL EXCERPT OF' RECORI)
INDEX
Descriotion Pase
Respondent's Damages Calculation (Plaintiff s Exhibit 14)
Medicaid Application Form (Plaintiffls Exhibit 15)
Victim Assistance Form (Plaintiff s Exhibit 22)
Checks (Plaintiff s Exhibits 24-30)
SER 1
SER 2-12
sER 13-14
sER 15-21
SER -L
Isabell Prichard estímaLed amouut that fleeds to be paid;
Isabell PrÍchard care was only paid ßL926,74 per month.
The care provided was:1. 21-00 per monthbase rate ( Includes: Meals, personal la.undry, assistance
bathing, medication, housekeeping grooming, hygienic care, assÍstance witheatÍng and t-oìleting.l
2. Incontinence of bladder-Z003. Incontinence of bot¡¡.els- 2004. Wanderlng- .' 3005. BehavÌor manageraent- 5006. NighttÍme care[ more than twice a night]-5007. DressÍng Dependant-200.00
Her care was about $+,000.00 from the day she moved 6'8.-2007 in untilabout February 13tt,2008 whén hér care level declined and I appliecl for a
level 3 for her to stay ín my faci[íty'From February 13ttt, 2008 she w.as,on Hospice with Providence Hospice andher care level shouldve have beenpa.id aceordinglyto her care needs.
1,- Hospice'Rate ior BasÍc'Rate: $S+Oo.oo2. Incontínence of bladder'Z003" InconËinence of bowetrs-'2004. \4/andering 3:00
5. Behavior managemenf' 50Ð
6, NighËtime care{ more than't¡øice a nÍght]'S'007,' z'o0-00B. 0.00
been $5700.00She was on level 3,çate frorn February 1-3ú Z'û08- till November 1-, 2008.
\Mhaf .sh.ouki be owed is app-roximately $ 2073,0CIfor 7 *onths l-4,51L.00,And for 9 months fi3774,A0"-33,966.00. * 48,477.A0.
LnYlVç \Iorn¿'Gvet
{ïrní5h
Plaintiffs Exhibit 14
1of1
t(')_)
SERêpplication Forrn
jlease nofify your worker if you need'to receive prinfed information i'n an'zt*ernate format such as Braille, Iarge print, audio tape or computer disc.{\ (SteformDHS 100Ð
2
SENIORS.dNÐPEOPLE WITHDISABILITIESContact Ðate lDate of Request û411017.0A7
Last ¡ame FRICIIA.RD Firsi ISABELL MIAddress 11850 S'W Allen Blvd C O Beaverton City Beaverton
Rehab
State OR Zip Code 97008 Telephone (503) 646-7164(TÏ)
Mailing address 14170 SW'Wiudjammer WayCity Beaverton State OR
Zip Code97005
Date of birth 08117/192,7. Social Sec. No. 540:24-4816
Marital status O e O manied O divorced O widowed OCitizenship O U.S. citizen O Non-citizen GenderOM OF
arated
?o Ono Blind? O OnoI live in O house ' O room and board O adult foster home
O apartrnent O nursing faci.lity O other (speciff):
Date sent04/17/2007
Case numberHH37668
Veteran? C yes . O no O Spouse is or was a vetemn
Name of veteranAlbert R. GardnerPrime numberRF3OOUTD
)^lt
clairn no.ed from
Ser-vice no. Date of birth08/17/t922through
RegisteredNativeAmer-ican?. O yes .O no
Membcr r*Iârtre . Tríbe naroe/number
Do y.ou intend to stay in Or.egon? @ yes O no
ffi i¡li,i;irTr'.*.r"Ë.$,i,.#låTffi@ Medicai assistance C Food Benefits O Services
ProgramA1
Branch Code34tlWorker IWW}IITE,JACKIE TI{ow many people live with you?(} (Líst tlzenr belot+,, use extrapaper if needed)
Last na:ne First MIDate of birih Sociai Sec. No. GenderO I\4 O F
Phone #(s03)'46e-2063
C U.S. citizen O non-citizen
Disabled? Oyes Ouo Bli¡rd? Oyes Ono Ðate Received
Do intend to tn ?o O rro
Are they applying for benefits? O yes
O MedicalAssistance O FoodBenefi.tsOnoO Services
z Department of l{uman Services (DHS) will not discÍìmtnate against anyofte. This means DHS wiltalÌ who qualify..DHS will not detty help to anyone based on age, rûce, color, natíonal ortgìn, sex,
sexual ortentatíon, relígíotr, political beliefs or disabílift-Page 1 ptaintiffs Exhibit 15
1 of11
;,TOl{
Ä Last raiTl€ GARDNER Firstname RICIL4,-II -, Initial(sAddress 141,7A S'W Win anrmer Vy' 3
Cily Beaverton State OR Zip 970ts, Tel Nmbr
t This person OPower of Attorney OAlternate Payeeislhas: @AuthorizedRepresentative OGuædian/Conseryato¡
CEmergency Contact
ChiIdHyou indiqated an authorized representative or alternate payee, that person rnusf sign in the space below:SignaËure Date
I, or other applicants, are receiving or have applied for money from the following:(check aIl ìtems that apply and prov íde ínformation)
Source Receive
@
Appliedfor Recipient and claim nurnber Amount
Social Benefits O TSABELL $1 6.s0Oyes O nof, or other applicants, have m iqiury insurance clafun.
If yes, glve the person(s) and dates of below and complete DIIS 451 fonn.
I, or otlier âre s
or other are on strike,'
)¡s to eTther of the above questions, cornplete the following:
Uo
no
no
oo
Narne of PersonAddress
State Zip Code Telephone
Pay Type O hourþ C salaried Gross payperpayperíod talce home pay) $Pay period Q Every 2 weelcs C monthly O Twíce a month O O not
have sb orPrevious
Date of finai pay Amount of final pay $
Date last worked
)
,.(
)
"PRICHARD, ISABELL"Ptaiñtiffs Exhíbit 1s
2of11
Page 2
.-.Se .:,i.. i::;,'.¡
:.:i ..... .. :.. ...:. ¡| t:. . - . -.. n.q.ÌL...1:.' . .=_-...:í.ì:r.' :' . .;; :,: .::... . :,Si|tfifj.;i r'':. i' 1r..:¡.' ..-.., .: : :-.i,_.:'_;i_-.-......i.-ì.-:jì:ï ;,-_-,:'.
f, or other applicants, own or havc a share in the following itern(s)-'çlzeck
ítems below and about il,¿etn.T Location and accounf number Oryner
h onHand
4
fsAmounf/value
$Held for You by Others e
Ch.ecking Account w u Mutual Bank 393-4''IPRICIIARD, ISABELLS 1,,74j.j3Savings Account $Stocks $
Bonds $Money in Safe DepositBox $
Sales Contract $Estate Fund $Retirement Fund $Time Certificate of Deposit $PI firnds $Securities $T& A account $TrustFund $
I, or other applicants, owr or are buying the following itein(s): automobile, truclÇ, rnotoroycle, boaf,othêr rnotoïized vehicle, trailer, tools of trade, farin or business equipment, livestoclc, or tirnber
, list below. Use additional paper if necessary Oyes O no
Owngr Malce, Model and Yea¡' Value A¡rount owed
$ $
Plaintiffs Exhibít 15
3of11
*PRICHARD, ISABELL'' Page 3
T, or other applícanls, otvn or alu ouying or have a share in a house, m.t,r-.rile horte, condominium or5or buildÏng. C yes @ no If yes, list below.
A eof O FIouse O Mobile home O Condominium O Other/ Is this
Address
a estate O Ono(
Siate Code
Use ofpropertyOwner
Valueincluded in Fire insurance Real estate taxes
I, or otirer applicants, have sold, traded, given arvay ot transferred to or from a trust any of the following:personai properry, casi¡ real properly (land or building or lifs estate interest) or the proceeds from a home
oqrify loan v¿ithin the lest 60 rnonths (or withinthe last 3 months for Food Benefit appiicanis).
This includes transfers tesulting from a divorce. O'yes @ no
Froperfy description Transferdate
Value attransfer
Arnountreceived
A¡nount ' Amount recrdowed to ou month
$ $$ $
Is the trust revocabie? O Yes O no
Attorney's nameTa
Page 4Plaintiffs Exhibit 15
4of11
"PRICHARÐ, ISABELL"
, *ffi Ê¡*ti u i""" n [,e¡a,g¡qtp, .,'" :,i..,, , -,'-, -: i:;.,lrTtHlili,-I, or other applicants, have a prepatd funeral plan or burial trust, includirig money left with others to cover'
6o es @no If the
efson Anount $
State Code
Is it inerrocable? O CnoI, or othet cants, otfllì or arn burial S (_,J @no theal Purchase ce$AddressStæe Code
or other have a will. O @ no lfyes, colD the
AtÈorney's namellocafion of willAddress Cify
State Zip Code. Telephone'ti;i".Ë;' iiuiii':"'+i';.1., iî..j.i .1".":,?r:i'
I, or other applicanþ have life or burial insurancflyes . @ no If1,eq, goryrplete tlr.e þllo'wirzg:A O Whole Life O Tenn O Burial Face value $ Cash value g
Person insured
Bno
AddressZip Code Telephone
Page 5 Plaintiffs Exhibit 15
5of11
"PRICHARD, ISABELL"
'I, or'other applicants, are renting or paying a share toward housing Q y.s O no7If yes, monthly payment Paid to
f qr other or costs
' other applicants, have the following utility c.osts{
fi'orn the rent or
How often due
Oyes Cno
urili Amountrate *
SewGarbage
ElectricityGas
lnitial Installation
Other Shelter Expense
I, or ofher applicants, receive hèlp towar-d housing and utility payments, rnedical cost, or dependent
care cost O yes @ no If yes, Iist belor,v.
Ferson who Item Howoften Amount
I, or othel applicants, are paying rnedical costs for people who iive in the household and are 60 lre¿xr uo¿older or
^re diÉabled. (Proof of medical cosfs mustbe given.) Ifyes, listbelow.
[tem Person czre Amount often dueHealth Insurance PRTCH.A.RD ISABELL $60.00
PRTCHÁ.R} ISABELL $93.50t' Services
JÈ-
D ÏIeat Glasses
for Medical Car-e
Prescription DrugsOver the Counter
Medical Services
Client Pay ltr
,'PRICHARD, ISABELL"Plaintiffs Exhibit 15
6of11
Page 6
If, you -e applyixrg for F'ood E. 'fits onlv,go to SecÉion 14.
Otherv,ìse coruthtue on this page,
fs;t-,ii
SER
8
-"-::ji ::: :Il; ur other applicants, have any of the folÏowing health coverage: basic zurd rnajor medical, drug plan,
.hospital, surgery, dentaJ, visual, health tnaintenærce organization, long-term care) Medicare, or Medicare
Supplernents. @yes Ono
lfyes, provide informatiou below on all policies and copies of the front and baclc of ail insurance cards
(medical, dental, , vision and long tertn care.
A CornpanycMs Policy no. 54t24.4816 Premium $ 93.50
P ersons covered PRICIIA-R.D, ISABELL Type i\4edicare Part A & EAddress11
Beginning date of coverage
State ^lr,-uus Tel
E CompanySecure Horizon Poiicy no. 0278665-01 Preinium $ 60.00
Pers'ons covered PRICHARD, ISABELLAddress
e [ilVIû
State Zi Code T 0 533-2743
Begirrning dafe of covetage L2lt7l2,tt6
cafe
Doctor SIIENOY, R/.GHUVEER B
):,ddress L2,442 S'W SHLS FRY 6
TIGARDPatient PRICIIARÐ, ISAEELL
StateOR Code97223 - 0000 230-6464 x û0000
I, or other applicants, Jlave unpaid medical bills for medical care received during the last 90 days.
Oyes Ono
Pzge 7 Plaintiffs Exhibit 15
7 of11
"PRICHARD, ÍSABELL'
' Do the people living with youpurchase andprepare rneals withyou? O yes O no9'\,ist dependent students between 18 and 50, except those r.vho are in high school or a
ol compietion program.
proglam Hours of class per weekTuition, mandatory fees, cost $
Total amount of scholarshi or loans $
MontJrs covered by grants, scholarships ol loans
I, or other applicants, æe paying dependent care for a child or disabledpÊrson so ofüer people in the
household ban work, go to haining, or look for ajob. O yes O no If yes, cornplete the following:
Person cared for
How often. Amount$
Caregiver
Address ' i-
Cíty State Zip Code Telephone
I, or other applicants, are paying legally-binding child support pa)¡fients
[f yes, entel amounf $
o yes() no
flth help determine compliance,4r'+6 considering your application
We ale atthorized to aslc for this infonnationunder Title VT of the Civil Righis Act of 1964.
For eihníci'ty cÌzoose one: C Hispanic or Latino @ Not l{ispaníc or Latino
For røciaÍ Iteríløge choose one or rÍioÍ.e: O Blaci< or AfricanArneribao O Asian O WhiteC Amelican Indiarr or Alaskan Native C Native Hawaiian,/ Paci.fi.c Islander O Other / Uulcnown
Plaíntiffs Exhibit 15
8of11
"PRICHARD, ¡SABELL' Page 8
rying im¡'rnf,i¡rfo4¡¡-ra{i"ou.carefully:-,-..:i_--'.Y-_ .re
, -..¡i:-.:'':.: .. i¡
10'The informatiou ),ou provide on this for-m rvill. be subject to verification and rer¡ierv by federal, state¡od local offtcials arrd through the state ircome and eligíbility verification system. This information, F also be subrnitted to the Imrnigration and Natulalizatiou Service (Il{S) for verification.t
"Á.ssigning" p4ymenfs -
To quali$r for public assistar:ce, you nr.ust ler DHS have any mouey you receive, or have the right toreceive from: l) private health insurarce, and 2) otJrel people or other solrÍces who arg or may be,liable lo co\¡er costs paid b), DHS related to an iujury.
By signing this folin., you agroe to "assign" to.DHS all dghts to ihese payrnents for anyone rvho is.coveted by youl pul¡lic assistance. That rnea¡rs yourself and other fanrily nrembers (including unbourðhildreÐ,
By sígningthis,foun, you agree to ireip DHS find and obtain thesepaynrents, There is a lirnit on horvmuch DHS can talce in pa5,66n1s, It carurot take fiIore than the amount it has paid in assistance for youandyour family.
You aiso agïee that medicalproviders, hospitals, employers and gotremnrent agencies can releasemedical records to insurance coinpanies. This covers records about you and other family mernbers onrnedical assistance. Tliis will only be done foi the purpose of getËing payment.
$you have ofher insurance.f you or a r:r.ember of your farnillz has other nredicai insútarce, teli the provider (doctor, ciinic or
, ÞituÐ before you get care. They must bill tire othel insurance conipany before they bill DHS.
If EHS pays a rnedical bill that should have been paid by insurance, it will take action to get its moneybaclc. For example:
. If DHS pays a bill thatprivate insurærce should have paid ÐIIS wiil try to get the rroney lrack fromthe ínstira.n ce colnpany.. If DHS pays a bill and the providel also gets paid by an insura:roe cornpary, DIIS will try to gct itsßLoney back ftoru the provider.
' If DHS pays a medical or selice bill and an insurance company sends you a check for it, DHS willtry to get its money back ftor¡¡'su,
Plaintiffs Exhíbit 15
9of11"PRICHARD, ISABELL'' Pa.ge 9
' Fenalties in the Food Be..cfits program
lf you do Éhe following... You will lose I'ood Benefits..." 12 months for the frst offense. 24 months for the second time. Perru-anently for the third time
. Trade Food Benefits for conholled substances such as drugs . 24 months for the first offense. Permanently forthe second time
. Trade Food Benefits for fiTearms, ammunition or explosives . Permanentþ
" Trade, buy or sell Food Benefits of $500 or more Permanently
' Give false i¡fonrration about who 1.eu are and where you live so youcai gei extr-a Food Benefi.ts
. 10 yeais for each offense
You can also be firredup to $250,000 or put in prison for up to 20 years, or both, for doingthese things. You may also be charged under other Federal laws.
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Hide information or mai<e false statementsrUse
EBT cards that belong to someone else
Use Food Benefits to buy alcohol or tobacco
Tlade or sell benefits or EBT cards
Why we need your Social Securify NumberWhen ybu apply for benefris, )¡ou must give proof of the Social Security Numbels for you and the otherpeople who want.benefits. Federal law (42USCI320b-7,42CFR435.910, and 42CFR435.920) requiresthis infonnation be provided..Your Social Security Nurrber helps DHS f,rgure outr,vhich benefits youcan get. It is used to check incorne and other assets.It also helps us checlc other state and federalrecords such as IRS, Medicaid, Social Security and Unenrployment benef,rts.
!¡ lial Securíty Nurnbers also help DHS gather information about \¡1ages and wollc history for research.
. ! helps improve servióes in the future. You do not have to be pæt of this research. Yóu cannot bedenied benefits or'seryices if you do not want to talce part in research.
EsÉaÉe claln sÉsÉemenÉBy signing this form, youunderstand that the Deparirnent of Hutxan Services may take money f,rouryour eslate (as defined in ORS 414.105). The amountthat can be t¿lcen is generally equal to the zunountofmedical beue.&ts (ìrLcluding loug terurr care) that you received after age 55.
Thís includes capitation payments made on your behalf through the Oregon Health Plan to a rnanagedcare provider, regardless of the amount of medical care actually provided.
If you ar'e pelnranently insliiltionalized (as defined in OAR.46t-135-0ÈlZ¡ at the tirne of your death,medical benefits that were paid prior to age 55 may be recovered. Recovery can occur with some cash
benefits received at any age, includingpayirients made for prescription dlug benefits i'equired underMedicare Part D coverage.
Plaintiffs Exhibit 15
10of11
"PRI'HARD, ISABELL" Page 10
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\ understand the person rvho signs this form rnust l'epay benefÏts to DHS when there is an overpaymentrt1 tî! case. I understand sorne ntedical services and equiprnent require prior authorization €A) by
'ious DHS agencies or my managed care plan before they can be delivered.t
I authorize release of rny ciiild support recolds fiorn the Oregon Departrnent of Justice, Ðivision ofChiid Supporl, to DHS or A.AA staff.
I understand tire questions on this applícation. Estate claims a¡.d medical assignment inforrnation hasbeeir explained to rne and I understand the explanation. I also understand the penalty for hiding
pinforrnation, giving false infonnation or brealcing any of'the rules listed in thepenaþ wanring. ISsffiun, under penalty of perjury, that rny Blswsrs aïe corect and complête to the best of rny
knorviedge, I understand thatl may have io give DHS documents to prove rvhat I have said.
If I appoint an authorized representaiive or alternatepayee, f untierstand that if ny aufirouzedrepresentative gives rvroÊ.g ol iircompiete infonnation so my household ge{s too marry benefits, I rryillhave fo pay baclc what I sirould not har¡e received, I understand thatrny.aiternatepayee t¡as fi;ll accessto use iny benefits. I cannot get those benefrts replaced if this person uses fhem without my permission.
I and ûty spouss agreÞ that for any aanuity that we report, ihe Ðeparti:aent of Hurnan Services r¡¿illbecome a b'eneficíary.
I have-read and understand my righÉs and responsibilities as explained h.bove and in Éhe SDS\539R, and f have a co of the form.
Signature o ofhousehold Ðate
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Plaintiffs Exhibit 15
11 of 11
"PRICHARD, ISABELL" Page 11
CranO\ ,' loernTY DAMAGE oR L$ifu. -Angelina Rodriguez - MR -10/25ll 1
13
Victim Assistance cio Washin.gtgl 9.:lntY Ðistrict Attorney's Office
rso Ñ. Fírst qvenue, suile 300, MS 40, Hillsboro, oR 97124'" "'phon*t
(503) 846-8671 FAX: (503) 846-3407
Def(s): RtcHARD DUANE GARÐNÉR / 11-328[
NameAddress
CltY/State/ZiP
Phone: {home}(wotk)
l(aren Lee Nichols-shtetds
NOTE: lf You wantthe judge io order lhe defendant to pay restifution you must provide us proof of y'our loss, if available'
1) Ptease detail the monetary losses You have incurred as a'result bf tlris cl{me. Líçi only those ìterns that were nct
recovered bY the PofÍce or tha'f were damaged. Please enclose documeniatÌon, guch as copies of bills, receiPts, and
ínsurance claÌms.Descrlption of ltem arrdfor oamage Valqs of ltem or Cost of Repãlr
additional that You incu as a resuli of ihfs crinre.
TOTAL LOS,Ë:
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Clãlm No'lnsurance GomPatU . .,-
Clalm Adjustor
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Pteasecheckpr¿}perbox".signand.dateforrt¡.ReturntoVictlnrAssistance.
E Defe¡dani's insurance has paird all expenses'
don't,
Plaintiffs ="nrtO'p4
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EXHIBITA
State v. Richard Duane Gardner - C112363CR (DA 11-3788)
Estate of lsabell Ann Prichardc/o Karen Nichols-ShieldsP.O Box 2624Gearhad, OR 97138
Larisa Louka9055 SW Beavedon-Hillsdafe Hwy Ste BPortland, OR 97225
fffioX r¡runl fir1lrzoli
Estate of lsabell Ann Prichard losses:Page 1 (supporting documentation pgs" 9-17) - $t,ZtPage 2 (supporting documentation pgs. {B-24}- $ZePage 3 (supporting documentatÍon pgs. 25-30)- $¿ZPage 4 (supporting documentation pgs" 31-36) - $10,Page 5 isupporfing doeumentation pgs,37-42) - $Page 6 (supporfing documentation pgs. 43-48) - $8,Page 7 (supporting documentation pgs" 49-54) - $t
pgs. 55-60) - $Zg,
- #48,477
$195,710.11
$48,477.00
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IN THE COURT OF APPEALS OF THE STATE OF OREGON
LARISA’S HOME CARE, LLC an Oregon Limited Liability Company,
Plaintiff-Respondent
v. KAREN NICHOLS-SHIELDS, the duly appointed Personal Representative of the Estate of Isabell Prichard, deceased,
Defendant-Appellant.
Washington County Circuit Court Case No. C124865CV
CA A154950
___________________________________________
APPELLANT’S REPLY BRIEF
___________________________________________
Ross A. Day, OSB No. 002395 DAY LAW GROUP, PC 15055 SW Sequoia Parkway, Suite 170 Portland, OR 97224 Telephone: (503) 747-2705 E-mail: [email protected]
Attorney for Plaintiff-Respondent
Hafez Daraee, OSB No. 932484 LUBY/DARAEE LAW GROUP, PC 7455 SW Bridgeport Road, Suite 200 Tigard, OR 97224 Telephone: (503) 766-4772 E-mail: [email protected]
Attorney for Defendant-Appellant
Filed – June, 2014
June 18, 2014 09:30 AM
ii
TABLE OF CONTENTS
APPELLANT’S REPLY BRIEF .................................................................................................. 4
I. Reply to Respondent’s Answer to First Assignment of Error ................................... 4
A. Argument .......................................................................................................................................... 4 1. OAR chapter 411 applies and bars equitable claims ................................................................. 4 2. Whether ORS 411.630 provides for an equitable remedy is immaterial. ......................... 7
II. Reply to Respondent’s Answer to Second Assignment of Error .......................... 13
A. Argument ........................................................................................................................................ 13 1. Ms. Prichard received a benefit, but it was paid-‐for in full. ................................................. 13 2. It would not be unjust to allow Appellant to retain the benefit because the
Respondent was paid in full. .................................................................................................................. 15
III. Conclusion ............................................................................................................................ 16
iii
TABLE OF AUTHORITIES
CASES
Atkeson v. T&K Lands, LLC, 258 Or App 373, 382-383, 309 P3d 188 (2013) ............................................................... 12 F.D.I.C. v. Smith, 328 Or 420, 429 (1999) ...................................................................................................................................... 7 F.D.I.C. v. Smith, 328 Or 420, 429, 980 P2d 141 (1999) ....................................................................................................... 12 Olszewski v. Scrippshealth, 135 Cal.Rptr.2d 1, 19 (Cal. 2003) ............................................................................................. 5 Yanez v. Jones, 361 F.Supp. 701, 706 (1973) .............................................................................................................................. 5
STATUTES
42 U.S.C. § 1320a-‐ .................................................................................................................................................................................. 5 42 U.S.C. §1396a(a)(25)(C) ............................................................................................................................................................... 5 ORS 410.070(1) .................................................................................................................................................................................... 13 ORS 411.630 ................................................................................................................................................................................. 7, 9, 10 ORS 411.795(3) .................................................................................................................................................................................... 10
ADMINISTRATIVE RULES
42 C.F.R. § 447.15 .................................................................................................................................................................................. 5 OAR 461-140-0220 ................................................................................................................................................................................ 5 OAR 411-050-0615 ................................................................................................................................................................................ 5 OAR 411-050-0615(1)(d) ............................................................................................................................................... 4, 13, 15, 16 OAR 411-050-0615(3)(c) ..................................................................................................................................................................... 9 OAR 461-140-0220(8) ........................................................................................................................................................................... 5 OAR Chapter 411 ........................................................................................................................................................................ 4, 6, 17
RULES OF APPELLATE PROCEDURES
ORAP 5.05(2)(b)(ii) ............................................................................................................................................................................ 18
4
APPELLANT’S REPLY BRIEF
I. Reply to Respondent’s Answer to First Assignment of Error
The trial court incorrectly concluded that the OARs did not prohibit
Respondent from bringing an equitable claim for unjust enrichment.
A. Argument
1. OAR chapter 411 applies and bars equitable claims
OAR Chapter 411 bars Respondent’s claim because the language of that
regulation evidences an intent to preclude equitable remedies. More
specifically, two separate provisions lead to this conclusion.
First, OAR 411-050-0615(1)(d)1 states:
“[t]he rate of compensation established by the Department is considered payment in full. The licensee may not request or accept additional funds or in-kind payment from any source.”
By expressly barring a provider from recovering additional funds, this
regulation makes it clear that funds received pursuant to an Adult Foster Home
Contract are limited to the amount of payments authorized by DHS. Further,
the regulation’s declaration that a provider has been paid in full if it receives the
amount established by DHS demonstrates that OAR 411-050-0615(1)(d)
1 Renumbered from OAR 411-‐050-‐0435(1)(d).
5
intended to preclude recovery of additional funds.2 Any contrary interpretation
of this regulation would lead to an erroneous result. More specifically,
permitting any additional recovery under this regulation would result in the
Respondent itself being unjustly enriched.
Second, OAR 461-140-0220(8) seeks to further protect a patient from
erroneous equitable claims. This regulation states that a transfer of assets is not
disqualifying in the context of determining eligibility to receive aid, if “[t]he
client was a victim of fraud, misrepresentation or coercion and legal steps have
been taken to recover the asset.” Such a statement evidences an intent to
prevent recovery of additional money from vulnerable patients such as Ms.
Prichard. Permitting providers such as Respondent to seek after-the-fact
recovery under the guise of equity would frustrate the purpose of the protective
function the Medicaid rules and regulations afford vulnerable patients. Put
simply, OAR 411-050-0615 and OAR 461-140-0220 unambiguously provide
that additional recovery under any equitable theory is simply not permitted.
2“Payment in full” provisions, or “balance billing,” are an essential part of Medicaid payment. See 42 U.S.C. §1396a(a)(25)(C); 42 C.F.R. § 447.15; 42 U.S.C. § 1320a-‐7b(d). Other jurisdictions have enforced such provisions, recognizing that failure to do so “jeopardize[s]…the right to good health….That right is seriously compromised if providers are able to charge extra to recipients entitled under such provisions to services fully paid for by the government.” Yanez v. Jones, 361 F.Supp. 701, 706 (1973); see also Olszewski v. Scrippshealth, 135 Cal.Rptr.2d 1, 19 (Cal. 2003).
6
In its brief, Respondent concludes that the OARs “do not eliminate a
private right of action in equity.” Resp. Br. at 15. Rather than cite to more
conclusive evidence of the legislature’s intent, Respondent simply refers this
Court to see OAR Chapter 411 generally. Moreover, Respondent seems to
suggest that the OARs “do not apply” in this case. Resp. Br. at 15. At trial,
Respondent established that it was a Medicaid eligible provider and that it had
entered into an Adult Foster Home Contract with DHS that authorized it to
provide services to Medicaid Patients. Tr. 238-240; ER 3-6. Because
Respondent was a Medicaid provider and Ms. Prichard was deemed by DHS to
be a Medicaid eligible recipient, OAR Chapter 411 necessarily applies.
Moreover, there was no evidence at trial (written or oral) proving, or even
suggesting, that DHS had changed its eligibility determinations as to Ms.
Prichard and had concluded she was ineligible for Medicaid benefits. Put
another way, it is an undisputed fact that at all times material to this case, DHS
had determined that Ms. Prichard was eligible and was qualified to receive
Medicaid benefits. Accordingly, these regulations apply to Respondent and bar
Respondent’s claims.
7
2. Whether ORS 411.630 provides for an equitable remedy is immaterial.
Respondent’s reliance on ORS 411.630 for the proposition that equitable
remedies were intended by the legislature is also misplaced. Without
explaining how, Respondent simply states that it “tends to suggest equitable
remedies are available and proper.” Resp. Br. at 16. What Respondent fails to
consider, however, is that this statute is wholly inapplicable in this appeal. As
Respondent correctly points out, it is illegal to fraudulently obtain public
assistance. At trial, however, the evidence established that Appellant had not
engaged in any conduct that violated this statute. The undisputed facts at trial
established that it was Richard Gardner’s illegal conduct—stealing his mother’s
money—that resulted in Ms. Prichard becoming Medicaid eligible. As argued
in her opening brief, Mr. Gardner’s illegal conduct cannot be imputed to
Appellant here. F.D.I.C. v. Smith, 328 Or 420, 429 (1999). Respondent’s
suggestion that Appellant engaged in fraudulent or otherwise illegal conduct is
both factually and legally incorrect.
The record reflects that Appellant did nothing illegal. In fact, the Trial
Judge very clearly stated so during her ruling at the conclusion of trial:
The Court: Through no fault of the plaintiff’s own, she took Ms. Prichard in as a Medicaid resident because her personal representative clearly committed fraud. It is no mistake that he did so…
8
Mr. Daraee: Your Honor, Hafez Daraee. One – one point, I want to make sure that – and this goes without saying, that the fraud you’re talking about has nothing to do Ms. Nichols-Shields. It’s about her brother that committed the act.
The Court: Yes. I – I don’t – I do not believe that the
evidence that was presented can be shown to any certainty that your client was part of it…
Tr. 338:2‒6; 339:3‒11 (emphasis added).
Besides the factual inaccuracies Respondent advances, Respondent’s
conclusion implying that Appellant’s acts were illegal as a matter of law is also
flawed. Appellant acknowledges that she intended to engage in legitimate
Medicaid planning for Ms. Prichard through the use of gifting. This activity is
not illegal, and the Respondent’s own witness, Garvin Reiter, a lawyer and an
expert in Elder Law, acknowledged as much during trial. During cross-
examination, Mr. Reiter testified as follows:
Q: Now, you practice elder law obviously. Is it fair to assume that a person who steals from an elderly person who doesn’t have the cognitive ability to understand what’s going on around them is basically committing elder abuse?
A: Well, I mean, if – I mean, I’d – I’d have to say yes. I
mean, if somebody is – if – if the hypothetical situation’s that somebody is just not competent and really unaware of what’s happening and somebody else is – is taking their funds, I would say that there is a carve-out under the elder abuse statutes for Medicaid planning. So it’s not elder abuse under Oregon law to do – do Medicaid planning. And it’s very common for people to use
9
powers of attorney and other estate planning tools to – to transfer assets on behalf of incapacitated people expressly for the purpose of doing Medicaid planning.
Q: So thank you for saying that. Let me take that–take it a
step further. So let’s say the look-back period is five years. And I can’t do math in my head, so I’m going to go with easy numbers. Let’s say today is 2010. I know it’s five years. So I start gifting money–you know, my dad’s money, let’s say. And then in 2015 some of that money is not subject to the transfer restrictions, correct?
A: That’s exactly right. Q: And there’s nothing illegal about that, is it? A: Well, it’s illegal if it’s elder abuse. And so there’s a
question of fact if it’s just basically elder abuse or theft or whether it’s bona fide Medicaid planning. If it’s bona fide Medicaid planning, that’s not illegal.
Tr. 153:16-154:25 (emphasis added). The record clearly demonstrates that Appellant’s actions were for a
proper Medicaid planning purpose, and Appellant had no part in the fraud
Richard Gardner perpetrated. Because the record clearly indicates that
Appellant did not engage in any fraudulent conduct, ORS 411.630 does not
apply and any consideration of whether fraudulent conduct supports a claim for
an equitable remedy is irrelevant.
Respondent suggests that OAR 411-050-0615(3)(c), which permits
recovery of overpayments by residents, would allow a provider to recover an
underpayment if a patient was not eligible for Medicaid. Although this
10
argument may be novel, like ORS 411.630, it is irrelevant in this case. DHS
never reversed or revoked Ms. Prichard’s Medicaid eligibility. Moreover, any
conclusion by the Trial Court that Ms. Prichard was not Medicaid eligible was
not only a collateral attack on DHS’s exclusive right to establish and to apply
eligibility criteria for Medicaid services, but also outside the jurisdiction of the
trial court. Again, Respondent’s expert, Garvin Reiter, acknowledged this at
trial:
Q: And would you agree with me that Medicaid eligibility is exclusively with the State of Oregon? In other words, you and I can agree that a person may or may not be eligible, but ultimately it’s the state of Oregon who makes that determination, correct?
A: Yes.
Tr. 155:9‒14. Because Ms. Prichard was never deemed to be ineligible for
Medicaid, Respondent cannot rely on such an analogy.
Respondent erroneously interprets ORS 411.795(3) as well. That statute
seeks to protect victims of fraud from further losses; it is not intended to create
a private right of action to enforce the Medicaid statutes as Respondent implies.
Mr. Reiter trial testimony also supports the inapplicability of ORS 411.795(3):
Q: Can I, as an unrelated third party, bring a lawsuit against you directly for Medicaid fraud or Medicaid abuse under Oregon law?
A: No. I mean, Medicaid fraud would be a crime, and so it
would have to be a prosecutor that would do that. And if
11
we’re talking about some sort of a civil action, again, that would be – that would be the attorney general. Department of Justice would have to bring that sort of a civil suit, so I think the answer’s no.
Tr. 157:4‒13.
But even if the OARs do not expressly preclude an equitable remedy,
Respondent in this case precluded itself from pursuing one by failing to first
pursue its legal remedies.
Respondent could have, but did not, pursue claims against Mr. Gardner.
Mr. Gardner was convicted in connection with this case. Tr. 266:6‒11. Mr.
Gardner admitted to misrepresenting Ms. Prichard’s finances to Respondent.
Tr. 280:18‒21. Respondent knew of Mr. Gardner’s illegal conduct well before
the statute of limitations on its direct tort claims had expired, but chose to do
nothing. Now that its direct claims against Mr. Gardner are time barred,
Respondent seeks recovery in equity claiming it has no adequate legal remedy.
The problem for Respondent, however, is that its failure to exercise a legal
remedy does not amount to lack of an adequate one. Accordingly, Respondent’s
failure to exercise its adequate legal remedy does not now permit it to seek an
equitable remedy.
Respondent also suggests in its brief that the agency relationships
between Appellant, Mr. Gardner, and Ms. Prichard are irrelevant. Respondent’s
dismissal of the agency relationship misses the point. The mere fact that an
12
agency relationship existed between Mr. Gardner and Ms. Prichard is critical.
As discussed in the Opening Brief, it is well-settled law that illegal activities of
an agent cannot be imputed to the principal, if those actions were outside the
course and scope of the agency relationship. F.D.I.C. v. Smith, 328 Or 420,
429, 980 P2d 141 (1999); Atkeson v. T&K Lands, LLC, 258 Or App 373, 382-
383, 309 P3d 188 (2013). Simply put, Respondent had a direct claim against
Mr. Gardner and could have recovered damages from him via a number of tort
theories. Respondent’s failure to pursue its legal remedies against Mr. Gardner
does not now give it license to seek recovery in equity against the Appellant.
Finally, respondent mischaracterizes Appellant’s involvement in Mr.
Gardner’s fraudulent activities. In its brief, Respondent claims this case is
about Appellant’s “coercion, conspiracy, and aiding and abetting Mr. Gardner
in [sic] intentionally defrauding Medicaid, and, by extension, respondent.”
Resp. Br. at 19. The problem for Respondent, however, is a complete lack of
any facts to support its assertions. And, it is undisputed that the Trial Court
expressly ruled that Appellant did not engage in any illegal conduct. Tr. 339.
Because Appellant did not engage in any illegal conduct, she cannot be held
accountable for Mr. Gardner’s actions.
13
The trial court erred when it improperly determined that the OARs did
not apply to this case, and found that Appellant was unjustly enriched. The trial
court’s ruling should be reversed.
II. Reply to Respondent’s Answer to Second Assignment of Error The trial court incorrectly concluded that Appellant was unjustly
enriched.
A. Argument
1. Ms. Prichard received a benefit, but it was paid-for in full.
Respondent is correct in its assertion that Ms. Prichard received a benefit
from the services it provided to her. The problem for Respondent, however, is
that the benefits Mr. Prichard received were paid-for in full. The record clearly
demonstrates that Respondent received the full Medicaid established rate of
payments for the services it rendered to Ms. Prichard. Tr. 211. The record also
demonstrates that Ms. Prichard was, at all times, eligible to receive Medicaid
assistance from DHS. The Respondent cannot ask the trial court to determine
Ms. Prichard’s Medicaid eligibility status, because DHS is the final and sole
arbiter of all Medicaid disability determinations. See ORS 410.070(1). And as
discussed above, OAR 411-050-0615(1)(d) deems Medicaid payments received
by care providers to be payment in full. Because Respondent was paid in full, it
follows that the Appellant could not have been unjustly enriched at its expense.
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The Respondent is partially correct in that the record demonstrates Ms.
Prichard received benefits, but contrary to Respondent’s view, the benefits Ms.
Prichard received were not a result of Appellant’s “conspiracy.” As the record
clearly demonstrates, there was no such conspiracy. Respondent’s continued
mischaracterization of the facts throughout its brief serves no purpose and does
nothing to establish the elements of its claim.
As the record demonstrates, Appellant intended to engage in legal
Medicaid planning. At trial and as discussed above, Respondent’s own expert
witness testified that Medicaid planning is both legal and common. Tr. 153‒54.
The Appellant took no action that could be construed as Medicaid fraud. She
made no fraudulent statements to DHS or Respondent. She filed no fraudulent
applications for benefits. Instead, it was Mr. Gardner who took these actions.
Because the Appellant neither engaged in nor knew of the Medicaid fraud
Richard Gardner perpetrated, she cannot now be held liable for Mr. Gardner’s
actions or saddled with consequences that flow from those actions. In other
words, Appellant’s innocent and legitimate attempts to plan for her mother’s
future needs cannot now be construed as a “conspiracy” to defraud Respondent.
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2. It would not be unjust to allow Appellant to retain the benefit because the Respondent was paid in full.
Respondent argues in its answering brief that the perceived “injustice”
here will “create a slippery slope, paving the way for other beneficiaries to
commit…Medicaid fraud.” Resp. Br. 23. Respondent warns that care
providers acting in good faith will bear the financial burden as a result of the
“misrepresentation of ill-intentioned beneficiaries.” Resp. Br. 23.
Respondent’s policy argument, however, fails to consider DHS’s dual role as
both the gatekeeper for determining Medicaid eligibility and as the agency
tasked with serving as the watchdog over Medicaid funds. DHS could have
reversed Ms. Prichard’s eligibility determination. It did not. The Respondent
could have sought review of Ms. Prichard’s Medicaid eligibility status. It did
not. Allowing providers such as Respondent to make after-the-fact eligibility
determinations in place of DHS would permit them to extort additional payment
from vulnerable Medicaid patients in contravention to OAR 411-050-
0615(1)(d). As previously discussed, DHS contemplated such a problem and
accounted for it in the regulations by declaring that payments made at the
Medicaid rate will be deemed payment in full.
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Respondent argues that there is no law barring the type of unjust
enrichment claim brought here. Respondent also argues that there is no legal
remedy with respect to Appellant or the Estate. Respondent concludes its
position by arguing that unjust enrichment is an available remedy. The problem
with Respondent’s syllogistic argument is that a lack of a legal remedy against
an improper party does not entitle the Respondent to an equitable remedy
against the same. The Respondent had, but failed to pursue, legal remedies
against Mr. Gardner. Its claims for reimbursement, as previously discussed, lie
solely with Mr. Gardner. Respondent cannot impute Mr. Gardner’s illegal
conduct to Appellant and Ms. Prichard in order to create an equitable claim
against them. To allow such a path to recovery would be “fundamentally
unfair,” and contrary to Oregon law. The trial court erred when it concluded
that Appellant was unjustly enriched, and it’s ruling should be reversed.
III. Conclusion
OAR 411-050-0615(1)(d) applies to Respondent, a licensed Medicaid-
eligible service provider, and because it applies Respondent cannot now recover
in equity for services deemed by DHS as paid-for in full. The undisputed
evidence conclusively established that DHS never determined that Ms. Prichard
had obtained benefits illegally, and as such Ms Prichard was never deemed
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ineligible for Medicaid. Respondent cannot ask the Court to revisit that DHS
determination.
When confronted by this complete regulatory bar, Respondent’s reaction
is to grasp for other sources of an equitable remedy. The Respondent first
asserts that it is left with no legal remedy and may only recover in equity.
Respondent is correct that OAR Chapter 411 bars recovery against Appellant,
but fails to acknowledge that it has no such effect on Mr. Gardner.
Respondent’s failure to exercise its legal remedies against Mr. Gardner simply
cannot serve as the genesis of an equitable remedy against the Appellant.
Respondent next suggests that Appellant’s relationship with Mr. Gardner is
evidence of her fraudulent behavior. The evidence, however, does not support
this conclusion, and the trial court explicitly said so. Finally, because OAR
Chapter 411 declares that payments by Medicaid are payments in full, it follows
that Respondent by definition cannot have been unjustly enriched.
The trial court’s judgment should be reversed because of the legal errors
it made when it concluded that plaintiff had been unjustly enriched.
DATED this 18th day of June, 2014.
/s/ Hafez Daraee __________________________
Hafez Daraee, OSB No. 932484 Attorney for Defendant
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Brief Length Certification
I certify that this brief complies with the word-count limitation in ORAP
5.05(2)(b)(ii) and that the word count of this brief is 3,008.
Font Certification The font used in this brief is a proportional font and is not smaller than
14-point type.
Certificate of Service I hereby certify that I served plaintiff’s counsel with a copy of
Appellant’s Reply Brief through the Court of Appeal’s E-File system, as well as
by email to counsel’s last known email address as provided in the Oregon State
Bar’s electronic directory, to wit:
Ross A. Day, OSB No. 002395 DAY LAW GROUP, PC 15055 SW Sequoia Parkway, Suite 170 Portland, OR 97224 Telephone: (503) 747-2705 E-mail: [email protected] Attorney for Plaintiff-Respondent
Dated this 18th Day of June, 2014. /s/ Hafez Daraee __________________________ Hafez Daraee, OSB No. 932484
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Attorney for Defendant-Appellant
