Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons, and
Agee, JJ., and Carrico, S.J.
ADAM AFZALL, AN INFANT,
BY AND THROUGH HIS PARENTS
AND NEXT FRIENDS,
SOPHIA AFZALL
AND STEPHEN AFZALL
OPINION BY
v. Record No. 060767 SENIOR JUSTICE HARRY L. CARRICO
January 12, 2007
COMMONWEALTH OF VIRGINIA
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Robert Wooldridge, Judge
Adam Afzall, an infant then nine years of age, was severely
injured by the negligence of a third party. The Department of
Medical Assistance Services (DMAS), the Commonwealth’s provider
of benefits under the national Medicaid program, paid
$419,809.56 for a portion of the costs of Adam’s treatment
related to those injuries. Adam, by his parents and next
friends, Sophia and Stephen Afzall, brought an action against
the third party alleging the third party’s negligence caused
Adam’s injuries. The parties settled the case, which was
approved by the trial court on September 3, 2004.
By letter dated December 3, 2004, the Commonwealth claimed
a lien for the amount DMAS paid for Adam’s care. Adam’s counsel
computed the “Commonwealth’s share” of Adam’s expenses for legal
fees and costs at $142,017.62 in obtaining the settlement.1
Counsel submitted a check to the Office of the Attorney General
for $277,791.94, representing the amount DMAS paid less the
proportionate amount of Adam’s legal fees and costs, “in full
satisfaction of [the] lien.” The Office of the Attorney General
returned the check with a demand for payment of the full lien in
the amount of $419,809.56.
Adam, by his parents and next friends, then filed a motion
for declaratory judgment against the Commonwealth, seeking a
declaration that the “Commonwealth’s share” of his expenses for
legal fees and costs in obtaining settlement of his negligence
case should be deducted from the amount of the lien.
In support of his position, Adam cited a provision in the
second paragraph of Code § 8.01-66.9, which, after establishing
liens for payments made by DMAS and other institutions for
persons who sustain personal injuries, provides as follows:
The Commonwealth’s or such Department’s or institution’s
lien shall be inferior to any lien for payment of
reasonable attorney’s fees and costs, but shall be superior
to all other liens created by the provisions of this
chapter and otherwise. Expenses for reasonable legal fees
and costs shall be deducted from the total amount
recovered.
1
The record shows that Adam’s legal fees were based upon
“one-third of the gross recovery, the amount of which is
confidential.”
2
Adam argued in the trial court that a plain reading of Code
§ 8.01-66.9 dictates that a plaintiff’s legal fees and costs
must be deducted from DMAS’s share of any recovery. The
Commonwealth argued that the statute did not require any
deduction. The trial court rejected Adam’s argument and
dismissed his motion for declaratory judgment. We awarded Adam
this appeal.
Adam makes the same argument on appeal as he made in the
trial court. However, for the first time, the Commonwealth
interposes an argument that “[s]overeign immunity bars a
declaratory judgment against the Commonwealth or its agencies.”
The Commonwealth concedes that it did not raise the
doctrine of sovereign immunity in the trial court or in its
brief in opposition to Adam’s petition for appeal, but it
asserts that the failure to raise the issue at an earlier time
does not constitute the Commonwealth’s waiver of its sovereign
immunity, citing Commonwealth v. Luzik, 259 Va. 198, 206-07, 524
S.E.2d 871, 877 (2000) (failure to assign cross-error to trial
court’s denial of claim of sovereign immunity cannot constitute
waiver of claim). Adam does not question the timeliness of the
Commonwealth’s argument concerning the doctrine of sovereign
immunity, but he contends sovereign immunity does not apply in
this case.
3
We agree that the Commonwealth can raise the defense of
sovereign immunity for the first time on appeal because if
sovereign immunity applies, the court is without subject matter
jurisdiction to adjudicate the claim. Id. at 206-07, 524 S.E.2d
at 876-77. “[O]nly the legislature acting in its policy-making
capacity can abrogate the Commonwealth’s sovereign immunity.”
Id. at 206, 524 S.E.2d at 876. A “‘waiver of immunity cannot be
implied from general statutory language’” but must be
“‘explicitly and expressly announced’” in the statute. Hinchey
v. Ogden, 226 Va. 234, 241, 307 S.E.2d 891, 895 (1983) (quoting
Elizabeth River Tunnel Dist. v. Beecher, 202 Va. 452, 457, 117
S.E.2d 685, 689 (1961)).
In the absence of such a waiver by the legislature, the
courts of this Commonwealth do not have the necessary
jurisdiction “to entertain [an] action.” Luzik, 259 Va. at 206,
524 S.E.2d at 877. Such subject matter jurisdiction cannot be
waived by the Commonwealth or given to a court by agreement or
inaction of the parties. Subject matter jurisdiction
can only be acquired by virtue of the Constitution or of
some statute. Neither the consent of the parties, nor
waiver, nor acquiescence can confer it. Nor can the right
to object for a want of it be lost by acquiescence,
neglect, estoppel or in any other manner. . . . and the
want of such jurisdiction of the trial court will be
noticed by this court ex mero motu.
4
Board of Supervisors v. Board of Zoning Appeals, 271 Va. 336,
344, 626 S.E.2d 374, 379 (2006) (quoting Humphreys v.
Commonwealth, 186 Va. 765, 772-73, 43 S.E.2d 890, 894 (1947)).
“As a general rule, the Commonwealth is immune both from
actions at law for damages and from suits in equity to restrain
governmental action or to compel such action.” Alliance to Save
the Mattaponi v. Commonwealth, 270 Va. 423, 455, 621 S.E.2d 78,
96 (2005). “[T]he doctrine of sovereign immunity serves a
multitude of purposes including but not limited to protecting
the public purse, providing for smooth operation of government,
eliminating public inconvenience and danger that might spring
from officials being fearful to act, assuring that citizens will
be willing to take public jobs, and preventing citizens from
improperly influencing the conduct of governmental affairs
through the threat or use of vexatious litigation.” Messina v.
Burden, 228 Va. 301, 308, 321 S.E.2d 657, 660 (1984).
Sovereign immunity may also bar a declaratory judgment
proceeding against the Commonwealth. Virginia Bd. of Med. v.
Virginia Physical Therapy Ass’n, 13 Va. App. 458, 413 S.E.2d 59
(1991)(VBM I), aff’d, 245 Va. 125, 427 S.E.2d 183 (1993)(VBM
II). VBM I involved a bill of complaint for declaratory
judgment filed by the Virginia Physical Therapy Association (the
VPTA) against the Virginia Board of Medicine (the Board) for
declaratory and injunctive relief against the enforcement of any
5
rule prohibiting the use of electromyographic examinations by
physical therapists. The trial court granted the relief sought
by VPTA, and the Board appealed.
The dispositive question before the Court of Appeals was
whether “the circuit court had subject matter jurisdiction to
hear the case.” Id. at 460, 413 S.E.2d at 61. The Court of
Appeals determined that the jurisdiction issue turned on “the
relationship between judicial review of the Board’s actions and
the doctrine of sovereign immunity.” Id. at 464, 413 S.E.2d at
63.
The Court of Appeals noted that in the Virginia
Administrative Process Act (VAPA),
the General Assembly has waived sovereign immunity only to
allow a party to obtain judicial review of the Board’s
adoption of rules or the Board’s case decisions, as such
are defined in the VAPA, in the manner provided in the
VAPA. In short, the Board has consented to and may be sued
only for its promulgation of a rule or its decision of a
case, as both are defined in the VAPA. The VPTA’s right to
bring a declaratory judgment action and in turn the court’s
jurisdiction to exercise jurisdiction over the action must
be founded on the provisions of Code § 9-6.14:16(A) and
fall within the explicit and limited waiver of sovereign
immunity contained in that Code section.[2]
Id. at 466, 413 S.E.2d at 64. The relief provided by then Code
§ 9-6.14:16(A) against the unlawfulness of a regulation or a
case decision was by an “appropriate and timely court action
2
Code § 9-6.14:16(A), part of the former Virginia
Administrative Process Act, was repealed by Acts 2001 ch. 844
6
against the agency . . . in the manner provided by the rules of
the Supreme Court of Virginia.”
The Court of Appeals noted that this Court in Kenley v.
Newport News Gen. & Non-Sectarian Hosp. Ass’n, 227 Va. 39, 314
S.E.2d 52 (1984), had concluded that, as Code § 9-6.14:16 then
read, a motion for declaratory judgment used to accomplish the
purpose of a direct appeal of a pending case was an available
procedure for that purpose. VBM I, 13 Va. App. at 468, 413
S.E.2d at 65. The Court of Appeals noted further that,
subsequent to the decision in Kenley, Code § 9-6.14:16 had been
revised by the General Assembly and no longer contained the
“ ‘imprecise language’ ” that prompted the decision in Kenley.
In fact, what was removed from Code § 9-6.14:16 was this telling
sentence: “Such proceedings include those for declaratory
judgments.” Kenley, 227 Va. at 46, 314 S.E.2d at 56.
The Court of Appeals stated that, “[i]n its present form,
Code § 9-6.14:16 clearly provides that the procedural steps for
obtaining court review of agency actions adopting a rule or
rendering a case decision are the procedural steps provided by
the Rules of the Supreme Court.” VBM I, 13 Va. App. at 468-69,
413 S.E.2d at 65. Part Two A of the Rules of the Supreme Court
of Virginia governs “Appeals Pursuant to the Administrative
and is now Code § 2.2-4026, part of the present Administrative
Process Act.
7
Process Act.” Notably lacking in these Rules is any mention of
the use of a motion for declaratory judgment as a means of
obtaining judicial review of an agency’s adoption of regulations
or its case decisions. Accordingly, the Court of Appeals
reversed the judgment of the trial court “[b]ecause [it] found
the circuit court lacked jurisdiction to hear the case.” VBM I,
13 Va. App. at 469, 413 S.E.2d at 66.
This Court awarded VPTA an appeal “to consider the question
whether the Court of Appeals erred in holding that the circuit
court lacked subject matter jurisdiction.” We said that we had
“considered this question and, for the reasons assigned by the
Court of Appeals in its opinion, we will affirm its judgment.”
VBM II, 245 Va. at 126, 427 S.E.2d at 184.
Adam argues that VBM I is distinguishable from the case at
bar. He contends the only similarity between the two cases is
that the plaintiffs in both filed for declaratory judgments and
the Commonwealth was a party to both. Unlike the plaintiff in
VBM I, Adam says, he does not “attempt to challenge the rules of
a governmental agency or otherwise to interfere with
governmental functions.” Nor, Adam continues, does he “attempt
to improperly influence the conduct of governmental affairs
through the threat or use of vexatious litigation or for damages
against the government or to restrain or compel it to act.”
What he has sought, Adam concludes, is “a judicial
8
interpretation not of the government’s right to recover its
statutory lien, but to determine what the Legislature meant when
it drafted the very statute that created the lien.”
We agree with the Commonwealth that VBM I governs the
outcome of this case and is not distinguishable. The close
similarity between this case and VBM I is that in each case the
plaintiff seeks to compel the Commonwealth to take certain
actions: in VBM I to refrain from enforcing a rule against the
use of electromyographic examinations by physical therapists and
in this case to require a reduction in the amount of the
Commonwealth’s lien for payments made for Adam’s treatment.
Both would have the effect of interfering with governmental
functions and, in Adam’s case, the adverse effect upon
“protecting the public purse.” Messina, 228 Va. at 308, 321
S.E.2d at 660.
In any event, the ultimate question in this case is whether
Code § 8.01-66.9, upon which Adam relies, evinces an intention
on the part of the General Assembly to waive sovereign immunity
so as to permit a party to seek judicial review by way of a
motion for declaratory judgment of action taken pursuant to that
Code section. The second paragraph of Code § 8.01-66.9 makes
the Commonwealth’s lien “inferior to any lien for payment of
reasonable attorney’s fees and costs” but “superior to all other
liens created by the provisions of this chapter,” with
9
“[e]xpenses for reasonable legal fees and costs [deductible]
from the total amount recovered.”
We find nothing in the language of this paragraph of Code
§ 8.01-66.9 that evinces such an intention. But, as the
Commonwealth points out, another paragraph of Code § 8.01-66.9
makes it clear that when the General Assembly intends to waive
sovereign immunity and provide a particular procedure for an
injured person to follow in seeking judicial review, it knows
how to demonstrate that intention. The final paragraph of the
statute provides that “[t]he court in which a suit by an injured
person . . . has been filed against the person . . . alleged to
have caused such injuries or in which such suit may properly be
filed, may, upon motion or petition by the injured person, . . .
after written notice is given to those holding liens attaching
to the recovery, reduce the amount of the liens and apportion
the recovery . . . between the plaintiff, the plaintiff’s
attorney, and the Commonwealth or such Department or institution
as the equities of the case may appear.” Consequently, we
conclude the bar of sovereign immunity applies in this case
because the Commonwealth has not waived that defense in the
context of a declaratory judgment action within the purview of
Code § 8.01-66.9.
Since sovereign immunity applies in this case, the trial
court was without jurisdiction to adjudicate Adam’s claim.
10
Therefore, we will dismiss the appeal and enter final judgment
in favor of the Commonwealth.
Dismissed and final judgment.
11