Court Opinion

ID: 9955158
Source: CourtListenerOpinion
Date Created: 2024-03-27 19:02:18.741752+00
Date Added: 2024-06-11T08:15:17.984712
License: Public Domain

Filed 3/27/24 County of Los Angeles v. Baass CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION ONE

 COUNTY OF LOS ANGELES,                                               B323406

           Cross-complainant and                                      (Los Angeles County
           Appellant,                                                 Super. Ct. No. 20STCV28846)

           v.

 MICHELLE BAASS,

           Cross-defendant and
           Respondent.

      APPEAL from a judgment of the Superior Court of
Los Angeles County, Kevin Clement Brazile, Judge. Reversed
and remanded with instructions.
      Law + Brandmeyer, Yuk K. Law, Zachary Schwake; Pollak,
Vida & Barer, Daniel P. Barer and Anna L. Birenbaum for
Cross-complainant and Appellant.
      Rob Bonta, Attorney General, Cheryl L. Feiner, Assistant
Attorney General, Gregory D. Brown and Jacquelyn Y. Young,
Deputy Attorneys General, for Cross-defendant and Respondent.
       This is an appeal from a judgment of dismissal entered
after the trial court sustained a demurrer to appellant County of
Los Angeles’s (the County’s) cross-complaint against respondent
Michelle Baass, Director of the Department of Health Care
Services,1 without leave to amend.
       The County and Rufino Lugo settled a medical malpractice
action that Lugo had brought against the County.2 The
settlement agreement obligates the County to assume any Medi-
Cal lien for which Lugo is legally responsible. The trial court in
the personal injury action3 granted Lugo’s petition to approve the
settlement agreement. The Department, which administers the
Medi-Cal program, claims that neither the County nor Lugo
informed the Department of the settlement or of Lugo’s petition
to approve it.
       In a letter sent to Lugo after the parties settled the
personal injury action, the Department asserted a Medi-Cal lien
against Lugo’s settlement in the amount of $380,920.77. The
County informed the Department of the County’s position that
after accounting for certain statutorily-mandated reductions, the
County owed only $109,337.19 on the lien. The County remitted
that sum to the Department.
       The Department then sued Lugo, apparently without the
Department or Lugo giving notice to the County, for the balance
the Department claimed was due on the lien ($271,583.58). After

      1   We refer to respondent as “the Department.”
      2   Lugo is not a party to this appeal.
      3 The judge who issued the judgment at issue on appeal
was not the same judge who presided over the underlying
personal injury case.

                                      2
Lugo paid that sum to the Department, Lugo brought the instant
action against the County to recoup that payment to the
Department; the County claims it ultimately reimbursed Lugo for
his payment to the Department. During the pendency of the
lawsuit, the County also cross-complained against the
Department for, inter alia, unjust enrichment. This appeal arises
from the trial court’s order sustaining the Department’s
demurrer to that cross-complaint without leave to amend.
       The County asserts that under the statutory scheme
governing Medi-Cal liens, it is not liable for the entire amount of
the lien. Rather, the County argues it is liable for only that
portion of the settlement attributable to the Department’s
payment of past medical expenses, as further reduced by the
Department’s statutory share of Lugo’s attorney fees and costs.
The Department retorts that the County has no standing to seek
a reduction in the lien because only the Department or Lugo
would have standing to do so, and then only by the motion
authorized by Medi-Cal’s statutory scheme. The Department also
argues the language of the settlement agreement and the order
approving that agreement expressly required the County to pay
the entire amount of the lien.
       On appeal, we hold that a motion for reduction of the lien
under Medi-Cal’s statutory scheme is not the exclusive means for
seeking reduction of the lien. The Department has not rebutted
the “strong” presumption against legislative intent to displace
common law remedies,4 and the County thus had standing to
bring its cross-complaint based on unjust enrichment. We also

      4 (See McMillin Albany LLC v. Superior Court (2018)
4 Cal.5th 241, 249 (McMillin Albany LLC).)

                                   3
reject the Department’s interpretation of the settlement
agreement and the order approving the agreement, respectively,
and hold that neither of them precludes the County from seeking
a reduction in the Department’s recovery on the lien. We thus
reverse the judgment of dismissal and remand the matter for
further proceedings.

     FACTUAL AND PROCEDURAL BACKGROUND5
      We summarize only those facts pertinent to this appeal.
      Lugo is an incapacitated person. The Department asserts,
“After a series of negligent acts by the County’s health care
providers, Lugo suffered cardiorespiratory arrest and sustained a
profound, irreversible brain injury, leaving him entirely
dependent on others for the remainder of his life.” The
Department further alleges, “As a result of this injury, the
Department paid $552,059.08 on behalf of Lugo for health care
services he received.”

      5    We derive our Factual and Procedural Background in
part from admissions the parties make in their briefing,
undisputed aspects of the trial court’s rulings, and assertions
made by the Department that the County does not contest in its
briefing. (See Artal v. Allen (2003) 111 Cal.App.4th 273, 275,
fn. 2 [“ ‘[A] reviewing court may make use of statements [in briefs
and argument] . . . as admissions against the party [advancing
them].’ ”]; Baxter v. State Teachers’ Retirement System (2017)
18 Cal.App.5th 340, 349, fn. 2 [utilizing the summary of facts
provided in the trial court’s ruling]; Association for Los Angeles
Deputy Sheriffs v. County of Los Angeles (2023)
94 Cal.App.5th 764, 773–774 [concluding that appellants “tacitly
concede[d]” a point raised by respondents by failing to dispute
it].)

                                    4
       In June 2015, Lugo sued the County for medical
malpractice. In March 2017, the parties to the personal injury
action participated in a mediation. Following the mediation,
Lugo and the County agreed to settle the action for $3.5 million.
Paragraph 10 of the parties’ settlement agreement provides:
“Defendant County of Los Angeles will assume and hold harmless
Plaintiffs for any Medi-Cal lien for services rendered and related
to the injuries claimed in this action provided prior to the time
this settlement is finalized, for which Plaintiff are [sic] legally
responsible.”
       In May 2017, the trial court in the underlying personal
injury action granted Lugo’s petition to approve the settlement
agreement. According to the Department, the order approving
the settlement agreement contains language that obligates the
County to “pay the entire amount of the [Department’s] Medi-Cal
lien for Lugo’s care . . . .”6 The Department further claims that
“[t]he County and Lugo did not notify the Department of their
mediation, their settlement agreement, or the petition for
compromise,” and that “[t]he County and Lugo . . . did not give
the Department notice of the hearing . . . on the petition for
compromise.”
       In June 2017, the County Board of Supervisors approved
the settlement.
       In August 2017, the Department sent a letter to Lugo,
indicating that after accounting for the Department’s statutory
share of attorney fees and litigation costs, Lugo owed $380,920.77

      6 We recite the pertinent text from the order approving the
settlement in our Discussion, part B.2, post.

                                    5
on a Medi-Cal lien for health care services stemming from the
County’s tortious conduct.
       In September 2017, the County informed the Department
via letter of the County’s position that pursuant to Medi-Cal’s
statutory scheme, the Department’s lien should be reduced to
$109,337.19. The County sent a check for $109,337.19 to the
Department. The County claims the Department deposited this
check.
       According to the County, without giving notice to the
County or naming the County as a party, in March 2020, the
Department sued Lugo to recover $271,583.58, which is the
amount the Department claims was the balance owed on the
Medi-Cal lien after deducting the County’s $109,337.19
payment.7 Lugo paid that amount to the Department.
       In July 2020, Lugo filed a complaint against the County for
breach of contract, account stated, and restitution. The trial
court later granted Lugo’s summary adjudication motion on his
first cause of action for breach of contract on the ground that “the
express terms of the settlement agreement and court order
[approving it] . . . require that the County reimburse Lugo for all
costs associated with the Medi-Cal lien.” The County later filed
an acknowledgment of satisfaction of that judgment.
       Prior to the entry of judgment in Lugo’s favor, the County
filed a cross-complaint against the Department for unjust
enrichment, equitable indemnity, and declaratory relief. The
trial court sustained the Department’s demurrer without leave to
amend, reasoning that “[n]othing ha[d] been cited to indicate

      7 The County appears to claim that it had no notice of this
suit until after Lugo sued the County for, inter alia, breach of the
settlement agreement.

                                    6
that . . . the County could unilaterally determine the amount of
the lien” or that the amount of the lien could be determined in
the instant proceedings instead of during the underlying personal
injury action.
       On August 26, 2022, the trial court entered a judgment of
dismissal in accordance with its order sustaining the
Department’s demurrer without leave to amend. The County
timely appealed this judgment.

 APPLICABLE LAW REGARDING MEDI-CAL LIENS AND
             STANDARDS OF REVIEW

A.    The Law Governing Medi-Cal Liens
       “Medicaid is a medical assistance program for low-income
individuals that is jointly funded by the federal and state
governments. . . . . [¶] 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 [Welfare and Institutions Code8] section 14000 et seq.
[Citation.] [The Department] is the state agency charged with
administering the Medi-Cal program.” (Daniel C. v. White
Memorial Medical Center (2022) 83 Cal.App.5th 789, 795–796 &
fn. 3, 800 (Daniel C.).)
       “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, [the Department] has the right to
recover from such party or carrier the reasonable value of the
Medi-Cal benefits. [Citation.] [The Department] may obtain

      8  Undesignated statutory citations are to the Welfare and
Institutions Code.

                                   7
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.” (Daniel C., supra,
83 Cal.App.5th at p. 800.) If the beneficiary settles an action
with the third party tortfeasor, then the Department is permitted
“to recover its lien from only that portion of the settlement
reasonably allocated to past medical expenses . . . .” (See id. at
pp. 795, 811, 814; see also § 14124.76, subd. (a) [“Recovery of the
[Department’s] lien from an injured beneficiary’s action or claim
is limited to that portion of a settlement . . . that represents
payment for medical expenses, or medical care, provided on
behalf of the beneficiary.”].)
       If the “action [against the tortfeasor was] pursued by [the]
beneficiary alone” (i.e., the Department was not a plaintiff), then
the Department’s recovery is further “reduced by [its] statutory
share of attorney fees and costs,” (see Daniel C., supra,
83 Cal.App.5th at pp. 795, 800, 814), to wit, a 25 percent
reduction to account for the Department’s “reasonable share of
attorney’s fees paid by the [Medi-Cal] beneficiary,” and by the
Department’s share of the litigation costs that is calculated
pursuant to a statutory formula (see § 14124.72, subd. (d), cited
in Daniel C., at p. 812).
       “[A]s a predicate to deciding how much of a Medi-Cal
beneficiary’s tort settlement [the Department] may claim
[pursuant to its lien], the trial court must determine which
portion of the settlement is attributable to past medical expenses,
against which [the Department] is entitled to collect its lien, and
other damages, against which it is not.” (See Daniel C., supra,
83 Cal.App.5th at p. 811.) In making this allocation, the trial

                                    8
court may, but is not required to, utilize the formula from
Arkansas Dept. of Health and Human Servs. v. Ahlborn (2006)
547 U.S. 268 (Ahlborn). (See Daniel C., at pp. 804, 807, 811.)
“[T]he 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.)’ [Citation.]” (Daniel C., at p. 809, fn. 8.) In lieu of the
Ahlborn formula, a trial court may “distinguish medical expenses
in the settlement from other damages ‘on the basis of a rational
approach.’ [Citations.]” (See Daniel C., at p. 811.)

B.    Standards of Review
      “ ‘A general demurrer searches the [pleading] for all defects
going to the existence of a cause of action and places at issue the
legal merits of the action on assumed facts.’ [Citation.]”
(Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1035; see also
Code Civ. Proc., § 430.10, subd. (e) [providing that a demurrer for
failure to state facts sufficient to constitute a cause of action
may be leveled against a complaint or a cross-complaint].)
“We independently review the ruling on a demurrer . . . .”
(Santa Ana Police Officers Assn. v. City of Santa Ana (2017)
13 Cal.App.5th 317, 323.) “[W]hen [a demurrer] is sustained
without leave to amend, we decide whether there is a reasonable
possibility that the defect can be cured by amendment: if it can
be, the trial court has abused its discretion and we reverse.’
[Citations.]” (See Sanowicz, at p. 1035.)

                                     9
                          DISCUSSION
       In its order sustaining the Department’s demurrer, the
trial court stated, “[N]othing has been cited to indicate that [the
amount of the Department’s lien] can now be determined in this
Court.” The court appended to this remark a citation to
section 14124.76, subdivision (b), thereby suggesting that this
provision establishes that the court could not determine the
proper amount of the Department’s lien.9 Similarly, the
Department maintains on appeal that the County lacks standing
to seek a reduction of the lien because subdivision (a) of section
14124.76 authorizes only the Medi-Cal beneficiary or the
Department to file a motion seeking such relief.
       Neither statutory provision precludes the County from
asking the trial court to reduce the Department’s lien.
(Discussion, part A, post.) We also reject the Department’s
assertion that the settlement agreement and the order approving
that agreement bar the County from seeking a reduction of the
lien. (Discussion, part B, post.) Thus, the trial court erred in
sustaining the Department’s demurrer to the County’s cross-
complaint.
       In reversing the judgment, we acknowledge the
Department advanced other arguments below in support of its
demurrer: “(1) the County failed to comply with the Government
Claims Act; . . . [(2)] the equitable indemnity claim fails because

      9 The trial court also stated, “Nothing has been cited to
indicate that contrary to . . . § 14124.76(a), the County could
unilaterally determine the amount of the lien.” We need not
reach that question, given that the County maintains it should be
afforded “the opportunity to litigate” the “statutorily-required
reductions to the lien . . . .”

                                   10
the County and the Department are not jointly and severally
liable for an obligation; and [(3)] the declaratory relief claim
relates to a past controversy encompassed by the County’s other
claims.” Yet, the Department does not challenge on appeal the
trial court’s ruling that the Department’s Government Claims Act
defense presents “factual dispute[s]” that cannot be resolved on
demurrer. The Department also does not reassert on appeal its
other challenges to the County’s equitable indemnity and
declaratory relief causes of action (i.e., items (2) and (3) in the
quotation at the beginning of this paragraph). Consequently, we
do not reach these issues. (See In re D.N. (2020) 56 Cal.App.5th
741, 767 (D.N.) [“ ‘ “Although it is the appellant’s task to show
error, there is a corresponding obligation on the part of the
respondent to aid the appellate court in sustaining the judgment.
‘[I]t is as much the duty of the respondent to assist the [appellate]
court upon the appeal as it is to properly present a case in the
first instance, in the court below.’ ” ’ ”].)

A.    The Trial Court Erred In Concluding That It Could
      Not Reduce the Department’s Lien, and We Reject
      the Department’s Argument That the County Lacks
      Standing to Seek Such a Reduction
      As we noted at the outset of our Discussion, the
Department argues section 14124.76, subdivision (a) establishes
that the County lacks standing to litigate the amount of the
Medi-Cal lien, and the trial court seems to have concluded that
subdivision (b) likewise prevents the County from doing so.
      Given its importance to the resolution of this appeal, we
quote fulsomely from the Medi-Cal Act. Section 14124.76,
subdivision (a) provides: “No settlement, judgment, or award in
any action or claim by a beneficiary to recover damages for

                                    11
injuries where the [Department] has an interest, shall be deemed
final or satisfied without first giving the [Department] notice and
a reasonable opportunity to perfect and to satisfy the
[Department’s] lien. Recovery of the [Department’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
[Department’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 of behalf
on the beneficiary [sic]. Absent the [Department’s] advance
agreement as to what portion of a settlement, judgment, or award
represents payment for medical expenses, or medical care,
provided on behalf of the beneficiary, the matter shall be
submitted to a court for decision. Either the [Department] 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 [Department] 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.” (See § 14124.76, subd. (a).)
       Subdivision (b) in turn provides: “If the beneficiary has
filed a third-party action or claim, the court where the action or
claim was filed shall have jurisdiction over a dispute between the
[Department] and the beneficiary regarding the amount of a lien

                                    12
asserted pursuant to this section that is based upon an allocation
of damages contained in a settlement or compromise of the third-
party action or claim. If no third-party action or claim has been
filed, any superior court in California where venue would have
been proper had a claim or action been filed shall have
jurisdiction over the motion. The motion may be filed as a special
motion and treated as an ordinary law and motion proceeding
and subject to regular motion fees. The reimbursement
determination motion shall be treated as a special proceeding of a
civil nature pursuant to Part 3 (commencing with Section 1063)
of the Code of Civil Procedure. When no action is pending, the
person making the motion shall be required to pay a first
appearance fee. When an action is pending, the person making
the motion shall pay a regular law and motion fee.
Notwithstanding Section 1064 of the Code of Civil Procedure,
either the beneficiary or the [Department] may appeal the final
findings, decision, or order.” (See Welf. & Inst. Code, § 14124.76,
subd. (b).)
        To recap, subdivision (a) states that the Department’s
reimbursement must bear some relation to the past medical
services the Department paid and further provides that absent
the Department’s advance agreement, determining the amount of
reimbursement “shall” be decided by the court. As to procedures
for implementing this reduction, subdivisions (a) and (b) of
section 14124.76 provide that the Department or the Medi-Cal
beneficiary “may seek resolution” by motion of the amount of the
Department’s recovery on the lien in the court where “the
beneficiary has filed a third-party action or claim” or in a court
with proper venue “[i]f no third-party action or claim has been
filed . . . .” (See § 14124.76, subds. (a)–(b), italics added.) The

                                   13
Department, and the trial court in its order sustaining the
demurrer, interpret this language as establishing that the only
means of determining the appropriate reduction of the lien is by a
motion brought by the Department or the beneficiary, and not by
an action filed by the alleged tortfeasor. We disagree.
       In its cross-complaint, the County has sought reduction of
the Medi-Cal lien via the doctrine of unjust enrichment.10
“Generally, one who is unjustly enriched at the expense of
another is required to make restitution. [Citations.] The
elements of . . . unjust enrichment are simply stated as ‘receipt of
a benefit and unjust retention of the benefit at the expense of
another.’ [Citations.]” (Professional Tax Appeal v. Kennedy-
Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238.) Under
this doctrine, “the obligation [to make restitution] arises when
the enrichment obtained lacks any adequate legal basis and thus
‘cannot conscientiously be retained.’ [Citation.]” (See Hartford
Casualty Ins. Co. v. J.R. Marketing, L.L.C. (2015) 61 Cal.4th 988,
998.)
       As further explained in our Discussion, part B.1, post, the
County assumed the Medi-Cal lien only insofar as Lugo was
liable thereon, and Lugo in turn owed the Department only that

      10 In its opening brief, the County argues, “The County
should have been permitted to amend its cross-complaint to add a
cause of action pursuant to . . . section 14124.76,
subd[ivision] (a) . . . .” Because we conclude the trial court erred
in sustaining the Department’s demurrer to the County’s cross-
complaint, we do not address whether the court erred in denying
the County leave to plead a cause of action under the statute.
(See Code Civ. Proc., § 472a, subds. (b)–(c) [indicating that if the
demurrer is overruled, the trial court need not decide whether to
grant leave to amend].)

                                   14
portion of the settlement reasonably allocated to past medical
expenses, as further reduced by the Department’s share of
attorney fees and costs. Therefore, the Department’s retention of
the full amount of its Medi-Cal lien, reduced only by the amount
the Department claims to be its share of attorney fees and costs
(see Factual & Procedural Background, ante), does not comport
with section 14124.76 subdivision (a)’s requirement that
reimbursement to the Department be made from only the
“portion of the settlement [that] is attributable to past medical
expenses” paid by the Department. (See Daniel C., supra,
83 Cal.App.5th at pp. 806–807 & fn. 6, 811, citing, inter alia,
§ 14124.76, subd. (a).)
      “[U]njust enrichment is a common law obligation implied
by law based on the equities of a particular case . . . .” (Federal
Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 346.) In
determining whether section 14124.76’s motion procedures bar
the County from obtaining a reduction of the lien under an unjust
enrichment theory, “we begin with a presumption that the
Legislature did not . . . intend” the “statutory scheme [to] alter[ ]
or displace[ ] the common law . . . .” (See McMillin Albany LLC,
supra, 4 Cal.5th at p. 249.) “[T]he presumption against
displacement of the common law is strong,” meaning that “we
conclude that settled common law principles must yield” “[o]nly
‘ “where there is no rational basis for harmonizing” ’ a statute
with the common law . . . .” (See ibid.) Put differently, unless the
Legislature has abrogated the common law “ ‘ “ ‘by express
declaration or by necessary implication[,]’ ” ’ ” “we construe
statutory enactments as consonant with existing common law
and reconcile the two bodies of law.” (See ibid.)

                                    15
       Neither the trial court nor the Department has identified
any legislative history or other support for the proposition that by
authorizing the Medi-Cal beneficiary and the Department to file
a motion to determine “the appropriate reimbursement amount”
(see § 14124.76, subds. (a)–(b)), the Legislature intended to
foreclose a third-party tortfeasor from seeking reduction of the
Department’s lien under the doctrine of unjust enrichment when
the Department has been paid more than its statutorily-
mandated share. Accordingly, the trial court erred in concluding
that it could not reduce the Department’s lien, and we reject the
Department’s assertion that the County lacks standing to seek
that relief.

B.    The Settlement Agreement and the Order Approving
      the Settlement Do Not Preclude the County From
      Seeking a Reduction of the Department’s Lien
        The Department’s principal argument in support of the
trial court’s sustaining the Department’s demurrer to the cross-
complaint is that “the County knowingly and willingly entered
into a binding settlement agreement under which the County
agreed to pay the Department’s lien in full, and . . . this
settlement agreement resulted in [a] Court Order expressly
requiring the County to pay the Department’s ‘entire Medi-Cal
lien.’ ” The Department further claims “the trial court lacks
jurisdiction to invalidate the Court Order” approving the
settlement because “[a]ny challenge to the Court Order had to be
raised either in the original personal injury suit or in an appeal
therefrom.” As explained below, we reject the Department’s
assertion that the settlement agreement and the court order
approving it bar the County from seeking a reduction of the
Medi-Cal lien.

                                   16
      1.    The settlement agreement obligates the County to pay
            the Department only the amount of the Medi-Cal lien
            for which Lugo was legally responsible
       The Department invokes paragraph 10 of the settlement
agreement to support its argument that the County cannot
request a reduction of the lien. To reiterate, paragraph 10 states:
“Defendant County of Los Angeles will assume and hold harmless
Plaintiffs for any Medi-Cal lien for services rendered and related
to the injuries claimed in this action provided prior to the time
this settlement is finalized, for which Plaintiff are [sic] legally
responsible.”
       The text of paragraph 10 requires the County to pay any
Medi-Cal lien for which Lugo was legally responsible.11 Under
these circumstances, the Department is a type of third-party
beneficiary to the settlement agreement, specifically, “ ‘ “[a]
creditor beneficiary . . . to whom a promisee [(Lugo)] owes a
preexisting duty [(reimbursement of the reasonable value of
Medi-Cal benefits)] which the promisee intends to discharge by
means of a promisor’s [(the County’s)] performance.” [Citations.]’
[Citation.]”12

      11 Although the Department asserts that “Lugo and his
wife” were plaintiffs in the underlying personal injury action, the
Department does not claim that Lugo’s wife was legally
responsible for the Medi-Cal lien at issue.
      12  (See Epitech, Inc. v. Kann (2012) 204 Cal.App.4th 1365,
1372; see also McMillian v. Stroud (2008) 166 Cal.App.4th 692,
695, 698 [“ ‘[The Department’s] right [vis-à-vis the lien] is akin to
that of [the Medi-Cal beneficiary’s] creditor to recover payment
for a debt [the Medi-Cal beneficiary] incurred when, having

                                    17
       The Department’s status as a creditor beneficiary is
significant because “[a]lthough the creditor beneficiary may
enforce the original obligation against either the promisor or the
promisee or against both, he may not collect more than his due;
satisfaction in whole or in part of either of these duties will
operate to that extent as satisfaction of the liability of the other.”
(See Kraus v. Willow Park Public Golf Course (1977)
73 Cal.App.3d 354, 371, italics added.) Put differently,
paragraph 10 imposed upon the County the obligation to pay the
Department precisely the same amount that Lugo owed on the
Medi-Cal lien. Under the Medi-Cal Act, Lugo owed the
Department “only that portion of the settlement reasonably
allocated to past medical expenses, as reduced by [the
Department’s] statutory share of attorney fees and costs.” (See
Daniel C., supra, 83 Cal.App.5th at p. 814.) We thus reject the
Department’s contention that in the settlement agreement, “the
County agreed to pay the Department’s lien in full . . . .” (Italics
added.)

      2.    The order approving the settlement agreement
            does not prevent the County from litigating the
            amount of the Department’s lien
       Although paragraph 10 of the settlement agreement merely
requires the County to discharge Lugo’s statutory obligation on
the Medi-Cal lien, the Department maintains that the order
approving the settlement agreement prevents the County from
seeking reduction of the lien. The order in question granted the
petition of Lugo’s guardian ad litem (his wife) for approval of the

received injuries for which the tortfeasor might be liable, he
accepted treatment for which Medi-Cal paid.’ ”].)

                                     18
settlement. The Department directs us to the following excerpt of
the order: “As part of the terms of the settlement Defendant,
County of Los Angeles is required to absorb and pay the entire
Medi-Cal lien as of the date that the County Board approves the
settlement. The County of Los Angeles will pay whatever the
Lien amount is that accrues from now until the date of Board
approval. Currently as of February 6, 2017 the lien is
$341,036.10.”13
         In the abstract, portions of this text could be read to
support the Department’s contention that the order bars the
County from seeking a reduction in the lien. Yet, “ ‘[t]he true
measure of an order . . . is not an isolated phrase appearing
therein . . . . [Citations.] . . . [T]he same rules of interpretation
will apply in ascertaining the meaning of a court’s order as in
ascertaining the meaning of any other writing. . . .’ [Citation.]”
(See Concerned Citizens Coalition of Stockton v. City of Stockton
(2005) 128 Cal.App.4th 70, 77 (Concerned Citizens Coalition of
Stockton).) One such rule of interpretation is that
‘ “ ‘ “[l]anguage . . . must be construed in the context of th[e
writing] as a whole, and in the circumstances of th[e] case . . . .’ ”
[Citations.] . . . While “reliance on [the] common understanding
of language is bedrock[,] [¶] [e]qually important are the

      13   Attachment 12 to the trial court’s order approving the
settlement clarifies that the County had to satisfy the Medi-Cal
lien with funds separate from the $3.5 million paid by the County
to settle the personal injury action.

                                    19
requirements of reasonableness and context.” [Citation.]’
[Citation.]”14
       The personal injury court approved a settlement agreement
that obligated the County to assume the Medi-Cal lien only
insofar as Lugo would be burdened by that lien. (See Discussion,
part B.1, ante.) Given that context, the order’s language
requiring the County to “absorb and pay the entire Medi-Cal lien”
could reasonably be interpreted as a mere restatement of the
County’s agreed-upon obligation completely to absolve Lugo of his
liability to the Department by using funds to satisfy the lien
separate from those paid directly to Lugo under the settlement.
Indeed, the order indicates that the trial court imposed this
obligation on the County “[a]s part of the terms of the
settlement,” thereby suggesting the court did not intend to create
any obligations that were not already prescribed in the
settlement agreement.
       In keeping with this reading of the order, the text could be
read as requiring the County to “pay whatever the Lien amount
is that accrues from now until the date of Board approval” as
specifying the temporal limit of the financial commitment
assumed by the County, that is, the County was required to pay
the amount Lugo owed the Department as of the date the County

      14  (See Mount Vernon Fire Ins. Co. v. Busby (2013)
219 Cal.App.4th 876, 882, first italics added [discussing this rule
of contract interpretation]; see also Poppers v. Tamalpais Union
High School Dist. (1986) 184 Cal.App.3d 399, 404 [“Statutory
language must be read in context, keeping in mind the nature and
purpose of the enactment, and must be given such interpretation
as will promote rather than defeat the intent of the law,” italics
added].)

                                   20
Board approved the settlement. Additionally, the order’s
specification of a dollar figure associated with the Medi-Cal lien
($341,036.10) could have been intended merely to set the floor as
to the total amount of lien the Department could claim.
Accordingly, under a reasonable construction of the order, the
personal injury court did not abridge the County’s right to seek
statutorily-mandated reductions to the lien.
       The Department’s alternative interpretation of the
approval order would enlarge the scope of the County’s financial
obligation beyond what the parties had agreed in the settlement
agreement—the lien amount for which Lugo is legally
responsible. The authority of Lugo’s guardian ad litem to
compromise his action against the County was limited by the
terms of the approved settlement agreement.15 The
Department’s construction of the order approving the settlement
would produce an anomalous result: The personal injury trial
court conferred upon Lugo the right to require the County to pay
the full amount of the Medi-Cal lien without the ability to seek
reductions thereof, even though Lugo’s guardian ad litem lacked
statutory or contractual authority to request that relief from the
court.
       Additionally, we observe that if the Department’s
interpretation of the approval order were correct, and, as the
Department insists, the County indeed “acquiesced” to the

      15   (See Code Civ. Proc., § 372, subd. (a)(3) [“The . . .
guardian ad litem . . . appearing for any . . . person who lacks
legal capacity to make decisions . . . shall have power, with the
approval of the court in which the action or proceeding is
pending, to compromise the same . . . or release or discharge any
claim . . . pursuant to that compromise,” italics added].)

                                   21
decree’s supposed requirement that the County pay the full
amount of the lien, then the County arguably could be potentially
liable for wasting public funds. (See Code Civ. Proc., § 526a,
subd. (a) [authorizing a taxpayer suit to “restrain[ ] and prevent”
the “waste of” public funds].) Specifically, the County would have
assumed liability for a lien amount not authorized by statute.16
(See Chiatello v. City and County of San Francisco (2010) 189
Cal.App.4th 472, 481–482 [“[P]ublic spending may qualify as
waste [under Code Civ. Proc., § 526a] if it is ‘ “completely
unnecessary,” ’ or ‘ “useless,” ’ or ‘provides no public benefit.’ ”].)
       In sum, we decline to adopt the Department’s construction
of the personal injury court’s approval order, and we hold that
the order does not foreclose the County from seeking a reduction
to the Medi-Cal lien at issue here. (See West Pueblo Partners,
LLC v. Stone Brewing Co., LLC (2023) 90 Cal.App.5th 1179, 1185
[“[T]he court ‘should avoid an interpretation [of a contract] . . .
which would result in an absurdity . . . .’ ”]; People v. Lofchie
(2014) 229 Cal.App.4th 240, 251 [“ ‘ “We must . . . avoid an
interpretation [of a statute] that would lead to absurd
consequences.” ’ ”]; see also Concerned Citizens Coalition of

      16  At one point in its appellate brief, the Department
argues that “the portion of the settlement allocated to past
medical expenses . . . equal[s] the full amount of those expenses,”
meaning there is no need for a court to utilize the Ahlborn
formula or any other approach to reduce the amount of the
Department’s lien. This argument is predicated on the
Department’s assertion that the County agreed to forgo the right
to seek a reduction of the lien. Because we reject the
Department’s construction of paragraph 10 of the settlement
agreement (see Discussion, part B.1, ante), this argument fails as
well.

                                     22
Stockton, supra, 128 Cal.App.4th at p. 77 [holding that “ ‘the
same rules of interpretation will apply in ascertaining the
meaning of a court’s order as in ascertaining the meaning of any
other writing’ ”].)

C.    We Express No Opinion on What Impact Each Party’s
      Conduct Should Have on the County’s Entitlement to
      Relief
       In its appellate brief, the Department appears to argue that
the County cannot secure equitable relief because it failed to
notify the Department of the settlement agreement prior to court
approval thereof. The Department raises this argument in
support of its position that the County may not “re-open[ ] th[e]
settlement to the County’s advantage.” Because we hold that
neither the settlement agreement nor the order approving it bars
the County from asking the trial court to reduce the
Department’s lien (see Discussion, part B, ante), it is not
necessary to re-open the settlement to litigate the amount of the
lien.
       We recognize section 14124.76, subdivision (a) provides,
“All reasonable efforts shall be made to obtain the [Department’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 o[n] behalf o[f] the
beneficiary.” (See § 14124.76, subd. (a), italics added.) We also
acknowledge that this sentence immediately precedes language
in the same subsection providing, “Absent the [Department’s]
advance agreement as to what portion of a settlement, judgment,
or award represents payment for medical expenses, or medical
care, provided on behalf of the beneficiary, the matter shall be
submitted to a court for decision.” (Ibid.)

                                   23
       The Department, however, does not contend that if a party
fails to make all reasonable efforts to obtain the Department’s
advance agreement, then section 14124.76, subdivision (a) bars
that party from asking a court to reduce the Medi-Cal lien. The
Department also does not argue that the County’s alleged failure
to provide notification of the settlement agreement prior to court
approval gives rise to unclean hands or some other defense
precluding the County’s recovery as a matter of law. (See, e.g.,
3 Cal. Affirmative Def. (2d ed. 2023) § 45:1 [“ ‘No one can take
advantage of his own wrong.’ Known as the . . . unclean hands
doctrine, this equitable principle . . . [¶] den[ies] the plaintiff the
equitable remedies that would otherwise be available in the
circumstances,” fns. omitted].) We thus do not address these
issues further. (See D.N., supra, 56 Cal.App.5th at p. 767.)
       We likewise express no opinion on what impact, if any, the
Department’s decision to sue Lugo, allegedly without notice to
the County, may ultimately have on the Department’s ability
successfully to maintain a defense against the County’s recovery.
(See, e.g., 3 Cal. Affirmative Def., supra, § 45:2 [“[T]here are
instances in which the court may balance or weigh the wrongful
conduct of plaintiff and defendant in determining whether to
deny relief on grounds of unclean hands.”].)

                                     24
                        DISPOSITION
      We reverse the trial court’s August 26, 2022 judgment of
dismissal. We remand this matter to the trial court with
instructions to (1) vacate the June 8, 2022 order sustaining
respondent’s demurrer without leave to amend, and (2) issue a
new order overruling respondent’s demurrer. Appellant is
awarded its costs on appeal.
      NOT TO BE PUBLISHED.

                                         BENDIX, J.

We concur:

             ROTHSCHILD, P. J.

             WEINGART, J.

                                  25