SUPERIOR COURT OF THE STATE OF CALIFORNIA  

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT 

 

 

I. Background 

Plaintiff Cristobal Garcia Chavez (“Plaintiff”) filed this action against defendants for damages arising from a pedestrian v. motor vehicle incident, wherein Plaintiff was hit by a bus at an intersection.  On July 14, 2023, Plaintiff filed a notice of settlement. 

Plaintiff now moves this Court per Welfare & Institutions Code § 14124.76 for an order determining the value of a Medi-Cal lien placed on this case by the California Department of Health Care Services (“DHCS”) based on hardship per Welfare & Institutions Code § 14124.71(b). 

On August 18, 2023, DHCS filed its opposition and objections to Plaintiff’s motion. Any reply was due on or before August 24, 2023. No reply was filed. 

 

II. Request for Judicial Notice and Evidentiary Objections 

DHCS requests the Court to take judicial notice of pleadings and rulings of other court cases outside of this current matter. The Court grants the request only as to the existence of the documents, but not to the truth of the contents. (Judges can take judicial notice of the existence of judicial opinions and verdicts from other cases, but not of the truth of hearsay statements from them [Johnson & Johnson v. Sup. Ct. (2011) 192 Cal.App.4th 757, 768.].) Furthermore, Courts cannot take judicial notice of a judge's findings unless the requirements of res judicata or collateral estoppel must apply pursuant to a final judgment. (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1051.)  

Additionally, DHCS’ evidentiary objections are overruled. 

 

III. Legal Standard  

Under California Welfare and Institutions Code 14124.76, subdivision (a): 

 

. . . . Recovery of the director’s lien from an injured beneficiary’s action or claim is limited to that portion of a settlement . . . 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 . . . that represents payment for medical expenses, or medical care, provided of behalf on the beneficiary.  Absent the director’s advance agreement as to what portion of a settlement . . . 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 . . . 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.” 

 

“In Ahlborn, the United States Supreme Court held that in seeking reimbursement ‘the State’s assigned rights extend only to recovery of payments for medical care.’  In response to Ahlborn, our Legislature amended the California statutes governing claims for reimbursements made by the Department for funds expended on behalf of injured parties by the Medi-Cal program.  (Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 747 . . . .)  Namely, from any settlement, judgment or award obtained by an injured party, the Department is limited to recovering payments it made for medical expenses.  (Welf. & Inst. § 14124.76, subd. (a).)  ‘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 . . . Ahlborn . . . and other relevant statutory and case law.’  ‘[W]hen the settlement, judgment or award does not specify what portion thereof was for past medical expenses, an allocation must be made in the settlement, judgment or award that indicates what portion is for past medical expenses as distinct from other damages.  The director’s recovery is limited to that portion of the settlement that is allocated to past medical expenses.’”  (Aguilera v. Loma Linda University Medical Center (2015) 235 Cal.App.4th 821, 827 [citations omitted].) 

“Settlements, however, are often not allocated between past medical expenses and other damages.  This was the situation in Ahlborn.  Thus, the parties in Ahlborn stipulated to the use of a formula (the Ahlborn formula) as an allocation method. . . .  The Ahlborn formula is the ratio of the settlement to the total claim, when applied to the benefits provided by the Department.  Expressed mathematically, the Ahlborn formula calculates the reimbursement due as the total settlement divided by the full value of the claim, which is then multiplied by the value of benefits provided.  (Reimbursement Due = [Total Settlement ÷ Full Value of Claim] x Value of Benefits Provided.).”  (Id. at pp. 827-828.) 

“The fundamental point is that a settlement that does not distinguish between past medical expenses and other damages must be allocated between these two classes of recoveries.  Without such an allocation, the principle set forth in Ahlborn, that the state cannot recover for anything other than past medical expenses, cannot be carried into effect.”  (Bolanos, supra, 169 Cal.App.4th at p. 753.) 

 

IV. Discussion  

Here, the matter settled for $650,000 after mediation on June 21, 2023. Based upon a life care plan prepared by Plaintiff’s expert Liz Holakeiwicz, a registered nurse, Plaintiff represents his overall damages are valued at $5,153,234.91. Plaintiff contends that his medical specials amount to a total of $215,234.90, in which DHCS paid $39,282.65 pursuant to his entitlement to Medi-Cal benefits. Plaintiff’s estimated future treatment, per the life care plan, is estimated to amount to $1,963,625, and “general damages” of $3,000,000.  

Because Plaintiff’s total recovery was $650,000, which is approximately 12.61% of his overall damages of $5,153,234.94, Plaintiff contends that DHCS’s gross lien recovery should be reduced to $4,953.54. Plaintiff’s counsel requests a further reduction for attorney’s fees, in which Plaintiff’s contingency attorney fee is 40%. Plaintiff requests Medi-Cal’s lien be reduced by 87%.  

In opposition, DHCS argues that it is entitled to its lien and that it seeks reimbursement of $24,916.10 to satisfy its $52,376.86 lien on Plaintiff’s settlement. DHCS contends that it reduced the lien from $39,282.65 to $24,916.10 after Plaintiff’s counsel notified DHCS that the litigation costs had increased to $178,289.86. DHCS argues that Ahlborn does not stand for the proposition that the formula must be applied in all cases, and that there is no requirement to use the Ahlborn formula. Furthermore, DHCS avers that Plaintiff’s life care plan detailing $1,963,625 will be paid for by Medi-Cal. DHCS further contends that DHCS did not stipulate to the value of Plaintiff’s claim or to the portion of settlement that constituted reimbursement for medical expenses. Furthermore, Plaintiff’s valuation of the claim is speculative because the computation was based upon Plaintiff’s life expectancy, skills, and other background information without any supporting expert opinion. Lastly, DHCS contends that the Welfare and Institution Code outlines the process for reducing DHCS’ lien to account for attorney’s fees and costs, which DHCS calculated according to Welfare and Institution Code §14124.72. DHCS provides that the reasonable value for past services amount to $52,376.86, in which 25% ($13,094.21) was reduced for attorney’s fees, and $14,366.55 deducted for portion of litigation costs. In total, DHCS contends that it is statutorily entitled to recover $24,916.10.  

DHCS submits declarations from representatives of DHCS’ Medi-Cal Eligibility division (“MCED”) regarding Plaintiff’s eligibility through the Medi-Cal program and long-term care related services based upon the submitted life care plan, and the final lien notice and reduction. Staff Services Manager I, Raquel Saunders (“Saunders”), in MCBD of DHCS declares that she reviewed Plaintiff’s life care plan created by Liz Holakiewicz. Saunders declares that aside from a hand held shower and an unspecific service of Day Treatment Program (which Medi-Cal may or may not cover depending on if it refers to community adult services), all of the medical services and medical items enumerated in the life care plan are covered services through Medi-Cal. MCED’s Health Program Specialist I, Michael Allen (“Allen”), declares that Plaintiff’s eligibility for Medi-Cal derives from his income and immigration status. Lastly, DHCS’ Staff Services Manager I, Koralei Smith, declares that DHCS did not stipulate to Plaintiff’s allegations of the overall value of the case or Plaintiff’s apportionment of medical costs, and that DHCS provided an updated final lien notice reduced to $24,916.10 to Plaintiff’s counsel. 

DHCS also argues that, even if an Ahlborn-style calculation is made, the Court should exclude future medical expenses from Plaintiff’s overall case value as long as Plaintiff remains eligible for Medi-Cal services and that it is reasonable probable DHCS will pay for Plaintiff’s expenses, pursuant to Aguilera v. Loma Linda University Medical Center (2015) 235 Cal.App.4th 821.  Aguilera similarly involved a claim for reimbursement made by the DHCS for funds expended on behalf of an injured party by the state's Medi–Cal program, and the injured party’s (Ashlynn Aguilera) special motion to determine the Department's lien under Welfare and Institutions Code section 14124.76.  In arguing that the full value of her claim amounted to $14,789,658, Aguilera represented that the present value of future medical costs is $1,560,429 and that the value of future attendant costs is $11,641,244.  (Id. at 825-826.)  The Court of Appeal found that the plaintiff’s future medical expenses must be excluded from the Ahlborn formula: 

 

“We agree in theory with the Department's contention that future health care expenses must be excluded, as a matter of law, in applying the Ahlborn formula to reduce the Department's lien, because if future health care expenses were to be included, the Department would be forced to accept a lower percentage of its total lien based on the amount of future benefits that will be paid by Medi–Cal.  However, as we shall discuss, excluding such expenses is contingent on the Department presenting sufficient evidence that it will in fact pay Ashlynn's expenses as long as she qualifies for the benefits that she is presently receiving…”  (Id. at 831-833.) 

 

With regard to DHCS’s evidentiary showing that Medi-Cal will in fact pay plaintiff’s expenses in the future, the Court of Appeal provided that “[a]ny declarations must establish the declarant's expertise in Medi–Cal benefits, funding and eligibility determinations.  [Citation.]  The declarations must also be supported with citations to applicable statutes or regulations regarding current Medi–Cal eligibility, the type of health care currently available under Medi–Cal, past funding to pay for such health care, and estimated future funding to pay for the type of health care at issue.”  (Id. at 832-833.)  The Court of Appeal nevertheless noted that “it is impossible for either party to predict the future.  We believe it is unjust to require absolute certainty from the Department regarding how Medi–Cal eligibility will be determined in the future, whether Ashlynn will remain Medi–Cal eligible, what benefits it will provide in the future and whether funding will exist for these future benefits.”  (Id. at 832.)  Thus, based on the evidence provided, “the trial court must make a determination whether it is reasonably probable the Department will pay [plaintiff’s] future health care expenses.  If the trial court makes such a finding, it is directed to exclude these expenses from its Ahlborn calculation.”  (Id. at 833.) 

DHCS argues that it is reasonably probable Plaintiff will continue to receive Medi-Cal benefits during his lifetime and that Medi-Cal will pay for nearly all of the medical services and medical items listed in Plaintiff’s life care plan. Therefore, DHCS avers that if the Court elects to apply a proportional reduction in recovery and use Plaintiff’s proposed formula, the minimum amount owed to DHCS is $10,673.70. This is premised upon removing future medical costs Medi-Cal will pay for Plaintiff, which is deducting $1,963,625 from Plaintiff’s total case valuation of $5,153,234.91. Accordingly, (650,000 ÷ 3,189,609.91) × 52,376.86 = 10,673.70. Plaintiff did not file a reply to respond to any of DHCS’ arguments. Nonetheless, DHCS avers that it is entitled to $24,916.10 in satisfaction of its lien pursuant to Welfare and Institutions Code Section 14124.72.  

The Court agrees with DHCS’ calculations.¿ As the Bolanos Court explained:¿ 

While it is perfectly correct to speak of the ratio of the settlement to the total claim, it may be both easier and more accurate to determine what percentage the settlement is of the total claim, and then to apply that percentage to the sum paid by the director to the beneficiary….  

 

This is not to say that the Ahlborn formula is the only one to be followed; there is nothing in that decision that compels this. What matters is that past medical expenses are distinguished in the settlement from other damages on the basis of a rational approach; it may be that the parties can reach an agreement without recourse to the Ahlborn formula. In fact, subdivision (a) of section 14124.76 urges the parties to do so. (At p. 182, post.)  

It is true that there are cases when the assumption of the Ahlborn formula may not apply, i.e., the settlement may not be driven primarily by past medical expenses…   

(Bolanos, supra 169 Cal.App.4th at 754-55.)   

Neither Ahlborn nor Bolanos require a particular formula be applied; rather, the allocation must be made on the basis of a rational approach.  (Martinez, 19 Cal.App.5th at 374.)  Furthermore, unlike in Ahlborn, where the parties stipulated in the district court that the beneficiary’s entire claim was reasonably valued at $3,040,708, in this case, the parties have not reached any such stipulation.  (Arkansas Dept. of Health and Human Services v. Ahlborn (2006) 547 U.S. 268, 274.)  Although Plaintiff asserts the total value of his case was $5,153,234.91, Plaintiff does not submit any evidence to substantiate this claim or establish this indeed was the total value of his case, aside from a life care plan prepared by a registered nurse for estimated future medical costs. Consequently, Plaintiff’s proposed approach is based on a speculative number Plaintiff claims represents the total value of his case.    

Plaintiff does not dispute that DHCS’ lien of $52,376.86 is based on the amount actually paid by DHCS for the subject medical services.  This amount of $52,376.86 is then reduced by 25% to account for a reasonable share of Plaintiff’s attorney’s fees, and then reduced further by $14,366.55 for portion of litigation costs, which amounts to $24,916.10.      

 

V. Conclusion  

In light of the foregoing, Plaintiff’s motion is denied. DHCS is to be reimbursed in the amount of $24,916.10.  

 

Plaintiff is ordered to give notice.   

 

PLEASE TAKE NOTICE: 

Dated this 30th day of August 2023