Court Opinion

ID: 4410083
Source: CourtListenerOpinion
Date Created: 2019-06-25 20:02:06.381882+00
Date Added: 2024-06-11T14:51:56.144073
License: Public Domain

Filed 6/25/19
                CERTIFIED FOR PUBLICATION

 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                          DIVISION EIGHT

ETHAN LOMELI, a Minor, etc.,          B290608

       Plaintiff and Appellant,       (Los Angeles County
                                      Super. Ct. No. BC569989)
                   v.

STATE DEPARTMENT OF
HEALTH CARE SERVICES,

       Defendant and Respondent.

      APPEAL from an order of the Superior Court of Los Angeles
County, Lori Ann Fournier, Judge. Affirmed.
      Steven B. Stevens and Steven Weinberg, for Plaintiff and
Appellant.
      Xavier Becerra, Attorney General, Julie Weng-Gutierrez,
Senior Assistant Attorney General, Richard T. Waldow, Supervising
Deputy Attorney General, Nicole J. Kau, Deputy Attorney General,
for Defendant and Respondent.
                             *******

                                  1
       If you are needy and someone injures you, the government
may pay for your medical care but later ask you for repayment if
you get a large settlement from the tortfeasor. In California this is
by way of Medi-Cal. Medi-Cal seeks repayment from people with
settlements so it can provide care to others in need.
       This case displays that situation. The trial court approved
the existence and amount of the Medi-Cal settlement lien in this
case. We affirm. Statutory citations are to the Welfare and
Institutions Code.
                                    I
       We recount the main facts, which are undisputed.
       Ethan Lomeli’s guardian sued medical care providers for his
catastrophic birth injuries. Through the Medi-Cal system, the
Department of Health Care Services paid for his care before and
during his lawsuit. Lomeli settled with defendants for $4 million.
The Department moved to impose a $267,159.60 lien on this
settlement. The trial court granted this motion. Lomeli appeals
this May 23, 2018 order.
                                   II
       Federal law does not block the Department’s lien. Our review
of this legal question is independent.
       Lomeli argues to the contrary, saying sections 14124.72 and
14124.76 violate the Supremacy Clause of the federal constitution.
 Lomeli’s argument relies solely on an analysis from the dissent in
Tristani ex rel. Karnes v. Richman (3rd Cir. 2011) 652 F.3d 360,
379–387 (Tristani). The trial court went with the Tristani majority.
So do we. At pages 367–375, the Tristani majority correctly
determined federal law does not prohibit liens like this one.
       Briefly, the Tristani debate is this. The Tristani majority
held two provisions of the Social Security Act did not bar state
Medicare liens. To effectuate Congress’s goals in enacting the

                                  2
federal Medicare program, the Tristani majority interpreted federal
statutes as containing implied exceptions to provisions that
otherwise seemed to bar the liens. (See Tristani, supra, 652 F.3d at
p. 370.) The dissent agreed some implicit federal exception to these
two Social Security statutes did exist. (Id. at pp. 384 (dis. opn. of
Pollack, J.) [“must constitute an explicit exception”] & 385 (dis. opn.
of Pollack, J.) [“a limited implied exception must be read into the
anti-recovery provision”].) The dissent argued this implicit
exception was narrower than the majority’s expression of it.
       The Tristani majority analysis is better for two reasons.
       First, a desire to effectuate the legislative purpose drove the
majority’s analysis.
       “The dominant mode of statutory interpretation over the past
century has been one premised on the view that legislation is a
purposive act, and judges should construe statutes to execute that
legislative purpose. This approach finds lineage in the sixteenth-
century English decision Heydon’s Case, which summons judges to
interpret statutes in a way ‘as shall suppress the mischief, and
advance the remedy.’” (Katzmann, Judging Statutes (2014) p. 31.)
       California courts follow this dominant mode. In our state, we
must interpret words to promote rather than to defeat the general
purpose of a statute. Suppose the language of a statute is
reasonably susceptible of two constructions. If one would produce
results that are reasonable, fair, and harmonious with the statute’s
manifest purpose, and another would produce absurd consequences,
we must adopt the former construction. (Department of Motor
Vehicles v. Industrial Acc. Com. (1939) 14 Cal. 2d 189, 195.) Like
the Tristani majority, our fundamental task is to ascertain the
intent of the lawmakers to effectuate the purpose of the statute.
 (E.g., Apple Inc. v. Superior Court (2013) 56 Cal. 4th 128, 135.)

                                   3
       Federal and California state law agree on this point: read a
statute to effectuate its purpose. The Tristani majority correctly
discerned Congress’s purpose: to ensure Medicaid beneficiaries do
not receive a windfall by recovering medical costs they did not pay.
 (See Tristani, supra, 652 F.3d at pp. 371–373.)
       Second, the Tristani majority included common sense and
practical reasoning in its analysis. (See id. at pp. 374–375.) Common
sense and practical reasoning are attractive in legal analysis.
       Lomeli adds nothing to the Tristani debate and, except for our
agreement with that majority’s careful and correct analysis, neither
do we.
                                   III
       Collateral estoppel does not bar this May 23, 2018 lien. Again
our review is independent.
       Lomeli incorrectly claims the trial court decided something
about the Medi-Cal lien by approving his minor’s compromise on
August 30, 2016. Before that 2016 approval, however, Lomeli
informed the court his pending petition did not “address the [Medi-
Cal] lien at all.” Lomeli’s representation was correct: the August
30, 2016 order did not address the Medi-Cal lien at all. The trial
court decided about the Medi-Cal lien only much later, on May 23,
2018.
       Lomeli’s collateral estoppel argument is wrong. Collateral
estoppel is about how an earlier decision affects a later one. There
must be two decisions before this doctrine can be pertinent. In this
case there was only one decision, which was on May 23, 2018.
There was no earlier decision of relevance.
       The trial court order of August 30, 2016 did not decide
anything about the Medi-Cal lien. The text of this order confirms
Lomeli’s representation that it did not decide the Medi-Cal lien in
any way. The order is on Judicial Council form MC-351. Lomeli’s

                                 4
lawyer typed his name and address in the heading on page one.
The form order states that, “[u]ntil further order of the court,” the
court reserves jurisdiction “to determine a claim for a reduction of a
Medi-Cal lien . . . .” This order continues that “[t]he amount shown
payable to the Department of Health Care Services in item 7c(1)(d)
of this order is the full amount of the lien claimed by the
department but is subject to reduction on further order of the court
upon determination of the claim for reduction.” Lomeli’s lawyer,
however, left “item 7c(1)(d)” blank—an oversight, or an
acknowledgement the lien issue remained undecided.
       As Lomeli represented, this order did not “address the [Medi-
Cal] lien at all.” The collateral estoppel argument has no sound
basis.
       Lomeli now argues, erroneously, the August 30, 2016 order
indeed did address the Medi-Cal lien, because of what his lawyer
wrote in this form’s final “Additional orders” section. Lomeli’s entry
here claims the settlement proceeds are allocated in five ways, with
four entries and then a fifth line that reads “Past Medical Expenses
- (zero).” Whatever this line might signify, it does not mean this
court order determined some issue concerning the Medi-Cal lien, for
the reasons stated above.
       There is an added and independently adequate reason to
disregard this purported allocation. When a private plaintiff and a
private defendant settle, it often will be for a lump sum—here, $4
million. The defendant wants only to pay the minimum to flee the
lawsuit and does not care how the $4 million is “allocated.” From
the defendant’s perspective, these “allocation” terms are empty
words that cost it nothing. Defendants in fact will be happy to
please plaintiffs by writing down somewhere that $X is for this and
$Y is for that, for this gesture can facilitate the deal at no expense
to defendants. And plaintiffs can have an illegitimate tactical

                                  5
reason for presenting an “allocation”: to reduce Medicare’s recovery
and to keep more money for themselves. (Cf. Arkansas Dept. of
Health and Human Services v. Ahlborn (2006) 547 U.S. 268, 287–
288 (Ahlborn) [discussing risk that settling private parties will
allocate away the State’s interest]; id. at p. 288, fn. 18 [“concerns
about settlement manipulation”]; Wos v. E.M.A. ex rel. Johnson
(2013) 568 U.S. 627, 634 [possibility exists that Medicaid
beneficiaries and tortfeasors might collaborate to allocate an
artificially low portion of a settlement to medical expenses].)
       The August 30, 2016 order did not address the Medi-Cal lien
at all. Lomeli’s contrary argument is invalid.
                                    IV
       The trial court’s lien calculation of $267,159.60 was correct.
We independently review the court’s approach to lien calculation,
which was proper as a matter of law. Substantial evidence supports
the application of this approach in this case.
       We first explain the trial court’s method, which one can call a
reality-based approach.
       Here is what the court did. The trial court adopted the
Department’s approach. This approach was based in reality
because it focused on Lomeli’s actual medical costs. Those costs
were for medical services provided between January 24, 2014 (the
date of birth and injury) and July 13, 2016. Five pages in the
record list these actual costs, procedure by procedure. The costs
total $367,646.60. The Department then reduced this gross total of
$367,646.60 by 25 percent to account for a reasonable share of
Lomeli’s attorney’s fee. A statute requires this 25 percent
reduction. (§ 14124.72, subd. (d).) The Department further
subtracted $8,575.35 to account for its share of Lomeli’s total
litigation costs of $93,300. This further reduction was also
according to statute. (See ibid.)

                                  6
       This reality-based approach yielded a lien sum of $267,159.60
($367,646.60 - $91,911.65 - $8,575.35 = $267,159.60). In other
words, the gross sum of actual costs, minus an attorney fee
adjustment, minus a litigation cost adjustment, equaled the proper
lien amount.
       This approach is legally valid and was grounded in verified
facts about this case. The law requires nothing more.
       Here is why this approach was proper. The law demands a
“rational approach.” (Martinez v. State Dept. of Health Care
Services (2017) 19 Cal.App.5th 370, 374 (Martinez) [courts must use
a rational approach, quoting Bolanos v. Superior Court (2008) 169
Cal. App. 4th 744, 754].) This reality-based approach was rational,
for it was based on reality and sound logic.
       Lomeli’s attack on this approach is in error. Lomeli cites five
cases to contest this approach, but to no avail.
       First, Lomeli cites Ahlborn, but that case’s holding does not
impugn the trial court’s order. Ahlborn held a state’s lien on a
Medicaid recipient’s tort settlement is limited to the recipient’s
medical costs. (Ahlborn, supra, 547 U.S. at pp. 272, 280, & 292; cf.
Martinez, supra, 19 Cal.App.5th at p. 372 [Ahlborn held a state’s
lien on a Medicaid recipient’s tort settlement is limited to the
recipient’s medical costs].) In this case, the Department sought to
recover only benefits attributable to medical expenses. This lien
comports with Ahlborn.
       The California Legislature incorporated Ahlborn by name into
state law. (See § 14124.76 [“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

                                  7
Services v. Ahlborn (2006) 547 U.S. 268 and other relevant
statutory and case law.”].)
      Ahlborn is governing law. What does that mean?
      Ahlborn’s holding was narrow because its factual setting was
unusual. In Ahlborn, the state agency entered an atypical series of
stipulations that made the case’s factual situation extraordinary.
The agency stipulated Ahlborn’s entire claim was reasonably valued
at $3,040,708.12. (Ahlborn, supra, 547 U.S. at p. 274.) A
stipulation like this is unusual. In a typical case like Lomeli’s, the
reasonable value of the plaintiff’s case is sharply disputed.
      A moment’s reflection shows why the reasonable value of a
plaintiff’s personal injury suit typically is sharply disputed. How
would an objective person discover the reasonable value of a tort
case that has yet to be settled or tried? Usually, the informed
parties disagree—intensely. The plaintiff has an earnest hope that
may be a reliable and canny prediction, mere wishful thinking,
empty bluffing, or something else. The defense commonly takes a
less expansive view, which may be based on a reliable and canny
prediction, mere wishful thinking, empty bluffing, or something
else. The uncertainty about the reasonable value is considerable.
And it is twofold. First, the probability of a finding of liability can
range from zero to 100 percent certainty. Second, damages results
can vary between nothing and some extremely large number. So we
have a sharply disputed argument, not agreement on an objective
value.
      To treat the “reasonable value” of the plaintiff’s pretrial claim
as an objective sum is naively unrealistic—unless there is a
stipulation, as there was in Ahlborn. That stipulation made the
Ahlborn situation an outlier. There was no stipulation here.
Ahlborn does not alter the analysis in this case.

                                  8
      Nothing in Ahlborn disapproved of a reality-based approach
in cases lacking stipulations. Lomeli concedes as much.
      Lomeli cites other inapposite cases. In some, the Department
presented no evidence to the trial court. (See Lima v. Vouis (2009)
174 Cal. App. 4th 242, 248; Lopez v. Daimler Chrysler Corp. (2009)
179 Cal. App. 4th 1373, 1377, 1386, 1387; Aguilera v. Loma Linda
University Medical Center (2015) 235 Cal. App. 4th 821, 826
(Aguilera).) This case differs because here the Department did
present solid evidence to support its reality-based approach.
      Lomeli likewise cites Bolanos v. Superior Court (2008) 169
Cal. App. 4th 744, 748, where the trial court did not determine the
portion of the settlement that was allocable to medical expenses.
By contrast, here the trial court did determine the portion of the
settlement allocable to medical expenses. The Bolanos holding does
not impeach the decisionmaking in this case.
      Finally, Lomeli cites the Martinez case, which is consistent
with the analysis here. Martinez held it was not rational to credit
injured victims with more noneconomic damages than they could
possibly have recovered, or with larger hospital bills than those
actually paid. (Martinez, supra, 19 Cal.App.5th at p. 374.) There
were no such errors here. The Martinez opinion likewise ruled the
Department must reduce its lien by 25 percent for attorney fees as
required by section 14124.72, subdivision (d). The Department in
Martinez conceded this error. (Id. at p. 375.) Here, the Department
correctly performed this reduction. Martinez’s holdings do not bear
on this case.
      Lomeli critiques the trial court order in another way. As an
alternative to the reality-based approach, Lomeli proposes what can
be called a “best-case scenario” approach. Lomeli’s idea works like
this. Reduce the Department’s lien by hypothesizing Lomeli’s best-

                                 9
case scenario for his tort suit. Using this hypothetical best-case
scenario, create the following fraction:
                        (Amount of actual settlement)
                                  divided by
                      (Hypothetical best-case scenario).
      Then multiply the Department’s medical costs expenditures
by this fraction to calculate the Department’s lien.
      Under Lomeli’s approach, the larger his best-case scenario,
the smaller the Department’s lien and the more money Lomeli gets
to keep. If the settlement is for $1 and Lomeli says his best-case
scenario would have been a $10 recovery, for instance, these figures
would dictate the Department can recover only one-tenth of what
the Department paid out. If Lomeli inflates his best-case scenario
to $100, then the Department’s recovery drops to 1/100 of its
payments. And so forth.
      In this case, Lomeli says his best-case scenario would be a
recovery of $18.9 million.
      Lomeli’s proposed best-case scenario approach has three
weaknesses.
      First, this approach is based on a hypothetical number rather
than an actual number. Lomeli’s $18.9 million number has not
been tested by stipulation or by trial. The number is Lomeli’s alone.
His $18.9 million is a hypothesis that assumes (1) the odds Lomeli
can prove liability are 100 percent and (2) the fact finder would
award Lomeli every dollar of damages Lomeli has conceived and
requested. These assumptions are unreal. If Lomeli’s lawyers had
believed them, they would not have settled an $18.9 million sure
thing for $4 million.
      Second, Lomeli’s suggested approach is manipulable. When
we give one side or the other unilateral authority to say what the
case is worth, we invite exaggeration. Lomeli says his expert

                                 10
witnesses back him up, but experts are no solution. As noted in
1858, “[e]xperience has shown that opposite opinions of persons
professing to be experts may be obtained to any amount . . . .”
(Winans v. New York & E.R. Co. (1858) 62 U.S. 88, 101; cf. Foster,
Expert Testimony,—Prevalent Complaints and Proposed Remedies
(1897) 11 Harv. L.Rev. 169, 170–71 [“It is often surprising to see
with what facility and to what an extent [experts’] views can be
made to correspond with the wishes or interests of the parties who
call them . . . . They are selected on account of their ability to
express a favorable opinion, which, there is great reason to believe,
is in many instances the result alone of employment and the bias
growing out of it.”]; Sargon Enterprises, Inc. v. University of
Southern California (2012) 55 Cal. 4th 747, 755, 766 [expert testified
elaborately but baselessly that damages exceeded one billion
dollars].)
       Third, the best-case scenario approach poses equity questions.
The Department can serve fewer needy patients when it has fewer
dollars. The effect of diminishing the Department’s recovery is to
benefit Lomeli, with his $4 million settlement, at the expense of
others who need medical care but who lack settlement funds.
Lomeli does not attempt to justify this result.
       In sum, the trial court did not err by preferring a reality-
based approach over Lomeli’s best-case scenario proposal.
       Lomeli makes other arguments, to no effect. He condemns
the Department’s prediction it will pay Lomeli’s future medical
needs, but the challenged order did not incorporate this prediction.
Lomeli faults the trial court for striking the declaration of one
David Fractor, but this declaration did not matter. The
Department’s analysis and the trial court’s order would have been
the same with or without this declaration. Lomeli argues no
admissible evidence commits the Department to paying future

                                 11
benefits to him. This argument is beside the point because the
court’s approach was based on past costs, not future payments.
Lomeli also contends the Department is seeking to be reimbursed
twice “for the same future contingent benefits.” This is inaccurate
because this lien relates only to past payments. Lomeli attacks the
reasoning and holding of Aguilera v. Loma Linda University
Medical Center, supra, 235 Cal. App. 4th 821. Aguilera’s holding is
not pertinent to this case, so this attack is not relevant. Lomeli also
argues the Department failed to meet its burden of proof, but the
Department’s reality-based approach was sound and supported.
                            DISPOSITION
      We affirm. The Department is entitled to costs on appeal.

                                           WILEY, J.

WE CONCUR:

            BIGELOW, P.J.

            GRIMES, J.

                                  12