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Debt Collection Law

DEBT COLLECTION LAW
Debt Collection Law  Case Summaries

■ Lima v. Vous, No. B201786

INTRODUCTION

            As part of a proposed medical malpractice settlement that did not allocate the proceeds to categories of damages, plaintiff and appellant Guadalupe Lima (plaintiff) made a motion to extinguish a portion of a Medicaid lien asserted by the Department of Health Services (DHS).[1]  In ruling on the motion to extinguish the lien, the trial court made findings, including the reasonableness of the amount of plaintiff’s total damages claimed and of the settlement, as well as the amount of plaintiff’s past medical expenses.  Nevertheless, the trial court denied plaintiff’s motion to extinguish the DHS lien, without determining the portion of the settlement proceeds allocable to plaintiff’s past medical expenses.  In doing so, the trial court failed to follow the federal requirements as enunciated in Arkansas Department of Health and Human Services v. Ahlborn (2006) 547 U.S. 268 (Ahlborn).  Accordingly, we reverse the trial court’s ruling on the amount of the Medicaid lien recovery and remand the matter with instructions to make the required allocation consistent with the trial court’s findings. 

FACTUAL AND PROCEDURAL BACKGROUND

            Plaintiff, a minor, was born prematurely and, as a result, suffers from cerebral palsy.  Because plaintiff qualified for benefits under the California Medicaid[2] plan, known as Medi-Cal,[3] DHS paid in excess of $435,000 for plaintiff’s medical care.  In conformity with California law (Welf. & Inst. Code, § 14124.74),[4] DHS asserted a lien on any recovery from defendant in the amount of the medical costs it had paid on behalf of plaintiff, minus certain statutory deductions. 

            On December 15, 2005, plaintiff, through her mother as guardian ad litem, filed a complaint against defendant Steve Vous, M.D. (defendant) for “medical negligence.”  According to plaintiff, defendant provided “[n]egligent obstetrical care [to] plaintiff’s mother including failure to properly recognize mother’s RH negative blood, improper antibody screening, [as well as providing] negligent treatment of mother for her hospital and prenatal care[,] failure to administer Rhogam, failure to give proper counseling, [and providing] negligent care to [plaintiff] the newborn.”  Defendant answered the complaint on March 8, 2006.

            On March 2, 2007, plaintiff filed a petition for approval of a compromise of her claim against defendant and to extinguish or strike the DHS lien to the extent it exceeded $21,446.45 (motion to extinguish).  Plaintiff described her injuries as “[c]erebral palsy secondary to prematurity, manifested by global developmental delay and gait disturbance . . . .”  She indicated that defendant had offered to pay $950,000 by “way of settlement.”  She also explained that DHS had claimed a lien in the amount of $319,275.30, that plaintiff disputed that amount under Ahlborn, supra, 547 U.S. 268, and that DHS was entitled to only $21,446.45. 

■ HELD:

Trial court's denial of plaintiff's motion to extinguish a portion of a Medicaid lien asserted by the Department of Health Services is reversed and remanded where: 1) the trial court violated the principles set forth in Ahlborn when it failed to determine the portion of the settlement proceeds allocable to past medical expenses and instead allowed DHS to recover the entire amount of its lien, less attorney fees and costs; and 2) DHS is not entitled to a lien on the portion of the settlement proceeds allocable to future medical costs.

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