Brooks v. St. Mary Medical Center
| Decision Date | 21 August 1997 |
| Docket Number | No. B097333,B097333 |
| Citation | 66 Cal.Rptr.2d 820,57 Cal.App.4th 241 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Previously published at 57 Cal.App.4th 241 57 Cal.App.4th 241, 53 Soc.Sec.Rep.Ser. 1004, 97 Cal. Daily Op. Serv. 6738, 97 Daily Journal D.A.R. 10,930 Nathan A. BROOKS, Plaintiff, Cross-Defendant and Respondent, v. ST. MARY MEDICAL CENTER, Defendant, Cross-Complainant and Appellant. |
Madden, Jones, Cole & Johnson and John C. Vita, Long Beach, for Defendant, Cross-Complainant and Appellant.
Ronald L.M. Goldman, Marc D. Anderson, Marina Del Rey, and Gary B. Fleischman, Beverly Hills, for Plaintiff, Cross-Defendant and Respondent.
This case concerns the effect of Medi-Cal reimbursements paid to health care providers. The Federal law governing the Medi-Cal program requires that every health care provider who accepts Medi-Cal payments for a particular patient must also agree not to seek further payment from that patient. Instead, the health care provider must content itself with the amounts paid by Medi-Cal. Whether this Federal law can be avoided by state statute is the question posed by this case.
The plaintiff was injured in a car accident. He was treated by defendant St. Mary Medical Center (St. Mary). St. Mary's bill totaled $77,384.45. After plaintiff was discharged from St. Mary, he filed suit against a third party seeking recovery for damages suffered in the accident. He also executed a lien on his lawsuit in favor of St. Mary. The precise circumstances of and reasons for execution of this lien are not revealed in the record. About eighteen months after plaintiff's discharge from St. Mary, St. Mary accepted two payments totaling $13,340 from Medi-Cal. A little over a year after St. Mary received these payments, plaintiff settled his lawsuit with the third party for $294,500.
Plaintiff filed this declaratory relief action to determine whether he has an obligation to make further payments to St. Mary. Plaintiff contends that St. Mary's acceptance of the payments from Medi-Cal prohibits St. Mary from seeking any further payment from him. St. Mary's cross-complained for the full amount of its bill. The trial court ruled in favor of plaintiff, disallowing any further recovery to St. Mary, and St. Mary appeals. 1
Because the ruling of the trial court was correct under controlling Federal law, we affirm.
California's Medi-Cal program receives Federal Medicaid funds to help finance California's program. As a condition of receipt of these Federal Medicaid funds, the Medi-Cal program must comply with Federal law and regulations. The Federal rule implicated in this case is the rule against what has been called "balance billing." Balance billing refers to the practice of billing patients for the balance remaining on a medical bill above the amount covered by Medi-Cal.
Medi-Cal (as the state agency distributing the Federal funds) "must limit participation in the Medicaid program [in California, Medi-Cal] to providers who accept, as payment in full, the amounts paid by the agency...." (42 C.F.R. § 447.15.) Moreover, a (42 U.S.C. § 1396a, subd. (a)(25)(C).) 2 Thus under Federal law, St. Mary was eligible for Medi-Cal money only if St. Mary agreed to accept that Medi-Cal money as payment in full. Presumably St. Mary made such an agreement, because St. Mary did in fact receive Medi-Cal money in this case. Once St. Mary accepted the Medi-Cal money, it was barred from billing for the balance. (See also Palumbo v. Myers (1983) 149 Cal.App.3d 1020, 197 Cal.Rptr. 214; Serafini v. Blake (1985) 167 Cal.App.3d Supp. 11, 213 Cal.Rptr. 207; cf. Rybicki v. Hartley, supra, 792 F.2d 260 [Medicare].)
In 1985, the Legislature attempted to avoid the Federal ban on balance billing by enacting provisions contained in Chapter 776 of the Statutes of 1985. This Chapter tentatively amended Welfare and Institutions Code section 14124.791 to allow medical care providers to file a lien for the balance not paid by Medi-Cal against sums recovered by the patient from third parties responsible for the patient's injuries. It also tentatively amended Welfare and Institutions Code section 14124.74 to provide that if a Medi-Cal patient received an award in a lawsuit arising out of the patient's injury, the court--after first ensuring payment of litigation expenses and reimbursement to Medi-Cal--was to impose a lien against the patient's recovery in favor of the patient's medical care provider in the amount of any unpaid charges.
The Legislature apparently recognized that these provisions were in conflict with the Federal ban on balance billing, and the new provisions were therefore not to become effective until "appropriate federal waivers" were obtained. (Stats.1985, ch. 776, § 6.) The Federal government denied the waiver requests in 1986, and the new provisions hence never took effect. (Historical and Statutory Notes, 74A West's Ann. Welf. & Inst.Code (1991 ed.) § 14019.3, p. 77.)
In 1992, the Legislature again tried to avoid the Federal ban on balance billing, this time by passing the statute involved here, Welfare and Institutions Code section 14124.791(a). This section contains two relevant provisions. The first provision concerns the filing of a lien: if a medical care provider has provided services to a patient because the patient was injured by a third party, even if the medical care provider has received payment from Medi-Cal, the health care provider may "file a lien for all fees for services provided to the [Medi-Cal patient] against any judgment, award, or settlement obtained by the [Medi-Cal patient] ... against that third party." The second relevant provision concerns recovery on the lien: the medical care provider "may only recover upon the lien if the provider has made a full reimbursement of any fees paid" by Medi-Cal.
The new statutory scheme thus provides first for creation of a lien against a personal injury recovery for the full amount of the medical care provider's bill, and second for recovery of this full amount by the medical care provider "if" the provider "has made" a full reimbursement to Medi-Cal.
These provisions raise numerous uncertainties: When must the medical care provider enforce its lien? Does a four-year statute of limitations apply? How is the personal injury plaintiff to know whether to accept a settlement offer while not knowing whether lien enforcement will later be attempted? May the medical care provider obtain a judgment for the full amount of its lien before reimbursing Medi-Cal? The statute prohibits only recovery prior to reimbursement. Does the statute create a new form of judgment subject to a condition subsequent--a judgment which cannot be enforced until the medical care provider "has made" full reimbursement of Medi-Cal monies received? No procedure is provided by statute for administration of such a conditional judgment--normally a judgment constitutes an unconditional final determination that money is owing, while here the medical care provider could not "recover" on an otherwise valid judgment until reimbursement was first made. How would a court know whether or not to enforce such a judgment? What if such a judgment were enforced without reimbursement? What if the medical care provider makes reimbursement only after recovery in the personal injury action has been distributed? Is there an estoppel? Other questions of similar vein are also raised.
These are legitimate questions, but they are all attacks on the wisdom of the statute. Courts have limited legitimate authority to review the wisdom of a statute. Even assuming that a statute may create procedural complications, it is the Legislature's judgment to enact the statute that controls. A court cannot properly invalidate a statute simply because it is incomplete, raises questions, might create confusion, etc. Nevertheless, the statute cannot be applied for a different reason--it conflicts with the Federal law under which the Medi-Cal system operates.
The Medicaid money involved here is, by law, Federal money. Although the Federal practice of raising tax money in the states and then returning some of that money to the states only if the states agree to abide by Federal conditions may appear to subvert the constitutional allocation of responsibilities between state and Federal governments, the practice has never been found illegal and is regularly used. No contention has been raised in this case that the practice exceeds constitutional bounds. By opting into the Federal program, the state subjected itself to the Federal law that governs the program. Similarly, St. Mary became subject to Federal law when St. Mary chose to participate in the program. St. Mary now contends that it should be governed by the state, rather than the Federal law. However, whenever state law conflicts with a valid Federal law, it is the Federal law that controls. (U.S. Const. art. VI, cl. 2 [The "Supremacy Clause"].)
An almost identical issue was decided in Evanston Hosp. v. Hauck (7th Cir.1993) 1 F.3d 540 (Evanston Hospital ). Evanston Hospital had provided medical care to a patient badly injured in an electrical accident, and had amassed...
To continue reading
Request your trial