Court Opinion

ID: 8210133
Source: CourtListenerOpinion
Date Created: 2022-09-28 22:02:28.78036+00
Date Added: 2024-06-11T16:41:47.887526
License: Public Domain

Filed 9/28/22 Opinion following rehearing
                  CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                   SECOND APPELLATE DISTRICT

                             DIVISION THREE

 DANIEL C., a Minor, etc.,                    B308253

        Plaintiff and Appellant,              (Los Angeles County
                                              Super. Ct. No. BC585574)
        v.

 WHITE MEMORIAL MEDICAL
 CENTER et al.,

        Defendants;

 STATE DEPARTMENT OF HEALTH
 CARE SERVICES,

        Claimant and Respondent.

      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.
      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

                                 2
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
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.

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.

                                 3
      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 his
$1.25 million settlement thus represented just about 9 percent of
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

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.

                                 4
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
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.

                                5
       DHCS further asserted that while the total value of a Medi-
Cal 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, which stated as follows:
       Brooke Hennessy, Chief of Financial Eligibility Unit of
Policy Development Branch of DHCS’s Medi-Cal Eligibility
Division, 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 Medi-Cal so long as his income and
resources remain at or below Medi-Cal eligibility limits.
       Raquel Sanchez, Staff Services Manager in DHCS’s Medi-
Cal Benefits Division, 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.

                                 6
“[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.
       Nayeema Wani, DHCS Compliance Unit Supervisor, 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 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

                                 7
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 in-home 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 Medi-
Cal 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
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 Medi-
Cal 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

                                8
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.4
                           DISCUSSION
      Daniel 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 consider these issues below.

4     We filed an earlier version of this opinion on May 26, 2022.
On June 7, 2022, we granted rehearing on our own motion to
permit the parties to submit supplemental briefs discussing the
impact on this case, if any, of Gallardo v. Marstiller (June 6,
2022) 142 S.Ct. 1751. In reissuing this opinion, we have
considered the parties’ supplemental letter briefs, filed June 27,
July 15, and July 28, 2022, as well as DHCS’s petition for
rehearing, filed June 6, 2022.

                                  9
I.    Background
      A.    The Medicaid program.
       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.
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.
(§ 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 v. Shewry (2008) 164 Cal.App.4th 615, 622–623
(Espericueta); 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).) A final

                                10
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, supra, 164 Cal.App.4th at p. 622.)
We 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.    Wrongful life claim.
       A wrongful life action may be 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
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

                                 11
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.)
II.   DHCS’s lien is not preempted by the Medicaid Act.
      Daniel 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]
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-of-

                                12
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,” 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.)

                                13
       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
judgment, those damages belong to the state, not to the
beneficiary.” (L.Q., at p. 1046.)

                                14
       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
medical care paid for by DHCS through the Medi-Cal program.”
(L.Q., at p. 1049.)

                                15
      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 Daniel’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 Medi-Cal Act
provides that DHCS “shall have a right to recover . . . the
reasonable value of benefits” provided to a Medi-Cal beneficiary
(§ 14124.71, subd. (a), italics added), and 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 simply settle around DHCS’s lien, to the
detriment of the public fisc. (See Arkansas Department of Health
& Human Services v. Ahlborn (2007) 547 U.S. 268, 288 (Ahlborn)

                                16
[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.    The Ahlborn decision and the California Medi–
            Cal Act.
       In Arkansas Department of Health & Human Services v.
Ahlborn, supra, 547 U.S. 268, 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

                                 17
claim a greater portion of the settlement than was properly
attributable to her past medical expenses.5 (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 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 court agreed:

5     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.)

                                18
“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.)
       In 2008, the California Legislature amended the state
Medi-Cal Act to conform to Ahlborn. As relevant here, section
14124.76, subdivision (a) provides that 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 DHCS’s lien in 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.” (Ibid.) All reasonable efforts must be made to
obtain DHCS’s advance agreement to a determination as to what
portion of a settlement, judgment, or award represents payment
for a beneficiary’s medical expenses, but if the parties cannot

                                 19
agree, “the matter shall be submitted to a court for decision.”
(Ibid.) 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 DHCS 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.” (Ibid.)
       The parties agree that under state law, DHCS may impose
a lien on only the portion of a beneficiary’s settlement that
represents past (not future) medical expenses.6 However, they
disagree about the scope of the court’s discretion when allocating
settlements between past medical expenses and other damages.
Because the Medi-Cal Act does not describe how courts are to
allocate settlements, we consider the approaches taken by other
appellate courts.
      B.    California case law.
     In Bolanos v. Superior Court (2008) 169 Cal.App.4th 744,
752–753 (Bolanos), the plaintiff brought a medical malpractice

6     In Gallardo v. Marstiller, supra, 142 S.Ct. 1751, the United
States Supreme Court held that the federal Medicaid Act permits
states to seek reimbursement from settlement payments
allocated for both past and future medical care, and thus that a
Florida statute that permitted the state to do so did not violate
federal law. In supplemental briefs submitted after Gallardo was
decided, Daniel and DHCS agree that Gallardo does not control
the present appeal because California has opted to limit its
recovery to only the portion of a settlement that represents
payment for past medical expenses.

                                20
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. (Bolanos, at pp. 753–
754.)7 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.” (Bolanos, at p. 754, italics added.) Further, the court
said, “the ratio of the settlement to the total of the claim, when
applied 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

7      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.)

                                 21
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” and “the
maximum amount the director may recover on the Medi-Cal
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
(then called the Department of Health Services (DHS)) claimed a
lien of about $300,000; the plaintiff urged the trial court to
reduce DHS’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 DHS’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
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

                                 22
$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
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

                                 23
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.8 (Id. at p. 826.) DHCS disagreed, asserting that it

8      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
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.)

                                 24
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
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

                                25
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
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

                                26
funding will exist for these future benefits. To the extent the
trial court required such certainty, it erred.” (Id. at p. 832.)9
      C.    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.10
       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

9      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.)
10     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.

                                  27
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
to past medical expenses, as California law 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

                                28
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% 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 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

                                29
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, the court’s 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
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

                                30
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 follow-
ups; 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. As we have noted, plaintiff
contends––and DHCS agrees––that DHCS may impose a lien
only on past medical expenses. DHCS’s assertion that the trial
court was not required to allocate the settlement because it

                               31
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 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
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,

                                32
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 Medi-
Cal 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 allocate the settlement between past medical expenses,
other compensable past expenses paid by plaintiff, and any future
compensable medical expenses that DHCS has not demonstrated
it is reasonably likely to pay. In making this allocation, the trial
court is not required to use the Ahlborn formula, but it must
distinguish past medical expenses from other damages on the
basis of a rational approach. The court shall then permit DHCS
to recover its lien from only that portion of the settlement
reasonably allocated to past medical expenses, as reduced by

                                33
DHCS’s statutory share of attorney fees and costs. (See
§ 14124.72, subd. (d).)11
                         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.

11    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.

                                34