California Court of Appeals, Fourth District, First Division
APPEAL and cross-appeal from an order of the Superior Court of San Bernardino County No. CIVDS1106102, John M. Pacheco, Judge.
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Kamala D. Harris, Attorney General, Kathleen A. Kenealy, Chief Assistant Attorney General, Julie Weng-Gutierrez, Assistant Attorney General, Jennifer M. Kim and Jonathan E. Rich, Deputy Attorneys General, for Claimant and Appellant.
Law Office of Philip Michels & Associates, Michels & Lew and Steven B. Stevens for Plaintiff and Appellant.
This case involves a claim for reimbursement made by California's State Department of Health Care Services (the Department) for funds expended on behalf of an injured party by the state's Medi-Cal program. The injured party, Ashlynn Aguilera, filed a special motion to determine the Department's lien under Welfare and Institutions Code section 14124.76. (Undesignated statutory references are to the Welfare and Institutions Code.)
We conclude the trial court properly employed the methodology used in Arkansas Dept. of Health and Human Servs. v. Ahlborn (2006) 547 U.S. 268 [164 L.Ed.2d 459, 274, 126 S.Ct. 1752] (Ahlborn), but erred when it refused to reduce the Department's lien to account for the attorney fees and expenses Ashlynn incurred. As we shall discuss, the matter is remanded to the trial court to set aside the order and (1) conduct further proceedings regarding whether the cost of Ashlynn's future at-home attendant care (attendant care) and medical care should be included in its Ahlborn calculation, and (2) apply section 14124.72, subdivision (d) (14124.72(d)) to determine the Department's share of Ashlynn's attorney fees and costs.
FACTUAL AND PROCEDURAL BACKGROUND
When Ashlynn was two months old she suffered injuries as a result of the negligence of a physician. She underwent a hemispherectomy (removal of half of the cerebral portion of her brain) and had a shunt implanted to relieve pressure inside her skull caused by excess cerebrospinal fluid. Ashlynn suffers from global developmental delay, mental retardation and behavioral disorders. She is also dependent on a gastronomy tube.
Ashlynn filed an action for medical malpractice and her parents settled the action for $950, 000. The settlement was near defendants' liability policy limits. The trial court approved the settlement, along with the request of Ashlynn's counsel for attorney fees and costs totaling $253, 006. Ashlynn's parents received $85, 000 of the settlement as a resolution of their prospective wrongful death action against defendants. The balance of the settlement was placed in a special needs trust.
The Department asserted a lien on Ashlynn's recovery, based on the $211, 191 that it spent on her behalf. The Department initially demanded $154, 295 to satisfy its lien. Ashlynn filed a special motion to determine the Department's lien under section 14124.76. Ashlynn supported her motion with declarations from her counsel and two physicians, presenting evidence regarding: her life expectancy; the care she will need throughout her life; the cost of future care; lost earning capacity; and the value of her pain and suffering. Among other things, Ashlynn presented evidence that she needs 16 hours per day of licensed vocational nurse (LVN) attendant care until she reaches the age of 21, and 24 hours per day LVN attendant care for the rest of her life. Rounded to the nearest dollar, she claimed that the full value of her claim was as follows:
Past Medical Costs:
$ 211, 1911
Future Medical Costs (Present Value):
$1, 560, 429
Future Attendant Costs (Present Value):
$11, 641, 244
Loss of Earning Capacity (Present Value):
$ 1, 126, 794
$ 250, 000
Full Value of Claim:
$14, 789, 658
Ashlynn argued the Department's lien should be $10, 046. She calculated this lien amount via a methodology used in Ahlborn. (Ahlborn, supra, 547 U.S. at p. 274.) The Department presented no evidence in its opposition to dispute this evidence. It argued that no statutory or case authority mandated the "rigid mathematical formula" used by Ashlynn. It claimed its lien was not limited to the past medical care expenses it paid, but extended to Ashlynn's future care. The Department also asserted its lien should not be reduced by the amount of attorney fees and costs expended by Ashlynn to obtain the settlement. The Department stated it would accept 16 percent of the total settlement to satisfy its lien, or about $150, 175.
In her reply, Ashlynn complained the Department failed to provide a rational alternative method for calculating the lien amount, no court has embraced the Department's arguments and the Department "plucked" the number "from the air." The Department then filed a supplemental opposition, which adopted the formula used by Ashlynn, but eliminated the value of Ashlynn's future medical expenses ($13, 201, 673) from the calculation on the grounds it would be paying those future expenses, resulting in a lien amount of $140, 537.
The trial court used the formula set forth by Ashlynn and later adopted by the Department. Although $85, 000 of the settlement proceeds went to Ashlynn's parents, the court followed Ashlynn's calculations and used the whole $950, 000 as the settlement amount, leading to a result slightly more favorable to the Department. However, it excluded from the calculation medical expenses the Department would pay on Ashlynn's behalf in the future, but included future expenses for attendant care. It also declined to reduce the Department's recovery to account for ...