2018-00236938-CU-PA

Dominic Breton vs. Lynn Marie Pike

Nature of Proceeding: Motion to Reduce Ca Department of Health Care Services’ Medical Lien

Filed By: O’Brien, John M.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

Plaintiff Dominic Breton’s (Breton) Motion to Reduce Medi-Cal lien is DENIED.

Lienor / Claimant the Department of Health Care Services’ (DHCS) request for judicial notice of the American Family Insurance website entitled “What is Medical Coverage” is DENIED.

Overview

Although filed ostensibly as a personal injury action for damages, this is actually a special proceeding to reduce a Medi-Cal lien under W&I Code § 14124.76(b). The case follows a 2017 automobile collision resulting in serious injuries to Breton. Breton was a backseat passenger in a car traveling on the freeway. He was 37-years-old at the time. Defendant Lynn Pike (Pike) changed lanes and struck the vehicle driven by Defendant Antonia Deisi Mendes Ferrer (Mendez).

Breton spent over 15 days in three different hospitals and underwent internal fixation surgery to repair his fractured spinal sacra and damaged nerves. His ribs were fractured as well. He developed complications, including pulmonary emboli. He was

in a wheelchair for approximately one and one-half months and still suffers from symptoms stemming from the accident.

Medi-Cal covered Breton’s medical expenses after the collision. DHCS administers the Medi-Cal program. Although Breton’s medical bills ran into the hundreds of thousands of dollars, DHCS settled them for the amount of $103,845.12 as of March 2018. (See O’Brien Decl., ¶ 10.)

On 3/22/18, DHCS informed Breton that, pursuant to W&I Code § 14124.72(d), it had reduced its lien for reimbursement from $103,845.12 to $84,133.84. Subd. (d) provides among other things that the “claim for reimbursement of the benefits provided to the beneficiary shall be limited to the amount of the director’s lien, as defined in subdivision (d) of Section 14124.70.” In turn, § 14124.70(d) defines the term “lien” to mean “the director’s claim for recovery, from a beneficiary’s tort action or claim, of the reasonable value of benefits provided on behalf of the beneficiary.” The DHCS asked Breton to remit payment in the reduced amount.

Through his counsel, Breton attempted to obtain a further reduction of the Medi-Cal lien. By letter, he informed the DHCS that the insurance policy limits tendered by Pike and Mendez fell far short of the value of his claims against them. Pike’s insurer tendered policy limits of $125,000, which consist of a per-person limit of $100,000 plus a medical-payments limit of $25,000. Mendez’ insurer separately tendered the policy limit of $15,000. It appears Breton is willing accept these $140,000 as full settlement of his claims against Pike and Mendez, subject to a ruling on the current motion. (See Reply at 1:20-2:3.) Breton contends that his claims are otherwise worth between $1.5 million and $2.5 million.

By letter dated 4/27/18, Breton proposed a Medi-Cal reimbursement of $7,736.46. (See O’Brien Decl., Exh. D, p. 2.) As he does in the current motion, Breton based his proposal on W&I Code § 14124.76(a), which provides:

No settlement, judgment, or award in any action or claim by a beneficiary to recover damages for injuries, where the 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 the director’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. […] Absent the director’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. […] 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 director 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.

The court examines Ahlborn in greater detail below.

DHCS rejected Breton’s proposal to settle his Medi-Cal lien for $7,736.46. (See Gill Decl., Exh. 3.) It countered with a proposal to settle for $53,631.26, which it concluded was the amount required under Ahlborn and applicable statutory provisions. Despite additional negotiation, DHCS and Breton reached an impasse, and this motion followed.

For reasons discussed below, the court denies the motion because Breton did not meet his burden of proof. The court nonetheless rejects some of DHCS’ arguments raised in opposition to the motion.

Discussion

As noted above, W&I Code § 14124.76(a) requires the court to consider the Ahlborn case when deciding the reimbursement to which DHCS is entitled. In Ahlborn, the Supreme Court used a formula, to which the parties in that case stipulated, to determine what portion of the settlement represented payments for medical expenses. “The Ahlborn formula is the ratio of the settlement to the total [value of the plaintiff’s personal injury] claim, when applied to the benefits provided by [DHCS]. [Citation.]” ( Aguilera v. Loma Linda Univ. Med. Ctr. (2015) 235 Cal.App.4th 821, 828.) “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 the benefits provided.” (Id.)

“Ahlborn itself does not require the application of the precise formula used in that case,” (Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 761), but the Court of Appeal has approved of its use in multiple cases. (See, e.g., id. at 761 [“We agree that Ahlborn itself does not require the application of the precise formula used in that case, although we do not think this approach, which has the Supreme Court’s approval, should be abandoned lightly”]; Lima v. Vouis (2009) 174 Cal.App.4th 242, 260 [“[T]he 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 damages and the reasonableness of the settlement amount in light of those total damages”]; Lopez v. DaimlerChrysler Corp. (2009) 179 Cal.App.4th 1373 [affirming the trial court’s application of Ahlborn where DHCS “offered no explanation for its valuation”]; Branson v. Sharp Healthcare, Inc. (2011) 193 Cal.App.4th 1467 [affirming the trial court’s use of Ahlborn, which unopposed by DHCS].)

Ahlborn provides an appropriate, well-regarded formula, and the court attempts to apply it here. To apply Ahlborn, the court must determine the value of Breton’s case. Breton tenders a value of between $1.5 and $2.5 million. He bases these values primarily on his medical treatment to date and his counsel’s experience as a personal injury lawyer. Breton’s counsel has tried 36 personal injury cases to verdict over 28 years, most of which were tried in Sacramento. (See O’Brien Decl., ¶ 9.) Counsel estimates Breton’s lost future earnings at $450,000 (30 yrs x $15,000/yr), given that Breton has worked as a laborer and will be unable to resume labor-intensive work with his injuries. In addition, counsel argues that past and future pain and suffering alone would support a $2 million verdict at trial.

Based on a range of values between $1.5 and $2.5 million, the proposed $140,000 settlement yields Ahlborn ratios between 5.6% and 9.3%. Breton asks the court to select the midpoint–7.45%–and apply it to the amount DHCS actually paid for his past medical treatment, which was $103,845.12. Thus, Breton moves for an order reducing

DHCS’ lien to $7,736.46.

DHCS opposes on several grounds. First, it argues that Breton comes to court with unclean hands and should not receive any relief. DHCS focuses on the fact that, whereas W&I Code § 14124.76 contemplates a “motion” for a lien reduction, Breton filed a civil action for damages instead. DHCS reasons that Breton intends, not to settle with Pike and Mendez for their policy limits, but to proceed to trial for the full value of his case. In the reply, however, Breton explains that he only filed this action to obtain case number and a means to move for a lien reduction. In DHCS’ view, this explanation lacks credibility, but the court disagrees.

There was no case pending when Breton reached his tentative settlement. Breton should have filed a “special motion” or something other than this damages action to pursue the lien reduction, (see W&I Code § 14124.76(b)), but the court discerns no fraud or bad faith. Breton has not served a summons on either Pike or Mendez and at this point does not appear intent on pursuing damages at trial. The court thus rejects DHCS’ unclean hands argument.

Next, DHCS argues that it is entitled to the entire portion of the settlement drawn from Pike’s $25,000 policy limit on coverage for medical payments. DHCS argues that this portion of the settlement is equivalent to “other” health care insurance benefitting Breton and must be excluded from lien reduction calculations. (See, e.g., W&I Code

§§ 10020, 10022 [individuals with health care insurance other than Medi-Cal may not receive duplicative benefits, and DHCS is subrogated to beneficiaries’ rights to payments under such other insurance].) DHCS cites no case adopting its position, and the court is not persuaded. In fact, the Third District Court of Appeal appears to have rejected a similar argument in Palumbo v. Myers (1983) 149 Cal.App.3d 1020, albeit in a different context. (See Palumbo, pp. 1026-1031 [rejecting argument that W&I Code provisions discussing “other coverage” apply to personal injury recoveries from third-party tortfeasors]; see also id., p. 1032 [“The key phrase, [other] ‘contractual or legal entitlement to health care service,’ in our view, also excludes a settlement of a tort claim”].) The court will not deny the motion on the ground DHCS is entitled to the entire $25,000 available under Pike’s medical-payments coverage.

Finally, DHCS argues that Breton has not met his burden of proof, and the court agrees. Breton must prove entitlement to a reduction of the Medi-Cal lien. (See McMillian v. Stroud (2008) 166 Cal.App.4th 692, 701.) The medical records filed with the motion establish that Breton underwent surgery and experienced the complications, including pulmonary emboli, discussed above. Other key addends in Breton’s $1.5 to $2.5 million estimate of his case’s value, however, are unsupported.

For example, Breton estimates lost future earnings totaling $450,000. He predicates this figure on his asserted inability to resume labor-intensive employment. Similarly, he argues that he has suffered permanent nerve damage warranting an award of future noneconomic damages of approximately $1 million. But the only evidence supporting a finding of permanent nerve damage or other permanent injury, as well as an inability to resume labor-intensive work, is Breton’s counsel’s declaration. (See O’Brien Decl., ¶ 11 [“I am informed and believe that he continues to suffer limitations with his sexual function and has debilitating low back pain”]; see id., ¶ 9 [Breton’s “ongoing and likely permanent nerve damage and 41.5-year remaining life expectancy further support and overall case value” in the range of $2 million].) As DHCS observes, Breton’s counsel is not a qualified medical expert, and his opinions that

Breton has sustained permanent injuries carry no weight in this proceeding. As a result, Breton has not proved a case value of between $1.5 and $2.5 million, and the Ahlborn formula does not entitle him to the lien reduction he seeks.

The motion is denied.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.