Opinion
No. C2-99-59.
Filed August 31, 1999.
Appeal from the District Court, Hennepin County, File No. CT9721950.
Jon R. Hawks, George E. Warner, Jon R. Hawks, Ltd., (for appellants)
Eric J. Magnuson, Doreen A. Mohs, Rider, Bennett, Egan Arundel, LLP, (for respondent Blue Cross and Blue Shield of Minnesota)
John Paul Martin, Rodger D. Squires, Hessian McKasy, P.A., (for respondent Norwest Bank Minnesota, N.A.)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellants Mount Sinai Hospital, Mount Sinai Hospice Home Care, L. Brian Katz, M.D., and Anthony J. Vine, M.D. (collectively Mount Sinai) challenge the district court's order denying their motions to intervene in an interpleader action brought by respondent Blue Cross and Blue Shield of Minnesota (Blue Cross) against Sanford A. Komissar and respondent Norwest Bank Minnesota, N.A. Mount Sinai alleges the trial court erred in refusing to allow it to assert its equitable and contractual rights to the funds deposited with the court by Blue Cross. Blue Cross requests that this court affirm its discharge from any further liability to Norwest or Mount Sinai. Mount Sinai moved for sanctions against Norwest and Blue Cross. We reverse the district court's order denying Mount Sinai's motion to intervene, affirm the discharge of Blue Cross, and deny Mount Sinai's motion for sanctions.
FACTS
From 1986 to 1989, Norwest loaned Komissar more than $400,000. When Komissar failed to repay the money, Norwest commenced an action against him and in 1989 obtained a default judgment.
Komissar suffers from a variety of health problems. In 1997 while Komissar was in New York City, he received more than $73,000 in medical care and treatment from Mount Sinai. Pursuant to Komissar's Blue Cross insurance policy, Mount Sinai billed Blue Cross directly for their services. Blue Cross did not dispute that these providers rendered the covered services, that the treatment was reasonable, or that they were entitled to payment from Blue Cross.
Attempting to satisfy its judgment against Komissar, Norwest served multiple garnishment summons on Blue Cross to collect the payments that would be paid to Komissar's medical providers for claims they submitted to Blue Cross.
Komissar's health care contract with Blue Cross provides that Blue Cross will reimburse him for certain health care services incurred by him. The policy, however, provided for direct payment to "participating providers" and payment directly to Komissar when a "nonparticipating provider" was used. Additionally, the policy prevented Komissar from assigning the benefits except under two limited instances.
Norwest contends the hospital, hospice, and doctors are nonparticipating providers and therefore benefits payable under the Blue Cross contract are payable to Komissar and subject to garnishment. They also argue there is no evidence Komissar assigned the funds to Mount Sinai.
On December 4, 1997, Blue Cross filed a complaint for interpleader and declaratory relief regarding the funds which Norwest sought to garnish from Blue Cross. Blue Cross petitioned the district court to require Norwest and Komissar to settle between themselves the rights to the money due pursuant to the Blue Cross contract and to discharge Blue Cross from liability.
In June 1998, Blue Cross moved the district court for leave to deposit the disputed funds into court pursuant to Minn.R.Civ.P. 67.01. As part of its motion, Blue Cross identified health care providers, including Mount Sinai, who had submitted claims to the funds.
On July 1, 1998, the court granted Blue Cross's motion to deposit the funds. The court's order gave the health care providers, including Mount Sinai, 30 days from the date of the order to intervene and "request a hearing or request to be included in any hearing" that would determine their entitlement to the deposited funds. The order also provided that in the absence of intervention, Norwest was to be awarded all of the unclaimed funds. Finally, the order discharged Blue Cross once it had served notice of entry of the order on the health care providers.
On July 2, 1998, counsel for Blue Cross served a copy of the court's July 1, 1998, order on all health care providers who had an interest in the deposited funds. On July 29, 1998, acting pro se, Dr. Katz submitted an affidavit to the court describing his and Dr. Vine's claim to the disputed funds. Dr. Katz also submitted documents supporting his claim. The doctors later obtained counsel and filed a formal motion for intervention. On July 30, 1998, Mount Sinai Hospital and Mount Sinai Hospice Home Care moved for leave to intervene. Norwest subsequently opposed the intervention. The district court denied Mount Sinai's motions to intervene, finding the motions were untimely. The court also released the deposited funds to Norwest and discharged Blue Cross. This appeal followed.
DECISION
1. Mount Sinai filed its motions to intervene under Minn.R.Civ.P. 24.01. "In reviewing orders concerning intervention as of right under Minn.R.Civ.P. 24.01, this court will independently assess the appropriateness of the order." Erickson v. Bennett , 409 N.W.2d 884, 886 (Minn.App. 1987).
Minn.R.Civ.P. 24.01 sets out four requirements that a nonparty must meet before being allowed to intervene as a matter of right:
(1) a timely application for intervention; (2) an interest relating to the property or transaction which is the subject of the action; (3) circumstances demonstrating that the disposition of the action may as a practical matter impair or impede the party's ability to protect that interest; and (4) a showing that the party is not adequately represented by the existing parties.
Id. (citation omitted). The district court found Mount Sinai's motions to intervene were untimely and, therefore, denied them. We disagree.
The timeliness of an application to intervene must be determined by the particular circumstances of each case, including such factors as "how far the suit has progressed, the reason for any delay in seeking intervention, and any prejudice to the existing parties because of a delay." Erickson , 409 N.W.2d at 886 (quotation omitted) . "Rule 24.01 is designed to protect nonparties from having their interests adversely affected by litigation conducted without their participation." BE K Constr. Co. v. Peterson, 464 N.W.2d 756, 758 (Minn.App. 1991). The rule is liberally applied. Blue Cross Blue Shield v. Flam , 509 N.W.2d 393, 396 (Minn.App. 1993), review denied (Minn. Feb. 24, 1994).
In the present case, the suit was still in its early stages when Mount Sinai gave notice of its intent to intervene and Norwest was not prejudiced by the delay. Mount Sinai responded within 30 days of receiving formal notice of the interpleader action and Norwest had full knowledge of Mount Sinai's claims to the funds as early as December 1997 when Blue Cross filed its interpleader complaint.
Additionally, Mount Sinai has an interest in the funds sufficient to support intervention. It will be unable to protect its interest unless it is allowed to intervene, and it is not adequately represented by the existing parties. See Erickson , 409 N.W.2d at 886.
Finally, section 571.83 of the garnishment chapter highlights the importance the legislature has placed on allowing intervenors to protect their rights in circumstances such as those in the present case. That section requires the court to permit the intervention of a person who is not a party to a garnishment action but "has or claims an interest" in any of the money that is the subject of the action. Minn. Stat. § 571.83 (1998).
Although Mount Sinai did not seek to intervene in the underlying garnishment proceeding brought by Norwest against Blue Cross, it would have been permitted to under this statute. Mount Sinai should not be prohibited from intervention in the interpleader action when it would be permitted to intervene in a garnishment proceeding that would require resolution of the same issues as those in the interpleader action. We conclude that the district court should have allowed intervention in this case.
2. Mount Sinai claims that because the district court improperly denied its motion to intervene, it was also error to discharge Blue Cross from its underlying obligation. Mount Sinai seems to argue that discharging Blue Cross without allowing Mount Sinai to litigate its claims against Blue Cross violates its right to due process because the district court never had personal jurisdiction over Mount Sinai.
An interpleader action is not predicated on in personam jurisdiction, but deals with the res that is in dispute. See Minn.R.Civ.P. 22, 67. We interpret Minn.R.Civ.P. 67.02 as contemplating a situation in which several parties make a claim to money or property held by a disinterested third party. "The rule permits the disinterested third party to deposit the money or property into court and be relieved of any further liability." Auto Owners Ins. Co. v. Valadez , 481 N.W.2d 398, 401 (Minn.App. 1992). The court then acquires in rem jurisdiction over the property and may proceed to resolve the competing claims to the property. Id.
Accordingly, we conclude the district court appropriately relieved Blue Cross of any further liability because Blue Cross fulfilled the requirements of Minn.R.Civ.P. 67.02.
3. Mount Sinai moved this court for sanctions in the form of costs and attorney fees, apparently under Minn. Stat. § 549.211 (1998). Mount Sinai's motion is procedurally flawed and we find no substantive basis for the award. The motion is denied.