Howe, et al v. Schlafman

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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30040
JOHNNY WADE HOWE,
Individually and on behalf of Courtney Howe,
Plaintiff-Intervenor Defendant-
Appellant
VERSUS
SCOTTSDALE INSURANCE CO.; ET AL.
Defendants
LOUISIANA STATE UNIVERSITY MEDICAL CENTER
Intervenor Plaintiff-Appellee
Appeal from the United States District Court
for the Western District of Louisiana
March 2, 2000
Before HIGGINBOTHAM and SMITH,
Circuit Judges, and FALLON, District
Judge.*

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ELDON E. FALLON, District Judge:
Johnny Wade Howe, on behalf of himself
and his daughter Courtney Howe (hereinafter
collectively referred to as "Howe"), sued the
Louisiana State University Medical Center
("LSUMC") for a portion of their legal fees
and costs of recovering damages from the
defendants, Scottsdale Insurance Company
("Scottsdale"), General Motors Corporation,
and Gordon Ira Schlafman. LSUMC, which
treated Howe for injuries suffered in an
automobile accident with Mr. Schlafman,
argues that it is entitled to a full
reimbursement from any damage award for
the services it rendered without any
reduction for a proportionate share of
Howe's legal fees and costs. Because the
district court correctly granted summary
judgment for LSUMC, we affirm.
I.
Johnny Wade Howe and his young
daughter Courtney Howe were injured in an
automobile accident with Gordon Ira
Schlafman on October 27, 1995. Following
the accident, they were taken to LSUMC in
Shreveport, Louisiana for treatment. The
cost of treatment totaled $22,035.49.
On February 26, 1996, Howe filed suit
against the defendants in the First Judicial
District Court in Caddo Parish, Louisiana to
recover damages suffered from the accident.
The defendants removed the case on the
basis of diversity jurisdiction to the Western
District of Louisiana on March 4, 1996.
On June 12, 1998, Scottsdale,
Schlafman's insurer, deposited $100,000, the
limit of its insurance policy, into the Court's
registry.
On September 22, 1998, LSUMC moved
to intervene in Howe's suit because it
claimed an interest in the proceeds. The
district court granted the motion, and
LSUMC filed a complaint of intervention on
September 29, 1998 asserting its medical lien
privilege over the deposited funds for the
amount of Howe's medical bills.
On October 8, 1998, LSUMC filed a
motion for summary judgment seeking
$22,035.49, the full amount of its medical
lien, without any pro-rata reduction for the
attorney's fees and costs incurred by the
plaintiff. Howe opposed the motion arguing
that LSUMC, as partial subrogee and/or co-
owner, is responsible for its share of the
expenses incurred in securing damages from
the defendants.
On December 7, 1998, the district court
granted LSUMC's motion for summary
judgment finding that LSUMC did not owe
any portion of attorney's fees or costs to the
plaintiff and was entitled to recover the
amount of its medical lien. Plaintiff
subsequently appealed.
II.
Louisiana provides two statutory
vehicles for its charity hospitals to recover
the costs of treating patients injured by third
parties.
First, the Louisiana legislature created a
medical lien privilege which provides:
A health care provider, hospital, or
ambulance service that furnishes
services or supplies to any injured
person shall have a privilege for the
reasonable charges or fees of such
health care provider, hospital, or
ambulance service on the net amount
payable to the injured person, his
heirs, or legal representatives, out of
the total amount of any recovery or
* District Judge of the Eastern
District of Louisiana, sitting by designation.

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sum had, collected, or to be
collected, whether by judgment
or by settlement or compromise,
from another person on account
of such injuries . . . . The
privilege of any attorney shall
have precedence over the
privilege created by this Section.
La. Rev. Stat. Ann. § 9:4752 (West 1999).
A charity hospital such as the LSUMC
may also intervene in suits brought by the
patient/plaintiff it treats.
Where a patient in any state
supported or veterans administration
hospital in the state has been injured
by the negligence of another person
other than his employer . . . and has a
right of action for the recovery of
compensatory damages against that
person, the department . . . shall be
subrogated to the right of action to
the extent of reasonable charges for
services rendered to the patient, in
accordance with like charges in other
first class hospitals, including
physicians' and surgeons' fees.
Id. § 46:7. The statute further explains that
"[a]ll proceedings for the recovery of any
charges or fees due any charity hospital of
this state . . . may be presented in any court
of this state . . . in a direct action or by
intervention, or by third opposition." Id. §
46:11.
Howe contends that this statutory
framework makes LSUMC a legal subrogee
or co-owner of the cause of action. Because
LSUMC could have acted directly or
indirectly as co-owner of a cause of action
under La. R.S. § 46:6, et seq., Howe argues
that LSUMC should be responsible for its
share of Howe's legal costs.
LSUMC insists that it did not exercise its
subrogation rights in this case. Rather,
LSUMC asserted its medical lien privilege
pursuant to La. R.S. § 9:4752 and therefore
does not owe Howe for his legal costs.
III.
The substantive law of this case is the
law of Louisiana. See Erie R. Co. v.
Tompkins, 304 U.S. 64 (1938). The issue is
whether Louisiana law requires an
apportionment of recovery costs between
LSUMC and the appellants. We review this
issue de novo. See Labiche v. Legal Sec.
Life Ins. Co., 31 F.3d 350, 351 (5th Cir.
1994). To determine Louisiana law on the
apportionment of recovery costs, this Court
should first look to final decisions of the
Louisiana Supreme Court. Id.
If the Louisiana Supreme Court has not
ruled on this issue, then this Court must
make an "Erie guess" and "determine as best
it can" what the Louisiana Supreme Court
would decide. Krieser v. Hobbs, 166 F.3d
736, 738 (5th Cir. 1999); id. (quoting
Transcontinental Gas Pipe Line Corp. v.
Transportation Ins. Co., 953 F.2d 985, 988
(5th Cir. 1992)).
In making an Erie guess in the absence of
a ruling from the state's highest court, this
Court may look to the decisions of
intermediate appellate state courts for
guidance. See Matheny v. Glen Falls Ins.
Co., 152 F.3d 348, 354 (5th Cir. 1998).
Intermediate appellate courts of Louisiana
are "a datum for ascertaining state law which
is not to be disregarded by a federal court
unless it is convinced by other persuasive
data that the highest court of the state would
decide otherwise." Labiche, 31 F.3d at 351
(quoting Commissioner v. Estate of Bosch,
387 U.S. 456, 465 (1967)).

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A.
With these principles in mind, we turn to
Louisiana jurisprudence. The Louisiana
Supreme Court has not ruled on the issue of
whether charity hospitals are required to
contribute toward its patients' costs of
recovering damages from tortfeasors. The
Court most closely addressed this issue of
cost-sharing in Moody v. Arabie when it
considered the apportionment of legal costs
in a workers' compensation suit. See 498
So. 2d 1081 (La. 1986).
In Moody, an injured worker who had
received worker's compensation benefits
brought suit against a third party tortfeasor.
See id. at 1083. The worker's compensation
carrier for the employer intervened to
recover the amount of compensation paid to
the worker. See id. The Court granted the
recoupment by the worker's compensation
carrier, but held that the carrier was
obligated to pay a portion of the injured
worker's recovery costs. See id.
The Court concluded that the employer
and worker held co-ownership over a
property right to recover damages from a
third party. See id. at 1085. According to a
theory of co-ownership, "each co-owner is
responsible for his proportionate part of
reasonable and necessary expenses and legal
services that accrue to his benefit." Id. The
costs of recovering from the third party
tortfeasor, therefore, "are to apportioned
between the worker and the employer
according to their interests in the recovery."
Id. at 1086.
Appellant argues that the cost-sharing
rationale of Moody should apply to the
present case because La. R.S. 46-6, et seq.
makes LSUMC the co-owner of appellant's
cause of action against a tortfeasor. As a co-
owner of a cause of action, LSUMC should
be responsible under Moody for a portion of
the appellant's costs of recovery. Howe
explains that this Court should extend the
co-ownership principles of Moody beyond
the worker's compensation arena because the
Louisiana Supreme Court has already applied
Moody to the case of an insurer. See
Barreca v. Cobb, 668 So. 2d 1129 (La.
1996) (holding health insurer responsible for
legal costs of plaintiff's recovery). Appellant
further contends that the principles of equity
and unjust enrichment require LSUMC to
share in the costs of obtaining a recovery
because La. R.S. § 9:4752 provides LSUMC
with a right to claim a portion of Howe's
recovery.
Appellee responds that Moody and its
progeny are not applicable to LSUMC
because it is not a co-owner of a cause of
action against a tortfeasor. Therefore, the
co-ownership responsibilities of Moody
should not be applied to it.
Howe's reliance on Barreca is misplaced.
In Barreca, the Louisiana Supreme Court
applied the rationale of Moody to a health
insurer because the insurer had a provision in
its policy granting it "the right to assert the
actions and rights of the plaintiff against the
tortfeasor." Id. at 1131. Because the Court
found that the insurer was contractually
subrogated to the plaintiff and therefore a
co-owner of the cause of action, it held the
insurer responsible for a proportionate share
of the recovery costs. See id. at 1132. In
the present case, however, no explicit
agreement or statute makes LSUMC the
subrogee and/or co-owner of Howe's cause
of action.
Because the Louisiana Supreme Court
has not spoken directly on whether Moody
should be extended to require charity
hospitals seeking compensation for medical
services to pay a share of a plaintiff's
attorney fees and costs, we must make our
best Erie guess as to how the Louisiana
Supreme Court would decide this issue. The

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role of this court is not "to create or modify
state law, rather only to predict it." St. Paul
Fire & Marine v. Convalescent Services,
193 F.3d 340, 345 (5th Cir. 1999). Because
there is no Louisiana Supreme Court
precedent on point, we seek guidance by
looking to the precedents established by
intermediate state appellate courts. See
Labiche, 31 F.3d at 351.
B.
Four of the five intermediate appellate
courts in Louisiana have refused to extend
Moody to charity hospitals and have held
that charity hospitals are not responsible for
the costs of recovering damages from third
party tortfeasors. See Mena v. Muhleisen
Properties, 652 So. 2d 65, 69 (La. Ct. App.
5 Cir. 1995) (holding that a charity hospital
seeking to enforce its medical lien privilege
pursuant to La. R.S. § 9:4752 is not required
to contribute to the costs of an injured
person's recovery), writ denied, Mena v.
Muhleisen Properties, 653 So. 2d 592 (La.
1995); Nicholes v. St. Helena Parish Police
Jury, 604 So. 2d 1023, 1034, (La. Ct. App.
1 Cir. 1992) (refusing to apply Moody
because specific statutes and not the general
law of co-ownership govern the relations of
a plaintiff and a charity hospital), writ
denied, Nicholes v. St. Helena Parish Police
Jury, 605 So. 2d 1378 (La. 1992); Moore v.
State for Louisiana State Univ. Medical
Ctr., 596 So. 2d 293, 296 (La. Ct. App. 3
Cir. 1992) (holding that LSUMC does not
co-own a cause of action against a tortfeasor
when it exercises its privilege under La. R.S.
§ 9:4752 and therefore is not obligated to
pay a portion of recovery costs), writ denied,
Moore v. State for Louisiana State Univ.
Medical Ctr., 600 So. 2d 667 (La. 1992);
Charity Hosp. of Louisiana v. Band 593 So.
2d 1392, 1394 (La. Ct. App. 4 Cir. 1992)
(distinguishing Moody from the case of a
charity hospital which has no independent
right to seeks medical expenses from a
tortfeasor), writ denied, Charity Hosp. of
Louisiana v. Band, 600 So. 2d 645 (La.
1992).
We cannot disregard a plethora of
precedent provided by the intermediate
appellate courts of Louisiana when the
appellant offers nothing to suggest why the
Louisiana Supreme Court would decide this
case differently. Accordingly, we make an
Erie guess that the charity hospitals of
Louisiana would not be required to
contribute to the costs of recovering from a
tortfeasor by the Louisiana Supreme Court.
Therefore, we find that the district court
correctly granted summary judgment for
LSUMC and affirm the judgement.
AFFIRMED.

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