Super. Ct. No. GIE030248 APPEAL from an order of the Superior Court of San Diego County, Laura W. Halgren, Judge. Affirmed in part; reversed in part with directions.
The opinion of the court was delivered by: Mcconnell, P. J.
CERTIFIED FOR PUBLICATION
The beneficiary of medical services under the California Medical Assistance Program (Medi-Cal) is required to reimburse the Department of Health Care Services (the Department) for the costs of medical care from a recovery obtained in a tort action against a third party liable for the beneficiary's injuries. The Department's claim, however, "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." (Welf. & Inst. Code,*fn1 § 14124.76, subd. (a); Arkansas Department of Health and Human Services v. Ahlborn (2006) 547 U.S. 268, 278 (Ahlborn).) When a settlement of third party litigation is unallocated between categories of damages, such as medical costs, lost earnings, and pain and suffering, the trial court may determine the appropriate Medi-Cal lien amount by comparing the percentage of the settlement to the beneficiary's total damages, and applying that percentage to the past medical costs for which the Department seeks reimbursement. (Lopez v. DaimlerChrysler Corp. (2009) 179 Cal.App.4th 1373, 1378 (Lopez).)
The beneficiary here, Daniel Branson, obtained an unallocated partial settlement of his medical malpractice action, after which the Department demanded partial reimbursement for medical costs to date, and he complied. When Branson received an additional unallocated settlement, which fully resolved his case, the Department sought additional reimbursement. He brought a motion under section 14124.76, subdivision (a) for the court's determination of the appropriate amount of the total lien. Branson argued that given his overall damages, he had overpaid the Department by $250,729. The court agreed with his calculation, and ordered that he is not required to pay the Department any additional amount. The court, however, found it lacked authority to order the Department to refund the overpayment.
On appeal, Branson challenges the court's jurisdictional finding. We conclude that under the plain language of subdivision (c) of section 14124.76, the court has jurisdiction to order the Department to refund Branson's overpayment. Section 14124.76, subdivision (c) states that in a proceeding to establish the appropriate amount of a Medi-Cal lien, the "court shall issue its findings, decision, or order, which shall be considered the final determination of the parties' rights and obligations with respect to the director's lien . . . ." (Italics added.) We also hold that Branson's payment of the Department's initial demand for reimbursement does not constitute a negotiated settlement that constitutes any type of waiver or forfeiture of his right to challenge the total lien amount at the conclusion of his malpractice action.
FACTUAL AND PROCEDURAL BACKGROUND
In 2004 Daniel Branson, then 42 years old, was the victim of medical malpractice, the failure to diagnose a spinal abscess, and as a result he suffers from quadriplegia and a plethora of attendant physical and psychological problems. He requires around the clock nursing care and he faces additional surgeries and many other expensive medical procedures.
Branson brought a medical malpractice action against a hospital, an emergency medical group, and individual physicians. The Department filed a notice of lien on any recovery for reimbursement of medical expenses Medi-Cal had covered.
Some time in 2007, Branson settled his claims against two of the defendants for a total of $2 million. The settlement was not allocated among categories of damages. In an August 8, 2007 letter to Branson's attorney, the Department stated it had paid $611,133.94 in medical costs for him and it would accept $440,478.64 in reimbursement based on the $2 million settlement, attorney fees of zero and litigation costs of $58,487.41. The letter does not reveal how the Department calculated the reimbursement amount. Further, there is no suggestion the Department's demand took into consideration Branson's total damages. The letter also states: "Due to the possibility of additional settlements, this reimbursement amount will only be considered as partial satisfaction of the Medi-Cal lien. Upon each settlement you are required . . . to notify us so that we can furnish you with an updated lien amount. The Department retains all statutory lien rights arising from Medi-Cal paid services with regard to any other settlement, award or judgment." In October 2007 Branson paid the full amount the Department requested.
In November 2008 Branson settled his claims against the remaining defendants for a total of $4,804,269. Again, the settlement was not allocated among categories of damages. In a November 19 letter to Branson's attorney, the Department stated Medi-Cal had paid an additional $513,979.71 for his medical costs. It sought reimbursement of an additional $370,390.66 to satisfy the Medi-Cal lien. Again, the letter did not explain how it calculated the reimbursement amount.
Because the total settlements Branson received amounted to only a fraction of his overall damages, he believed the Department was not entitled to further reimbursement, and in fact he had already overpaid the reasonable amount of the Medi-Cal lien. Thus, in November 2009 he brought a motion under section 14124.76 to have the court determine the reasonable amount of the Medi-Cal lien, to strike the Department's demand for further reimbursement, and to order the Department to refund the amount of his overpayment.
Branson argued that under Ahlborn, supra, 547 U.S. 268, a reasonable method of determining the appropriate amount of the Medi-Cal lien was to compare the percentage of his total settlements to his overall damages, and apply the same percentage to the Department's total expenditures. Branson adduced evidence he had a life expectancy of 20.8 years and his overall damages, including the statutory limit of $250,000 for pain and suffering, were $29,047,398.*fn2 His total settlements were $6,804,269, thus he recovered only 23.4 percent of his damages. The Department's total expenditures for medical costs were $1,125,113, and 23.4 percent of that figure is $263,276. Further, under section 14124.72, subdivision (d), the lien is reduced by $65,819, which is 25 percent of Branson's attorney fees, and by $7,708 for the Department's share of litigation costs, for a lien amount of $189,749. Thus, by paying the Department's initial demand for reimbursement of $440,478, he overpaid his debt by $250,729.
The Department filed no written opposition and did not appear at the hearing.
On January 13, 2010, the court issued an order adopting Branson's calculation of the appropriate amount of the Medi-Cal lien, and determining he had overpaid the Department by $250,729. The court ordered that Branson owed the Department nothing further, but it found it lacked jurisdiction ...