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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alaska Native Tribal Health Consortium v. Settlement Funds Held For or to be Paid on Behalf of E.R. (01/30/2004) sp-5775

Alaska Native Tribal Health Consortium v. Settlement Funds Held For or to be Paid on Behalf of E.R. (01/30/2004) sp-5775

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


HEALTH CONSORTIUM, d/b/a )    Supreme Court No. S-10662
CENTER,                       )    Superior Court No.
                              )    3AN-01-09666 CI
             Appellant,            )
                              )    O P I N I O N
     v.                       )
                              )    [No. 5775 - January 30, 2004]
E.R., a minor, by and through his  )
legal guardian, MARTHA RIDLEY,     )
             Appellee.             )
HEALTH CONSORTIUM, d/b/a )    Supreme Court Nos. S-10696/10785
CENTER,                       )    Superior Court No.
                              )    3AN-01-10138 CI
             Appellant/            )
             Cross-Appellee,       )
     v.                       )
DAVID W. WARDEN,              )
             Appellee/             )
             Cross-Appellant.      )
          Appeal  in File No. S-10662 from the Superior
          Court  of the State of Alaska, Third Judicial
          District,   Anchorage,  John  Reese,   Judge.
          Appeal  in File Nos. S-10696/10785  from  the
          Superior Court of the State of Alaska,  Third
          Judicial   District,   Anchorage,   Eric   T.
          Sanders, Judge.

          Appearances:     Peter   J.    Aschenbrenner,
          Aschenbrenner  Law Offices, Inc.,  Fairbanks,
          for  Appellant/Cross-Appellee  Alaska  Native
          Tribal   Health  Consortium.    J.   Mitchell
          Joyner,  Law  Office of J.  Mitchell  Joyner,
          Anchorage,  for  Appellee  E.R.   Robert   A.
          Rehbock,  Rehbock & Rehbock,  Anchorage,  for
          Appellee/Cross-Appellant David W. Warden.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Fabe,  and  Carpeneti, Justices.   [Eastaugh,
          Justice, not participating.]

          FABE, Justice.


          In  this  consolidated appeal1 we address  whether  the

Alaska  Native  Tribal  Health Consortium  (the  Consortium)  can

enforce  a  health  care  provider lien  on  settlement  proceeds

received  by Alaska Native patients from third-party tortfeasors.

If  we  determine that such a lien can be enforced, the principal

question  that follows is whether the lien must be reduced  by  a

pro  rata  share of the patients attorneys fees.  These questions

arise in two cases that share similar factual backgrounds.   Each

case  involves an Alaska Native who was treated as a  patient  at

the  Alaska Native Medical Center (ANMC) for injuries  caused  by

third-party  tortfeasors.  ANMC, run by  the  Consortium,  treats

Alaska Natives for free.  The Consortium recorded hospital  liens

on  the  settlements that two patients, Warden and E.R., obtained

from  their  respective  tortfeasors.   Both  patients  attorneys

disputed  the validity of the liens.  In both cases, the superior

court  concluded that the health care provider lien is valid  and

should  be  paid in full, less a pro rata share of  the  patients

attorneys  fees  and costs incurred in obtaining  the  recovery.2

Because the Consortium has a federal right to enforce a statutory

health  care  provider  lien, and because it  would  be  unjustly

enriched if it did not pay a pro rata share of attorneys fees, we

affirm the superior courts determination in both cases.  We  hold

that  the  Consortiums  statutory health care  provider  lien  is

enforceable and is subject to a pro rata reduction for  attorneys

fees and costs.


     A.   The  Consortiums Claim to Settlement Funds Obtained  on
          Behalf of David W. Warden
          On  February 15, 2000, David Warden, an Alaska  Native,

was injured in a motor vehicle accident with Mary Copley, who was

insured  by Allstate Insurance Company.  Warden received  medical

treatment  from  ANMC for injuries to his back and  neck  between

February 15, 2000 and March 8, 2001.

          Shortly  after  the  accident, Warden  engaged  counsel

Robert  Rehbock  and  entered into a  contingency  fee  agreement

entitling  Rehbock  to  a percentage of any  recovery.   Allstate

entered  into  negotiations with Warden, seeking to minimize  its

obligation   by   emphasizing  Wardens   pre-   and   co-existing

conditions.  Allstate declined to enter any settlement  agreement

unless  there  was  full and final release of all  parts  of  the

claim.   The  Consortium did not respond to Allstates efforts  to

obtain medical records and information concerning the care Warden

received, only providing such documentation after further efforts

by Warden and Rehbock.

          On  May 3, 2001, the Consortium recorded a health  care

providers  lien pursuant to AS 34.35.450-.482 for $8,947.22,  the

alleged  value  of services provided to Warden.   Copies  of  the

recorded  lien were forwarded by certified mail to  Allstate  and

its  insured,  Mary Copley.  The transmittal letter  to  Allstate

included  a request that ANMC be named as the payee on any  check

issued  arising out of the accident.  The Consortium  provided  a

copy  of  the lien to Warden, who apprised Allstate of  the  lien

claim and continued to seek recovery for all claims.

          On  August  3, 2001, Allstate settled with  Warden  for

$24,947.22 to cover all losses and to release all claims  against

Copley  and  Allstate.   Out of this amount,  Allstate  issued  a

separate  settlement  check on the same day  for  $8,947.22  made

payable  to  Rehbock Rehbock & Wittenbrader In  Trust  for  David

Warden,  and ALASKA Native Medical Center.  The same day, Rehbock

informed  the Consortium that he proposed to turn over two-thirds

of  the total check for that lien and receive the remaining  one-

third  for  his fees but that he would not disburse  any  of  the

disputed  lien to my client or for my fee pending our  resolution

of the dispute.  The Consortium therefore declined to endorse the

check,  and  the disputed funds were placed with  the  court  and

then,  by  stipulation, held in Rehbocks trust account.   Rehbock

has  at  this point only taken for his fee one-third of the  non-

disputed funds.

          The  Consortium filed a complaint in superior court  on

September 9, 2001 against Settlement Funds Held for or to be Paid

on  Behalf of David W. Warden seeking to foreclose its lien under

AS  34.35.480.   Wardens  answer  admitted  that  the  Consortium

rendered  medical services to Warden and had recorded a lien  for

$8,947.22, but challenged the validity of the lien.  The  parties

filed  cross-motions  for summary judgment, with  the  Consortium

moving  to  foreclose its lien and with Warden arguing  that  the

Consortium could not assert a lien because Warden was entitled to

free  treatment  at  ANMC,  or  in  the  alternative,  that   the

Consortiums lien recovery should be reduced by the percentage  in

the   contingency  fee  agreement  between  Warden  and  Rehbock.

Without  elaborating  on its reasoning, the superior  court  held

that  the Consortium was entitled to foreclose its lien  and  was

entitled  to  the  full amount less its pro  rata  share  of  the

attorneys fees and costs Warden incurred to obtain the settlement

proceeds from Allstate.

          The  Consortium appeals the pro rata reduction  of  its

lien  recovery.  Warden cross-appeals the superior courts  ruling

that the Consortium was entitled to foreclose on its lien.

     B.   The Consortiums Claims to Settlement Funds Obtained  on
          Behalf of E.R.
          In  December  1999 E.R., a minor, suffered second-  and

third-degree burns on his feet and legs when he was placed  in  a

bathtub  of  scalding  water.   As an  Alaska  Native,  E.R.  was

entitled  to  free medical services at the Alaska Native  Medical

Center,  a facility operated by the Consortium.  E.R. was treated

on first an inpatient and then an outpatient basis, with his last

treatment occurring on August 11, 2000.  On October 25, 2000, the

Consortium  filed  a health care providers lien  pursuant  to  AS

34.35.450-.482 for $30,081.65 for the services provided to E.R.

          J. Mitchell Joyner represented E.R., through his parent

Martha  Ridley, in a suit against Richard Knowles, who owned  the

property  on which E.R. was injured.  On March 26 and  27,  2001,

Joyner  apparently  called  and  then  wrote  to  the  Consortium

offering to settle the lien claim for $5,000 in light of  Joyners

assertion that the lien was deficient on its face.  On March  30,

2001, E.R. moved under Alaska Civil Rule 90.2 for approval  of  a

settlement  agreement to resolve its claim  against  Knowles  for

$95,000.  That motion specifically addressed the Consortium lien,

declaring  that  the lien was unenforceable.  The superior  court

approved the settlement on April 2, 2001.  Notice of the approval

was sent to counsel for Knowles, who was insured by State Farm.

          Following  the  superior courts approval,  Joyner  drew

from  the  $95,000 settlement his attorneys fees of $31,666  (the

one-third  contingency fee agreed upon with Ridley)  and  roughly

$9,260 in costs.  On April 3, 2001, Joyner advised the Consortium

of  the  settlement and explained that, given E.R.s challenge  of

the liens validity, Joyner would hold the $30,081.65 in his trust

account until the disputed matter was resolved.

          In  August  2001  the Consortium filed a  complaint  in

superior court against Settlement Funds Held for or to be Paid on

Behalf  of  E.R. seeking to foreclose on its lien.  E.R.s  answer

denied  the liens validity, and in a motion for summary judgment,

argued  that  the  lien was invalid because it was  filed  in  an

untimely manner, more than the ninety days after the last service

provided  by  a  physician, required by  AS  35.34.460.   In  the

alternative, E.R. asserted that if the lien was valid,  then  the

amount  owed to the Consortium should be subject to  a  pro  rata

reduction  for  the cost incurred in obtaining the recovery  from

Knowles.  The Consortium also moved for summary judgment.

          In  May  2002 the superior court rendered its  decision

and  entered  judgment. The court ruled that  [f]ederal  law  and

decisions indicate that the Consortiums lien was valid,  declared

that  any attack by Joyner on the lien was denied because of  his

conflict  of  interest in advocating the lien  while  pursuing  a

settlement yet later challenging it, and held that the Consortium

was  entitled  to 100% of its liened amount, $30,081.65,  less  a

proportionate share of the costs and attorney fees incurred.

          The Consortium did not seek a stay of the decision, and

the  trust  funds  were disbursed to E.R. and the  Consortium  in

accordance  with  the courts order.  Joyners trust  account  thus

currently contains no settlement funds.

          The  Consortium appeals the superior courts ruling that

its  recovery  should  be  reduced by a  proportionate  share  of

Joyners attorneys fees and costs.


          To  resolve  the  questions  appealed,  we  must  first

consider  both  the  rights of the Alaska  Native  Tribal  Health

Consortium  and the rights of Alaska Native patients who  seek  a

judgment or settlement for injuries treated by ANMC without cost.

We must decide whether federal and state law allow the Consortium

to  enforce  a  health care provider lien on settlement  proceeds

from  third-party  tortfeasors when the patient  personally  owed

nothing  to  the  Consortium.  Warden argues that  Alaska  Native

patients  are federally entitled to free health care  and  should

not  have  to satisfy the Consortiums claim from the proceeds  of

their  personal  injury recovery.  The Consortium  contends  that

because Warden negotiated a separate settlement on behalf of  the

Alaska Native Medical Center, the full amount of the proceeds did

not  belong  to  Warden.   The Consortium  further  asserts  that

Congress   federalized  its  state  rights  to   insurance-funded

recoveries from tort actions under 25 U.S.C.  1621e(a), and  that

AS  34.35.450 is the state mechanism that actualizes this federal

right.    If  the  Consortiums  health  care  provider  lien   is

enforceable,  we  must then decide whether  the  lien  should  be

reduced by a pro rata share of attorneys fees expended to  obtain

the  settlement  proceeds.  We will assess each  of  the  parties

arguments following the standard of review.

     A.   Standard of Review

          We  review  grants of summary judgment de novo.3   [We]

may consider any argument ascertainable from the record, even  if

the superior court did not rule on it, when reviewing the summary

judgment  order.4   We  similarly apply our independent  judgment

when  reviewing  questions of statutory interpretation  and  must

adopt  the  rule  of  law  that is most persuasive  in  light  of

precedent, reason, and policy. 5

     B.   The  Consortium Is Entitled To Enforce Its Health  Care

          Provider Lien.

          We  must  first  consider whether  federal  law  allows

enforcement of the Consortiums health care provider lien.  Warden

          charges that enforcement of the Consortiums lien would violate

federal law.  Warden argues that 25 U.S.C.  1621u entitles him to

free  medical  services and that requir[ing] him to satisfy  [the

Consortium]  claim  from  the proceeds  of  his  personal  injury

recovery violates that statute.  That statute states, in relevant

part, that [a] patient who receives contract health care services

that  are authorized by the [Indian Health] Service shall not  be

liable  for  the payment of any charges or costs associated  with

the provision of such services.6

          The  Consortium maintains that  1621u concerns  payment

arrangements for fee-for-service health care providers,  such  as

Providence  or  Alaska Regional Hospitals, but does  not  address

tribal  health  contractors like the  Consortium  who  are  under

contract  with  the Secretary of Health and Human Services.   The

Consortiums  interpretation is bolstered  by  25  U.S.C.   1621r,

which also uses the term contract health services to mean private

contract health services providers.7

          We  note  at  numerous points below that Warden  as  an

Alaska  Native  does have a federal right to  free  care.8   This

federal  right,  however, is not violated by enforcement  of  the

Consortiums  lien.   All of Wardens federal claims,  as  well  as

Wardens  claim that the Alaska Legislature did not  intend  (even

assuming  it  could  constitutionally do  so)  to  disenfranchise

Native  Beneficiaries of the advantage to them of obtaining  free

care and pocketing the money they save, fail because they rest on

the  same  core fallacy, namely that all of the settlement  funds

are  Wardens  and  that  satisfying the lien  from  the  recovery

essentially reduces his damages and makes him pay for his medical


          As the Consortium argued below, however, the settlement

fund  does  not  belong to Warden because the settlement  is  not

composed  entirely  of his funds; he negotiated  for  a  separate

settlement with Allstate and a separate check for ANMC,  so  only

the  funds  not subject to the Consortiums lien are Wardens,  and

          thus the Consortiums lien takes nothing from Warden to which he

is entitled.10

          Warden   also   contends  that  the  Consortiums   lien

diminishes Wardens cause of action and his damages, in  violation

of 25 U.S.C.  1621e(d), which states that [n]o action taken by  .

.  . a tribal organization to enforce the right of recovery . . .

shall  affect the right of any person to any damages.   We  agree

with  the  Consortiums argument that  1621e(d) merely protects  a

patients  right  to  sue and prevents a tribal health  contractor

from  giving to the tortfeasor a complete release of all  claims.

Enforcement of the Consortiums lien does not affect Wardens right

to damages, but rather just the amount of damages.

          We  determine that federal law does not prohibit and in

fact  specifically  provides for enforcement of  the  Consortiums

health  care  provider lien to the same extent a  nongovernmental

provider is entitled to enforce such a lien under state law.  The

Consortium correctly argues that in 25 U.S.C.  1621e(a), Congress

federalized  the  Consortiums state  rights  to  insurance-funded

recoveries  from  tort actions.  Under this  federal  statute,  a

tribal  organization providing health services has the  right  to

recover reimbursement from third parties for reasonable expenses.

This  right  is  enforceable to the  same  extent  that  the  law

entitles  a nongovernmental provider or an individual to  recover

from third parties if the individual had been required to pay and

did pay for services.  Section 1621e(a) provides that

          a tribal organization shall have the right to
          recover the reasonable expenses incurred by .
          . . a tribal organization in providing health
          services . . . to any individual to the  same
          extent   that   such   individual,   or   any
          nongovernmental  provider of  such  services,
          would be eligible to receive reimbursement or
          indemnification for such expenses if
          (1)   such  services had been provided  by  a
          nongovernmental provider, and
          (2)  such individual had been required to pay
          such expenses and did pay such expenses.
The  Consortium correctly contends that  1621e(a) strips [Warden]

of  a federal defense to [the Consortiums] state lien foreclosure

action.  The Consortiums rights to lien foreclosure under federal

law  should  equal the rights that a nongovernmental provider  of

health services could exercise under state law.  We conclude that

under 25 U.S.C.  1621e(a), the Consortium has a federal right  to

enforce a statutory health care provider lien to the same  extent

that  state law allows a nongovernmental provider to enforce such

a lien.

          The state statute creating the hospital lien here is AS

34.35.450(a).   The Consortium asserts that AS 34.35.450  is  the

state statutory mechanism by which the Consortiums federal rights

are  actualized in terms of rights in recoveries funded by third-

party  liability  insurance carriers, and  indemnity,  or  health

insurance  contracts.  Alaska Statute  34.35.450(a)  provides  as


          An operator of a hospital in the state . .  .
          who  furnishes service to a person who has  a
          traumatic  injury  has a lien  upon  any  sum
          awarded to the injured person or the personal
          representative  of  the  injured  person   by
          judgment  or  obtained  by  a  settlement  or
          compromise  to the extent of the  amount  due
          the  hospital . . . for the reasonable  value
          of  the service furnished before the date  of
          judgment, settlement, or compromise, together
          with  costs and reasonable attorney fees that
          the court allows, incurred in the enforcement
          of  the lien.  AS 34.35.450  34.35.480 do not
          apply  to a claim, right of action, or  money
          accruing under AS 23.30 (Workers Compensation
Warden argues that state law does not create an enforceable  lien

where  another  paid  for  the medical services  and  the  Native

American  beneficiary owed the hospital nothing.  Warden  asserts

that  a  hospital  lien cannot exist without an underlying  debt,

pointing to the language in AS 34.35.450(a) providing for a  lien

to  the  extent  of the amount due the hospital .  .  .  for  the

reasonable  value  of the service furnished.   (Emphasis  added.)

This language is in contrast to AS 34.35.450(b), which allows the

hospital  a lien on the amount that an insurer has contracted  to

pay  for  the sum incurred for hospitalization of its  insured.11

Because  Warden, as an Alaska Native, owed the Consortium nothing

for  his medical services, Warden thus claims that the Consortium

could not assert a lien under state law.

          The  flaw  in Wardens reasoning is that AS 34.35.450(a)

does  not specify that the amount due the hospital has to be  due

from  the patient personally.  The language can also be  read  as

allowing  the  amount due the hospital . . . for  the  reasonable

value  of  the  service furnished to mean that the  hospital  can

recover  the amount of expense it incurred from any  sum  .  .  .

obtained by a settlement with a tortfeasor or insurer.

          The  Consortium  persuasively argues that  federal  law

makes  clear  that  Warden does not personally  have  to  owe  it

anything  for  a debt to arise from his receipt of  free  medical

services,  citing  the Alaska federal district court  opinion  in

Yukon-Kuskokwim Health Corp. v. Trust Insurance Plan of Southwest

Alaska.12  The Yukon-Kuskokwim Health Corporation (YKHC), like the

Consortium,  administered health care services to Alaska  Natives

through  operation  of  a  hospital under  a  contract  with  the

Department of Health and Human Services.13  YKHC provided  health

care  to  Alaska Natives insured by the Trust Insurance  Plan  of

Southwest   Alaska   (TIPSA),  a  trust   composed   of   several

southwestern  Alaska  employers  with  high  numbers  of   Native

employees that provides group insurance to those employees.14  For

reasons similar to Wardens arguments here, TIPSA routinely denied

claims  submitted by YKHC for services provided to  those  Alaska

Natives.  That is, TIPSA based these denials on the fact that the

Alaska Natives had no legal obligation to pay for health services

received  from  government contractors like  YKHC.15   Yet,  when

Congress passed the Indian Health Amendments of 1992, it  amended

the  Indian Health Care Improvement Act, 25 U.S.C.  1621e(a),  to

expressly  provide tribal organizations with a right of  recovery

to collect the reasonable costs of health care provided to Native

Americans   and  Alaska  Natives  from  third-party   insurers.16

          Following passage of the amendments, YKHC filed suit against

TIPSA  under 25 U.S.C.  1621e to recover the reasonable  cost  of

health care provided to Alaska Native TIPSA beneficiaries.17   In

upholding the retroactivity of the amendments, the district court

noted that the amendments to  1621e(a) effectively amended TIPSAs

insurance  policy,  which  had  excluded  coverage  for   medical

services  where Alaska Natives were not legally required  to  pay

for  the services, by requiring assumptions that the health  care

recipient  received care at a nongovernmental hospital,  that  he

was  required  to  pay,  and that he had  paid  for  the  medical

services.18  The discussion of federal law in Yukon-Kuskokwim thus

provides strong support for the Consortiums assertion that Warden

did not need to have an actual amount due.

          Furthermore, the language of 25 U.S.C.  1621e(a) quoted

earlier   supports   the   Consortiums   position.    Unlike   AS

34.35.450(a),  but very much like .450(b), that  federal  statute

states  that  the Consortium, as a tribal organization,  has  the

right  to  recover  the reasonable expenses incurred  .  .  .  in

providing  health services . . . to any individual  to  the  same

extent  as  that individual or a nongovernmental health  provider

could  receive reimbursement if such individual had been required

to  pay  such  expenses  and  did pay such  expenses.   (Emphasis

added.)   Again,  this  language seems to clearly  indicate  that

Warden did not have to personally owe the Consortium anything for

it  to  have  a right of recovery of the expenses it incurred  in

treating  him.19   We conclude that, given the  federal  law  and

decision discussed above, AS 34.35.450(a) does not require Warden

to  personally  owe anything to the Consortium in order  for  the

hospital to assert a lien.

          Raising  another federal argument, Warden  attacks  the

validity  of the lien on the ground that the Consortium seeks  to

be  paid twice.  Warden charges that the Consortium seeks  to  be

paid once from Wardens recovery and a second time from the Indian

Health Funds that paid for Wardens medical services in the  first

          place.  Warden points to 25 U.S.C.  1621f, which provides that

any  reimbursements  that  a  tribal  organization  recovers  are

retained  by  the organization and do not affect  the  amount  of

funding it receives from the Indian Health Service.20

          The  Consortium counters that it is not seeking  to  be

paid  twice,  since  it  uses the funds it  recovers  to  replace

federal  grant  funds that have diminished  in  importance  as  a

source  of financial support for the institution.  The Consortium

further notes that this description of its funding and its use of

recovered  funds,  supported by affidavit, was uncontested  below

and  relied on by the superior court in approving the Consortiums

lien.  We agree with the Consortiums position.

          We  conclude that the Consortium is not seeking  to  be
paid  twice; rather it is seeking to recover its costs in  caring
for  Warden.   As the Consortium convincingly argued  below,  the
Consortium incurred expenses in treating Warden, in that portions
of its federal funding were used to pay the providers who treated
Wardens  injuries. Furthermore, the Consortium  correctly  points
out  that 25 U.S.C.  1621f supports its argument, as it indicates
that  the  Consortium  may seek recoveries  via  state  tort  and
insurance systems and use these funds to carry out its programs.

          We   will   next  consider  Wardens  charge  that   the

Consortiums  lien notice was deficient and failed to  conform  to

state law.  The Consortiums lien notice contains one clause  that

is  not  in  the  statute, extending its lien  to  any  money  or

reimbursement  due  or owing or to be paid or payable  under  any

contract  providing  for  indemnity or  compensation  for  sum(s)

incurred   for  hospitalization  .  .  .  from  any   entity   or

organization  including Allstate Insurance Company.   While  this

clause  essentially covers circumstances in which AS 34.35.450(b)

might   apply,   Warden  alleges  that  the  Consortiums   notice

erroneously  extends  the  lien not just  to  a  company  with  a

contract  to pay for its insureds hospitalization, as  envisioned

by .450(b), but also to the tortfeasors insurer.

          We  determine  that Wardens claim of  deficient  notice

fails for two reasons.  First, this clause is not relevant to the

current case because the lien in this case is authorized under AS

          34.35.450(a) and the corresponding section in the Consortiums

lien  notice involving recovery from settlement funds, not  under

AS  34.35.450(b).   Second, as the Consortium argued  below,  its

lien  form is substantially similar to the statutory form  in  AS

34.35.465, which is all that is required by AS 34.35.460.

          The  last challenge by Warden we consider on the  issue

of  the  liens  validity is his claim that the Consortium  cannot

foreclose  upon a lien against an unnegotiated settlement  check.

Warden  argues that AS 34.35.450 provides for a lien only against

settlement   proceeds,  whereas  Allstate   merely   tendered   a

negotiable  instrument  promising to pay the  parties.21   Warden

maintains that Allstate offered to discharge the Consortiums  and

Wardens  demands in exchange for their acceptance of  the  check.

But  the  Consortium  refused to endorse the  check,  and  Warden

contends  that  the  Alaska statutes do not provide  for  a  lien

against  a  promise  for  payment  in  a  conditional  negotiable

instrument.  In other words, Warden argues that [u]ntil the check

was  paid there can be no lien foreclosure because there has been

no payment or release to or from Warden and tortfeasor.

          The   Consortium  counters  that  at  the   moment   of

settlement,  Allstate  was contractually obligated  to  fund  the

settlement,  so  no  reason exists why  AS  34.35.450  would  not

operate  to attach the Consortiums lien to that obligation.   The

Consortium argues that it has rights to the liened funds under AS

34.35.450  whether the funds were in Allstates account after  the

release  was  delivered  but prior to the  check  being  written,

whether the settlement check was drawn but unendorsed, or whether

the funds were in Rehbocks trust account.

          We  agree  with  the Consortium.  Wardens  argument  is

overly  technical and unpersuasive.  The settlement funds  exist;

they  were  first placed with the court and then, by stipulation,

endorsed and held in Rehbocks trust account pending resolution of

the  dispute.   Allstate and Warden agreed on  a  settlement  and

release of all claims, contractually obligating Allstate  to  pay

          $24,947.22 and obliging Warden to indemnify Allstate and Copley

from  any  suits  or  claims  brought  by  holders  of  liens  or

subrogated interests to recoup medical expenses.  Alaska  Statute

34.35.450(a)  applies to any sum . . . obtained by a  settlement;

this language would cover the sum that Allstate was contractually

obligated to provide in the settlement.  Accordingly, we conclude

that  the  Consortium  could foreclose on its  lien  against  the


     C.   The Consortiums Suit Is Not Moot.

          Although  E.R. did not cross-appeal the  issue  of  the

liens enforceability, an additional issue that arises in E.R.  is

the  claim that the Consortiums health care provider lien is  now

moot.   E.R.  contends that the Consortiums appeal is  against  a

party that no longer exists, since the settlement funds held  for

or to be paid on behalf of E.R. have been disbursed in accordance

with  the superior courts order and are in the possession of E.R.

and  his  custodian, who are not parties to  this  action.   E.R.

therefore argues that the Consortium can gain nothing in pursuing

this appeal, since even if the Consortium prevails, there are  no

settlement  funds  in  the  trust  account  to  disburse  to  the

Consortium.  And E.R. and his mother, who have the funds but  are

not  parties, would not be bound by a decision in this appeal and

would  be  under  no obligation to turn over any portion  of  the

personal  injury  proceeds  to the  Consortium.   As  such,  E.R.

maintains that this appeal is moot.22

          The  Consortium  makes several counter  arguments,  the

most  compelling of which is that it has a right  to  restitution

under the Restatement of Restitution  74, which provides that

          a  person  who  has conferred a benefit  upon
          another  in  compliance with a  judgment,  or
          whose property has been taken thereunder,  is
          entitled  to  restitution if the judgment  is
          reversed  or  set  aside, unless  restitution
          would  be inequitable or the parties contract
          that  payment is to be final; if the judgment
          is  modified, there is a right to restitution
          of the excess.[23]
            We  have  concluded  above  that  the  Consortium  is

          entitled to enforce its statutory health care provider lien under

federal and state law.  We further determine that Restatement  74

enables  the Consortiums right to restitution to be given  effect

under   a  trust  theory.   Joyner,  as  trustee  of  the  former

settlement  fund,  must disburse to the Consortium  any  recovery

stemming from this opinion.

     D.   The Consortiums Lien Is Subject to a Pro Rata Reduction
          for Attorneys Fees and Costs.
          1.   Federal  and state statutes are ambiguous  on  the
               issue  of  a pro rata reduction of the Consortiums
               lien,  therefore,  relevant policy  considerations
               should be applied.
          We  turn now to the question of whether the Consortiums

health care provider lien must be reduced by a pro rata share  of

the  patients attorneys fees.  The Consortium makes a variety  of

statutory arguments in attempting to establish that its  lien  is

not subject to a pro rata reduction for attorneys fees and costs,

but none of the statutes clearly prohibits such a reduction.   As

the New Mexico Supreme Court reasoned, the ambiguity of statutory

provisions   requires   the   court   to   defer   to   equitable

considerations to determine whether to reduce the lien by  a  pro

rata  share.24   And  in Cooper v. Argonaut  Insurance,  we  took

equitable   considerations  into  account  in  our  analysis   of

ambiguous statutory language, looking to the probable legislative

intent  to  conclude that the statute should be read  to  require

proration of attorneys fees to avoid unjust enrichment.

          The  most significant statutory argument raised by  the

Consortium involves AS 34.35.475.  The Consortium maintains  that

AS 34.35.475(a)(3) directs the attorney to be paid from the gross

settlement, with the remaining funds first going to satisfy liens

in  full and then going to the patient.  Alaska Statute 34.35.475


               (a)  A person or insurer is liable to  a
          hospital, physician, or nurse, in the  amount
          that  the  hospital, physician, or  nurse  is
          entitled  to receive, for 180 days after  the
          date of a payment to the injured person,  the
          heirs   of   the  injured  person,   personal
               representatives, or the attorney of them,
          when the person or insurer
               (1)   receives a copy of notice of lien,
          or  the  lien is recorded as provided  in  AS
          34.35.460 and 34.35.465;
               (2)  makes the payment after receipt  of
          notice  or  the  recording  of  the  lien  as
          compensation for the injury suffered; and
               (3)    does   not   pay  the   hospital,
          physician, or the licensed special nurse  for
          the reasonable value of the services rendered
          to  the  injured  person and claimed  in  the
          notice  of lien, or so much of the  value  of
          the  services as can be satisfied  out  of  a
          judgment,  settlement, or  compromise,  after
          paying the attorney fees, costs, and expenses
          incurred in connection with it.
               (b)   The hospital, physician, or  nurse
          has  a  cause of action, during the 180 days,
          against the person or insurer.
(Emphasis added.)  The purpose of this statute, as the Consortium

admits, is to provide for continuing liability against persons or

insurers if, after receiving notice of a hospital lien, they have

paid  the  injured  person  for that  persons  injuries  but  the

hospital lien goes unsatisfied.25

          The Consortium interprets the emphasized language in AS

34.35.475  above as implying that the attorney will  pay  himself

off the top of the gross settlement, therefore preventing a claim

by  the client against a nonclient for a pro rata reduction.   In

E.R., the Consortium notes that the gross settlement was $95,000,

which  is enough for attorneys fees ($31,666), costs ($9,261.16),

the  Consortiums lien ($30,081.65), and $23,991.19 remaining  for


          However, in Cooper, we determined that similar language

in  AS 23.30.015(g)  dictating that an employee shall pay to  its

employer out of any third-party recovery all amounts paid by  the

employer  or  the  workers compensation carrier  insofar  as  the

recovery  is sufficient after deducting all litigation costs  and

expenses   could  be  construed  in  two  divergent  ways:    (1)

requiring a deduction from the amount reimbursed to the  employer

          for litigation expenses attributable to its share of the

recovery,  a pro rata reduction, or (2) requiring a deduction  of

all   litigation  expenses  from  the  total  recovery  with  the

remainder going to reimburse the employer.26  We acknowledged that

grammatically the disputed phrase lends itself more to the second

construction, but held that the first alternative more accurately

conforms  to  the legislative intent.27  Therefore,  we  conclude

that,  given our previous decision in Cooper, the language of  AS

34.35.475 is ambiguous.28

          Upon  finding the law ambiguous, we concluded in Cooper

that the statute should be read to require proration of attorneys

fees to ensure there is not unjust enrichment.29  In a case quite

similar  to this one, the New Mexico Supreme Court interpreted  a

statute  entitling  a  hospital  that  provided  services  to  an

accident  victim to assert a lien upon that part of the judgment,

settlement  or  compromise going, or belonging to  such  patient,

less  the  amount paid for attorneys fees, court costs and  other

expenses  necessary thereto in obtaining the judgment, settlement

or  compromise.30   New  Mexicos statute thus  contains  language

similar  to  that of AS 34.35.475.  Because the court  determined

that  the  statute  was silent on the issue of  apportionment  of

expenses  to  the  lienholder, the court looked to  the  relevant

policy  considerations to determine the most equitable  result.31

We  agree  with  the approach followed by the New Mexico  Supreme

Court:   Absent other evidence of legislative intent, the silence

or ambiguity of statutory provisions on the issue of apportioning

attorneys fees requires us to refer to equitable considerations.

          The  Consortiums second statutory argument involves  AS

34.35.455,  which also lacks clarity on the issue of apportioning

attorneys  fees.  That statute, entitled Limitation on extent  of

lien, states:

          Except as otherwise provided, a lien under AS
          34.35.450   34.35.480 may not be allowed  for
          hospitalization   or  the   services   of   a
          physician or licensed special nurse furnished
          after a settlement is made by or on behalf of
          the  person  causing the  injury  unless  the
          settlement  is made within 20 days  from  the
          date  of  the injury.  A lien is not  allowed
          for   necessary  attorney  fees,  costs,  and
          expenses  incurred by the injured  person  in
          securing   a   settlement,   compromise,   or
(Emphasis  added.)  The Consortium contends that  this  statutory

language  is  clear  in  forbidding an injured  person,  or  that

persons attorney, from making a claim on a hospitals liened funds

to pay for a portion of attorneys fees and costs.  The Consortium

asserts  that  the  first  sentence of  the  statute  limits  the

hospitals rights, while the second speaks to the injured  person.

The  Consortium contends that the Legislature was protecting  the

health care providers rights by limiting the rights of an injured

party to reduce the lien.

          But  the meaning of AS 34.35.455 is far from clear,  as

E.R. correctly notes.  First, section .455 is included in article

12  of AS 34.35, which addresses liens for hospitals, physicians,

and  nurses;  this  leads  one to the  conclusion  that  whatever

language  is contained in that statute applies to limitations  on

hospital  liens,  not  liens  by injured  parties.   Second,  the

initial  language of the enactment, prior to the 1963  amendment,

provided  that  [n]o lien shall be allowed against  any  sum  for

necessary  attorney  fees,  costs and expenses  incurred  by  the

injured party in securing a settlement, compromise or judgment.32

          E.R.  argues  that these facts allow for two  different

interpretations  of AS 34.35.455, requiring us  to  look  at  the

statutory language, history, and purpose.33  The language of  the

previous  enactment could mean what the Consortium says it  does,

or  it is possible that the purpose of the statutory language  is

to  limit  the extension of hospital liens to the attorneys  fees

and  costs  incurred by the injured party; in  other  words,  the

statute  could  merely be prioritizing an attorney  lien  over  a

hospital lien.  Given the language of the previous enactment, and

the  context,  location,  and title of the  statute,  the  latter

          interpretation is more plausible.  We determine that the statute

is  at  best  unclear,  and most likely  limits  the  Consortiums

rights, not the rights of the injured parties or their attorneys.

          In   its  third  statutory  challenge  to  a  pro  rata

reduction  of  its lien, the Consortium contends  that  under  AS

34.35.450(a) the reduction would leave its lien unsatisfied.   In

Warden,  the Consortium essentially contends that a reduction  in

its  lien,  for  the  purpose of allowing  Rehbock  to  pay  more

settlement  funds  to Warden, would leave the  lien  unfulfilled.

The  Consortium  looks to the language of AS 34.35.450(a),  which

grants  the  hospital a lien upon any sum . .  .  obtained  by  a

settlement, and argues that any settlement funds transferred from

Rehbock to Warden would still be settlement funds subject to  the


          The  Consortium  similarly  argues  in  E.R.  that  the

superior  court  erred in allowing a lien reduction  to  increase

E.R.s  recovery and that Joyner cannot pay more settlement  funds

to  his  client by transferring his claim to attorneys  fees  and

costs.  The Consortium notes that AS 34.35.450(a) gives it a lien

upon  any  sum   . . .  obtained by a settlement,  and  that  any

settlement  funds transferred by Joyner to E.R.  would  therefore

still  be  subject to the Consortiums lien.  The Consortium  thus

essentially  argues that a lien reduction would  leave  its  lien

unfulfilled and would subject Knowles, the owner of the  property

on  which  E.R. was injured, and his insurer to double  liability

under AS 34.35.475.

          But  in  Martinez,  the New Mexico  Supreme  Court  has

addressed  and  rejected  a  similar  assertion  that  pro   rata

reduction for attorneys fees would leave the lien unsatisfied and

still in effect as to the balance due:

          The Hospitals argument, however, is based  on
          the  false premise that the lien is not  paid
          in  full.  The lien is satisfied from the net
          proceeds   of  the  settlement  or   judgment
          pursuant  to  the  Act.   Under  our  holding
          today, the Hospital then has a responsibility
          to  pay its proportionate amount of attorneys
          fees  incurred in obtaining the net proceeds,
          either  out of the net proceeds or from  some
          collateral source.  In essence, it is  as  if
          the  Hospital employed an attorney to  secure
          payment from the patient; the Hospital  might
          recover  the  full amount of the payment  but
          its  net  benefit would be reduced  by  legal
          fees  that would not be reimbursed  absent  a
          statutory or contractual right to those fees.
          Thus,  there  is no deficiency and  the  lien
          would not remain in effect.[34]
The  New Mexico courts reasoning is persuasive and applicable  to

both  Warden and E.R.  We determine that the Consortiums lien  is

satisfied  from  the net proceeds of the judgment or  settlement,

and  the Consortium has a responsibility to pay its proportionate

share of attorneys fees incurred in obtaining the net proceeds.

          The last statutory challenge we review on the issue  of

a  reduction  of  the lien by a pro rata share of attorneys  fees

involves a federal statute.  The Consortium claims that 25 U.S.C.

1621e(c) prohibits state law from prevent[ing] or hinder[ing] the

right of recovery of . . . a tribal organization under [25 U.S.C.

1621e(a)],  and that reducing the Consortiums lien would  violate

this statute.

          We  disagree  with the Consortium.  Reducing  the  lien

would  not  violate  the  right  of  recovery,  it  would  merely

influence  the amount that can be recovered; more accurately,  it

would  simply  require  the Consortium to  pay  the  lawyers  who

implemented its right of recovery.35  As with AS 34.35.450(a), the

situation  is  analogous to the Consortium  filing  suit  itself,

making a full recovery, and then paying its attorneys their  fees

the  right  of recovery would not be hindered, but the  attorneys

must be paid for their work.

          2.    Equitable  considerations allow for  a  pro  rata


          Federal  and  state  statutes do not  provide  a  clear

answer  as  to  whether  the Consortiums  statutory  health  care

provider lien can be reduced by a pro rata share of the attorneys

fees  expended  to  acquire settlement  proceeds;  therefore,  we

          follow the approach of Cooper and the New Mexico Supreme Court

and  apply  equitable considerations.  Rehbock  and  Joyner  each

argue that the Consortium would obtain a windfall if it recovered

on  its  lien but received its legal services at the  expense  of

Warden  and  E.R. They are thus each making what  amounts  to  an

unjust enrichment argument.  Under Alaska law, to establish  that

pro  rata reduction of the Consortiums lien is necessary to avoid

unjust enrichment, Warden and E.R. must each show that (1) either

they  or their attorneys conferred a benefit upon the Consortium;

(2)  the Consortium appreciated the benefit; and (3) it would  be

inequitable  for the Consortium to accept and retain the  benefit

without paying Rehbock or Warden the value thereof.36

          At  times,  the  Consortium implies  that  Rehbock  and

Joyner conferred no benefit upon it  all that Rehbock offered the

Consortium  was the opportunity to litigate the Consortiums  lien

with him at the same time that Rehbock was defending his claim to

have rendered legal services to the Consortium.  [The Consortium]

only  got  any money from Joyner by litigating against him.   The

Consortium  points  our attention to the fact  that  after  eight

months  of disputing [the Consortiums] lien, Joyner then  claimed

to have benefited [the Consortium].

          We conclude that the Consortiums argument is misplaced.

If  the  Consortium felt burdened by the litigation dispute  over

the  validity of the lien, it could have moved for Civil Rule  82

attorneys  fees  once  it  prevailed  on  that  issue.   But  the

litigation expenses that the Consortium incurred while  defending

the  lien  do  not negate the labor and funding that Rehbock  and

Joyner  contributed  in asserting a cause of action  against  the

third-party  tortfeasors.  The benefit  conferred  was  that  the

Consortium  did  not pay anything for the legal services  Rehbock

and  Joyner rendered in securing the funds that would be used  to

satisfy  the  Consortiums lien.  Rehbock  and  Joyner  thus  each

benefited  the  Consortium, and the Consortium appreciated  those

benefits.   We must next consider whether it would be  unjust  to

          allow the Consortium to benefit without paying for its share of

the legal fees and costs.

          As  noted above, in Cooper v. Argonaut Insurance  Cos.,

we  interpreted  a  workers compensation  statute  with  language

similar  to  AS  34.35.475 to allow for a pro rata reduction  for

attorneys fees and costs.37  Part of our reasoning was  that  the

Legislature did not intend the employers compensation carrier  to

secure  a  windfall profit at the employees expense, noting  that

when  the  carrier recovers from a third-party tort-feasor  as  a

result  of  the  employees suit, the recovery  is  an  unexpected

return because the premium paid by the employer is normally based

on a projected injury loss without regard to possible third-party

claims.38  We declared that requiring an employer or compensation

carrier  to  pay  its  pro rata share for  the  recovery  of  the

unexpected  funds  prevents the entire burden of  the  litigation

[from  being] borne by the employee.  The carrier would take  the

benefit   of  both  the  employers  premium  and  the   employees

litigation  effort.   This would result in  the  carriers  unjust

enrichment.39   We also cited with approval a California  Supreme

Court  decision requir[ing] the passive beneficiaries to  bear  a

fair share of the costs.40

          Rehbock  and  Joyner  each argue  that  the  Consortium

should  bear  its share of the costs to prevent Warden  and  E.R.

from  incurring  the  full  cost  of  recovery  and  letting  the

Consortium receive a windfall.  The Consortium argues that Cooper

is  not  applicable here.  The Consortium maintains  that  Cooper

does  not support an attorneys right to claim attorneys fees  and

costs  from  a  nonparty that is claiming a hospital  lien.   The

Consortium  further notes that hospital liens  have  a  different

legislative  history,  purpose, and  set  of  circumstances  than

workers compensation. 41

          The  Consortiums  distinctions  do  not  undermine  the

applicability  of  the reasoning of Cooper  to  this  case.   The

issues  of preventing a carrier from securing a windfall  at  the

          employees expense, preventing the entire burden of the litigation

from  being  borne  by the injured plaintiff,  preventing  unjust

enrichment, and requiring passive beneficiaries to share  in  the

costs of recovery are all equitable considerations that translate

well  to  this  case.  The fact that the Consortium,  unlike  the

compensation carrier, expects to recover from third parties  does

not  alter  the equitable considerations involved in  determining

whether the Consortium should have to pay its share of the  costs

of obtaining that recovery.

          Again,  we  conclude that the New Mexico Supreme  Court

decision   in  Martinez  v.  St.  Joseph  Healthcare  System   is

instructive  here.   As  noted above, that  court  interpreted  a

statute  similar to AS 34.35.475, determined it to be  ambiguous,

and  thus  looked  to  the  relevant  policy  considerations   to

determine the most equitable result.42  Instead of following other

jurisdictions decisions, the New Mexico court chose to follow its

own  analogous  rulings and so looked to a  workers  compensation

decision  in which the New Mexico Court of Appeals held  that  an

employer  and  a  worker  were to apportion  the  legal  expenses

necessary   to   obtaining  a  judgment  against  a   third-party

tortfeasor, on the grounds of fundamental fairness.43   The court,

therefore, looked to its own version of Cooper.

          The  New  Mexico court concluded that in hospital  lien

cases  the  common-fund doctrine most appropriately  defines  the

duties  and  liabilities of the parties  and  provides  the  most

fundamental fairness.44  The court explained:

          In  hospital lien cases, the hospitals  right
          to  assert a lien, and its right to  recovery
          based on that lien, depend by statute on  the
          obtaining  of  a judgment or settlement.  The
          proceeds   of  that  judgment  or  settlement
          operate as a fund, and, without the fund, the
          hospital  has nothing upon which to assert  a
          lien  under the Act.  By seeking payment from
          the   fund  in  reliance  on  the  lien,  the
          hospital  directly receives the  benefits  of
          the  work  done  by  the  patients  attorney.
          Further,  as in [the Court of Appeals  case],
          the  estate  bore  the initial  expenses  and
          risks  of  litigation. Because  of  this,  it
          would  be  fundamentally unfair to allow  the
          Hospital  to  collect  on  its  lien  without
          paying  its  prorated  share  of  the   legal
The   New  Mexico  courts  reasoning  is  again  persuasive   and

applicable to this case.46

          In  the past, we have examined the common fund doctrine

and  its  purpose of preventing unjust enrichment.  The  doctrine

holds that a litigant or a lawyer who recovers a common fund  for

the  benefit  of  persons other than himself  or  his  client  is

entitled to a reasonable attorneys fee from the fund as a whole. 47

The  doctrine  is  implicated  any  time  one  litigants  success

releases  well-defined  benefits for a limited  and  identifiable

group of others.48  An underlying rationale of the doctrine is to

prevent  unjust  enrichment:  As explained by the  United  States

Supreme  Court,  persons  who obtain the  benefit  of  a  lawsuit

without  contributing to its cost are unjustly  enriched  at  the

successful litigants expense. 49

          We  determine  that  application  of  the  common  fund

doctrine  here is  appropriate for the same reasons we  described

in Edwards v. Alaska Pulp Corporation:

          The  primary reasons for applying the  common
          fund  doctrine  to this case are  to  prevent
          unjust   enrichment  and  provide  reasonable
          compensation to class counsel.  In this case,
          the  plaintiffs lawyers created a  fund  that
          would not otherwise exist.  The fund contains
          a specified amount, and it benefits a limited
          community.  .  . .  Thus the doctrine  allows
          fees  to  be spread among those benefited  by
          the  suit in proportion to the benefits  they
          received.    Without   application   of   the
          doctrine    in   this   case,    the    funds
          beneficiaries  would receive a clear  benefit
          from  the efforts of the plaintiffs attorneys
          whose  work  created the  fund,  while  those
          attorneys    would   not   be    sufficiently
          compensated.  We conclude that the  facts  in
          this  case give rise to the unjust enrichment
          or  free rider concerns that the common  fund
          doctrine  is  intended to address,  and  that
          application of the doctrine to this  case  is
Other   jurisdictions   have  established   notice   and   intent

prerequisites for the application of the common fund doctrine  as

it relates to pro rata reduction of attorneys fees.51  We decline

to  apply  these prerequisites to the cases at hand, and  instead

follow the reasoning adopted by the New Mexico Supreme Court  and

our  previous decision in Edwards.  We conclude that it would  be

unfair  to  allow  the Consortium to collect on its  health  care

provider  lien without paying a pro rata share of attorneys  fees

when,  without the common fund created by the plaintiffs lawyers,

the Consortium would have nothing upon which to enforce its lien.

The  Consortium is ready and willing to take the benefits of  the

common  fund;  therefore, it must also pay a fair  share  of  the

expenses used to obtain the fund.

          The Consortium disputes the relevance of the benefit it

receives,  claiming that both Rehbock and Joyner  were  officious

intermeddler[s]   who  conferred  incidental  benefits   on   the

Consortium and thus cannot appeal to claims of unjust enrichment.

The  Consortium  also contends that because no  contract  existed

between  it  and  Rehbock, any benefits  he  conferred  upon  the

Consortium were gratuitous and do not require restitution.52  The

Consortium  maintains  that Rehbock  did  not  engage  in  active

representation on the Consortiums behalf, but rather was  working

for his own client in conducting the settlement as he did, making

the  Consortium merely an incidental beneficiary.  In support  of

this  assertion,  the Consortium cites to the Washington  Supreme

Court  decision in Lynch v. Deaconess Medical Center, which held,

in  part, that the fact that Deaconess eventually recovered  this

amount  [that it was owed] is only an incidental benefit  derived

from Mr. Lynchs services to his client.53

          We  decline  to follow the reasoning of the  Washington

Supreme  Court, instead we adopt the approach of the  New  Mexico

Supreme  Court  in  Martinez which also explicitly  rejected  the

hospitals  claim that it was merely an incidental beneficiary  of

the lawyers services for his client:

          We do not agree that the benefit the hospital
          receives  from the judgment or settlement  is
          merely  incidental.  If the attorney for  the
          patient   does  not  secure  a  judgment   or
          settlement, the hospital has nothing to which
          it  may  attach its lien. At that point,  the
          hospital/patient   relationship   truly    is
          nothing    more    than   a   creditor/debtor
          relationship, and the hospital must  use  its
          own legal resources to recover its funds.  In
          contrast, if the patients attorney secures  a
          judgment  or settlement (as the attorney  did
          in  this  case), the hospital recovers  money
          due  without  expending its legal  resources.
          If  we  did  not allow division of the  legal
          costs,  hospitals would be encouraged to  sit
          back  and reap the rewards of anothers  labor
          at  that  partys expense.  We do not  believe
          that is consistent with public policy in  New
Distinguishing indirect beneficiaries such as mortgage holders or

utility  companies that are paid by customers  who  have  secured

recoveries, the court observed that providers that have  contract

assignment, subrogation, or statutory lien rights . . .   have  a

recognized interest in the accumulation of a fund from a specific

source  and receive a direct benefit from the attorneys  labor.55

Again,  we  conclude that the New Mexico Supreme Courts reasoning

is   persuasive:    The   Consortium  benefited   directly,   not


          The   final   policy  argument  we  consider   is   the

Consortiums  allegation  that  Rehbock  and  Joyner  committed  a

variety  of  ethical  violations that should  prevent  them  from

obtaining  a pro rata fee from the Consortium.  We conclude  that

these ethical allegations lack a sound basis in both cases.

                First,  in  Warden, the Consortium  charges  that

Ethics  Opinion 92-3 requires an attorney in charge of settlement

funds containing a specific allocation for a third-party lien  to

use  the amount designated to satisfy the lien.  Allstates  check

was  in  payment  of  medical  lien regarding  David  Warden  for

treatment provided as a result of accident on 2/15/2000,  was  in

the exact amount of the Consortiums lien, and was made payable to

     the order of Rehbock Rehbock & Wittenbrader in trust for David

Warden, and ALASKA Native Medical Center.  The Consortium alleges

that Allstate intended the lien to be paid in full.

          The  Consortium further accuses Rehbock of now claiming

to be attorney for the Consortium, of being an unethical attorney

in  segregat[ing] the funds in the settlement  to  make  his  own

claim  to  the  funds  without  the nonclients  consent,  and  of

switching  sides mid-settlement [to] structure a forced exchange.

The  Consortium  also  alleges that there  is  no  evidence  that

Rehbocks  fee agreement with Warden was a fee-sharing arrangement

that  would  allow  Rehbock  to claim  attorneys  fees  from  the

Consortium,  and thus that Rehbocks attempt to do so crosses  the

line  marked by Rule of Professional Conduct 1.8(f);  he  is  now

demanding compensation for representing [another] client  .  .  .

other  than  [the first] client.   The Consortium  cites  to  our

previous  decisions that once a conflict of interest  or  ethical

violation  is  established,  the  attorney  is  prohibited   from

collecting fees.56

          The   Consortiums  claims  of  ethical  violations  are

without  merit.  Ethics Opinion 92-3 speaks of a valid assignment

or perfected lien and indicates that the attorney is obligated to

withhold  and  segregate  those funds in question  when  disputes

arise.  Rehbock thus correctly declares that Ethics Opinion  92-3

does  not suggest that an attorney must pay the full amount of  a

lien  where  there  is  a dispute regarding the  liens  validity,

amount,  and susceptibility to pro rata reduction for  fees,  but

rather  simply directs the attorney to allow the court to  decide

the  dispute.  And the superior court did not err in invading the

settlement for a reduction for fees as the Consortium alleges.

          Rehbock  recognizes  that Rule of Professional  Conduct

1.15  clearly  calls for him to keep separate the disputed  joint

check, since the rule directs that if a dispute arises concerning

the  interests of an attorney and a third-party property that  is

in  the  attorneys  possession,  the  attorney  should  keep  the

          property separate.  Rehbock notes that the Allstate check was

payable  to  Warden and ANMC and thus required  them  to  resolve

their dispute as to who was entitled to how much of it.  We agree

with  Rehbock  that he handled the disputed check  in  accordance

with  the Rules of Professional Conduct.  None of the Consortiums

ethical allegations bear up under scrutiny.

          Second, in E.R., the Consortium alleges that Joyner had

a conflict of interest because he was attempting to claim his own

fees  from  the  settlement funds and because  an  attorney  acts

unethically in asserting a claim to trust funds for which  he  or

she  is trustee after his or her firm has been paid in full.  The

Consortium also alleges that Joyners attempt to secure additional

fees  for  himself from the liened funds undercuts the  statutory

lien and goes against Rule of Professional Conduct 1.8(f), as  he

is now demanding compensation for representing [another] client .

.  .  other than [the first] client.  The Consortium asserts that

Joyner  could have refused to advocate the lien in the settlement

or could have negotiated with the Consortium (with E.R.s consent)

for  the  price of his advocacy, but that [w]aiting  until  after

settlement  to  claim  more money is unethical.   The  Consortium

further  maintains  that  Joyner violated  Rule  of  Professional

Conduct 1.15(b) which requires an attorney, upon receiving  funds

in  which a third person has an interest, to promptly notify that

person  and  to  promptly deliver to the . . . third  person  any

funds  or  other property that the . . . third person is entitled

to  receive.  The Consortium advances an argument similar to  the

one  asserted in Warden, citing to Alaskas general rule that once

a  conflict of interest or ethical violation is established,  the

attorney is prohibited from collecting fees.57

          We determine that the Consortiums claims are inaccurate

for  several reasons.  First, Joyner was not attempting to secure

more fees for himself, as his fees had already been paid; rather,

he  was seeking on behalf of his client to require the Consortium

to  reimburse E.R. for a portion of E.R.s expenses.  Second,  the

          only basis on which the superior court appears to have found a

conflict of interest was the fact that Joyner advocated the  lien

in  the  settlement  and  then  advocated  against  its  validity

afterwards.   But Joyners position on the liens behalf  does  not

amount  to an unethical breach.  Third, Joyner properly disclosed

the receipt of the funds into his trust account, gave notice that

there  was  a  dispute over the amount that  the  Consortium  was

entitled  to receive, and informed the Consortium that the  funds

would  be  held  in trust until the dispute was  resolved.58   We

conclude,  therefore,  that the Consortiums  ethical  allegations

against Joyner are unfounded.


          Because the Consortium has a federal right to enforce a

statutory  health care provider lien to the same  extent  that  a

nongovernmental medical provider has such a right under state law

and  because  the  Consortium would be unjustly  enriched  if  it

benefited from settlement proceeds without paying a share of  the

attorneys  fees  that  created  the  settlement,  we  AFFIRM  the

superior  courts determinations in both cases.  We hold that  the

Consortium  can foreclose on its statutory health  care  provider

lien  and  that  its recovery should be subject  to  a  pro  rata

reduction for its share of attorneys fees and costs.

     1     These  cases  were not consolidated  for  briefing  or
argument.  We have consolidated them for purposes of the  opinion
because  they share similar factual backgrounds and raise similar
legal issues.

     2     The  Consortium appeals the reduction in  both  cases.
Only  in Warden, however, did the patient file a cross-appeal  of
the  superior  courts  determination that  the  Consortium  could
foreclose on its lien.

     3    Bennett v. Weimar, 975 P.2d 691, 694 (Alaska 1999).

     4     Jackinsky  v.  Jackinsky, 894 P.2d  650,  654  (Alaska

     5     Jerue  v.  Millett,  66 P.3d 736,  740  (Alaska  2003)
(quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)).

     6    25 U.S.C.  1621u(a) (2001).

     7       Whenever possible, we construe each part or  section
of  a  statute  with every other part or section,  to  produce  a
harmonious  whole.   Romann v. State,  Dept  of  Transp.  &  Pub.
Facilities,  991 P.2d 186, 190 (Alaska 1999) (quoting  Benner  v.
Wichman,  874 P.2d 949, 957 (Alaska 1994)); see also  Nystrom  v.
Buckhorn Homes, Inc., 778 P.2d 1115, 1122 (Alaska 1989)  (We  are
supported  in our conclusion concerning the meaning of  the  term
individual  by  reference to the usage  of  that  term  in  other
sections of the lien law.).

     8     See  generally Yukon-Kuskokwim Health Corp.  v.  Trust
Ins.  Plan  of  Southwest Alaska, 884 F. Supp.  1360  (D.  Alaska

     9     Warden also points to 25 U.S.C.  1681, which prohibits
the Indian Health Service from charging Indians with the economic
means  to pay until Congress selects a policy for doing so, which
it  has  not yet done.  Apart from sharing the same faulty  root,
the  Consortium  correctly points out that  1681 is  now  omitted
from the United States Code, as it was an appropriations rider in
1996  that  was  never subsequently reenacted.  See  25  U.S.C.A.
1681 (West 2003).

     10     This reasoning also defeats another claim of Wardens,
namely that AS 34.35.450 (discussed below) does not create a  new
right or cause of action against Warden or Wardens funds.  Again,
enforcement of the Consortiums lien was not a new cause of action
against  Warden  or  his  funds since  Warden  negotiated  for  a
separate check for ANMC; thus, those funds are not Wardens.

     11    Alaska Statute 34.35.450(b) provides:

          When the person receiving hospitalization has
          a   contract   providing  for  indemnity   or
          compensation   for  the  sum   incurred   for
          hospitalization, the hospital has a lien upon
          the  amount  payable under the contract.  The
          party  obligated to make reimbursement  under
          the  contract  may pay the sum due  under  it
          directly to the hospital, and this payment is
          a  full  release  of  the  party  making  the
          payment  under the contract in the amount  of
          the payment.
     12    884 F. Supp. 1360 (D. Alaska 1994).

     13    Id. at 1362.

     14    Id.

     15    Id.

     16    Id. at 1363.

     17    Id.

     18    Id. at 1368.

     19     The Consortium also makes a less convincing state law
argument to support its position, pointing to AS 34.35.025, which
applies  to  several  other types of liens and  which  authorizes
foreclosure actions against all parties personally liable .  .  .
and all other persons interested in the matter in controversy  or
the  property sought to be charged with the lien. The  Consortium
argues  that  this statute shows that the legislature  understood
the  difference between defendants who are personally liable  and
those  with an interest in the property and yet included both  as
possible  parties, and that given AS 34.35.930s call for  liberal
construction  of the lien chapter, this means at least  that  the
acknowledgment of different types of defendants for one group  of
lienholders  provides an analogy for others.  This other  statute
only shows, however, that the Legislature recognized that not all
parties to lien foreclosure actions have to be persons personally
liable;  it  does  not establish that someone who  is  personally
liable for the debt need not exist.

     20    25 U.S.C.  1621f (2001) provides:

          (a)   .  .  . all reimbursements received  or
          recovered, under authority of this chapter, .
          .  . or any other provision of law, by reason
          of the provision of health services by . .  .
          a   tribe  or  tribal  organization  under  a
          contract     pursuant    to    the     Indian
          Self-Determination  Act  .  .  .   shall   be
          retained  by  .  .  . that  tribe  or  tribal
          organization and shall be available  for  the
          facilities, and to carry out the programs, of
          .  .  . that tribe or tribal organization  to
          provide health care services to Indians.
          (b)   The  [Indian  Health] Service  may  not
          offset or limit the amount of funds obligated
          to  any  service  unit or  any  entity  under
          contract  with  the Service  because  of  the
          receipt  of  reimbursements under  subsection
          (a) of this section.
     21    See AS 45.03.104(a).

     22    See Ulmer v. Alaska Rest. & Beverage Assn, 33 P.3d 773,
776 (Alaska 2001) (A claim will be deemed moot if it has lost its
character  as a present, live controversy.  We have further  held
that a case is moot if the party bringing the action would not be
entitled to any relief even if it prevails.) (internal quotations
and alterations omitted).

     23    Restatement of Restitution  74 (1937).

     24    Martinez v. St. Joseph Healthcare Sys., 871 P.2d 1363,
1365 (N.M. 1994).

     25     The  Consortium maintains that the public  policy  in
favor of settlements would be disrupted if the delegation of lien
funds from an insurance carrier to the plaintiffs attorney became
a  source  of contention.  However, there will only be contention
as  long  as  there  is  uncertainty, which this  opinion  should

     26    556 P.2d 525, 526 (Alaska 1976).

     27    Id.

     28     The Consortium also cites to Rhoad v. McLean Trucking
Co.,  686  P.2d  483,  487  (Wash. 1984),  a  Washington  workers
compensation  case.   However, that case  not  only  involved  an
unambiguous  statute, id. at 485, it also explicitly  noted  that
our  decision in Cooper provided for apportionment  of  fees  and
thus  was  contrary to the rule in [Washington] that a  statutory
right  to reimbursement is not to be diminished absent an express
statutory provision.  Id. at 487.

     29    556 P.2d at 527-28.

     30    Martinez v. St. Joseph Healthcare Sys., 871 P.2d 1363,
1365 (N.M. 1994) (quoting N.M. Stat. Ann.  48-8-1 (1978)).

     31    Id.

     32    Ch. 75,  2, SLA 1959 (emphasis added).

     33     Municipality  of  Anchorage v. Suzuki,  41  P.3d  147
(Alaska 2002).

     34    871 P.2d at 1368.

     35     See  State  Farm Mut. Auto. Ins. Co. v.  Geline,  179
N.W.2d  815,  820  n.5-9 (Wis. 1970) (citing to  cases  in  other
jurisdictions  awarding  proportionate  fees  because  holder  of
subrogated  interest did not participate in action  but  received
benefit  of it, including Vignali v. Farmers Equitable Ins.  Co.,
216  N.E.2d  827 (Ill. App. 1966), which it described as  holding
that  since such expenses would have been paid by the insurer  if
it  had initiated the action the result should have been the same
even if such recovery was secured by the insured).

     36    See Bennett v. Artus, 20 P.3d 560, 563 (Alaska 2001).

     37    556 P.2d 525, 526 (Alaska 1976).

     38    Id. at 527.

     39    Id.

     40     Id. at 527 n.11 (citing Quinn v. State, 539 P.2d 761,
764-65  (Cal.  1975)).   Although not  addressing  any  equitable
underpinnings, we also addressed pro rata reductions in dicta  in
Ruggles ex. rel Estate of Mayer v. Grow 984 P.2d 509, 512 (Alaska
1999).   The  present  case  differs from  Ruggles  in  that  the
Consortium is not an insurer and Warden was not its insured.  But
as  argued  by  the  attorney in the companion E.R.  case,  since
Alaska  Natives are entitled to free care at ANMC, the Consortium
could  be seen as being like an insurer in that it must bear  the
financial  burden  of  providing health care notwithstanding  any
likelihood of recovering from third parties.  Ruggles might  thus
provide  additional  jurisprudential support  for  requiring  the
Consortium to bear its pro rata share of fees.

     41     The Consortium points out, for instance, that workers
compensation carriers do not compute their premiums  with  third-
party  recovery  in  mind, as opposed to the Consortiums  funding
mechanism,  which  does.  The Consortium also  argues  in  Warden
(without  citing  any support) that letting  Rehbock  govern  the
tortfeasor   litigation  and  the  settlement   negotiation   and
management is a Congressionally anticipated act of self-restraint
on  the  part  of  its tribal health contractors.   This  is  not
conduct to be characterized disparagingly as free or easy riding.

     42    Martinez v. St. Joseph Healthcare Sys., 871 P.2d 1363,
1365 (N.M. 1994).

     43    Id. at 1366.

     44    Id.

     45    Id. at 1366-67 (citations omitted).

     46    The only real difference is that the patients suit was
against  her  own insurer and not a tortfeasors, but  as  already
noted,  the  Consortium  has the same right  of  recovery  as  an
individual  does  for reimbursement, so this distinction  is  not

     47    Edwards v. Alaska Pulp Corp., 920 P.2d 751, 754 (Alaska
1996)  (quoting  Boeing  Co. v. Van Gemert,  444  U.S.  472,  478

     48    Id. at 755.

     49    Id. at 754 (quoting Boeing, 444 U.S. at 478); see also
Municipality of Anchorage v. Gentile, 922 P.2d 248,  267  (Alaska

     50    920 P.2d at 756 (footnote and citation omitted).

     51     See Oakley v. Firemans Fund of Wis., 470 N.W.2d  882,
887  (Wis.  1991); State Farm Mut. Auto. Ins. Co. v. Geline,  179
N.W.2d  815,  822  (Wis. 1970); In re Marriage  of  Meadows,  492
N.W.2d 656, 658 (Iowa 1992).

     52     Restatement of Restitution  2 (1937)  (A  person  who
officiously  confers a benefit upon another is  not  entitled  to
restitution therefor.); id.  112.

     53    776 P.2d 681, 683 (Wash. 1989).

     54    871 P.2d at 1367.

     55    Id. at 1367-68.

     56     In  re Estate of Brandon, 902 P.2d 1299, 1317 (Alaska
1995)  (In Alaska, the general rule has been that once a conflict
of  interest or other ethical violation has been established, the
attorney  is  prohibited from collecting  fees  for  his  or  her

     57    Id.

     58     Furthermore,  even assuming that the superior  courts
finding of a conflict of interest were correct, the finding would
not  necessarily  have  precluded the  court  from  wielding  its
equitable powers to award fees to Joyner.  See Bennett v.  Artus,
20  P.3d 560, 563 (Alaska 2001) (holding that, even though  trial
court  condemned  conduct  of attorney  who  had  a  conflict  of
interest,  trial  court  could have  permissibly  concluded  that
greater  inequity  would  result by allowing  opposing  party  to
retain benefit of attorneys uncompensated contributions).