Court Opinion

ID: 9840663
Source: CourtListenerOpinion
Date Created: 2023-09-19 18:03:34.950231+00
Date Added: 2024-06-11T10:59:49.468118
License: Public Domain

Filed 9/19/23
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                         DIVISION SEVEN

 LONG BEACH MEMORIAL                  B321876
 MEDICAL CENTER,
                                      (Los Angeles County
         Plaintiff and Appellant,     Super. Ct. No.
                                      21STCV17810)
         v.

 ALLSTATE INSURANCE
 COMPANY,

         Defendant and Respondent.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, William F. Fahey, Judge. Reversed with
directions.
      Law Offices of Yoshida & Garcia and Shogo Garcia for
Plaintiff and Appellant.
      Pollak, Vida & Barer, Daniel P. Barer and Anna L.
Birenbaum for Defendant and Respondent.
                        INTRODUCTION

       Under the Hospital Lien Act (HLA) (Civ. Code, §§ 3045.1-
3045.6), 1 “when a hospital provides care for a patient, the
hospital has a statutory lien against any . . . settlement received
by the patient from a third person responsible for his or her
injuries, or the third person’s insurer, if the hospital has notified
the third person or insurer of the lien.” (Mercy Hospital &
Medical Center v. Farmers Ins. Group of Companies (1997)
15 Cal.4th 213, 215 (Mercy Hospital).) The HLA prohibits an
insurer from paying a patient without paying the hospital the
amount of its lien, or as much as can be satisfied from 50 percent
of the patient’s recovery from the tortfeasor or insurer.
       The insurer in this case had notice of the hospital’s lien for
treatment provided to the patient and, pursuant to a settlement
agreement with the patient, gave him a check for the lien amount
made payable to both him and the hospital. Did that comply with
the HLA? The hospital, Long Beach Memorial Medical Center,
claims it did not and sued the insurer that wrote the check,
Allstate Insurance Company, for violating the HLA by making a
settlement payment to the patient without paying the Medical
Center the amount of its lien.
       The trial court granted Allstate’s motion for summary
judgment, ruling Allstate’s two-payee check, which was never
cashed, satisfied its obligation under the HLA. We reach the
opposite conclusion: Merely delivering to the patient (or, in this
case, his attorney) a check for the lien amount, made payable to

1     Undesignated statutory references are to the Civil Code.

                                 2
both the patient and the hospital, is not payment in satisfaction
of the hospital’s lien under the HLA. Therefore, we reverse.

      FACTUAL AND PROCEDURAL BACKGROUND

       In December 2017 the Medical Center treated Vernon
Barnes for injuries he received in a car accident. Afterward
Barnes submitted a personal injury claim to Allstate, which
insured the driver Barnes claimed was at fault in the accident.
The Medical Center informed Allstate by letter that Barnes had
incurred $116,714.67 in expenses for his treatment at the
Medical Center and that the Medical Center was asserting a lien
for that amount under the HLA.
       In February 2020 Barnes and Allstate settled his claim for
$300,000. The settlement agreement provided Allstate would pay
this amount by sending Barnes’s attorneys three checks: one
made payable to Medicare for $24,230.93, one made payable to
Barnes and his attorneys for $159,054.40, and one made payable
to Barnes and the Medical Center for $116,714.67, the amount of
the lien. The settlement agreement also provided Barnes and his
attorneys would indemnify, defend, and hold harmless Allstate
and its insured against claims by the Medical Center or anyone
else with a statutory right of recovery against Allstate and its
insured.
       Later in February 2020 Allstate sent Barnes’s attorneys a
check for $116,714.67 made payable to Barnes and the Medical
Center (the February 2020 check). 2 That check, however, was

2    No copy of this check appears in the record, and there is
some confusion about whether it included Barnes’s attorneys as

                                3
never deposited, and by March 2021 it had expired. At that time
Allstate sent Barnes’s attorneys a second check for the same
amount made payable to the same parties (the March 2021
check). To Allstate’s knowledge, that check was never cashed.
       In May 2021 the Medical Center filed this action against
Allstate, asserting a single cause of action for violating the HLA.
The Medical Center alleged that Allstate, having received written
notice of the Medical Center’s lien regarding Barnes’s medical
treatment, violated the HLA by paying Barnes to settle his
personal injury claim without paying the Medical Center the
amount of its lien.
       Allstate filed a motion for summary judgment, contending
the Medical Center could not establish one or more elements of
its cause of action. Specifically, Allstate argued the undisputed
facts established that it “protected the lien by issuing a two-party
check including [the Medical Center] as a payee on the check” or,
alternatively, that “there has been no payment because the
multi-party check has not been cashed.” Allstate did not specify
whether the check it referred to was the February 2020 check or
the March 2021 check. But the gist of Allstate’s argument
appears to have been that, by delivering to Barnes’s attorneys a
check for $116,714.67 made payable to Barnes and the Medical
Center, Allstate had either (a) made a payment to the Medical
Center for the amount of its lien or (b) made no payment to either
Barnes or the Medical Center because no such check was ever

payees in addition to Barnes and the Medical Center. Neither
party suggests the possible inclusion of Barnes’s attorneys as
payees on the check is relevant to the issues in this appeal, and it
does not affect our analysis. We treat the check as having been
made payable only to Barnes and the Medical Center.

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cashed. In either event, according to Allstate, the Medical Center
could not establish Allstate made a settlement payment to
Barnes without paying the Medical Center the amount of its lien.
       In opposition, the Medical Center agreed the undisputed
facts established Allstate had not paid it the amount of its lien
because no check payable to the Medical Center had been cashed.
The Medical Center disagreed, however, that this also meant
Allstate had not made a settlement payment to Barnes. The
Medical Center pointed out the settlement agreement between
Barnes and Allstate called for Allstate to send Barnes’s attorneys
a separate check payable to Barnes and his attorneys for
$159,054.40. The Medical Center also cited an exhibit to a
declaration by counsel for Allstate in support of the motion for
summary judgment that appeared to show just such a check had
been issued, mailed, and cashed in February 2020. 3
       After a hearing, for which we do not have a reporter’s
transcript, the trial court granted Allstate’s motion for summary
judgment without written analysis. The Medical Center timely
appealed.

3      Allstate asserts that this exhibit was “erroneously-
included” [sic] and not properly authenticated and that, had the
Medical Center “raised the argument about [this] check in the
trial court, Allstate could have responded to that argument
during the briefing on the summary judgment motion and could
have remedied the incorrect exhibit.” This is an odd assertion,
given how clearly the Medical Center raised the argument in its
opposition papers (under the heading “The Undisputed Material
Facts Show That Vernon Barnes and His Counsel Received
Separate Settlement Payment from ALLSTATE of at Least
$159,054.40”). In any event, the issue is irrelevant to our
resolution of this appeal.

                                5
                          DISCUSSION

       A.     Applicable Law: Summary Judgment Standards
       “A court may grant a motion for summary judgment only
when all the papers submitted show that there is no triable issue
as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” (Fajardo v. Dailey (2022)
85 Cal.App.5th 221, 225, internal quotation marks omitted; see
Code Civ. Proc., § 437c, subd. (c); Regents of University of
California v. Superior Court (2018) 4 Cal.5th 607, 618; Randle v.
Farmers New World Life Ins. Co. (2022) 85 Cal.App.5th 53, 61.)
“A defendant moving for summary judgment has the initial
burden of presenting evidence that a cause of action lacks merit
because the plaintiff cannot establish an element of the cause of
action or there is a complete defense.” (Sabetian v. Exxon Mobil
Corp. (2020) 57 Cal.App.5th 1054, 1068; see § 437c, subd. (p)(2);
Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850
(Aguilar); Randle, at p. 61.)
       “Where, as here, the defendant moves for summary
judgment on the grounds that one or more elements of the
plaintiff’s [cause of action] cannot be established, the defendant
must present evidence that either ‘conclusively negate[s] an
element of the plaintiff’s cause of action’ or ‘show[s] that the
plaintiff does not possess, and cannot reasonably obtain,’
evidence needed to establish an element . . . .” (White v. Smule,
Inc. (2022) 75 Cal.App.5th 346, 354; see Aguilar, supra,
25 Cal.4th at pp. 853-855.) “‘Only after the defendant carries
that initial burden does the burden shift to the plaintiff “to show
that a triable issue of one or more material facts exists as to the
cause of action . . . .”’’’ (Fajardo v. Dailey, supra, 85 Cal.App.5th

                                  6
at pp. 225-226; see Code Civ. Proc., § 437c, subd. (p)(2); Aguilar,
at pp. 849-850.) “There is a triable issue of material fact if, and
only if, the evidence would allow a reasonable trier of fact to find
the underlying fact in favor of the party opposing the motion in
accordance with the applicable standard of proof.” (Aguilar, at
p. 850; see Lemm v. Ecolab Inc. (2023) 87 Cal.App.5th 159, 169.)
       “‘“‘We review the trial court’s decision de novo, considering
all the evidence set forth in the moving and opposing papers
except that to which objections were made and sustained.’”
[Citation.] We liberally construe the evidence in support of the
party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.’’’ (Hampton v. County of
San Diego (2015) 62 Cal.4th 340, 347; see Lemm v. Ecolab Inc.,
supra, 87 Cal.App.5th at pp. 168-169.)

      B.     More Applicable Law: The Hospital Lien Act
      Enacted in 1961, the HLA creates a “statutory medical lien
in favor of a hospital against third persons liable for the patient’s
injuries.” (Mercy Hospital, supra, 15 Cal.4th at p. 217; see
Stats. 1961, ch. 2080, § 1, p. 4340.) “Under the HLA, any
hospital ‘which furnishes emergency and ongoing medical or
other services to any person injured by reason of an accident or
negligent or wrongful act . . . shall, if the person has a claim
against another for damages on account of his or her injuries,
have a lien upon the damages recovered, or to be recovered, by
the person . . . to the extent of the amount of the reasonable and
necessary charges of the hospital and any hospital affiliated
health facility . . . .’ (§ 3045.1.) ‘The lien shall apply whether the
damages are recovered, or are to be recovered, by judgment,
settlement, or compromise.’ (§ 3045.2.) The hospital’s recovery

                                  7
on the lien is, however, limited ‘to an amount which could be
satisfied from 50 percent of the’ amount recovered by the injured
person from the tortfeasor.” (Parnell v. Adventist Health
System/West (2005) 35 Cal.4th 595, 601, fns. omitted.)
       For the hospital’s lien to become effective, “the hospital
must provide written notice of, among other things, ‘the amount
claimed as reasonable and necessary charges’ to the third party
alleged to be liable to the injured person and to any known
insurer of that third party.” (State Farm Mutual Automobile Ins.
Co. v. Huff (2013) 216 Cal.App.4th 1463, 1469 (State Farm),
quoting § 3045.3.) The HLA “imposes liability on a properly
notified third party or insurer for the amount the hospital was
entitled to receive as payment for treating the injured person if
the third party or insurer pays the injured person without first
paying the hospital as much of the lien amount as can be paid
from 50 percent of the amount due under a final judgment,
settlement, or compromise after payment of prior liens.” (State
Farm, at p. 1469, citing § 3045.4.) 4 The HLA enables a hospital
to “‘enforce’ its lien by filing an action, within one year of the date

4      Section 3045.4 provides, in relevant part: “Any person, . . .
including, but not limited to, an insurance carrier, making any
payment to the injured person, or to his or her attorney, . . . for
the injuries he or she sustained, after the receipt of the notice as
provided by Section 3045.3, without paying to the . . . institution
or body maintaining the hospital the amount of its lien claimed in
the notice, or so much thereof as can be satisfied out of 50 percent
of the moneys due under any final judgment, compromise, or
settlement agreement . . . shall be liable to the . . . institution or
body maintaining the hospital for the amount of its lien claimed
in the notice which the hospital was entitled to receive as
payment for the medical care and services rendered to the injured
person.”

                                   8
the settlement or judgment proceeds were paid to the injured
person, against the entity ‘making the payment and to whom
such notice was given as herein provided.’” (County of San
Bernardino v. Calderon (2007) 148 Cal.App.4th 1103, 1110,
quoting § 3045.5; see County of Santa Clara v. Escobar (2016)
244 Cal.App.4th 555, 580 [“the HLA expressly entitles the
hospital to proceed directly against a tortfeasor who pays the
injured person without honoring the lien,” italics omitted].)
       Taken together, these provisions serve the HLA’s purpose:
“to secure part of the patient’s recovery from liable third persons
to pay his or her hospital bill, while ensuring that the patient
retained sufficient funds to address other losses resulting from
the tortious injury.” (Mercy Hospital, supra, 15 Cal.4th at p. 217;
accord, County of San Bernardino v. Calderon, supra,
148 Cal.App.4th at p. 1109.) It was to balance “these competing
interests,” for example, that “the Legislature limited the amount
of a hospital’s lien on the settlement or judgment proceeds that a
tortfeasor pays an injured person to ‘the reasonable and
necessary charges of the hospital’ for treating the injury
[citation]—the same amount of medical expenses the injured
person may recover as damages from the tortfeasor.” (State
Farm, supra, 216 Cal.App.4th at p. 1471.)

      C.    Application of All That Law (and More)
      The Medical Center contends the trial court erred in ruling
Allstate demonstrated the Medical Center could not establish
Allstate made a settlement payment to Barnes without paying

                                 9
the Medical Center the amount of its lien. We agree with that
contention.
      Abandoning the alternative argument it made in the trial
court—i.e., that Allstate never made a settlement payment to
Barnes because “the multi-party check” was not cashed—Allstate
goes all in on its argument that giving Barnes’s attorneys a check
for $116,714.67 made payable to Barnes and the Medical Center
constituted a payment to the Medical Center for the amount of its
lien. Allstate maintains that it made this payment to the
Medical Center “concurrent with payment to Barnes” and that,
therefore, the Medical Center cannot establish Allstate made a
settlement payment to Barnes without paying the Medical Center
the amount of its lien. As in the trial court, Allstate declines to
specify which check made payable to the Medical Center as co-
payee—the February 2020 check or the March 2021 check—
Allstate claims satisfied its payment obligation to the Medical
Center. 5 But it doesn’t matter: Neither check was a payment to
the Medical Center.
      Citing Crystaplex Plastics, Ltd. v. Redevelopment Agency
(2000) 77 Cal.App.4th 990 (Crystaplex), Allstate argues the
check(s) in question constituted payment to the Medical Center
because a “check issued to multiple payees, delivered to one
payee, is delivery of a check.” (See id. at p. 998 [under principles
of constructive possession, delivery of a check “to one of the joint

5     Given that Allstate no longer appears to dispute it made a
separate settlement payment to Barnes in February 2020,
Allstate presumably has in mind the February 2020 check. On
the other hand, it’s hard to argue an expired check paid anyone
for anything.

                                10
payees is delivery to all of them”].) 6 But that Allstate may have
constructively delivered the check(s) to the Medical Center does
not mean Allstate made a “payment” to the Medical Center. (See
§ 1478 [“Performance of an obligation for the delivery of money
only, is called payment.”].) On the contrary, as a general rule
“‘a check of itself is not payment until cashed . . . .’” (Hale v.
Bohannon (1952) 38 Cal.2d 458, 467; accord, Cornwell v. Bank of
America (1990) 224 Cal.App.3d 995, 1000; see Navrides v. Zurich
Ins. Co. (1971) 5 Cal.3d 698, 706 [a “‘check is never a payment of
the debt for which it is given until the check itself is paid or
otherwise discharged’”]; Hale, at p. 467 [the “‘mere giving of a
check does not constitute payment’”]; Mendiondo v. Greitman
(1949) 93 Cal.App.2d 765, 767 [same]; Art Frost of Glendale v.
Hooper (1955) 130 Cal.App.2d Supp. 903, 906 [“[u]ntil the check
involved here was cashed, . . . the obligation of the drawer
remained in existence”]; Bass v. Olson (9th Cir. 1967) 378 F.2d
818, 820 [“under governing California law, mere possession of an
uncashed check is not equivalent to payment,” and therefore,
“prior to the actual presentation of the check at the bank,” the
defendant, who physically possessed the check, “was never
‘paid’”].) There is no evidence either check Allstate made out to

6      Crystaplex, supra, 77 Cal.App.4th 990 involved a cause of
action under Commercial Code section 3309, which “allows the
payee of a check to enforce it against the drawer when the check
has been lost or stolen.” (Crystaplex, at p. 995.) The court held
the plaintiff sufficiently pleaded the first element of that cause of
action—“that ‘the person was in possession of the instrument and
entitled to enforce it when loss of possession occurred’”—by
alleging that the plaintiff “was a joint payee of the check, and
that the check was delivered to a copayee.” (Id. at pp. 998-999.)

                                 11
the Medical Center as a co-payee was ever cashed. In fact, it
appears undisputed that neither was.
       An exception to the general rule that mere delivery of a
check is not payment may apply where the parties have agreed
otherwise. (See Navrides v. Zurich Ins. Co., supra, 5 Cal.3d at
p. 706 [a check does not constitute payment “‘unless expressly
agreed to be taken in payment’”]; Beazell v. Kane (1954)
127 Cal.App.2d 593, 596 [“an agreement to accept a check as
payment obviates the rule”]; Art Frost of Glendale v. Hooper,
supra, 130 Cal.App.2d Supp. at p. 906 [“In the absence of an
agreement that a check is to constitute payment, it does not
discharge the obligation for which it is given.”].) But “‘the party
attempting to prove payment by mere delivery or acceptance [of a
check] must go further and in addition prove that such delivery
and acceptance was in accordance with an agreement that it was
to be accepted as payment.’” (Hale v. Bohannon, supra, 38 Cal.2d
at p. 467; accord, Cornwell v. Bank of America, supra,
224 Cal.App.3d at p. 1000; Mendiondo v. Greitman, supra,
93 Cal.App.2d at p. 767.) Allstate does not invoke the exception
to the general rule here, let alone cite evidence of an agreement
between it and the Medical Center regarding delivery or
acceptance of a check as payment. 7
       Finally, Allstate argues “public policy supports a finding
that [its] conduct did not violate the HLA.” Allstate suggests the

7     The record does contain one-sided correspondence from
attorneys representing the Medical Center to attorneys
representing Allstate stating Allstate could satisfy its payment
obligation to the Medical Center by sending the Medical Center’s
attorneys a check for the lien amount made payable to the
Medical Center. Which, of course, was not done.

                                12
Medical Center was not harmed by the manner in which Allstate
purported to satisfy its obligations under the HLA because,
“when a check is delivered to one of multiple payees, all payees
[must] negotiate the check,” and all the Medical Center “had to
do was resolve the lien with Mr. Barnes.” Allstate, however, cites
no authority authorizing courts to create a public policy exception
to the HLA. And Allstate’s argument the Medical Center
suffered no harm because it could “resolve” its lien with Barnes
seems disingenuous: The obvious point of including Barnes as co-
payee was to empower him to negotiate keeping some portion of
the amount of the Medical Center’s lien for himself. The HLA
does not condition the hospital’s right to payment on the timing
or resolution of a negotiation between the patient and the
hospital.

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                         DISPOSITION

       The judgment is reversed. The trial court is directed to
vacate its order granting Allstate’s motion for summary judgment
and enter a new order denying the motion. The Medical Center
is to recover its costs on appeal.

                                   SEGAL, J.

We concur:

             PERLUSS, P. J.

             FEUER, J.

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