Judge: Lisa R. Jaskol, Case: 19STCV15763, Date: 2024-07-24 Tentative Ruling
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Case Number: 19STCV15763 Hearing Date: July 24, 2024 Dept: 28
Having considered the moving, opposition, and reply papers, the Court rules as follows.
BACKGROUND
On May 6, 2019, Plaintiffs Jazlynn Amari Moran, by and through her guardian ad litem Jennifer Moran, and Jennifer Moran filed this action against Defendants Garfield Medical Center (“Garfield”), Jamie C. Lin, M.D. (“Lin”), Ben Ha, M.D. (“Ha”), and Does 1-30 for negligence.
On July 26, 2019, the Court appointed Jennifer Moran to serve as Plaintiff Jazlynn Amari Moran’s guardian ad litem.
On June 5, 2019, Garfield filed an answer. On June 17, 2019, Lin filed an answer. On June 24, 2019, Ha filed an answer.
On March 17, 2020, the Court granted Plaintiff Jazlynn Amari Moran’s motion for trial preference. The Court ruled that the trial would remain scheduled for November 2, 2020.
On August 13, 2020, the Court granted Ha’s ex parte application and continued the trial to February 23, 2021.
On August 25, 2020, Plaintiffs filed a notice of settlement.
On October 23, 2020, Petitioner Jennifer Moran (“Petitioner”) filed a petition to approve the compromise of minor Plaintiff Jazlynn Amari Moran’s pending action. An attachment to the petition stated: “Medi-Cal claims that it paid $410,466.68, but the plaintiff disputes that amount. . . . The petitioner proposes to hold that sum in its client trust account pending later determination of the Medi-Cal lien claim, under Welfare & Institutions Code section 14124.76 (separate motion to determine lien claim).” The petition asked the Court to retain jurisdiction of the case pending resolution of the lien claim. The petition also asked the Court to find that the present value of Plaintiff Jazlynn Amari Moran’s future care was $28,185,265.00.
On January 29, 2021, the Court granted the petition to approve the compromise of Plaintiff Jazlynn Amari Moran’s claims and also approved a special needs trust. The gross amount of the settlement was $7,480,000.00. The Court observed:
“Petitioner states that Claimant has outstanding medical expenses paid by Medi-Cal in the amount of $410,466.68. (Pet., ¶ 13b(4).) The Medi-Cal lien in dispute is $410,466.68. (Id.)
“The balance of the proceeds of the proposed settlement remaining for Claimant after payment of all requested fees and expenses is $5,820,895.86.” (Jan. 29, 2021 minute order p. 3.)
On March 1, 2021, the Court dismissed Garfield with prejudice at Plaintiffs’ request. On April 27, 2021, the Court dismissed Lin with prejudice at Plaintiffs’ request.
On April 27, 2021, the Court dismissed the entire action with prejudice at Plaintiffs’ request. The order of dismissal did not address the Court’s previous order reserving jurisdiction to resolve the lien dispute. The Court finds that the dismissal order did not deprive the Court of jurisdiction to address the lien dispute.
On March 21, 2024, Plaintiff Jazlynn Amari Moran (“Plaintiff”), by and through her guardian ad litem Jennifer Moran, filed a motion under Welfare & Institutions Code section 14124.76 to determine the amount of the Department of Health Care Services’s lien. The motion was set for hearing on June 14, 2024. On June 4, 2024, the Department of Health Care Services (“the Department”) filed an opposition. On June 7, 2024, Plaintiff filed a reply. The Court continued the hearing to July 24, 2024.
REQUESTS
Plaintiff asks the Court to reduce the Department’s Medi-Cal lien to zero, $19,224, or $66,645.
The Department asks the Court to deny the motion and confirm a lien of $371,633.85.
EVIDENTIARY OBJECTIONS
Department’s objections
Overruled
Plaintiff’s objections
Overruled
LEGAL STANDARD
Welfare and Institutions Code section 14124.785 provides:
“The director’s recovery is limited to the amount derived from applying Section 14124.72, 14124.76, or 14124.78, whichever is less, to the total settlement, judgment, or award amount upon resolution of all actions or claims associated with the injury with regard to each and every defendant. All statutes of limitations related to the recovery of the director’s lien are tolled until the director receives notification of the resolution of all actions or claims associated with the injury with regard to each and every defendant.”
(Welf. & Inst. Code, § 14124.785.)
Welfare and Institutions Code section 14124.72 provides:
“(a) If an action is brought by the director pursuant to Section 14124.71, it shall be commenced within the period prescribed in Section 338 of the Code of Civil Procedure.
“(b) The death of the beneficiary does not abate any right of action established by Section 14124.71.
“(c) When an action or claim is brought by persons entitled to bring such actions or assert such claims against a third party who may be liable for causing the death of a beneficiary, any settlement, judgment or award obtained is subject to the director’s right to recover from that party the reasonable value of the benefits provided to the beneficiary under the Medi-Cal program, as provided in subdivision (d).
“(d) The director’s claim for reimbursement of the benefits provided to the beneficiary shall be limited to the amount of the director’s lien, as defined in subdivision (d) of Section 14124.70. If the action or claim is brought by the beneficiary alone and the beneficiary incurs a personal liability to pay attorney’s fees and costs of litigation, the amount of the director’s lien that is reimbursed shall be reduced by 25 percent, which represents the director’s reasonable share of attorney’s fees paid by the beneficiary, and that portion of the cost of litigation expenses determined by multiplying the actual litigation expenses by the ratio of the amount reimbursed to the director as satisfaction of the director’s lien, prior to deducting reasonable attorney’s fees and litigation expenses, to the full amount of the settlement, judgment, or award.”
(Welf. & Inst. Code, § 14124.72.)
Welfare and Institutions Code section 14124.76 provides:
“(a) No settlement, judgment, or award in any action or claim by a beneficiary to recover damages for injuries, where the director has an interest, shall be deemed final or satisfied without first giving the director notice and a reasonable opportunity to perfect and to satisfy the director’s lien. Recovery of the director’s lien from an injured beneficiary’s action or claim is limited to that portion of a settlement, judgment, or award that represents payment for medical expenses, or medical care, provided on behalf of the beneficiary. All reasonable efforts shall be made to obtain the director’s advance agreement to a determination as to what portion of a settlement, judgment, or award that represents payment for medical expenses, or medical care, provided [on] behalf [of] the beneficiary. Absent the director’s advance agreement as to what portion of a settlement, judgment, or award represents payment for medical expenses, or medical care, provided on behalf of the beneficiary, the matter shall be submitted to a court for decision. Either the director or the beneficiary may seek resolution of the dispute by filing a motion, which shall be subject to regular law and motion procedures. In determining what portion of a settlement, judgment, or award represents payment for medical expenses, or medical care, provided on behalf of the beneficiary and as to what the appropriate reimbursement amount to the director should be, the court shall be guided by the United States Supreme Court decision in Arkansas Department of Health and Human Services v. Ahlborn (2006) 547 U.S. 268 and other relevant statutory and case law.
“(b) If the beneficiary has filed a third-party action or claim, the court where the action or claim was filed shall have jurisdiction over a dispute between the director and the beneficiary regarding the amount of a lien asserted pursuant to this section that is based upon an allocation of damages contained in a settlement or compromise of the third-party action or claim. . . . When an action is pending, the person making the motion shall pay a regular law and motion fee. Notwithstanding Section 1064 of the Code of Civil Procedure, either the beneficiary or the director may appeal the final findings, decision, or order.
“(c) The court shall issue its findings, decision, or order, which shall be considered the final determination of the parties’ rights and obligations with respect to the director’s lien, unless the settlement is contingent on an acceptable allocation of the settlement proceeds, in which case, the court’s findings, decision, or order shall be considered a tentative determination. If the beneficiary does not serve notice of a rejection of the tentative determination, which shall be based solely upon a rejection of the contingent settlement, within 30 days of the notice of entry of the court’s tentative determination, subject to further consideration by the court pursuant to subdivision (d), the tentative determination shall become final. Notwithstanding Section 1064 of the Code of Civil Procedure, either the beneficiary or the director may appeal the final findings, decision, or order.
“(d) If the beneficiary does not accept the tentative determination, which shall be based solely upon a rejection of the contingent settlement, any party may subsequently seek further consideration of the court’s findings upon application to modify the prior findings, decision, or order based on new or different facts or circumstances. The application shall include an affidavit showing what application was made before, when, and to what judge, what order or decision was made, and what new or different facts or circumstances, including a different settlement, are claimed to exist. Upon further consideration, the court may modify the allocation in the interest of fairness and for good cause.”
(Welf. & Inst. Code, § 14124.76.)
Welfare and Institutions Code section 14124.78 provides:
“Notwithstanding any other provision of law, in no event shall the director recover more than the beneficiary recovers after deducting, from the settlement judgment, or award, attorney’s fees and litigation costs paid for by the beneficiary. If the director’s recovery is determined under this section, the reductions in subdivision (d) of Section 14124.72 shall not apply.”
(Welf. & Inst. Code, § 14124.78.)
“In [Arkansas Department of Health and Human Services v. Ahlborn (2006) 547 U.S. 268 (Ahlborn)], the United States Supreme Court held that the entire settlement is not subject to Medicaid reimbursement, but only . . . that portion of the settlement attributable to medical benefits. (Ahlborn, supra, 547 U.S. at p. 282, 126 S.Ct. 1752.) Ahlborn, however, does not mandate a particular formula for allocating medical benefits where the settlement makes no such allocation. Instead, the allocation must be made on the basis of a ‘rational approach.’ ” (Martinez v. State Dept. of Health Care Services (2017) 19 Cal.App.5th 370, 374, quoting Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 754 (Bolanos).)
DISCUSSION
A. The Department properly asserted a lien based on Plaintiff’s past medical expenses
In her complaint, Plaintiff sought damages for past medical expenses. Nonetheless, Plaintiff now argues that her $7,480,000.00 settlement includes no compensation for past medical expenses which Medi-Cal paid. According to Plaintiff, because she was required to assign her claim for past medical expenses to the Department, she could not pursue damages based on those expenses in her lawsuit. (Motion p. 15 [Plaintiff “did not pursue recovery of a claim that was not hers to make”].) As a result, Plaintiff argues, the Department has no enforceable lien on the settlement proceeds and the Court cannot allocate any portion of the settlement to past medical benefits.
The Court of Appeal rejected a similar argument in L.Q. v. California Hospital Medical Center (2021) 69 Cal.App.5th 1026, 1049-50:
“Nor can we conclude, as plaintiff suggests, that as a matter of law her settlement could not have included any recovery for past medical expenses. Plaintiff suggests that ‘[h]aving acquired by forced assignment the right to past medical expenses, the State—not the Medicaid recipient—is responsible for pursuing the tortfeasor for reimbursement.’ But plaintiff's analysis is at odds with California law, which specifically provides that ‘[n]o settlement, judgment, or award in any action or claim by a beneficiary to recover damages for injuries, where the [DHCS] director has an interest, shall be deemed final or satisfied without first giving the director notice and a reasonable opportunity to perfect and to satisfy [a] director's lien [on] ... that portion of a settlement, judgment, or award that represents payment for medical expenses, or medical care, provided on behalf of the beneficiary.’ ([Welf. & Inst. Code,] § 14124.76, subd. (a), italics added.) This provision cannot be reconciled with plaintiff's suggestion that a Medi-Cal beneficiary's settlement with a tortfeasor necessarily excludes damages for past medical expenses.”
Plaintiff also appears to contend that the Department cannot seek reimbursement of Plaintiff’s medical expenses unless the Department intervened in Plaintiff’s case or otherwise directly enforced its rights against the Defendants who allegedly caused Plaintiff’s injuries. Yet “[t]he Department can obtain reimbursement by filing an action directly against a third-party tortfeasor, by intervening in a Medi-Cal beneficiary’s action against a third party or by filing a lien against a beneficiary's settlement, judgment or award.” (Espericueta v. Shewry (2008) 164 Cal.App.4th 615, 622-623 (Espericueta), citing Welf. & Inst. Code, §§ 14124.71, 14124.72, 14124.73.)
The Court concludes that Plaintiff has not shown that the settlement omitted compensation for past medical damages.
B. The Court did not allocate a portion of the settlement to past medical expenses when it approved the minor’s compromise in January 2021
Citing Espericueta, supra, 64 Cal.App.4th 615, the Department argues that the Court has already allocated $410,466.68 of Plaintiff’s settlement to past medical expenses. Therefore, the Department contends, the Court should simply adopt that allocation.
Espericueta is distinguishable. There, the trial court did not retain jurisdiction to address a disputed lien. (See Espericueta, supra, 64 Cal.App.4th at pp. 619-620.) In granting the petition to approve a minor’s compromise, the trial court ordered that (1) the Medi-Cal lien would be paid directly to the Department out of the settlement proceeds, (2) the “ ‘net up-front cash (after payment of fees, costs and the Medi–Cal lien) in the amount of $513,396 [would] be held in Claimant counsel’s trust account, as agent for the Trustee’ for distribution in accordance with the terms of a settlement trust, to be established to provide for the best interests of [the plaintiff],” (3) the trust was to remain subject to the court’s continuing jurisdiction, with accountings submitted in accordance with the Probate Code, and (4) the court “ ‘retain[ed] jurisdiction pursuant to [Code of Civil Procedure] § 664.6 regarding the distribution of settlement funds.’ ” (Id. at p. 620.)
Six months later, the plaintiff moved to extinguish or reduce the lien. (Espericueta, supra, 64 Cal.App.4th at p. 620.) The Court of Appeal affirmed the trial court’s denial of the motion, holding:
“The trial court’s order granting the petition and approving the minor’s compromise constituted a judicial allocation of medical expenses. While it is true, as appellant asserts, that the trial court retained jurisdiction regarding distribution of the settlement funds, the court did not retain jurisdiction to reallocate the amount of medical expenses it had already ordered to be paid to the Department. A fair reading of the order makes clear that the jurisdiction retained under Code of Civil Procedure section 664.6 related to periodic future payments and the trust created by the remaining proceeds of the settlement.” (Id. at p. 626.)
In contrast, the Court did not “allocate” $410,466.68 of Plaintiff’s settlement to past medical expenses when it approved the minor’s compromise. Instead, on January 29, 2021, the Court recognized that “[t]he Medi-Cal lien in dispute is $410,466.68.” On February 18, 2021, the Court reserved jurisdiction to determine a claim for reduction of the Medi-Cal lien under Welfare and Institutions Code section 14124.76. Therefore, the Court has not previously determined the amount of the settlement that represents past medical expenses.
C. The Court may consider the Department's evidence of the reasonable value of past medical services
Plaintiff has the burden of proving that the portion of the settlement representing past medical payments was less than the amount the Department claims. (See McMillian v. Stroud (2008) 166 Cal.App.4th 692, 701-702.)
On May 5, 2020, the Department sent Plaintiffs’ counsel “a preliminary itemization of injury-related services paid by the Medi-Cal program for [Plaintiff].” (Plaintiffs’ exh. 7.) The letter lists payments for medical services provided by Altamed Health Services, CA Med Pharmacy, Children’s Hospital Los Angeles, Garfield Medical Center, Maxim Healthcare Services, and other providers. The payments total $410,466.68. The letter states that “[t]his is not the final lien amount.”
On September 24, 2020, the Department sent Plaintiffs’ counsel an updated list with payments totaling $470,543.47, again noting that this was not the final lien amount. (Plaintiff’s exh. 8.)
On
October 29, 2020, the Department sent Plaintiff’s counsel a letter stating that
Plaintiff “has received $470,979.83 in benefits through the Medi-Cal Program
related to the third party liability injury (Injury) on November 22, 2018.” (Plaintiff’s exh. 9.) The letter stated that “[r]eimbursement in
the amount of $349,212.71 will satisfy DHCS’ lien” subject to certain
conditions.
After
Plaintiff filed her motion, the Department updated its lien calculation based
on newly-discovered evidence that Plaintiff had received In-Home Supportive
Services. (Opposition p. 9.) The Department explained that it had not
included the payments for In-Home Supportive Services in its previous reports
and lien calculations. When the
Department included these additional payments in its lien calculation, it
determined that the final gross lien amount was $501,219.02. After reductions based on Welfare and
Institutions Code sections 14124.72, subdivision (d), the Department now seeks
repayment of an updated net lien amount of $371,633.85. The Department has submitted evidence
supporting these assertions.
Plaintiff, however, argues that the Department has failed to “specify which of the items it paid (that is, fee-for-service expenses), and which items were paid by the managed care plan.” (Motion p. 17.) According to Plaintiff, the Court should not attribute the managed care plan’s payments to Medi-Cal because Medi-Cal pays a set monthly amount to the managed care plan.
The Department responds that it is entitled to recover the reasonable value of services incurred by managed care plans because, under federal law, managed care plans are required to assign their recovery rights to the Department. In addition, Welfare and Institutions Code section 14124.71, subdivision (a), provides that “[w]hen benefits are provided or will be provided to a beneficiary under this chapter because of an injury for which another party is liable . . . , the director shall have a right to recover from such a party . . . the reasonable value of benefits so provided.” (Welf. & Inst. Code, § 14124.71, subd. (a).)
Welfare and Institutions Code section 14124.70, subdivision (c), in turn, defines “reasonable value of benefits” to include both of the following:
“(1) Except in a case in which services were provided to a beneficiary under a managed care arrangement or contract, ‘reasonable value of benefits’ means the Medi-Cal rate of payment, for the type of services rendered, under the schedule of maximum allowances authorized by Section 14106 or, the Medi-Cal rate of payment, for the type of services rendered, under regulations adopted pursuant to this chapter, including but not limited, to Section 14105.
“(2) If services were provided to a beneficiary under a managed care arrangement or contract, ‘reasonable value of benefits’ means the rate of payment to the provider by the plan for the services rendered to the beneficiary, except in cases where the plan pays the provider on a capitated or risk sharing basis, in which case it means the value of the services rendered to the beneficiary calculated by the plan as the usual customary and reasonable charge made to the general public by the provider for similar services.”
(Welf. & Inst. Code, § 14124.70, subd. (c).)
Plaintiff suggests that 42 U.S.C. section 1396a(a)(25) preempts the definitions in Welfare and Institutions Code section 14124.70, subdivision (c), because the federal statute “limits States to ‘reimbursement’ of [their] expenditures.” (Motion p. 17.) However, Plaintiff provides no authority or argument to support this contention and the Court considers it waived.
Plaintiff also argues that the Court must apply the definition of “reasonable value” adopted in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 556 (Howell) and Hanif v. Housing Auth. (1988) 200 Cal.App.3d 635, 641. (Motion pp. 17-18; Reply p. 8.) But these cases addressed a different issue: “whether [a plaintiff’s] recovery of medical damages is limited to the amounts providers actually are paid or extends to the amounts of their undiscounted bills . . . .” (Howell, supra, 52 Cal.4th at p. 552.) Plaintiff has cited no authority supporting her argument that this definition applies to the Department’s statutory reimbursement rights after a plaintiff settles her claims.
The Court concludes that the Department is entitled to assert a lien based on the reasonable value of past medical benefits provided to Plaintiff, including benefits provided by fee-for-service and managed care plan providers. Based on the evidence, the Court finds that the reasonable value of past medical benefits is $501, 219.02.
D. The Court allocates $114,162.65 of the settlement to past medical expenses
Citing Bolanos, supra, 169 Cal.App.4th 744, Lima v. Vouis (2009) 174 Cal.App.4th 242, and Lopez v. Daimler-Chrysler (2009) 179 Cal.App.4th 1373, Plaintiff argues that a reasonable method to determine the portion of a settlement attributable to past medical expenses is to compare the settlement amount to the total damages, and apply that ratio, or percentage, to the amount of medical expenses the Department paid. (Motion pp. 19-20; see Bolanos, supra, 169 Cal.App.4th at p. 748 [“in a settlement that is not allocated between past medical expenses and other damages, the ratio of the settlement to the total of the claim, when applied to the director’s total payments to the beneficiary, is an acceptable approximation of the amount of medical expenses”].)
Applying this methodology to $410,667 in payments for past medical expenses, Plaintiff asserts that (1) her case was worth $32,840,653, (2) the settlement amount of $7,480,000 is 22.777% of the total case value, and (3) 22.777% of $410,667 is $93,538. Plaintiff reduces that figure by 25% for attorney’s fees under Welfare and Institutions Code section 14124.72, subdivision (d), and further reduces the figure to account for the Department’s proportionate share of costs, resulting in a final recoverable amount of $66,645.
The Department disputes Plaintiff’s calculation, arguing the Department is entitled to recover $371,633.85. According to the Department, it provided Medi-Cal services valued at $501,219.02. When this figure is reduced by 25% for attorney’s fees and for costs under Welfare and Institutions Code section 14124.72, the net amount is $371,633.85.
In addition, the Department argues, Plaintiff’s calculation is flawed because it uses an inflated estimate of future medical expenses. Citing Aguilera v. Loma Linda University Medical Center (2015) 235 Cal.App.4th 821 (Aguilera), the Department argues that Plaintiff failed to reduce the total case value by the amount of future medical expenses which Medi-Cal is reasonably likely to pay.
In Aguilera, the Court of Appeal “agree[d] in theory” with the Department’s contention that future health care expenses which Medi-Cal would pay should be excluded in calculating the total case value. (Aguilera, supra, 235 Cal.App.4th at p. 831.) However, “excluding such expenses is contingent on the Department presenting sufficient evidence that it will in fact pay [the plaintiff’s] expenses as long as she qualifies for the benefits that she is presently receiving.” (Id. at p. 832.) The Court of Appeal “believe[d] it is unjust to require absolute certainty from the Department regarding how Medi–Cal eligibility will be determined in the future, whether [the plaintiff] will remain Medi–Cal eligible, what benefits it will provide in the future and whether funding will exist for these future benefits.” (Ibid.)
Here, on February 18, 2021, in its Order Approving Compromise of Pending Action (form MC-351), the Court found (in attachment 12) that “the overall value of the minor’s damages” included the “present value of future care, in the amount of $28,185,265 . . . .” The Court did not reserve jurisdiction to determine this issue. Therefore, the Court finds that Plaintiff has properly included $28,185,265 as the present value of future care in calculating the value of her case.
Based on the Court’s findings that Medi-Cal paid $501,219.02 in past medical expenses and the case value was $32,840,653, the Court concludes that (1) the settlement amount of $7,480,000 is 22.777% of the total case value, and (2) 22.777% of $501,219.02 is $114,162.65. Therefore, the Court allocates $114,162.65 of the settlement to past medical expenses.
E. The Court awards the Department $84,647.05 on its lien
To calculate the net lien amount, the Court reduces $114,162.65 by 25% for attorney’s fees ($28,540.66), bringing the figure to $85,621.99. Reducing this amount by the Department’s proportionate share of the costs ($974.94) brings the lien amount to $84,647.05 under Welfare and Institutions Code section 14124.76.
The amount calculated under Welfare and Institutions Code section 14124.76 ($84,647.05) is less than the amount the Department calculates under Welfare and Institutions Code section 14124.72 ($371,633.85). The Court is required to award the smaller amount. (Welf. & Inst. Code, § 14124.785.) Therefore, the Court awards the Department $84,647.05.
CONCLUSION
The Court GRANTS in part the motion of Plaintiff Jazlynn Amari Moran to determine the amount of the Department of Health Care Services’s lien. The Court allocates $114,162.65 of the settlement to past medical expenses. The Court determines that the Department of Health Care Services shall recover $84,647.05 on its lien. In all other respects, the Court DENIES the motion.
Moving party is to give notice of this ruling.
Moving party is ordered to file proof of service of this ruling within five days.