Filed 5/26/22

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

DANIEL C., a Minor, etc.,

Plaintiff and Appellant,

v.

WHITE MEMORIAL MEDICAL 

CENTER et al.

Defendants;

STATE DEPARTMENT OF HEALTH 

CARE SERVICES,

Claimant and Respondent.

B308253

(Los Angeles County

Super. Ct. No. BC585574)
2

APPEAL from an order of the Superior Court of 

Los Angeles County, Robert S. Draper, Judge. Reversed with 

directions. 

Steven B. Stevens; Law Offices of Martin Stanley and 

Martin Stanley, for Plaintiff and Appellant.

Rob Bonta, Attorney General, Cheryl L. Feiner, Assistant 

Attorney General, Richard T. Waldow, Gregory D. Brown and 

Cristina M. Matsushima, Deputy Attorneys General, for 

Claimant and Respondent.

 ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳ ̳

Appellant Daniel C. (Daniel) is a severely disabled child 

whose congenital abnormalities were undetected during his 

mother’s pregnancy until after viability. Daniel sued various 

medical providers for wrongful life, settling with one, 

Dr. Kathryn Shaw, in 2018. The California Department of 

Health Care Services (DHCS) asserted a lien on Daniel’s

settlement to recover what DHCS paid for his medical care 

through the state’s Medi-Cal program, and the trial court 

awarded DHCS the full amount of the lien. 

We reverse. As we discuss, we reject Daniel’s contentions 

that DHCS’s lien is preempted by federal law and that there is no 

substantial evidence that Daniel’s settlement included payments 

for past medical expenses. However, we find that the trial court 

erred by failing to distinguish between past medical expenses and 

other damages, and to apportion the settlement accordingly. We 

therefore will reverse and remand to the trial court to make the 

required findings and allocation.
3

FACTUAL AND PROCEDURAL BACKGROUND

A. Background.

Daniel was born on May 12, 2012, with profound mental 

and physical disabilities. He has severe cognitive and 

developmental impairments, is completely blind, and suffers 

significant hearing loss. At the age of five years, he was unable 

to stand independently because of skeletal abnormalities and is 

not expected ever to walk independently. He receives all of his 

nutrition through a gastrostomy tube because of difficulty 

swallowing. He is completely dependent on others for his daily 

care, including feeding, dressing, toileting, hygiene, and mobility, 

and he is unlikely to experience any meaningful improvement.

Through his mother and guardian ad litem, Rebecca

Gutierrez, Daniel filed a wrongful life suit against his mother’s 

prenatal health care provider, Dr. Shaw, alleging she negligently 

failed to diagnose serious abnormalities in his spine and bones 

that were evident on his ultrasound.

1 Daniel settled his action 

against Dr. Shaw in April 2018 for $1,250,000, subject to court 

approval.

B. Court approval of settlement; DHCS lien.

Since Daniel’s birth, DHCS has paid for his medical care 

through the California Medical Assistance Program, known as 

Medi-Cal. In March 2018, Daniel’s counsel notified DHCS of the 

1 Daniel named several other health care providers as 

defendants. All except Dr. Shaw were eventually dismissed from 

the case and are not relevant to this appeal.
4

pending lawsuit, and in April 2018, DHCS notified counsel of its 

right to assert a lien against any third party settlement or 

judgment.

On April 16, 2019, the trial court approved the settlement 

with Dr. Shaw and created a special needs trust for Daniel’s

benefit. It further ordered that $358,117 be held in Daniel’s

counsel’s client trust account pending a determination of DHCS’s 

lien.

On July 6, 2020, DHCS provided a revised final lien letter, 

stating that it had paid $358,061 for Daniel’s medical care, of 

which it sought to recover $229,696.

2

C. Daniel’s motion to determine Medi-Cal lien.

Daniel filed a motion pursuant to Welfare and Institutions 

Code3 section 14124.76 to determine DHCS’s lien. He contended

that DHCS was not entitled to any portion of his settlement 

because the federal Medicaid Act (42 U.S.C., § 1396p) preempted

states from imposing liens on judgments or settlements recovered 

by Medi-Cal recipients. Alternatively, Daniel contended that his 

total past and future damages exceeded $13 million, and that his 

$1.25 million settlement thus represented just about 9 percent of 

2 Under California law, if DHCS does not intervene in a 

Medi-Cal beneficiary’s claim against a third party tortfeasor, its 

claim for reimbursement of medical benefits is reduced by 

25 percent, “which represents [DHCS’s] reasonable share of 

attorney’s fees paid by the [Medi-Cal] beneficiary,” plus the 

department’s statutory share of litigation costs. (Welf. & Inst. 

Code, § 14124.72, subd. (d).) 

3 All subsequent undesignated statutory references are to 

the Welfare and Institutions Code.
5

his total damages. Daniel argued that DHCS’s recovery therefore 

should be limited to 9 percent of the past medical expenses paid 

by Medi-Cal, or $32,517, as further reduced by DHCS’s 

proportionate share of Daniel’s attorney fees and costs.

In support of his motion, Daniel submitted a declaration 

and life care plan prepared by Certified Nurse Life Care Planner 

Jennifer Craigmyle. Craigmyle stated that Daniel’s mother 

currently provided all of his daily care; although Daniel had been 

approved for in-home supportive services and respite care, his 

mother had difficulty finding nurses to provide the care Daniel 

required. Craigmyle stated Daniel’s life expectancy was 35 to 40 

years from his current age, and she created a detailed life care 

plan identifying the care and equipment he would need 

throughout his life, including medical care, attendant care, 

fiduciary and conservator fees, educational assessments, medical 

supplies, durable medical equipment, and physical and 

occupational therapy. Craigmyle also provided estimates of the 

costs of this care and equipment.

Daniel also submitted the declaration of economist David 

Fractor, which calculated the present value of Daniel’s future 

needs. Fractor opined that the present value of Daniel’s future 

care was $13.4 million. 

D. DHCS’s opposition to motion.

DHCS opposed Daniel’s motion. It asserted that its lien 

was not preempted by the Medicaid Act; to the contrary, the 

Medicaid Act required it to take all reasonable measures to seek 

reimbursement from third party tortfeasors for care and services 

paid through the Medi-Cal program. With regard to the amount 

of the lien, DHCS acknowledged that its reimbursement was 

limited to the portion of the settlement representing medical 
6

expenses, and that its recovery was further limited by 25 percent 

to account for its reasonable share of attorney fees. DHCS urged, 

however, that because Daniel’s settlement arose from a wrongful 

life action, it necessarily included only medical and educational 

damages. Daniel’s life care plan claimed only $23,000 in 

educational expenses, and thus the remainder of the 

$1.25 million settlement necessarily was for medical expenses 

subject to DHCS’s lien. 

DHCS further asserted that while the total value of a MediCal beneficiary’s claim ordinarily includes both past and future 

medical expenses, a claim must exclude future medical expenses

that Medi-Cal will cover. In the present case, Daniel is eligible 

for “full-scope” Medi-Cal coverage, which means he is eligible to 

receive all services available through the Medi-Cal program that 

are determined to be medically necessary. In light of Daniel’s 

medical condition and the reasonable probability that his 

condition will not improve, Daniel is likely to remain eligible for 

this coverage throughout his life. DHCS thus contended it was 

entitled to recover the full amount of its Medi-Cal lien.

In support of its opposition, DHCS submitted a number of 

declarations, including the following:

Declaration of Brooke Hennessy, Chief of Financial 

Eligibility Unit of Policy Development Branch of DHCS’s MediCal Eligibility Division: Hennessy stated that Daniel is eligible 

for full-scope Medi-Cal, meaning he is eligible to receive all 

services available through the Medi-Cal program that are 

determined to be medically necessary. He currently is receiving 

Medi-Cal benefits, including in-home supportive services, and is 

enrolled in L.A. Care, a Medi-Cal managed care plan. It is 

reasonably probable that Daniel will remain eligible for full-scope 
7

Medi-Cal so long as his income and resources remain at or below 

Medi-Cal eligibility limits.

Declaration of Raquel Sanchez, Staff Services Manager in 

DHCS’s Medi-Cal Benefits Division: Sanchez stated that services 

are available to Medi-Cal beneficiaries through the State Plan 

(the formal contract between the state and federal government) 

and through waiver programs. For example, Medi-Cal provides 

home and community-based services, including skilled nursing 

services, to eligible individuals in their homes and in community 

settings. “[A]ll but a few of the medical services and items 

enumerated within it are State Plan services available through

Medi-Cal to eligible full scope Medi-Cal beneficiaries,” like 

Daniel. Further, it is “reasonably probable” that Medi-Cal will 

pay for most of the medical services and medical items 

enumerated in Daniel’s Life Care Plan, including (1) physician 

services, (2) durable medical equipment and medical supplies 

including, for example, hearing aid replacements, gastrostomy 

supplies, incontinence supplies, shower chairs, and wheelchairs,

(3) orthotic and prosthetic appliances, (4) diagnostic testing, 

(5) inpatient hospital services, (6) in-home supportive services, 

including, for example Licensed Vocational Nurse (LVN) services,

and (7) transportation. The only items in the Life Care Plan that 

are not available through Medi-Cal are physical and occupational 

therapy, with an expected lifetime cost of $83,000.

Declaration of Nayeema Wani, DHCS Compliance Unit 

Supervisor: Wani stated that Daniel has cognitive deficits, 

hearing deficits, and physical impairments, which require him to 

have assistance with health care needs. Due to the severity of his 

condition, it is unlikely that his condition will improve. The Life 

Care Plan states that plaintiff presently requires 16-hour 
8

caregiving assistance provided by an LVN for the next 16 years, 

and then 24-hour caregiving assistance provided by an LVN. 

Twenty-four hour in-home LVN nursing is available through the 

Home and Community Based Services (HCBS) waiver program, 

so long as Daniel chooses to apply to receive such services and the 

services are deemed to be medically necessary. Currently, Daniel 

is receiving services through the State Plan’s In-Home 

Supportive Services program, for which he has been eligible since 

April 2016. Daniel also may choose to apply for other in-home 

and community-based nursing services through the State Plan’s 

Early Periodic Screening, Diagnostic and Treatment program. 

Should Daniel choose to apply for home and community-based 

services through HCBS waivers, nursing supervision and inhome skilled nursing services, including 24-hour LVN care, will 

be provided to him so long as he enrolls in such services and the 

services are determined to meet applicable medical necessity 

criteria.

E. Daniel’s reply.

In his reply, Daniel asserted that there was no evidence 

that any portion of his settlement was for past medical expenses; 

indeed, he was not aware of the amount of the lien when he 

entered into the settlement. Further, Daniel noted that some of 

his past medical expenses had been paid for by two managed care 

plans (for which Medi-Cal paid Daniel’s premiums), not by MediCal directly, and he urged that DHCS should not recover for 

those medical expenses. Finally, he urged, it was improper to 

disregard the value of his future damages on the ground that 

DHCS might make future payments, and DHCS failed to meet its

burden to show that it will in fact pay for all of Daniel’s future 

care. Although DHCS’s experts’ declarations describe benefits 
9

that might be available in theory, none articulated a commitment 

to make these payments. Daniel also asserted evidentiary

objections to some of DHCS’s evidence. 

F. Order granting Medi-Cal lien. 

On August 10, 2020, the trial court granted DHCS’s MediCal lien in the amount of $229,696. The court found that both 

parties agreed that Daniel’s past medical expenses were 

$358,118, and that sum should be reduced by 25 percent to 

account for DHCS’s share of attorney fees. The court rejected 

Daniel’s contention that DHCS was entitled to recover only 

9 percent of its outlay for Daniel’s medical expenses, stating that 

“[i]f the Court were to include future costs in its calculations, the 

Department would be entitled to an even greater share of the 

recovery, based on the ‘assumption that it will be responsible for 

all or a substantial portion of plaintiff’s future medical 

expenses.’ ” The court accordingly concluded that DHCS’s 

requested lien amount was reasonable, and that DHCS was 

entitled to recover on its lien in the amount of $229,696.

Daniel timely appealed from the order granting DHCS’s 

Medi-Cal lien.

DISCUSSION

Plaintiff contends: (1) DHCS’s lien is preempted by the 

federal Medicaid Act; (2) there is no substantial evidence that 

Daniel’s settlement included payments for past medical expenses; 

and (3) the trial court failed to equitably allocate the settlement. 

We address these contentions below.
10

I. Applicable law.

A. 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). Daniel’s preemption claim raises a pure question 

of law, which we review de novo. (Lima v. Vouis (2009) 

174 Cal.App.4th 242, 253 (Lima); Espericueta v. Shewry (2008) 

164 Cal.App.4th 615, 622 (Espericueta).) We will review his 

claims regarding the proper allocation of the settlement for an 

abuse of discretion. (Lopez v. DaimlerChrysler Corp. (2009) 

179 Cal.App.4th 1373, 1387.) “The court abuses its discretion . . . 

where it misconceives its duty, applies an incorrect legal 

standard, or fails to independently consider the weight of the 

evidence.” (People v. Carter (2014) 227 Cal.App.4th 322, 328.)

B. State Medi-Cal Act.

In 1965, Congress created the federal Medicaid program by 

enacting Title XIX of the Social Security Act (42 U.S.C. § 1396 

et 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.)

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 section 

14000 et seq. (See § 14000.4 [short title].) DHCS is the state 

agency charged with administering the Medi-Cal program. 
11

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 . . . 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 
12

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).)

II. DHCS’s lien is not preempted by the Medicaid Act.

Plaintiff concedes that DHCS’s lien is authorized by 

provisions of the Medi-Cal Act, but he contends that these 

provisions are preempted because they violate the “anti-lien” and 

“anti-recovery” provisions of the federal Medicaid Act. We 

disagree.

We recently addressed this issue in L.Q. v. California 

Hospital Medical Center (2021) 69 Cal.App.5th 1026 (L.Q.). 

There, we explained that 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. Among other things, 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]
13

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” (the acquisition-ofrights 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,” 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 
14

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.) 

In L.Q., after reviewing federal case law interpreting the 

Medicaid Act, we agreed with DHCS that the assignment, 

acquisition-of-rights, and reimbursement clauses create implied 

exceptions to the anti-lien and anti-recovery provisions. (L.Q., 

supra, 69 Cal.App.5th at p. 1046.) We noted that L.Q.’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 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).) We 

therefore concluded that, “[t]aken 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 third party as part of a settlement or 
15

judgment, those damages belong to the state, not to the 

beneficiary.” (L.Q., at p. 1046.) 

We further concluded that, for this reason, “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.” [Citations.]’ 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].” ’ ” (L.Q., 

supra, 69 Cal.App.5th at pp. 1046–1047.)

We noted, finally, that states have long imposed Medicaid 

liens limited to medical costs, and courts routinely have found 

such liens to be valid. Further, “[a]lthough Congress repeatedly 

has had the opportunity to amend the Medicaid Act to prohibit 

such liens, it has never done so.” (L.Q., supra, 69 Cal.App.5th at 

pp. 1048–1049, citing Tristani v. Richman (3d Cir. 2011) 652 F.3d 

360, 369, fn. 10; Martinez v. State Dept. of Health Care Services

(2017) 19 Cal.App.5th 370, 372; Lima, supra, 174 Cal.App.4th at 

p. 262.) For all of these reasons, we concluded that 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, and we thus held that “DHCS is entitled to recover 

the portion of [a] plaintiff’s settlement attributable to past 
16

medical care paid for by DHCS through the Medi-Cal program.” 

(L.Q., at p. 1049.)

We adopt our analysis in L.Q., concluding, as we did there,

that the provisions of the Medi-Cal Act permitting DHCS to 

impose a lien on plaintiff’s tort recovery are not preempted by 

federal law.

III. The trial court did not err by concluding that 

Daniel’s settlement included past medical expenses.

Daniel contends there is no substantial evidence that his 

settlement included past medical expenses; to the contrary, he 

urges, the settlement could not have included past medical 

expenses because at the time of the settlement negotiation, 

neither he nor Dr. Shaw’s counsel had any information about the 

amount of such expenses. Moreover, Daniel says, “[n]either the 

parties in the settlement agreement, nor the Superior Court in its 

minor’s compromise approval, allocated any sum to medical (or 

Medi-Cal) expenses.”

Daniel’s contention assumes that a Medi-Cal beneficiary’s 

settlement of a tort claim includes damages for past medical 

expenses only if the beneficiary so intends—or, in other words, 

that the beneficiary’s intended allocation of the settlement is 

dispositive. He cites no authority for this proposition, however, 

and we are aware of none. To the contrary, the Welfare and 

Institutions Code provides that DHCS “shall have a right to 

recover . . . the reasonable value of benefits” provided to a MediCal beneficiary (§ 14124.71, subd. (a), italics added), and it 

further provides that the court, not the Medi-Cal beneficiary, 

determines what portion of a settlement is fairly allocated to 

satisfy DHCS’s lien (§ 14124.76, subd. (a)). As DHCS notes, were 

the law otherwise, a beneficiary and third party tortfeasor could 
17

simply settle around DHCS’s lien, to the detriment of the public 

fisc. (See Arkansas Department of Health & Human Services v. 

Ahlborn, supra, 547 U.S. 268, 288 [noting that absent an 

agreement between a Medicaid beneficiary and state agency, the 

allocation of settlement proceeds shall be decided by a court to 

avoid “the risk that parties to a tort suit will allocate away the 

State’s interest”].) Daniel’s subjective intentions or expectations

with regard to the composition of the settlement proceeds, 

therefore, are irrelevant to our analysis. 

IV. The trial court erred by failing to equitably allocate 

the settlement.

Daniel next contends that the trial court erred by allowing 

DHCS full compensation for its past medical expenses without

allocating the settlement proceeds between past medical 

expenses and other damages. We agree.

A. Legal principles.

1. Wrongful life claim.

A wrongful life action is brought by a child born with a 

genetic defect who alleges that a physician or other health care 

provider negligently failed to inform the child’s parents of the 

possibility that the child would be born with the defect. (Turpin 

v. Sortini (1982) 31 Cal.3d 220, 223, 237–239.) A child may 

maintain a wrongful life action when a defendant has “ ‘failed to 

diagnose and warn the parents of the probability that an infant 

will be born with a hereditary ailment or disability and the infant 

is in fact born with that ailment.’ (Foy v. Greenblott (1983) 

141 Cal.App.3d 1, 14.)” (Barragan v. Lopez (2007) 

156 Cal.App.4th 997, 1004.) The child’s claim is that, but for the 

physician’s negligence, the child would not have been born into 
18

the pain and suffering caused by his or her genetic defect. 

(Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 492–493

(Ermoian).) 

“The ‘resulting injury’ in a wrongful life action is not the 

plaintiff’s disease or birth defects, but the birth of the plaintiff 

with the defect.” (Ermoian, supra, 152 Cal.App.4th at p. 493.) 

A child who prevails on a wrongful life claim may not recover for 

lost earnings or general damages, including pain and suffering,

but may recover special damages “for the extraordinary expenses 

necessary to treat the hereditary ailment from which he or she 

suffers.” (Galvez v. Frields (2001) 88 Cal.App.4th 1410, 1419–

1420 (Galvez); Johnson v. Superior Court (2002) 101 Cal.App.4th 

869, 887–889.)

2. The Ahlborn decision.

In Arkansas Department of Health & Human Services v. 

Ahlborn, supra, 547 U.S. 268 (Ahlborn), the United States 

Supreme Court considered whether a state agency may impose a 

lien on a Medicaid beneficiary’s recovery from a third party

tortfeasor. 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 declaration that ADHS’s 

lien violated the Medicaid Act because it allowed the state to 
19

claim a greater portion of the settlement than was properly 

attributable to her past medical expenses.4 (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

Medicaid 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(a)(1).) 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, 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 medical care,” but urged that the anti-lien provision 

precluded attachment of the remainder of the settlement. The 

4 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 were correct, 

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.)
20

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.)

Ahlborn thus has several implications for courts addressing 

Medi-Cal liens. First, the state is entitled to only that portion of 

a settlement that compensates for past medical expenses. Thus, 

the state “is not automatically entitled to the entire settlement, 

even if the claim for reimbursement exceeds the settlement.” 

(Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 752–753

(Bolanos).) Further, “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.” (Id. at p. 753.)
21

3. California cases interpreting Ahlborn.

Although both Ahlborn and state statutes require courts to 

allocate settlements between past medical expenses and other 

damages, neither describes how courts are to make this 

allocation. The case law provides some useful guidance, however. 

In Bolanos, supra, 169 Cal.App.4th 744, the plaintiff brought a 

medical malpractice action against her health care providers, 

settling the action for $1.5 million. DHCS advised that it had 

spent in excess of $700,000 on the plaintiff’s medical care and 

would impose a lien of more than $500,000 on the settlement. 

(Id. at pp. 748–749.) Over plaintiff’s opposition, the trial court 

granted the lien in full. The Court of Appeal reversed. It noted 

that in Ahlborn, the Supreme Court approved an allocation that

calculated what percentage the plaintiff’s settlement was of her 

total claim for damages, and then permitted the state to place a 

lien on only that percentage of its medical care costs. (Id. at 

pp. 753–754.)5 While the Bolanos court noted that the Ahlborn 

formula is not the only formula that may be used to allocate 

settlements, it held that medical expenses must be “distinguished 

in the settlement from other damages on the basis of a rational 

approach.” (Id. at p. 754, italics added.) Further, the court said, 

“the ratio of the settlement to the total of the claim, when applied 

5 For example, in Ahlborn, the plaintiff settled a $3 million 

claim for $550,000, or approximately one-sixth (about 16 percent) 

of the total claim. (Ahlborn, supra, 547 U.S. at p. 274.) ADHS 

paid approximately $215,000 for the plaintiff’s care. (Id. at 

p. 273.) The parties stipulated that if ADHS could assert a lien 

against only the portion of the settlement attributable to past 

health care costs, it could recover only about $35,000 or 16 

percent of its total expenditures. (Id. at p. 274.)
22

to [DHCS’s] total payments to the beneficiary, is an acceptable 

approximation of the amount of medical expenses.” (Id. at p.

748.) 

In the case before it, the Court of Appeal found that the 

trial court had failed to make findings as to the plaintiff’s life 

expectancy, her total claim, or the portion of the settlement 

allocable to medical expenses. (Bolanos, supra, 169 Cal.App.4th

at pp. 757–758.) Accordingly, it directed the trial court to vacate 

its order and determine “the portion of the settlement that 

represents payment for past medical expenses, or medical care,”

and “the maximum amount the director may recover on the MediCal lien.” (Id. at p. 762.)

The court reached a similar conclusion in Lima, supra, 

174 Cal.App.4th 242. There, the plaintiff settled a medical 

negligence claim against her physician for $950,000, or about 

6.75 percent of her total claimed damages of $14 million. DHCS 

claimed a lien of about $300,000; the plaintiff urged the trial 

court to reduce DHCS’s lien to $21,000, or about 6.75 percent of 

its total expenditures. (Id. at pp. 247–248.) The trial court 

concluded that the plaintiff’s claimed damages were reasonable, 

but it nonetheless denied the plaintiff’s request to reduce DHCS’s 

lien. In making this order, the trial court did not determine what

portion of the settlement proceeds were allocable to the plaintiff’s 

past medical expenses. (Id. at p. 246.) 

The Court of Appeal reversed and remanded. It explained: 

“The trial court found that the total value of plaintiff’s claim was 

$14,077,177; that the value of the settlement—$950,000—was 

reasonable under the circumstances of this case; and that the 

amount of plaintiff’s past medical costs was $435,395. 

Nevertheless, it made no attempt to determine the portion of the 
23

settlement that should be allocated to past medical expenses. 

Instead, it determined that DHS was entitled to recover the 

entire amount of its lien, less statutory deductions, from the total

amount of the settlement proceeds. In doing so, the trial court 

ignored its own findings, including its finding that settling a 

$14 million claim for $950,000 was reasonable under the 

circumstances presented.

“Absent a determination of the settlement proceeds 

allocable to plaintiff’s various categories of damages, it cannot be 

ascertained whether DHS’s lien is being imposed upon amounts 

paid in settlement for damages other than plaintiff’s past medical 

costs. As discussed above, the imposition of the DHS lien on 

amounts allocable to damages other than past medical expenses 

would contravene the mandate in Ahlborn, supra, 547 U.S. 268[,]

that Medicaid liens cannot extend to settlement proceeds 

earmarked for other types of damages, such as pain and suffering 

or lost income.

“Based on the holding in Ahlborn, supra, 547 U.S. 268, we 

conclude that the trial court was required to distinguish past 

medical benefits in the settlement from other categories of 

damage using a rational approach that takes into consideration 

the trial court’s various findings, including its findings 

concerning the total value of plaintiff’s damages and the 

reasonableness of the settlement amount in light of those total 

damages. This latter finding . . . establishes that the trial court

concluded it was reasonable under the circumstances for plaintiff 

to compromise her $14 million claim for a fraction of its value, 

i.e., the reasonable settlement value of plaintiff’s claim against 

the physician defendant was 6.75 percent of the total monetary 

damages she incurred. Notwithstanding that finding, the trial 
24

court, in violation of the principles set forth in Ahlborn, 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.” (Lima, supra, 

174 Cal.App.4th at pp. 260–261.) The Court of Appeal therefore 

reversed the trial court’s ruling on the amount of the Medi-Cal 

lien and remanded with directions to the trial court to “make the 

required allocation consistent with [its] findings.” (Id. at p. 246.)

The court considered a somewhat different allocation issue 

in Aguilera v. Loma Linda University Medical Center (2015)

235 Cal.App.4th 821 (Aguilera)—namely, how to allocate future

medical and custodial care costs that may be paid by DHCS, not 

by a Medi-Cal beneficiary. There, the plaintiff settled a medical 

negligence action against her physician for $950,000, near the 

defendant’s policy limits. (Id. at p. 825.) DHCS asserted a lien 

on the plaintiff’s recovery based on the roughly $200,000 it had 

spent on her behalf. (Ibid.) The plaintiff filed a motion to 

determine DHCS’s lien, claiming that the full value of her claim 

was nearly $15 million, and thus that her settlement was only 

about 6 percent of her total damages. Of her total damages, the 

plaintiff claimed approximately $200,000 for past medical costs, 

$1.5 million for future medical costs, and $11 million for future 

attendant costs. (Id. at pp. 825–826.) She asserted that DHCS’s 

recovery therefore should be limited to about $10,000, or 

approximately 6 percent of its lien claim, based on the Ahlborn

formula.6 (Id. at p. 826.) DHCS disagreed, asserting that it 

6 The court explained that the Ahlborn formula “is the ratio 

of the settlement to the total claim, when applied to the benefits 

provided by the Department. [Citation.] Expressed 
25

would be paying the plaintiff’s future medical and attendant care 

expenses, and thus those expenses should be excluded from the 

calculation. The trial court excluded the plaintiff’s future 

medical expenses from its determination of the plaintiff’s future 

expected damages, but not her future attendant care expenses,

from the calculation, awarding DHCS a lien of about $15,000. 

DHCS appealed. (Id. at p. 826.)

The Court of Appeal reversed with directions. While it 

“agree[d] in theory” with DHCS’s contention that future health 

care expenses that would be paid by Medi-Cal should be excluded

from the Ahlborn formula, it explained that “excluding such 

expenses is contingent on the Department presenting sufficient 

evidence that it will in fact pay [plaintiff] Ashlynn’s expenses as 

long as she qualifies for the benefits that she is presently 

receiving.” (Aguilera, supra, 235 Cal.App.4th at pp. 831–832.) 

The court concluded that DHCS had failed to present such 

evidence because although it had submitted a declaration stating 

that the plaintiff’s future medical and custodial care needs would 

be met by Medi-Cal, “[n]othing in [the] declaration suggested any 

expertise with regard to past or future benefit eligibility or 

benefit determinations,” and the declarant “cited no statutes or 

regulations requiring that Medi-Cal pay for all her health care 

needs, showing that Medi-Cal paid for these expenses in the past 

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] × Value of Benefits Provided.)” (Aguilera, 

supra, 235 Cal.App.4th at p. 828.)
26

or that it is reasonably probable Medi-Cal will pay all of these 

expenses in the future.” (Id. at p. 832.)

The court concluded that it had articulated a new legal 

standard, and thus it remanded the case to the trial court for 

further proceedings, including the presentation of additional 

evidence by either party. It cautioned the parties that on 

remand, “[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. Based on the evidence provided, the trial 

court must make a determination whether it is reasonably 

probable the Department will pay [the 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.” 

(Aguilera, supra, 235 Cal.App.4th at p. 833.)

The court cautioned, however, that predictions about the 

future are inherently uncertain, and it said DHCS thus should 

not be tasked with establishing the plaintiff’s future Medi-Cal 

eligibility with “absolute certainty.” It explained: “[Plaintiff’s]

future health care needs are uncertain and necessarily based on 

reasoned assumptions and estimates from health care 

professionals. Similarly, the benefits the Department will offer 

in the future and its future funding for these benefits is uncertain 

and can be based on reasonable assumptions and estimates. 

Stated differently, it is impossible for either party to predict the 

future. We believe it is unjust to require absolute certainty from 
27

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. To the extent the 

trial court required such certainty, it erred.” (Id. at p. 832.)7

B. Analysis.

Daniel asserts the trial court erred by failing to allocate his 

settlement between past medical expenses and other damages as 

Ahlborn and California law require. He notes that the trial court

approved the settlement of his $13.7 million claim for 

$1.25 million, or approximately 9 percent of the total, and he 

contends that the court therefore should have equitably 

apportioned the settlement between him and DHCS by applying 

the Ahlborn formula—that is, by permitting DHCS to recover 

only about 9 percent of its total expenditures, as further reduced 

by its statutory share of attorney fees and costs.8

7 Daniel asserts that Aguilera’s reasoning and holding are 

unsound because it “tacitly assumed that the child would be a 

fee-for-service Medi-Cal recipient for the foreseeable future.” The 

Aguilera court manifestly did not make this assumption; to the 

contrary, it required DHCS to establish, based on reliable 

evidence, that it was reasonably likely DHCS would pay the 

plaintiff’s future medical expenses. (Aguilera, supra, 

235 Cal.App.4th at p. 833.)

8 In his opening brief, Daniel asserts that DHCS’s share of 

litigation costs exceeds its share of the settlement based on past 

medical expenses, and thus that its net lien is “- $11,872,” i.e., is 

less than $0. As DHCS notes, and as Daniel concedes in his reply 

brief, that analysis relies on a superseded version of the Welfare 

and Institutions Code.
28

DHCS contends that the trial court correctly determined 

that its requested reimbursement was reasonable and 

appropriate under state and federal law. It urges that the trial 

court was not required to apply the Ahlborn formula, but that 

even if it had done so, Daniel would not have received a more 

favorable result because “[s]ubstantial evidence supports the trial 

court’s finding that it is reasonably probable [DHCS] will cover 

the majority of [Daniel’s] future medical expenses.” DHCS thus 

argues that the trial court properly excluded future medical 

expenses from its calculation. 

We agree with Daniel that the trial court failed to equitably 

allocate the settlement. Considered together, the cases discussed 

above establish that as a predicate to deciding how much of a 

Medi-Cal beneficiary’s tort settlement DHCS may claim, the trial 

court must determine which portion of the settlement is 

attributable to past medical expenses, against which DHCS is 

entitled to collect its lien, and other damages, against which it is 

not. (Bolanos, supra, 169 Cal.App.4th at p. 753; Lima, supra, 

174 Cal.App.4th at pp. 260–261.) In making this allocation, the 

trial court is not required to use the Ahlborn formula, but it must 

distinguish medical expenses in the settlement from other 

damages “on the basis of a rational approach.” (Bolanos, at 

p. 754; Lima, at pp. 260–261.) And while the court may exclude 

future medical expenses from its calculation of DHCS’s lien if it 

finds that it is “reasonably probable” DHCS will pay such 

expenses, it must make such a finding based on competent 

evidence. (Aguilera, supra, 235 Cal.App.4th at p. 833.)

In the present case, it does not appear that the trial court 

determined which portion of Daniel’s settlement was attributable 
29

to past medical expenses, as Ahlborn requires. Its analysis was 

as follows: 

“Welfare & Institutions Code Section 14124.76(a) provides: 

‘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.’

“In this case, Plaintiffs agree with the Department that the 

past medical expenses were $358,118. Under Welfare &

Institutions Code section 14124.72, subdivision (d), ‘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, . . .’ 

(Welf. & Inst. Code, § 14124.72.)

“For this case, $358,117.51 minus one quarter is 

$268,588.13. The Department states, now, that it is entitled to 

recover $229,709.90, but that it will accept $229,696.73. 

Plaintiffs seek to reduce this amount to zero, largely based on 

calculations that include large future medical expenses. 

Plaintiffs argue that the Department’s recovery is limited to only 

9.08 % percent of $358,118 (the requested amount) because 

Daniel’s damages, including future damages[,] are $13,847,277[,] 

and his recovery of $1,250,000 is 9.08% of $13,847,277. The 

Court does not agree that the caselaw supports these 

calculations, which in fact, seem backwards. If the Court were to 

include future costs in its calculations, the Department would be 

entitled to an even greater share of the recovery, based on the 

‘assumption that it will be responsible for all or a substantial 
30

portion of plaintiff’s future medical expenses.’ (See, 

Lima[, supra,] 174 Cal.App.4th [at p.] 262.) In fact, the case [law]

generally recognizes that ‘lien recovery was limited to that 

portion of [Plaintiff’s] settlement proceeds that were meant to 

compensate her for past medical costs.’ (Id. at 257.)

“Accordingly, the Court finds that the Department’s 

requested lien amount is reasonable. The Department is to 

recover on its lien in the amount of $229,696.73.”

This articulation of the trial court’s analysis makes clear, 

first, that the trial court did not determine which portion of 

Daniel’s settlement with Dr. Shaw represented past medical 

expenses. Indeed, although the trial court quoted a sentence of 

section 14124.76, subdivision (a), which states that DHCS’s 

recovery is limited to the portion of the settlement that 

represents payments for medical expenses or medical care, it 

nowhere made a finding as to how much of the settlement 

represented payment for such care. Instead, its only finding was 

the total cost of Daniel’s medical care—not how much of the 

settlement was allocable to that care.

The trial court also did not make a finding as to who—

Daniel or DHCS—would pay Daniel’s future medical expenses. 

As we have discussed, Aguilera held that future health care 

expenses that will be paid by DHCS should be excluded from the 

calculation—but only if the trial court makes a finding that it is 

reasonably probable DHCS will pay such expenses. Manifestly, 

the trial court made no such finding—instead, it “ ‘assum[ed],’ ” 

without deciding, that DHCS would pay such expenses.

The trial court, thus, appears to have made precisely the 

same error that was made by the trial courts in Bolanos and 

Lima—that is, it failed to allocate the settlement “between past 
31

medical expenses and other damages.” (Bolanos, supra, 

169 Cal.App.4th at p. 753; see also Lima, supra, 174 Cal.App.4th 

at pp. 260–261.) As in those cases, therefore, this matter must be 

remanded to the trial court to make that determination in the 

first instance.

DHCS contends that the trial court’s failure to make the 

necessary finding was harmless because “nearly the entirety of 

[Daniel’s] settlement is subject to the Department’s lien” as a 

matter of law. It asserts: “[T]he plaintiff—child in a wrongful 

life action may only recover ‘extraordinary, additional medical 

expenses that are occasioned by the hereditary ailment’ and 

‘extraordinary expenses for specialized teaching.’ [Citations.] 

Because [Daniel’s] settlement arises from a wrongful life action, 

his entire settlement—as a matter of law—represents only

medical and educational damages. . . . [Daniel] submitted 

evidence that he will incur $2,335 for an education advocate 

evaluation and $20,995.00 for education advocate annual followups; the Department does not dispute these figures. The $23,330 

in educational expenses are not medical expenses and thus [are] 

not subject to the Department’s lien. The remaining $1,226,670 

of [Daniel’s] $1.25 million settlement, however, represents

medical expenses subject to the Department’s lien. Because the 

Department’s recovery of $229,696.73 in satisfaction of its lien 

does not exceed the portion of the settlement representing 

medical expenses, the trial court’s award complies with state law 

and with Ahlborn.”

There are several problems with DHCS’s analysis, the most 

significant of which is that it fails to distinguish between past 

and future medical expenses. DHCS’s analysis assumes that it 

may impose a lien both on medical expenses incurred in the past
32

and those to be incurred in the future. DHCS cites no authority 

for this proposition, however, and the law is to the contrary. As 

the court explained in Bolanos, the Supreme Court’s holding in 

Ahlborn means that “the state is entitled only to that portion of 

the settlement that compensates for past medical expenses.” 

(Bolanos, supra, 169 Cal.App.4th at p. 752, italics added; see also 

Lima, supra, 174 Cal.App.4th at p. 260 [“the imposition of the 

DHS lien on amounts allocable to damages other than past 

medical expenses would contravene the mandate in Ahlborn”], 

italics added.) DHCS’s assertion that the trial court was not 

required to allocate the settlement because it consisted almost 

entirely of medical expenses therefore misses the mark.

DHCS further errs in asserting that as a wrongful life 

plaintiff, Daniel may recover only “medical expenses” and 

“ ‘extraordinary expenses for specialized teaching.’ ” While 

DHCS is correct that a wrongful life plaintiff may not recover 

general damages or lost earnings, a plaintiff may recover the 

“extraordinary expenses necessary to treat the hereditary 

ailment from which he or she suffers.” (Galvez, supra, 

88 Cal.App.4th at pp. 1419–1420.) None of the cases cited by 

DHCS suggests that such expenses necessarily are limited to 

medical and educational expenses. 

DHCS errs, finally, in suggesting that we may affirm the 

trial court’s order because substantial evidence supports the 

conclusion that it is reasonably probable that DHCS will pay 

Daniel’s future medical expenses. Had the trial court made such 

a finding, we would, of course, review that finding for substantial 

evidence. (E.g., Greif v. Sanin (2022) 74 Cal.App.5th 412, 442,

[substantial evidence standard of review applied to factual 

findings].) But as we have said, the trial court did not make such 
33

a finding, instead “ ‘assum[ing]’ ” that DHCS would pay Daniel’s 

future medical expenses. Because an allocation between past 

medical and other expenses is a necessary predicate to a lien 

determination, the trial court’s failure to make such an allocation

was an abuse of discretion requiring reversal. (See Lima, supra, 

174 Cal.App.4th at p. 261; Bolanos, supra, 169 Cal.App.4th at 

p. 762.)

We note the evidence before the trial court did not compel 

the conclusion that all or most of Daniel’s future medical 

expenses will be paid by DHCS. It is true, as DHCS contends, 

that its declarations in opposition to Daniel’s motion state that it 

is reasonably probable Daniel will remain eligible for full-scope 

Medi-Cal so long as his income and resources remain below MediCal eligibility, and that it is reasonably probable that Medi-Cal 

will pay for most of the items enumerated in his life care plan, 

including physician services, durable medical equipment and 

medical supplies, diagnostic testing, inpatient hospital services, 

and inpatient supportive services, including LVN services. 

However, Daniel’s life care plan notes that Daniel’s mother 

currently provides all daily care for Daniel, and that although 

Daniel is entitled to both in-home supportive care services and 

respite care, his mother “has found it challenging to secure a 

nurse to provide respite care as the agencies nearby are not 

staffed to assist her.” On remand, therefore, the trial court must 

resolve these factual disputes and determine which of Daniel’s 

future expenses are likely to be paid by DHCS.

For all the foregoing reasons, we will reverse and remand 

this matter for further proceedings. On remand, the trial court 

shall determine the amount due DHCS as follows. First, the 

court shall determine the value of Daniel’s future expenses it is 
34

reasonably probable DHCS will pay, consistent with the 

standards articulated in Aguilera. Second, the court shall divide 

the settlement amount by the full value of Daniel’s claim less the 

value of Daniel’s future expenses it is reasonably probable DHCS

will pay. Finally, the court shall apply the resulting percentage 

to the value of past benefits provided by DHCS as reduced by 

DHCS’s statutory share of attorney fees and costs. In other 

words, DHCS’s recovery shall be as follows: (Total Settlement ÷ 

[Full Value of Claim – Future Expenses To Be Paid By DHCS]) x 

(Reasonable Value of Past Benefits Provided by DHCS – DHCS’s 

Share of Attorney Fees and Costs).9

9 We recognize that Daniel also challenges the trial court’s 

order on the grounds that the trial court overruled some of his 

evidentiary objections and permitted DHCS to recover medical 

expenses paid by managed care plans, not by DHCS directly. 

Because we reverse the order in full, we do not reach these 

issues.
35

DISPOSITION

The order is reversed and remanded to the trial court for 

further proceedings in accordance with this opinion. Appellant 

is awarded his appellate costs.

CERTIFIED FOR PUBLICATION

EDMON, P. J.

We concur:

LAVIN, J.

EGERTON, J.