Fitch v. Select Products Co.

• Decision Date: 01 August 2005
• Docket Number: No. S116223.,S116223.
• Citation: 31 Cal.Rptr.3d 591,115 P.3d 1233,36 Cal.4th 812
• Parties: David Jay FITCH, a Minor, etc., et al., Plaintiffs and Respondents, v. SELECT PRODUCTS COMPANY, Defendant; State Department of Health Services, Claimant and Appellant.
• Court: California Supreme Court

31 Cal.Rptr.3d 591

36 Cal.4th 812

115 P.3d 1233

David Jay FITCH, a Minor, etc., et al., Plaintiffs and Respondents, v. SELECT PRODUCTS COMPANY, Defendant State Department of Health Services, Claimant and Appellant.

No. S116223.

Supreme Court of California.

August 1, 2005.

Bill Lockyer, Attorney General, Manuel M. Medeiros, State Solicitor General, Andrea Hoch, Chief Assistant Attorney General, James Humes, Assistant Attorney General, John H. Sanders, John Venegas and Karen Ackerson-Brazille, Deputy Attorneys General, for Claimant and Appellant.

Andrews & Hensleigh, Joseph Andrews, Los Angeles, and John J. Aumer, Sherman Oaks, for Plaintiffs and Respondents.

KENNARD, J.

May a Medi-Cal lien for costs incurred in treating a decedent's final illness be asserted against a recovery in a wrongful death action when that recovery does not and could not include those medical expenses? The answer is "no."

I

Elan Jay Fitch (Fitch or decedent) contracted cancer while working for the Southland Corporation (Southland) as a diesel mechanic. Medi-Cal, a program administered by the California Department of Health Services (DHS), paid the medical expenses to treat Fitch's cancer. When Fitch filed a workers' compensation claim against Southland, alleging that workplace exposure to carcinogenic chemicals was the cause of the cancer, the DHS filed a lien in the workers' compensation proceeding to recover $106,700.40 it had paid for Fitch's medical treatment. In September 1993, Fitch died of the cancer, survived by his wife, Dianne, and three minor children.

On January 27, 1995, while the workers' compensation proceeding was pending, Fitch's widow brought a tort action seeking damages resulting from Fitch's illness and death. She brought the action as an individual, as the representative of her husband's estate, and on behalf of the three minor children. The complaint named Select Products Company (Select) as one of the defendants, alleging that Fitch's illness and death was caused by a coating product manufactured by Select that Fitch had used in his work. In September 1996, the trial court ruled that the statute of limitations barred the action by Fitch's widow as an individual and as the representative of Fitch's estate; thereafter, this action proceeded as a wrongful death action by Fitch's three minor children, with Dianne acting as their guardian ad litem.

On August 5, 1998, Dianne settled the workers' compensation claim with Fitch's former employer, Southland. As part of the settlement, Southland agreed to "pay, adjust, or litigate all liens . . . ." Southland then settled the DHS's lien in the workers' compensation proceeding for $40,000, with the DHS reserving "all rights to pursue reimbursement/recovery in any third party claim . . . ."

In October 1999, the DHS filed in the wrongful death action a Medi-Cal lien in the amount of $66,795.98 (representing the amount the DHS claimed in the workers' compensation case, less the $40,000 that the DHS had already obtained in the settlement of that proceeding). In March 2000, plaintiffs (the three Fitch children) moved to strike the DHS lien, asserting that the lien violated the workers' compensation settlement agreement. The trial court declined to rule on the motion, stating that the matter was within the exclusive jurisdiction of the Workers' Compensation Appeals Board (WCAB). Thereafter, in the workers' compensation proceeding, plaintiffs asked the WCAB for a determination that Southland's $40,000 payment to the DHS in the workers' compensation case had fully satisfied and extinguished the DHS's Medi-Cal lien. The WCAB concluded that it lacked jurisdiction over the $66,795.98 lien the DHS asserted in plaintiffs' civil wrongful death action.

Plaintiffs' wrongful death action proceeded to trial against Select alone (other defendants had either settled or been dismissed). During the trial, the court granted a defense motion to preclude plaintiffs from introducing evidence of the DHS's Medi-Cal lien. The court also ruled that defendant Select could not be held liable in a wrongful death action for decedent's medical expenses as those expenses could only be recovered in an action by Dianne as the representative of her husband's estate, and the court had already ruled that such an action was barred by the statute of limitations. The trial resulted in a judgment for plaintiffs in the amount of $682,598.50.

After the trial, plaintiffs renewed their motion in the superior court to strike the DHS lien. The court granted the motion, ruling that because the damages recoverable in plaintiffs' wrongful death action did not and could not include the decedent's medical expenses, the DHS could not recover such expenses by asserting a lien against a recovery by plaintiffs in the wrongful death action. The DHS appealed.

The Court of Appeal reversed. It held that the statutes governing third party liability for Medi-Cal benefits imposed on the DHS a right and an obligation to assert the lien in plaintiffs' wrongful death action, that the exclusive jurisdiction of the WCAB does not extend to Medi-Cal liens, and that federal law does not preempt California's Medi-Cal lien procedures. We granted review.

II

Plaintiffs contend that the statutes governing Medi-Cal liens in actions against third parties do not authorize Medi-Cal liens in wrongful death actions in which the plaintiff's recovery does not include medical expenses incurred by the decedent. The issue they raise, being one of statutory construction, is governed by well-established principles. The objective of statutory construction is to determine the intent of the enacting body so that the law may receive the interpretation that best effectuates that intent. (Hassan v. Mercy American River Hospital (2003) 31 Cal.4th 709, 715, 3 Cal.Rptr.3d 623, 74 P.3d 726.) "We first examine the words themselves because the statutory language is generally the most reliable indicator of legislative intent. [Citation.] The words of the statute should be given their ordinary and usual meaning and should be construed in their statutory context." (Ibid.) If the plain, commonsense meaning of a statute's words is unambiguous, the plain meaning controls. (In re Jennings (2004) 34 Cal.4th 254, 263, 17 Cal.Rptr.3d 645, 95 P.3d 906.)

The Welfare and Institutions Code authorizes the DHS to recover the value of Medi-Cal-provided medical treatment from third parties who have caused the injury that required the treatment. (Welf. & Inst.Code, § 14124.70 et seq.; unless otherwise indicated, all statutory references are to the Welfare and Institutions Code.) The statutory scheme permits the DHS to obtain this recovery either by bringing its own action against the third party or by asserting a lien in another person's action against the third party, as discussed below.

Section 14124.71 provides: "When benefits are provided . . . to a beneficiary . . . because of an injury for which another person is liable, . . . the director shall have a right to recover from such person . . . the reasonable value of the benefits so provided." (§ 14124.71, subd. (a), italics added.) It also authorizes the Attorney General (and certain other persons and entities) to bring a direct action against the third party on behalf of the DHS: "The Attorney General . . . may, to enforce such right, institute and prosecute legal proceedings against the third person or carrier who may be liable for the injury in an appropriate court, either in the name of the director [of the DHS] or in the name of the injured person, his guardian, conservator, personal representative, estate, or survivors." (Ibid.)

Section 14124.71 also allows the DHS, acting through its director, to "[c]ompromise, or settle and release any such claim, or [to] . . . [w]aive any such claim, in whole or in part, for the convenience of the director, or if the director determines that collection would result in undue hardship upon the person who suffered the injury, or in a wrongful death action upon the heirs of the deceased." (§ 14124.71, subd. (b).) To further protect the interests of the beneficiary and his or her estate and survivors, section 14124.71 states that "[n]o action taken in behalf of the director [of the DHS] pursuant to this section . . . shall operate to deny to the beneficiary the recovery for that portion of any damages not covered hereunder." (§ 14124.71, subd. (c).)

Section 14124.72 authorizes the DHS to assert a lien against a recovery from a third party: "When an action or claim is brought by persons entitled to bring such actions or assert such claims against a third party who may be liable for causing the death of a beneficiary, any settlement, judgment or award obtained is subject to the director's right to recover from that party the reasonable value of the benefits provided to the beneficiary under the Medi-Cal program . . . ." (§ 14124.72, subd. (c).) When the beneficiary has brought the action in which the DHS asserts a lien, and has incurred a personal liability for attorney fees, the DHS's recovery is "limited to the reasonable value of benefits provided to the beneficiary under the Medi-Cal program less 25 percent [,] which represents the [DHS's] reasonable share of attorney's fees paid by the beneficiary[,] and that portion of the cost of litigation expenses determined by multiplying by the ratio of the full amount of the reasonable value of benefits so provided to the full amount of the judgment, award, or settlement." (§ 14124.72, subd. (d).)

Finally, section 14124.70 defines "beneficiary" to mean "any person who has received benefits . . . because of an injury for which another person or party may be liable" and to include "such beneficiary's guardian, conservator or other personal representative, his estate or survivors." (§ 14124.70, subd. (b).)

We conclude that the statutory scheme discussed above does not authorize the DHS to assert a Medi-Cal lien against a wrongful death...