California State Auto. Assn. Inter-Ins. Bureau v. Jackson

• Decision Date: 07 August 1973
• Docket Number: INTER-INSURANCE
• Citation: 512 P.2d 1201,9 Cal.3d 859,109 Cal.Rptr. 297
• Court: California Supreme Court
• Parties: , 512 P.2d 1201 CALIFORNIA STATE AUTOMOBILE ASSOCIATIONBUREAU, Plaintiff, v. Joe JACKSON, Jr., Defendant and Appellant, Department of Health Care Services, Claimant and Appellant. Sac. 7966.

Page 297

109 Cal.Rptr. 297

9 Cal.3d 859, 512 P.2d 1201

CALIFORNIA STATE AUTOMOBILE ASSOCIATION INTER-INSURANCE BUREAU, Plaintiff, v. Joe JACKSON, Jr., Defendant and Appellant Department of Health Care Services, Claimant and Appellant.

Sac. 7966.

Supreme Court of California In Bank.

Aug. 7, 1973.

Clarence S. Brown, Sacramento, for defendant and appellant.

Evelle J. Younger, Atty. Gen., Elizabeth Palmer, Asst. Atty. Gen., John Fourt and N. Eugene Hill, Deputy Attys. Gen., for claimant and appellant.

No appearance for plaintiff.

SULLIVAN, Justice.

In this interpleader action, defendant Joe Jackson, Jr., appeals from that portion of a judgment which grants a lien pursuant to Welfare and Institutions Code section 14117 ¹ in favor of lien claimant Department of Health Care Services of the State of California (Department) ² against the amount apportioned to Jackson of the proceeds of uninsured motorist coverage deposited in court by the interpleading plaintiff insurer.

Jackson and other persons were passengers in an automobile owned and operated by Avery Sanders. They were injured as the result of a collision with an uninsured motorist. Jackson's medical expenses ($9,833.39) for the treatment of his injuries were paid under the California Medical Assistance Program (Medi-Cal), administered by the Department.

The automobile liability policy issued to Sanders by plaintiff California State Automobile Association Inter-Insurance Bureau contained an uninsured motorist clause, as required by Insurance Code section 11580.2, with maximum coverage of $15,000 for injury to each person, not to exceed $30,000 for each accident. Plaintiff brought the instant interpleader action, naming as defendants, Sanders, Jackson, and the other occupants of the vehicle and deposited with the clerk of the court (see Code Civ.Proc., § 386), the sum of $30,000 which was its maximum liability under the policy. The Department, represented by the Attorney General, filed in the action a notice of lien claiming a first lien of $9,833.39 against any judgment rendered in favor of Jackson.

After receiving evidence as to the extent of injuries suffered by each occupant of the Sanders automobile, the trial court announced that it would apportion $11,000 of the $30,000 to Jackson and.$19,000 to the other injured persons. Judgment was entered accordingly in which th county clerk was ordered to pay Jackson the sum of $11,000 'subject to the lien of the State of California.' The judgment also stated that the amounts apportioned to the various parties were 'insufficient and inadequate to fully compensate' them and merely reflected a proportionate disposition of the proceeds.

On the day the judgment was entered, ³ the defendants, through their respective counsel, filed a stipulation waiving the right of appeal. ⁴ However, neither plaintiff insurer, previously dismissed from the action, nor the lien claimant (Department), entered into the stipulation. Notwithstanding the waiver, Jackson appealed from that portion of the judgment which allowed a lien to the Department against the amount awarded him. ⁵

As a result we are confronted at the start with the Department's contention that Jackson waived his right of appeal and that his appeal should be dismissed. The Department argues that when the interpleading plaintiff deposited in court the $30,000 representing its limit of liability and was discharged from further liability, plaintiff ceased to be a party in the case and thereupon Jackson and the other defendants became the adversaries. (See 3 Witkin, Cal.Procedure (2d ed. 1971) p. 1899.) The agreement entered into by such adversaries, so the argument runs, was an 'arms-length transaction,' was approved by Jackson's attorney and was submitted to the court, and therefore constituted a waiver of appeal not only as to the parties thereto but also as to Department. In response Jackson asserts (1) that the waiver was intended to relate only to the apportionment of the funds among defendants and not to the validity of the Department's lien; and (2) that assuming arguendo that it did relate to the validity of the lien, it was ineffective because Jackson's counsel could not validly waive his client's right to appeal without the latter's consent. Since we are of the opinion that Jackson's first point has merit, we deem it unnecessary to reach the second. ⁶

From our examination of the language of the stipulation (see fn. 4, Ante) we are satisfied that Jackson did not thereby waive his right to appeal the validity of the Department's lien. It is noteworthy that the Department is not a party to the stipulation. On the contrary, only defendants who asserted conflicting claims to the insurance proceeds deposited in court entered into the stipulation. In pertinent part it states: '(The) right of appeal is waived by each of the Respective parties.' (Italics added.) 'Respective' means 'proper or relating to particular persons or things each to each.' (Webster's Third New Internat. Dict. (1963).) It is apparent from the context in which the stipulation was drafted, some four days prior to the entry of the judgment making Jackson's award subject to the Department's lien, that the conflicting claimants to the $30,000 insurance proceeds were merely agreeing that they would not further challenge the judgment insofar as it apportioned the proceeds between Jackson on the one hand and the members of the Sanders family on the other.

We turn to the merits. Essentially the main issue of the appeal is this: May the Department recover the amounts paid by it for hospital and medical services ⁷ required by Jackson for the treatment of injuries sustained in an automobile collision with an uninsured motorist by filing a lien against a judgment awarding Jackson a portion of the proceeds paid under the uninsured motorist coverage of an automobile liability policy? Jackson contends that the Department is not entitled to a lien for two reasons: First, he argues section 14117 ⁸ and Labor Code section 3852, ⁹ to which the former section refers, construed together, permit recovery by the Department for Medi-Cal outlays only from the third-party tortfeasor, that is, from 'the third person who is liable for the injury' (§ 14117, subd. (a)) but not from the insurance company affording uninsured motorist coverage or the beneficiary (e.g., Jackson) of such coverage; and, secondly, he urges, since section 14117 likens recovery by the Department under the Medi-Cal Act to recovery by an employer or the latter's compensation carrier under the workmen's compensation laws (see Lab.Code, § 3850 et seq.), the Department is barred by an exclusion in Insurance Code section 11580.2, subdivision (c)(4), disallowing recovery from the proceeds of uninsured motorist coverage 'where it would inure directly or indirectly to the benefit of any workmen's compensation carrier or to any person qualified as a self-insurer under any workmen's compensation law.'

Section 14117 was enacted in response to the federal requirement that a state or agency administering a medical assistance plan must, as a condition of federal approval, '. . . take all reasonable measures to ascertain the legal liability of third parties to pay for care and services (available under the plan) arising out of injury, disease, or disability . . . and (C) that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the State or local agency will seek reimbursement for such assistance to the extent of such legal liability.' (79 Stat. 344 (1965) 42 U.S.C. § 1396a(a)(25). Thus the Department's recovery pursuant to section 14117 of the benefits provided by it subserves the general purpose and intent of the Legislature in establishing the California Medical Assistance Program which declares among other things that 'benefits available under this chapter shall not duplicate those provided under other . . . contractual or legal entitlements of the person or persons receiving them.' (Former subd. (c), now subd. (b), § 14000; see Stats.1972, ch. 1366, § 1, p. 2718.)

The point of Jackson's first argument is simply that section 14117 permits the Department to recover from 'another person . . . civilly liable' but not from Jackson himself. However, as we explain Infra, an analysis of the facts of the instant case demonstrates that the Department's lien falls properly within the statutory provisions.

As set forth in section 14117 (see fn. 8, Ante), 'the director shall have a Right to recover from such person (civilly liable) the reasonable value of the benefits' provided under the Medi-Cal program. The appropriate legal officer 'may, to enforce such right, institute and prosecute legal proceedings against the third person who is liable for the injury . . .. In enforcing such right the director may commence and prosecute actions, File liens, or intervene in court proceedings All in the same manner, with the same rights and authority as to notice, settlement and other matters, and To the same extent provided in Chapter 5 (commencing with Section 3850), Part I, Division 4 of the Labor Code for an employer or workmen's compensation insurer where payments have been made or a liability incurred by an employer or an insurer under the workmen's compensation laws.' (Italics added.) Thus section 14117, subdivision (a), instead of setting forth in specific detail a procedural mechanism for enforcing the Department's right of recovery, merely incorporates by reference a mechanism existing in the Labor Code. Section 3852, for example, which is included among the Labor Code sections referred to, provides for one of the methods by which, in the context of the workmen's compensation laws, an employer or his workmen's compensation carrier who has provided benefits to an injured employee may recover from the negligent third person causing the injuries. ¹⁰ Thus, Mutatis...