PETERS v. DEPT. OF SOCIAL SER., 273 Conn. 434 (2005)

870 A.2d 448

No. (SC 17311).Supreme Court of Connecticut.

Sullivan, C. J., and Borden, Norcott, Katz and Zarella, Js.

Syllabus
The plaintiff, who had been seriously injured in a motorcycle accident, recovered an arbitration award in the amount of $747,500 from the tortfeasor, which was reduced to $526,298.33 after deducting attorney’s fees and costs. The defendant department of administrative services claimed a lien in the amount of $70,590.72 against the award pursuant to the statutes (§§ 17b-93 and 17b-94) providing for reimbursement of medicaid and public assistance benefits previously paid by the state to the plaintiff. The plaintiff challenged the amount of the lien, claiming that it should be reduced by a pro rata portion of the attorney’s fees and costs that he incurred in the action against the tortfeasor. A hearing officer for the named defendant, the department of social services, upheld the full amount of the lien, and the plaintiff appealed from that decision to the trial court. That court dismissed the plaintiff’s administrative appeal, concluding that neither state nor federal law specifically requires the state to pursue actions against third parties to recover public assistance moneys, and that neither provides for pro rata reductions in medicaid lien amounts for costs incurred in procuring recoveries from third parties. On the plaintiff’s appeal, held that, although the trial court properly dismissed the plaintiff’s administrative appeal, it should have done so for lack of subject matter jurisdiction rather than on the substantive merits of the case, the plaintiff having had no statutory right of appeal from the decision of the department of social services with respect to the lien and, therefore, the hearing not having been a “contested case” as defined under the Uniform Administrative Procedure

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Act (§ 4-166 [2]); accordingly, the judgment was reversed and the case was remanded to the trial court with direction to dismiss the plaintiffs administrative appeal for lack of subject matter jurisdiction.

Argued February 14, 2005.

Officially released April 26, 2005.

Procedural History
Appeal from a decision by a hearing officer for the named defendant upholding a claim for a lien against an arbitration award granted to the plaintiff filed by the defendant department of administrative services to secure reimbursement of medicaid benefits previously paid to the plaintiff, brought to the Superior Court in the judicial district of New Britain, Tax Session, and tried to the court, Dunnell, J.; judgment dismissing the appeal, from which the plaintiff appealed to the Appellate Court, which denied the defendants’ motion to dismiss the appeal and, sua sponte, ordered supplemental briefing on the issue of whether the trial court lacked subject matter jurisdiction over the appeal for lack of a final judgment; thereafter, the appeal was transferred to this court Improper form of judgment; judgment directed.

Roger Lee Crossland, for the appellant (plaintiff).

Robert A. Nagy, assistant attorney general, with whom, on the brief, was Richard Blumenthal, attorney general, for the appellees (defendants).

Opinion
NORCOTT, J.

The plaintiff, James Peters, appeals from the judgment of the trial court dismissing his administrative appeal from a decision of the named defendant, the department of social services (department), upholding the state’s claim for a lien, which was filed by the defendant department of administrative services (administrative services), against an arbitration

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award granted to the plaintiff. On appeal,[1] the plaintiff contends that the trial court improperly concluded that the state was entitled, pursuant to General Statutes §§ 17b-93[2] and 17b-94,[3] to the full amount of its statutory lien for medicaid and public assistance reimbursement

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from the proceeds of the settlement of a personal injury

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action without a pro rata reduction for the attorney’s fees that had been incurred by the plaintiff in connection therewith. We conclude that although the trial court properly dismissed the plaintiff’s administrative appeal, it should have been dismissed on different grounds. We conclude that the trial court lacked subject matter jurisdiction over the plaintiff’s administrative appeal pursuant to the Uniform Administrative Procedure Act (UAPA), General Statutes § 4-166 et seq., because the administrative appeal did not relate to a “`[c]ontested case'” as that term is defined by General Statutes § 4-166 (2).[4] We, therefore, reverse the judgment and remand the case to the trial court with direction to dismiss the plaintiff’s administrative appeal for lack of subject matter jurisdiction.

The record reveals the following facts and procedural history. The plaintiff was seriously injured in a motorcycle accident. Having incurred medical bills in the amount of $280,000, the plaintiff received, from the state, medicaid assistance in the amount of $62,890.72 and general cash assistance in the amount of $7700. The plaintiff thereafter obtained an arbitration award in the amount of $747,500, reduced to $526,298.33 after deducting attorney’s fees and costs.

Administrative services subsequently notified the plaintiff that it was placing a lien on the proceeds of his personal injury case for reimbursement of the medicaid assistance and general cash assistance the state had

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provided, for a total lien amount of $70,590.72.[5] Thereafter, the plaintiffs attorney sent a letter to the department’s office of legal counsel requesting a hearing to challenge the amount of the lien, and stating his position that the lien should be reduced by one third for “attorneys’ fees incurred in the resolution of this matter. . . .”

Subsequently, the department held a hearing, which the notice of decision stated was conducted in accordance with General Statutes §§ 17b-60[6] and 17b-61,[7] as well as the UAPA. The hearing officer rejected the plaintiffs contention that “the amount of the [s]tate’s lien for accident related medical assistance [should] be reduced by [a]ttorney’s fees and costs pro rata by one third

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because the [s]tate had the opportunity to sue and it [did not] and saved that cost.” The hearing officer also concluded that the amount of the lien as calculated by administrative services was correct. Accordingly, the hearing officer dismissed the plaintiffs claim and ruled that the state could recover from the plaintiffs arbitration award the assistance payments in the total amount of $70,590.72.

The plaintiff then appealed from the department’s administrative decision to the trial court. The trial court concluded that, although federal medicaid statutes require that the states have a policy for recovering assistance moneys from third parties, neither federal nor Connecticut law require the state to “pursue third parties on its own.” The trial court also determined that neither Connecticut nor federal law provides for pro rata reductions in medicaid lien amounts for “costs incurred in procuring recovery from third parties.” Accordingly, the trial court rendered judgment dismissing the plaintiffs appeal. This appeal followed.[8]

On appeal, the plaintiff, relying primarily on Norwest Bank of North Dakota, N.A. v. Doth, 159 F.3d 328, 334-36
(8th Cir. 1998) (Heaney, J., concurring), and Wilson v State, 142 Wash. 2d 40, 49-50, 10 P.3d 1061 (2000), cert. denied, 532 U.S. 1020, 121 S. Ct. 1959, 149 L. Ed. 2d 755
(2001), claims that the trial court

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improperly concluded that the state was entitled to the full statutory lien without a pro rata reduction for his attorney’s fees. The department contends otherwise in response, and also claims that both the trial court and this court lack subject matter jurisdiction under the UAPA to hear the plaintiffs appeal because there is no “`[c]ontested case'” under § 4-166 (2) as the hearing was not required by state statute, but rather, pursuant to the settlement in DelVecchio v Freedman, United States District Court, Docket No. N-86-136 (D. Conn. March 23, 1987).

We begin our analysis with the subject matter jurisdiction claim and the applicable standard of review. “We have long held that because [a] determination regarding a trial court’s subject matter jurisdiction is a question of law, our review is plenary.” (Internal quotation marks omitted.) Nine State Street, LLC v. Planning Zoning Commission, 270 Conn. 42, 45, 850 A.2d 1032 (2004). Moreover, “[i]t is a fundamental rule that a court may raise and review the issue of subject matter jurisdiction at any time. . . . Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it. . . . [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction. . . .” (Citations omitted; internal quotation marks omitted.) Lewis v. Gaming Policy Board, 224 Conn. 693, 698, 620 A.2d 780 (1993); id., 699 (law of case doctrine did not preclude one trial judge from reexamining previous determination by another trial judge that subject matter jurisdiction existed). The subject matter jurisdiction requirement may not be waived by any party, and also may be raised by a party, or by the court sua sponte, at any stage of the proceedings, including on appeal. Id., 698-99; see also, e.g., Webster Bank v. Zak, 259 Conn. 766, 774, 792 A.2d 66 (2002) (“[t]his court has often stated that the question of subject matter jurisdiction,

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because it addresses the basic competency of the court, can be raised by any of the parties, or by the court sua sponte, at any time” [internal quotation marks omitted]).[9]

“There is no absolute right of appeal to the courts from a decision of an administrative agency. . . . The UAPA grants the Superior Court jurisdiction over appeals of agency decisions only in certain limited and well delineated circumstances. . . . Judicial review of an administrative decision is governed by General Statutes § 4-183 (a) of the UAPA, which provides that [a] person who has exhausted all administrative remedies . . . and who is aggrieved by a final decision may appeal to the superior court. . . . A final decision is defined in § 4-166
(3) (A) as the agency determination in a contested case. . . .

“A contested case is defined in § 4-166 (2) as a proceeding . . . in which the legal rights, duties or privileges of a party are required by statute to be determined by an agency after an opportunity for hearing or in which a hearing is in fact held. . . . Not every matter or issue determined by an agency qualifies for contested

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case status. . . . [W]e have determined that even in a case where a hearing is in fact held, in order to constitute a contested case, a party to that hearing must have enjoyed a statutory right to have his legal rights, duties or privileges determined by that agency holding the hearing. . . . In the instance where no party to a hearing enjoys such a right, the Superior Court is without jurisdiction over any appeal from that agency’s determination.” (Citations omitted; internal quotation marks omitted.)Lewis v. Gaming Policy Board, supra, 224 Conn. 699-700, quoting New England Dairies, Inc. v Commissioner of Agriculture, 221 Conn. 422, 427, 604 A.2d 810 (1992).

In Lewis v. Gaming Policy Board, supra, 224 Conn. 694-95, the executive director of the gaming policy board had terminated a state lottery supervisor for insubordination. The supervisor received an initial pretermination hearing before the executive director, and a second hearing before the board, which approved the director’s decision to terminate him. Id., 695. The supervisor then appealed from that administrative decision to the trial court pursuant to General Statutes §4-183 (a) of the UAPA, and the trial court dismissed the administrative appeal. Id., 696.

On appeal, this court stated that, “[e]ven if the plaintiff did have a legal right or privilege in continued employment with the division, and even if that right or privilege was terminated in a deficient proceeding before the executive director and the board, the plaintiff still cannot prevail unless the defendants were statutorily required to determine the plaintiffs legal right or privilege to his continued employment in a hearing.” Id., 700-701. This court affirmed the trial court’s determination that it lacked subject matter jurisdiction for lack of a “contested case” because the hearing was not statutorily required. Id., 702-703. The court reviewed all of the statutes governing the “activities of the division of

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special revenue and the gaming policy board”; id., 701; and concluded that, “in the absence of an express statutory requirement obligating the defendants to determine the plaintiff’s legal right or privilege to continued employment, the plaintiff’s claim fails.” Id., 703. In so holding, the court rejected the supervisor’s argument that the existence of an agency personnel policy requiring pretermination hearings rendered his a “contested case” under the UAPA. Id., 703-704. The court stated that, “although agency regulations, rules or policies may require the agency to hold a hearing, that does not constitute a matter as a `contested case’ under § 4-166 (2) unless the plaintiff’s rights or privileges are `statutorily’ required to be determined by the agency. If the plaintiff’s rights or privileges are not `statutorily’ required to be determined by the agency, a `contested case’ does not exist and a plaintiff would have no right to appeal pursuant to § 4-183 (a).”[10] Id., 705; see also, e.g., Dyous v. Psychiatric Security Review Board, 264 Conn. 766, 775, 826 A.2d 138 (2003) (reviewing appeal options provided by General Statutes § 17a-597 [a] and

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concluding that “there is no administrative appeal from the decision of the [psychiatric security review board] transferring the plaintiff to a maximum security facility”); Morel v Commissioner of Public Health, 262 Conn. 222, 236-37, 811 A.2d 1256 (2002) (concluding that vendor could not take administrative appeal of his disqualification from federal supplemental food program because department hearing was required by federal regulation, not state statute), overruled on other grounds by Commission on Human Rights Opportunities v. Board of Education, 270 Conn. 665, 675-76, 855 A.2d 212 (2004); Bailey v. Medical Examining Board for State Employee Disability Retirement, 75 Conn. App. 215, 221-23, 815 A.2d 281 (2003) (no right to appeal from board’s denial of disability retirement benefits because chapter containing applicable statute was silent as to hearings before board).

Indeed, the court further noted in Lewis that, “[a]lthough § 4-166 (2) excludes a large class of agency decision-making from contested case status, it nonetheless provides that the legislature, rather than the agencies, has the primary and continuing role in deciding which class of proceedings should enjoy the full panoply of procedural protections afforded by the UAPA to contested cases, including the right to appellate review by the judiciary. Deciding which class of cases qualifies for contested case status reflects an important matter of public policy and `the primary responsibility for formulating public policy must remain with the legislature.'” Lewis v. Gaming Policy Board, supra, 224 Conn. 709.

“To ascertain whether a statute requires an agency to determine the legal rights, privileges or duties of a party, we need to examine all the statutory provisions that govern the activities of the particular agency or agencies in question.” Id., 701. We begin with the relevant lien statutes, specifically §§ 17b-93
and 17b-94. See

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footnotes 2 and 3 of this opinion. We note that the text of neither statute requires a hearing prior to the department’s imposition of a lien on the proceeds of a lawsuit. Moreover, our review of the social services statutes reveals a wide variety of specific circumstances wherein the legislature has mandated the provision of a hearing by the department, none of which apply to the imposition of alien. See, e.g., General Statutes §17b-16b (limitation of benefits for persons with outstanding state or federal felony arrest warrants); General Statutes §17b-66 (public assistance determinations); General Statutes §17b-654 (determinations with respect to applicants for or recipients of vocational rehabilitation services).[11] “The contrast between [the lien statutes]

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and those statutes is persuasive evidence of a lack of a similar legislative purpose to impose by statute a hearing requirement. . . .” Morel v. Commissioner of Public Health, supra, 262 Conn. 239-40.

This lack of a statutory prerequisite is consistent with the department’s position that it provides such hearings pursuant to a settlement agreement that the department entered into i DelVecchio v. Freedman, supra, Docket No. N-86-136. In DelVecchio, the parties entered into a stipulation of dismissal in exchange for the department’s promulgation of new notices, policies and procedures with respect to statutory liens. These policies and procedures included the provision of hearings to contest the existence or amounts of the claimed statutory liens, pursuant to then General Statutes § 17-2a, which is now § 17b-60.[12]

Accordingly, we conclude that, in the absence of a statut requiring that the department conduct a hearing with respect to the liens, the “`[c]ontested case'” requirement of § 4-166 (2) was not satisfied, and the trial court accordingly lacked subject matter jurisdiction under the UAPA.[13] Accordingly, although the trial

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court properly rendered judgment dismissing the plaintiffs administrative appeal, it should have done so for lack of subject matter jurisdiction, rather than on the substantive merits of the case.

The form of the judgment is improper, the judgment is reversed and the case is remanded to the trial court with direction to dismiss the appeal for lack of subject matter jurisdiction.

In this opinion the other justices concurred.