L.Q. v. Cal. Hospital Medical Center ( 2021 )

Filed 9/30/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
L.Q., a Minor, etc., B305723
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC608973)
v.
CALIFORNIA HOSPITAL MEDICAL
CENTER et al.,
Defendants;
BRADLEY P. GILBERT, as Director,
etc.,
Claimant and Appellant.
APPEAL from an order of the Superior Court of
Los Angeles County, Holly J. Fujie, Judge. Reversed with
directions.
Xavier Becerra and Rob Bonta, Attorneys General, Cheryl
L. Feiner, Assistant Attorney General, Gregory D. Brown and
Tara L. Newman, Deputy Attorneys General, for Claimant and
Appellant.
Law Offices of Michels & Lew, Philip Michels and Steven
B. Stevens for Plaintiff and Respondent.
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Respondent L.Q. (plaintiff) is a severely disabled child who
suffered catastrophic injuries during her birth in 2015. She sued
various medical providers for professional negligence, settling
those actions in 2019 for $3,000,000. The California Department
of Health Care Services (hereafter, DHCS), through its director,
appellant Bradley Gilbert, asserted a lien on plaintiff’s
settlement to recover what DHCS paid for plaintiff’s medical care
through the state’s Medi-Cal program. The trial court denied the
lien, concluding that it was prohibited by the “anti-lien” provision
of the federal Medicaid Act, 42 U.S.C. section 1396 et seq. (the
Medicaid Act or the Act).
We conclude that the trial court erred by denying DHCS’s
lien. While the anti-lien provision of the Medicaid Act generally
prohibits liens against the property of Medicaid beneficiaries,
other provisions of the Act carve out exceptions for settlements or
judgments recovered from third-party tortfeasors, to the extent
such settlements or judgments are attributable to payments
made by the state for the beneficiaries’ medical care. We
therefore will reverse and remand the matter to the trial court to
determine what portion of the settlement properly is subject to
DHCS’s lien.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. Background
Plaintiff was catastrophically injured during her birth in
June 2015, and as a result suffers severe disabilities, including
quadriplegic cerebral palsy, microcephaly, profound
developmental delays, profound intellectual disabilities, and
epilepsy.
In 2016, through her mother and guardian ad litem,
Carolina Q., plaintiff sued the California Hospital Medical
Center, USC-Eisner Family Medicine Center, and individual
doctors and nurses for professional negligence. Plaintiff and
defendants settled the action in 2019 for $3,000,000, subject to
court approval.
B. DHCS Lien
Since plaintiff’s birth, DHCS has paid for her medical care
through the California Medical Assistance Program, known as
Medi-Cal. In March 2017, DHCS notified plaintiff of its right
pursuant to Welfare and Institutions Code 1 section 14124.76 to
assert a lien on any recovery she obtained through her medical
negligence action; subsequently, in 2019, DHCS advised that it
had paid $672,959 for plaintiff’s medical care and would assert a
lien of $477,264 (DHCS’s expenditures, less its statutory share of
attorney fees and litigation costs) on the settlement funds.
In June 2019, plaintiff and defendants sought trial court
approval of the settlements. The court granted the petitions to
approve the settlements, ordered $649,289 to be held in plaintiff’s
attorney’s trust account to satisfy a potential Medi-Cal lien, and
1 All subsequent undesignated statutory references are to
the Welfare and Institutions Code.
3
reserved jurisdiction to determine any claim for a reduction of the
lien.
In November 2019, plaintiff filed a motion in the trial court
pursuant to section 14124.76 to determine DHCS’s lien. Plaintiff
contended the federal Medicaid Act precluded states from
imposing liens on judgments or settlements received by Medi-Cal
recipients from third-party tortfeasors, and thus DHCS was not
entitled to any portion of the settlement. Alternatively, plaintiff
urged she had recovered only about 11 percent of her total
damages, and thus DHCS’s recovery should also be limited to
11 percent of its total expenditures, or about $72,000. 2
DHCS opposed plaintiff’s motion. It contended that it was
entitled pursuant to section 14124.72 to recover the reasonable
value of the medical care provided to plaintiff, reduced by the
DHCS’s share of plaintiff’s attorney fees and litigation costs.
DHCS further contended that the federal Medicaid Act did not
preclude it from asserting a lien on plaintiff’s recovery; to the
contrary, it asserted the Act required it to seek reimbursement
from that recovery.
On February 6, 2020, the trial court issued an order
denying DHCS’s lien. It found that although California law
2 Plaintiff claimed that her total damages were nearly
$28 million, calculated as follows:
Loss of earning capacity: $1,616,762
Non-economic injuries: $250,000
Past medical costs: $672,959
Future medical and attendant care costs: $25,411,798
TOTAL: $27,951,519
4
permitted DHCS to place a lien on plaintiff’s settlement, such
lien was prohibited by the “anti-lien” provision of the federal
Medicaid Act, 42 U.S.C. section 1396p(a)(1). The court explained:
“[T]he plain language of [42 U.S.C.] Section 1396p(a)(1) bars a
lien from being imposed against Plaintiff’s settlement proceeds
arising from medical expenses properly and correctly paid by
DHCS. . . . DHCS does not argue that medical assistance
benefits were incorrectly paid to Plaintiff which would allow the
opportunity for DHCS to recover from Plaintiff pursuant to
[42 U.S.C.] Section 1396p(b)(1). DHCS has instituted a lien due
to the expenses it paid for Plaintiff’s medical care. Thus, based
on the statutory language[,] complying with [both] the federal
and state provisions with respect to recovery of advanced medical
expenses pursuant to a settlement is an impossibility . . . .
‘Under the Supremacy Clause, [w]here state and federal law . . .
conflict, state law must give way.’ [Citation.] Here, there is a
conflict between the right of DHCS to be paid from a beneficiary’s
settlement proceeds and federal statutory law which prohibits a
lien from being imposed against a settlement of an individual,
before death, due to medical assistance expenses paid for that
beneficiary.” The court thus ordered that DHCS would “recover
zero dollars on its lien claim with respect to this action[.]”
DHCS timely appealed from the order denying its Medi-Cal
lien.
DISCUSSION
DHCS contends that the trial court erred in denying its lien
because the United States Supreme Court has expressly held
that a state may impose a lien on a Medicaid recipient’s recovery
from a third-party tortfeasor, so long as such lien is limited to the
portion of the recovery attributable to past medical expenses.
5
Alternatively, DHCS urges that the plain language and history of
the Medicaid Act confirm that the Act does not preempt
California’s Medi-Cal lien statutes.
Plaintiff contends that the United States Supreme Court
has never held that states may recover portions of tort
settlements attributable to past medical care from Medicaid
beneficiaries, and that such an interpretation is inconsistent with
the Medicaid Act’s plain language and legislative history. In the
alternative, plaintiff contends there is no evidence that any
portion of her settlement was attributable to her past medical
expenses; to the contrary, she urges, the trial court made an
implied finding, supported by substantial evidence, that her
settlement did not include past medical expenses.
As we discuss more fully below, although the Supreme
Court has never specifically held that Medicaid liens are
permitted under the circumstances presented here, that
conclusion is supported by Supreme Court dicta and is compelled
by the plain language of the Act. The trial court therefore erred
in entirely denying DHCS’s lien. Further, because the trial court
expressly did not consider whether plaintiff’s settlement included
compensation for past medical expenses, we cannot imply it made
such a finding. We therefore will reverse and remand to the trial
court for further proceedings.
I.
Appealability and Standard of Review
A final determination of rights and obligations with respect
to a Medi-Cal lien is appealable pursuant to section 14124.76,
subdivision (c). Because the present appeal raises pure questions
of law, our review is de novo. (Lima v. Vouis (2009)
6
174 Cal.App.4th 242, 253; Espericueta v. Shewry (2008)
164 Cal.App.4th 615, 622 (Espericueta).)
II.
Statutory Framework and Relevant Case Law
A. The Federal Medicaid Act
In 1965, Congress created the federal Medicaid program by
enacting Title XIX of the Social Security Act (42 U.S.C. § 1396et seq.). Medicaid is a medical assistance program for low-income
individuals that is jointly funded by the federal and state
governments. States’ participation in the Medicaid program is
optional; however, any state that chooses to participate must
develop and implement a state plan that conforms to federal law.
(Harris v. McRae (1980) 448 U.S. 297, 301.)
The Medicaid Act includes several provisions that require
states, as a condition of receiving federal Medicaid funds, to seek
reimbursement for payments made on behalf of Medicaid
beneficiaries who later recover from third-party tortfeasors. As
relevant here, states must require Medicaid beneficiaries to
“assign [to] the State any rights [of the beneficiary] . . . to
payment for medical care from any third party” (the assignment
clause). (42 U.S.C. § 1396k(a)(1)(A).) Further, states must
“ha[ve] in effect laws under which, to the extent that payment
has been made under the [state’s Medicaid plan] for health care
items or services furnished to an individual, the State is
considered to have acquired the rights of such individual to
payment by any other party for such health care items or
services” (the acquisition-of-rights clause). (42 U.S.C.
§ 1396a(a)(25)(H).) Finally, states must “take all reasonable
measures to ascertain the legal liability of third parties . . . to pay
for care and services available under the [state’s Medicaid] plan,”
7
and “in any case where such a legal liability is found to exist after
medical assistance has been made available on behalf of the
individual and where the amount of reimbursement the State can
reasonably expect to recover exceeds the costs of [obtaining] such
recovery, . . . [to] seek reimbursement for such assistance to the
extent of such legal liability” (the reimbursement clause).
(42 U.S.C. § 1396a(a)(25)(A)―(B).)
The Act also includes provisions that prohibit states from
recovering funds paid on behalf of Medicaid beneficiaries from
the beneficiaries themselves. One such provision—the “anti-lien”
provision—says that, except in circumstances not relevant here,
“[n]o lien may be imposed against the property of any individual
prior to his death on account of medical assistance paid or to be
paid on his behalf under the State plan.” (42 U.S.C.
§ 1396p(a)(1).) Another such provision—the “anti-recovery”
provision—says that “[n]o adjustment or recovery of any medical
assistance correctly paid on behalf of an individual under the
State plan may be made, except that the State shall seek
adjustment or recovery of any medical assistance correctly paid
on behalf of an individual under the State plan in [circumstances
not present here].” (42 U.S.C. § 1396p(b)(1).) As the Supreme
Court has noted, the assignment, acquisition-of-rights, and
reimbursement provisions, on the one hand, and the anti-lien and
anti-recovery provisions, on the other, “exist[] in some tension”
with one another. (Wos v. E. M. A. (2013) 568 U.S. 627, 633
(Wos).)
B. State Medi-Cal Act
California has elected to participate in Medicaid by
establishing the Medi-Cal program. California’s implementing
legislation, known as the Medi-Cal Act, is codified at
8
section 14000 et seq. (See § 14000.4 [short title].) DHCS is the
state agency charged with administering the Medi-Cal program.
The Medi-Cal Act states that when benefits are provided to
a Medi-Cal beneficiary because of an injury for which a third
party or carrier is liable, DHCS has the right to recover from
such party or carrier the reasonable value of the Medi-Cal
benefits provided. (§ 14124.71, subd. (a).) DHCS may 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. (§§ 14124.71, 14124.72,
14124.73; see also Espericueta, supra, 164 Cal.App.4th at
pp. 622–623; Kizer v. Ortiz (1990) 219 Cal.App.3d 1055, 1058–
1059.) If DHCS files a lien in an action pursued by a beneficiary
alone, DHCS’s claim for reimbursement is reduced by 25 percent,
representing its share of attorney fees, as well as by its statutory
share of litigation costs. (§ 14124.72, subd. (d).)
“No 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 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
9
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.” (§ 14124.76, subd. (a).)
C. Relevant Case Law
The United States Supreme Court has twice considered
whether laws permitting states to impose liens on Medicaid
recipients’ third-party tort settlements violate the anti-lien
provisions of the Medicaid Act. The first case to address the
issue, Arkansas Department of Health & Human Services v.
Ahlborn (2006) 547 U.S. 268 (Ahlborn) was brought by a
Medicaid recipient who, after suffering catastrophic injuries in a
car accident, sued the alleged tortfeasors for past and future
medical costs, personal injury, past and future pain and
suffering, and past and future lost wages. The case settled for
$550,000, which was not allocated among the various categories
of damages. The Arkansas Department of Health Services
(ADHS) imposed a lien against the settlement proceeds in the
amount of $215,645, which represented the total payments made
by ADHS for Ahlborn’s care. Ahlborn then filed suit seeking a
10
declaration that ADHS’s lien violated the Medicaid Act because it
allowed the state to claim a greater portion of the settlement
than was properly attributable to her past medical expenses. 3
(Id. at pp. 273–274.)
The Supreme Court held that the Medicaid Act precluded
ADHS from imposing a lien on any portion of Ahlborn’s
settlement not attributable to her past medical expenses.
(Ahlborn, supra, 547 U.S. at p. 280.) It noted, first, that the Act
requires recipients, as a condition of eligibility, to “assign the
State any rights . . . to payment for medical care from any third
party.” (42 U.S.C. § 1396k(a)(1)(A), italics added.) By its plain
language, therefore, the statute appeared to limit the state’s lien
to only that portion of Ahlborn’s settlement attributable to
medical expenses. Further, the Act prohibits states from placing
a lien on “the property of any individual prior to his death on
account of medical assistance paid or to be paid on his behalf
under the State plan.” (42 U.S.C. § 1396p.) The court observed
that, considered alone, this provision “would appear to ban even a
lien on that portion of the settlement proceeds that represents
payments for medical care,” but Ahlborn “does not ask us to go so
far.” (Ahlborn, supra, 547 U.S. at p. 284.) Instead, Ahlborn
“assume[d] that the State’s lien is consistent with federal law
insofar as it encumbers proceeds designated as payments for
3 The parties stipulated that Ahlborn’s entire claim was
reasonably valued at about $3 million, and the settlement
($550,000) was about one-sixth of that sum. The parties also
agreed that if Ahlborn’s construction of federal law was correct,
then ADHS would be entitled to only the portion of the
settlement that constituted reimbursement for past medical
expenses ($35,581). (Ahlborn, supra, 547 U.S. at p. 274.)
11
medical care,” but urged that the anti-lien provision precluded
attachment of the remainder of the settlement. 4 The court
agreed: “There is no question that the State can require an
assignment of the right, or chose in action, to receive payments
for medical care. So much is expressly provided for by
§§ 1396a(a)(25) [the reimbursement clause] and 1396k(a) [the
assignment clause]. And we assume, as do the parties, that the
State can also demand as a condition of Medicaid eligibility that
the recipient ‘assign’ in advance any payments that may
constitute reimbursement for medical costs. To the extent that
the forced assignment is expressly authorized by the terms of
§§ 1396a(a)(25) and 1396k(a), it is an exception to the anti-lien
provision. [Citations.] But that does not mean that the State can
force an assignment of, or place a lien on, any other portion of
Ahlborn’s property. As explained above, the exception carved out
by §§ 1396a(a)(25) and 1396k(a) is limited to payments for
medical care. Beyond that, the anti-lien provision applies.”
(Id. at pp. 284–285.)
The high court considered a related issue several years
later in Wos, supra, 568 U.S. 627. Wos concerned a
North Carolina statute requiring that up to one-third of a
Medicaid beneficiary’s recovery from a third party for a tortious
injury be paid to the state as reimbursement for payments the
state made for the beneficiary’s medical treatment on account of
4 In view of the posture in which the case was presented, the
court assumed without deciding “that a State can fulfill its
obligations under the federal third-party liability provisions by
requiring an ‘assignment’ of part of, or placing a lien on, the
settlement that a Medicaid recipient procures on her own.”
(Ahlborn, supra, 547 U.S. at p. 280, fn. 9.)
12
the injury. (Id. at p. 630.) The court concluded that the
North Carolina statute was incompatible with the Medicaid Act
because it “sets forth no process for determining what portion of a
beneficiary’s tort recovery is attributable to medical expenses.
Instead, North Carolina has picked an arbitrary number—one-
third—and by statutory command labeled that portion of a
beneficiary’s tort recovery as representing payment for medical
care.” (Id. at p. 636.) The North Carolina statute thus “allow[s]
the State to take one-third of the total recovery, even if a proper
stipulation or judgment attributes a smaller percentage to
medical expenses.” (Id. at p. 638.) The court concluded that this
“irrebuttable, one-size-fits-all statutory presumption is
incompatible with the Medicaid Act’s clear mandate that a State
may not demand any portion of a beneficiary’s tort recovery
except the share that is attributable to medical expenses.” (Id. at
p. 639.)
In reaching this conclusion, the court characterized its
prior decision in Ahlborn as holding “that the Medicaid statute
sets both a floor and a ceiling on a State’s potential share of a
beneficiary’s tort recovery. Federal law requires an assignment
to the State of ‘the right to recover that portion of a settlement
that represents payments for medical care,’ but it also ‘precludes
attachment or encumbrance of the remainder of the settlement.’
[Citation.] This is so because the beneficiary has a property right
in the proceeds of the settlement, bringing it within the ambit of
the anti-lien provision. [Citation.] That property right is subject
to the specific statutory ‘exception’ requiring a State to seek
reimbursement for medical expenses paid on the beneficiary’s
behalf, but the anti-lien provision protects the beneficiary’s
13
interest in the remainder of the settlement.” (Wos, supra,
568 U.S. at pp. 633–634.)
As the above discussion makes clear, in neither Ahlborn
nor Wos was the court asked to decide the issue before us in the
present case: whether states lawfully may impose liens on that
portion of a Medicaid beneficiary’s judgment or settlement
attributable to past medical care. That issue was squarely
presented to the Court of Appeals for the Third Circuit in
Tristani v. Richman (3d Cir. 2011) 652 F.3d 360 (Tristani).
Tristani arose under the Pennsylvania Medicaid statute, which
provided that if a Medicaid beneficiary pursued a claim against a
third party for medical costs, the state could impose a lien
“ ‘against the medical portion of the judgment or award, [in the]
amount of [the Pennsylvania Department of Public Welfare’s
(DPW)] expenditures for the benefit of the beneficiary under the
medical assistance program.’ ” (Id. at p. 368.) The Tristani
plaintiffs claimed that DPW’s practice of asserting liens on the
medical portion of a Medicaid recipient’s recovery violated the
anti-lien provision of the Act; DPW countered that its liens fell
within an exception to the anti-lien provision of the Medicaid Act,
as recognized by the Supreme Court in Ahlborn. (Id. at p. 368.)
The district court agreed with the plaintiffs that although
the Medicaid Act permits states to sue third-party tortfeasors
responsible for injuries to Medicaid beneficiaries in order to
recover Medicaid outlays, states could not recover such outlays by
imposing liens on money recovered from third parties by the
Medicaid beneficiaries themselves. A divided panel of the Court
of Appeals reversed. The court noted, first, that the anti-lien and
anti-recovery provisions significantly predated the assignment,
acquisition-of-rights, and reimbursement clauses, and were
14
intended to insulate elderly beneficiaries from paying the costs of
their care during their lifetimes. (Tristani, supra, 652 F.3d at p.
371.) The court noted, however, that these and other provisions
“ultimately allow[] a state to recoup its medical assistance
expenditures directly from the estate of a deceased beneficiary,”
and thus “in no way entitle[] beneficiaries to retain monies paid
to them by liable third parties in compensation for their medical
costs.” (Id. at p. 372.) The court found that the legislative
history of the anti-lien and anti-recovery provisions confirmed
this understanding: As a Senate Report discussing the provision
stated, “ ‘[t]his provision was inserted in order to protect the
individual and [her] spouse from the loss of their property,
usually the home, during their lifetime.’ ” (Ibid., italics added.)
Thus, the court concluded, “Congress’s concern for protecting a
Medicaid beneficiary’s personal assets—not her interest in
recovering medical costs paid on her behalf—clearly animated
the enactment of the anti-lien and anti-recovery provisions.
Moreover, a beneficiary’s property interest in her home is readily
distinguishable from the inchoate interest that she retains in her
chose in action [against a third-party tortfeasor for medical
expenses], particularly since Congress has mandated assignment
of that chose to the state. We cannot agree that Congress
intended these provisions to prohibit states from placing liens on
recoveries from liable third parties.” (Ibid., fn. omitted.)
The court next considered the reimbursement clause, which
was enacted after the anti-lien and anti-recovery provisions. The
reimbursement clause requires states to ascertain the legal
liability of third parties, to treat such legal liability as a resource
of the Medicaid recipient for purposes of determining eligibility
for medical assistance, and “in any case where such a legal
15
liability is found to exist after medical assistance has been made
available on behalf of the individual, . . . [to] seek reimbursement
for such assistance to the extent of such legal liability.” (Tristani,
supra, 652 F.3d at pp. 372–373.) The court noted that although
the anti-lien and anti-recovery provisions were in force when the
reimbursement provision was enacted, “Congress made no
attempt to reconcile this new requirement with the prohibition
against states recovering medical assistance payments made on
behalf of Medicaid beneficiaries. Instead, the statute simply
requires states to consider any known third-party liability as an
asset of the individual in determining eligibility, and to seek
reimbursement when liability is discovered after medical
assistance payments have been made.” (Id. at p. 373.)
The court turned finally to the assignment clause, which
requires beneficiaries “to assign the State any rights, of the
individual or of any other person who is eligible for medical
assistance under this title and on whose behalf the individual has
the legal authority to execute an assignment of such rights, . . . to
payment for medical care from any third party.” (Tristani, supra,
652 F.3d at p. 373.) The court noted that the district court
viewed this clause as evidence of congressional intent to require
states to intervene in lawsuits initiated by Medicaid beneficiaries
against third parties, but “[w]e see it differently.” (Id. at p. 374.)
The court explained: “As the [DPW] correctly point[s] out, a
partial assignment typically creates a lien on a portion of the
recovery in favor of the assignee. [Citations.] We do not believe
that Congress would prohibit states from imposing liens to
recoup medical costs while at the same time imposing a
requirement that has the legal effect of creating such liens. The
more logical conclusion is that Congress understood that the legal
16
effect of the [assignment clause] would be to provide the states
with a lien on recoveries of medical costs. Thus, in our view, the
[assignment clause] is evidence of Congress’s intent to except
recoveries of medical assistance payments whenever third parties
are found liable for them.” (Ibid.)
The court opined that “the only way to harmonize the
conflicting language of the anti-lien and anti-recovery provisions
with the later-enacted reimbursement and forced assignment
provisions is to conclude that the anti-lien and anti-recovery
provisions do not apply to medical costs recoverable from liable
third parties. The anti-lien and anti-recovery provisions evince
congressional intent to protect the assets of Medicaid recipients,
and to ensure that beneficiaries are not forced to personally bear
the costs of their medical care. Meanwhile, the reimbursement
and forced assignment provisions require states to recover the
costs of medical assistance payments despite the apparent
prohibition against seeking recovery of medical assistance
payments. It defies common sense to conclude that Congress
intended to protect the rights of Medicaid beneficiaries to recover
medical costs that they never paid in the first place. Indeed,
federal law requires beneficiaries to assign their right to recover
such medical costs to the state, because it is the state—not the
beneficiaries—that pays these costs.” (Tristani, supra, 652 F.3d
at p. 374.)
The court noted, moreover, that practical considerations
weighed in favor of its holding. It said: “At present, over thirty
states use liens to recoup medical expenses paid on behalf of
Medicaid beneficiaries from liable third parties. See State v.
Peters, 287 Conn. 82, 946 A.2d 1231, 1239 n. 19 (2008). And
disparate federal and state courts have overwhelmingly endorsed
17
this practice. [Citation.] In Pennsylvania, the authority for
imposing such liens dates back to 1980. [Citations.] Since then,
Congress has had occasion to amend the anti-lien and anti-
recovery provisions, and has chosen not to prohibit this
widespread and pervasive practice. Its failure to do so further
supports our holding that Medicaid medical expense liens are
excepted from the anti-lien and anti-recovery provisions. See
Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 55 L.Ed.2d 40(1978) (‘Congress is presumed to be aware of an administrative or
judicial interpretation of a statute and to adopt that
interpretation when it reenacts a statute without change.’).”
(Tristani, supra, 652 F.3d at p. 375.)
The court summarized its conclusion at follows: “The text
of the [Medicaid Act], when combined with its structure, purpose,
and legislative history, reveals that Congress sought to
accomplish different goals in enacting the anti-lien and anti-
recovery provisions on the one hand, and the reimbursement and
[assignment clauses] on the other hand. While the anti-lien and
anti-recovery provisions were intended to protect the assets of
Medicaid recipients, the subsequently-enacted [assignment and
reimbursement clauses] were intended to limit the financial
burden of Medicaid on the states and ensure that Medicaid
beneficiaries did not receive a windfall by recovering medical
costs they did not pay. In this context, the [assignment and
reimbursement clauses] are best viewed as creating an implied
exception to the anti-lien and anti-recovery provisions of the Act.
Our conclusion is bolstered by the fact that the statutory
mechanism created by Congress for beneficiaries to relinquish
their right to recover medical assistance payments to the state—a
partial assignment—itself creates a lien. Consequently, we hold
18
that liens on settlements or judgments limited to medical costs
are not prohibited by the anti-lien and anti-recovery provisions of
the [Medicaid] Act.” (Tristani, supra, 652 F.3d at p. 375,
fn. omitted.) 5
The dissenting judge in Tristani reached a different
conclusion, urging that while the Medicaid Act permits states to
seek reimbursement directly from third parties, it does not
permit liens on recoveries obtained from third-party tortfeasors
by Medicaid beneficiaries themselves. The dissent noted that the
reimbursement clause requires states to take all reasonable
measures to collect sufficient information to enable the state “to
ascertain the legal liability of third parties,” and further to
submit a plan for “pursuing claims against such third parties.”
(Tristani, supra, 652 F.3d at p. 379 (dis. opn. of Pollak, J.).) The
statute also requires beneficiaries to “assist the State in pursuing
. . . any third party who may be liable to pay for care and services
available under the plan.” (Id. at p. 380.) These provisions, the
dissent said, envision “an active role in litigation by state
5 See also I.P. ex rel. Cardenas v. Henneberry (D. Colo. 2011)
795 F.Supp.2d 1189, 1195 [because state can require Medicaid
beneficiary to assign right to receive payment for medical care, it
may also impose a lien on settlement funds: “Plaintiff seems to
take issue with the Colorado statute’s use of the word ‘lien,’ a
term also used in the Arkansas statute in Ahlborn. [Citation.]
The Court, however, finds no material distinction between the
two terms. Regardless of whether the state imposes a lien on a
Medicaid recipient’s settlement proceeds or whether it forces an
assignment of those proceeds, the result is the same. The state
acquires a legal right over the proceeds”].
19
entities, not the passive role played by the DPW.” (Id. at p. 382.)
Taken together, the dissent believed these provisions revealed
Congress’s intent to “pursue liable third parties directly,” (ibid.)
rather than to “seek recoveries ‘of medical assistance correctly
paid’ from Medicaid beneficiaries’ settlements and judgments.”
(Id. at p. 385.)
III.
The Federal Medicaid Act Does Not Preempt
California Law Permitting DHCS’s Lien
Having set out the relevant statutes and case law, we now
turn to the contentions made by the parties in the present appeal.
DHCS’s initial contention is that the United States Supreme
Court has directly held that states may impose liens on Medicaid
beneficiaries’ recoveries from third party tortfeasors, so long as
such liens are limited to past medical expenses. We do not agree.
The court in Ahlborn expressly declined to reach this issue,
assuming without deciding that a state may place a lien on that
portion of a Medicaid beneficiary’s recovery designated as
payment for past medical care. (Alhborn, supra, 547 U.S. at
p. 284, fn. 13 [anti-recovery provision “would appear to forestall
any attempt by the State to recover benefits paid;” however,
because the parties “neither cite nor discuss the antirecovery
provision,” the court “leave[s] for another day the question of its
impact on the analysis”].) The Wos court was not so explicit, but
the question presented in that case—whether the federal anti-
lien provision preempted a North Carolina law requiring a
Medicaid beneficiary to pay to the state up to one-third of any
damages recovered for a tortious injury—made it unnecessary for
the court to decide whether a state may impose a lien on the
portions of a beneficiary’s recovery designated for past medical
20
care. We therefore cannot conclude, as DHCS would have us do,
that “controlling U.S. Supreme Court precedent” requires us to
reverse the trial court’s order refusing the agency’s lien.
(E.g., B.B. v. County of Los Angeles (2020) 10 Cal.5th 1, 11
[“ ‘ “cases are not authority for propositions not considered” ’ ”].)
However, although Wos did not decide the issue before us,
its analysis strongly supports the proposition that a state may
place a lien on the share of a Medicaid beneficiary’s recovery
attributable to medical care. As we have described, Wos
explained that the Medicaid Act “sets both a floor and a ceiling on
a State’s potential share of a beneficiary’s tort recovery” because
a Medicaid beneficiary’s property right to the proceeds of a
judgment or settlement “is subject to the specific statutory
‘exception’ requiring a State to seek reimbursement for medical
expenses paid on the beneficiary’s behalf.” (Wos, supra, 568 U.S.
at pp. 633–634, italics added.) The court also said that the
North Carolina law permitting the state to place a lien on one-
third of a Medicaid beneficiary’s tort recovery was “incompatible
with the Medicaid Act’s clear mandate that a State may not
demand any portion of a beneficiary’s tort recovery except the
share that is attributable to medical expenses.” (Id. at p. 639,
italics added.) In short, while the Supreme Court did not decide
the issue before us, its statements in dicta—which, while not
binding, are persuasive—strongly suggest that the Supreme
Court would find California’s Medi-Cal lien provisions consistent
with federal law. (See People v. Rios (2013) 222 Cal.App.4th 542,
563 [although statements unnecessary to a court’s decision are
not binding precedent, “Supreme Court dicta generally should be
followed, particularly where the comments reflect the court’s
considered reasoning”]; People v. Wade (1996) 48 Cal.App.4th
21460, 467 [Supreme Court dicta highly persuasive]; City of
Los Angeles v. San Pedro, L.A. & S.L.R. Co. (1920) 182 Cal. 652,
660 [“The statements in the opinions of the Supreme Court of this
state and of the United States . . . although obiter dicta, are very
persuasive”].)
Turning to the Medicaid Act itself, we agree with DHCS
that the assignment, acquisition-of-rights, and reimbursement
clauses create implied exceptions to the anti-lien and anti-
recovery provisions. Plaintiff’s contention that a Medicaid lien
violates the anti-lien provision of the Medicaid Act assumes that
a Medicaid beneficiary’s recovery from a third party is the
beneficiary’s “property” within the meaning of 42 United States
Code section 1396p(a)(1), which says that “[n]o lien may be
imposed against the property of any individual prior to his death
on account of medical assistance paid or to be paid on his behalf
under the State plan.” (Italics added.) But as we have discussed,
the assignment clause mandates that states require Medicaid
beneficiaries to “assign [to] the State any rights [of the
beneficiary] . . . to payment for medical care from any third
party,” and the acquisition-of-rights clause requires states to
“ha[ve] in effect laws under which, to the extent that payment
has been made under the State plan for medical assistance for
health care items or services furnished to an individual, the State
is considered to have acquired the rights of such individual to
payment by any other party for such health care items or
services.” (42 U.S.C. §§ 1396k(a)(1)(A), 1396a(a)(25)(H).) Taken
together, these provisions give the state, not the Medicaid
beneficiary, the right to recover damages from third parties for
past medical expenses. To the extent, therefore, that the
beneficiary recovers damages for past medical expenses from a
22
third party as part of a settlement or judgment, those damages
belong to the state, not to the beneficiary.
For this reason, many courts have held, and we agree, that
a Medicaid lien against a beneficiary’s recovery for medical
expenses “does not attach to the property of the beneficiary
because the beneficiary, by statute, has to assign to the agency
‘any rights he or she has to seek reimbursement from any third
party up to the amount of medical assistance paid.’ ([Cricchio v.
Pennisi (1997) 90 N.Y.2d 296, 304 [660 N.Y.S.2d 679, 683 N.E.2d
301, 305].)” (Olszewski v. Scripps Health (2003) 30 Cal.4th 798,
823, italics added.) Stated differently, “ ‘Because the injured
Medicaid [beneficiary] has assigned its recovery rights to [the
state agency], and [the agency] is subrogated to the rights of the
beneficiary [citations], the settlement proceeds are resources of
the third-party tortfeasor that are owed to [the agency].’
[Citation.] The state agency therefore ‘steps in and puts a lien on
the recovery before it becomes the property of the Medicaid
[beneficiary].’ ([Wilson v. Washington (2000) 142 Wash.2d 40 [10
P.3d 1061, 1066], italics added.)” (Id. at p. 823.)
The facts of the present case are consistent with the
conclusion that the portion of plaintiff’s settlement to which
DHCS claims a right is not the “property” of plaintiff within the
meaning of the anti-lien provision. The trial court’s order
approving the parties’ settlement specifically directed defendants
to pay to plaintiff’s counsel the sum of $649,289.75 “to be held in
[plaintiff’s attorney’s] Trust Account for any potential Medi-Cal
lien,” subject to “reduction on further order of the court upon
determination of the claim for reduction.” The funds claimed by
DHCS thus have never been plaintiff’s property; instead, they
were paid by defendants directly into plaintiff’s attorney’s trust
23
account, to be distributed as ordered by the court. The state’s
lien therefore does not violate the Medicaid Act because it does
not attach to “property” of a Medicaid beneficiary. (See also S.S.
v. State (Utah 1998) 972 P.2d 439, 442 [“Payments made by a
third party do not legally become the property of the recipient
until after a valid settlement, which necessarily must include
reimbursement to Medicaid.”].)
Our conclusion is reenforced by the reimbursement clause
of the Medicaid Act, which specifically requires states, in any
case in which a third party has been found legally liable for
medical assistance paid for by the state’s Medicaid program, to
“seek reimbursement for such assistance to the extent of such legal
liability.” (42 U.S.C. § 1396a(a)(25)(B), italics added.) Plaintiff
contends states must seek such reimbursement directly from
third parties, not from beneficiaries, but that is not what the
reimbursement clause says. To the contrary, in contrast with
42 United States Code section 1396a(a)(25)(A), which directs
states to “ascertain the legal liability of third parties” and to
create a state plan “for pursuing claims against such third
parties” (italics added), 42 United States Code section
1396(a)(25)(B) does not include an analogous limitation on the
persons or entities from which states may seek reimbursement.
We decline to read into subdivision (a)(25)(B) a limitation not
present in the statutory language itself.
Plaintiff suggests that our conclusion creates an “implied
repeal” of the Medicaid Act’s anti-lien and anti-recovery
provisions, but we do not agree. “ ‘[A]bsent “a clearly expressed
congressional intention,” . . . [a]n implied repeal will only be
found where provisions in two statutes are in “irreconcilable
conflict,” or where the latter Act covers the whole subject of the
24
earlier one and “is clearly intended as a substitute.” ’ [Citation.]”
(Carcieri v. Salazar (2009) 555 U.S. 379, 395.) In the present
case, we are dealing not with two statutes, but with one—namely,
the federal Medicaid Act. Moreover, as we have said, we find no
“irreconcilable conflict” between the anti-lien and anti-recovery
provisions, on the one hand, and the assignment, acquisition-of-
rights, and reimbursement clauses, on the other. To the
contrary, we believe that, read together, these clauses permit a
lien on a Medicaid beneficiary’s recovery of medical expenses,
which is not the “property” of the beneficiary.
We also do not agree with plaintiff’s contention that the
legislative history of the Medicaid Act post-Ahlborn requires the
conclusion that DHCS’s lien violates the Act’s anti-lien provision.
Plaintiff points to four amendments Congress passed in 2013, but
then delayed implementing and ultimately repealed. According
to plaintiff, these amendments would have given states “first-
dollar liens and rights to recover every dollar they spent for care
and treatment of Medicaid recipients who were injured by
tortfeasors, even if those recipients were not fully compensated
for their other injuries,” as well as “an assignment of a Medicaid
recipient’s tort recovery, instead of an assignment of rights
against the tortfeasor.” Because Congress ultimately repealed
these amendments, plaintiff urges that Congress “does not want
the States to be pursuing Medicaid recipients with threats of
liens, seizures of their properties, and demands for
reimbursements.”
There are several problems with plaintiff’s analysis. The
plain language of the amendments suggests that Congress acted
in 2013 to legislatively overrule Ahlborn by allowing states to
place liens on Medicaid recipients’ entire third-party recoveries,
25
rather than on only the portion of such recoveries attributable to
past health care. By repealing these amendments, Congress
restored the post-Ahlborn status quo—that is, it prohibited states
from placing liens on any portion of a beneficiary’s third-party
recovery not attributable to past health care. But we see nothing
in the amendments’ plain language to suggest that Congress also
intended to limit the rights of states to impose liens on the
portion of such recovery attributable to the past health care
provided through the Medicaid program. Nor has plaintiff
provided us with any legislative history in the form of committee
reports or otherwise that would provide insight into Congress’s
intention. We therefore cannot conclude, as plaintiff would have
us do, that Congress intended by its repeal of the 2013
amendments to prohibit states from imposing liens on the
medical care portion of Medicaid beneficiaries’ recoveries.
We note finally, as did the court in Tristani, that states
have long imposed Medicaid liens limited to medical costs, and
courts routinely have found such liens to be valid. (See, e.g.,
Tristani, supra, 652 F.3d at p. 369, fn. 10; Martinez v. State Dept.
of Health Care Services (2017) 19 Cal.App.5th 370, 372; Lima v.
Vouis, supra, 174 Cal.App.4th at p. 262.) Although Congress
repeatedly has had the opportunity to amend the Medicaid Act to
prohibit such liens, it has never done so. We therefore infer
Congress does not consider Medicaid liens limited to medical
costs to be inconsistent with the anti-lien or anti-recovery
provisions of the Medicaid Act. (See Lorillard v. Pons (1978)
434 U.S. 575, 580–581.)
For all of these reasons, we conclude that DHCS is entitled
to recover the portion of plaintiff’s settlement attributable to past
26
medical care paid for by DHCS through the Medi-Cal program.
The trial court erred in concluding otherwise.
IV.
The Superior Court Did Not Impliedly Find
that Plaintiff’s Settlement Omitted Past Medical Expenses
Plaintiff contends that even if we reject her interpretation
of the Medicaid Act, we nonetheless can affirm the trial court’s
order by concluding that the court impliedly found her settlement
did not include past medical expenses. We do not agree. In
denying DHCS’s Medi-Cal lien, the trial court issued a seven-
page order that set out in detail the trial court’s interpretation of
the relevant statutory and case law, concluding that DHCS was
not entitled to recover on its lien because “the plain language of
[42 United States Code] Section 1396p(a)(1) bars a lien from
being imposed against Plaintiff’s settlement proceeds arising
from medical expenses properly and correctly paid by DHCS.”
The court’s order thus makes clear that Judge Fujie disallowed
the state’s lien because she concluded it was barred by the anti-
lien provision of the Act—not because she found plaintiff’s
recovery did not include past medical expenses.
Where a written order clearly expresses the legal and
factual basis for the trial court’s resolution of controverted issues,
an appellate court will not imply findings the trial court did not
make. (E.g., Lafayette Morehouse, Inc. v. Chronicle Publishing
Co. (1995) 39 Cal.App.4th 1379, 1384 [“When the record clearly
demonstrates what the trial court did, we will not presume it did
something different.”]; Paterno v. State of California (2003)
113 Cal.App.4th 998, 1015 [same].) Because Judge Fujie clearly
set out why she denied DHCS’s lien, we will not presume that she
denied it for other reasons.
27
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.” (§ 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.
V.
This Matter Must Be Remanded for the
Trial Court to Determine, in the First Instance,
the Amount of DHCS’s Lien
Having concluded that DHCS is entitled to recover the
portion of plaintiff’s settlement attributable to past medical care
costs paid for by the state, we must next consider what that
portion is. The procedure for allocating settlement funds between
a beneficiary and DHCS is set out in section 14124.76,
subdivision (a), which provides that if a Medi-Cal beneficiary and
DHCS cannot agree as to what portion of a settlement, judgment,
or award represents payment for medical expenses, “the matter
28
shall be submitted to a court for decision.” Either DHCS or the
beneficiary “may seek resolution of the dispute by filing a motion,
which shall be subject to regular law and motion procedures.”
(§ 14124.76, subd. (a).)
In the present case, plaintiff and DHCS have not been able
to agree on DHCS’s share of the settlement, and because the trial
court concluded that federal law precluded DHCS’s lien in any
amount, it did not decide, as section 14124.76, subdivision (a)
directs, “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.”
We shall direct the trial court to make this determination on
remand.
29
DISPOSITION
The order denying DHCS’s lien is reversed. On remand,
the trial court shall conduct a hearing pursuant to Welfare and
Institutions Code section 14124.76 to determine (1) what portion
of plaintiff’s settlement is attributable to medical care expenses
paid for by the state, and (2) the reimbursement to which DHCS
is entitled. DHCS is awarded its appellate costs.
DHCS’s motion for judicial notice (filed August 2, 2021),
and plaintiff’s motion to strike portions of DHCS’s reply brief or
for leave to file a supplemental brief (filed August 16, 2021) are
denied.
CERTIFIED FOR PUBLICATION
EDMON, P. J.
We concur:
EGERTON, J.
MATTHEWS, J. *
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
30