Espericuenta v. Shewry
Filed July 1, 2008,
Second District, Div. Two
Cite as 2008 SOS 3901

Judicially Allocated Medical Expenses: No Basis to Modify

Guadalupe Espericuenta (Espericuenta) suffered severe and permanent injuries, including blindness and the loss of her right leg. This arose from a car accident in which she was thrown from a vehicle that rolled over after tire tread separation.

Consequently, Espericuenta, through her mother, sued the owner and driver of the vehicle and the tire manufacturer. Espericuenta’s medical treatment was paid by Medi-Cal.

In 2006, Espericuenta’s counsel advised the California Department of Health Care Services (Department) that the case had already been settled for $3.6 million. The Department, upon request of Espericuenta’s counsel, informed the latter that Medi-Cal had already paid $341,885.87 up to that time, which was not a final amount.

When Espericuenta’s guardian ad litem petitioned the trial court for approval of the settlement, the petition referred to an attachment stating that Espericuenta’s medical bills had been paid by Medi-Cal, with the Department claiming a lien on it. Moreover, after said amount was reduced by 25 % for attorney fees and by 8.5 % for litigation costs pursuant to Welf. & Inst. Code §14124.72(d), the total amount owed to Medi-Cal was $239,474.40.

The trial court in approving the petition made the following orders:

• the Medi-Cal lien of $239,474.40 was to be paid directly to the Department out of the settlement proceeds


• the trust was to remain subject to the court’s continuing jurisdiction, which included oversight of the distribution of settlement funds

Meanwhile, the U.S. Supreme Court decided the case of Arkansas Dept. of Health and Human Servs. v. Ahlborn (2006) 547 U.S. 268. It held that a state Medicaid agency could not lay claim to more than the portion of a beneficiary’s settlement that represents medical expenses. Due to this development, Espericuenta moved to extinguish or strike the Department’s lien by arguing that its lien should be reduced by the same percentage that her settlement bore to the overall value of her case.

The trial court denied the motion.

On appeal, The California Court of Appeal affirmed the order holding as follows:

• medical expenses portion of the settlement had already been judicially allocated hence, there was no basis for modifying the order
  

  Unlike the present case, the Ahlborn case involved an out-of-court settlement in which there was no allocation of the categories of damages.

• Espericuenta’s compromise, as filed and verified by the former, specifically set forth the Department’s lien of $239,474.40, which reflected the statutory deductions for attorney fees and costs


• Espericuenta’s assertion that the trial court made no finding as to what portion of the settlement reflected past medical expenses was untenable
  

  In fact, the trial court’s order granting the petition and approving the minor’s compromise constituted a judicial allocation of medical expenses.