Newton v. Clemons

• Citation: 1 Cal.Rptr.3d 90,110 Cal.App.4th 1
• Decision Date: 10 June 2003
• Docket Number: No. E031878.,E031878.
• Court: California Court of Appeals
• Parties: Gayla NEWTON, Plaintiff and Appellant, v. La Perle CLEMONS, Defendant, County of San Bernardino, Claimant and Respondent.

1 Cal.Rptr.3d 90

110 Cal.App.4th 1

Gayla NEWTON, Plaintiff and Appellant, v. La Perle CLEMONS, Defendant, County of San Bernardino, Claimant and Respondent.

No. E031878.

Court of Appeal, Fourth District, Division 2.

June 10, 2003.

Review Denied October 1, 2003.

Baker, Jacobs & Oring and John M. Inferrera, Los Angeles, for Plaintiff and Appellant.

Alan K. Marks, County Counsel, and Paul St. John, Deputy County Counsel, for Claimant and Respondent.

OPINION

WARD, J.

Plaintiff and appellant Gayla Newton, a medically indigent adult (MIA), received medical treatment for injuries she sustained in a slip-and-fall accident at home. San Bernardino County Medical Center, a hospital operated by real party in interest and respondent, County of San Bernardino (the County), provided the medical care. Plaintiff sued defendant LaPerle Clemons for negligence, on premises liability and other theories. Defendant's insurance carrier ultimately agreed to pay the policy limits of $100,000, but issued the insurance proceeds in two checks, one of which was jointly payable to the County, in satisfaction of the County's asserted lien for reimbursement of medical services. Plaintiff moved to set aside her dismissal of the Clemons action, seeking an order expunging the County's hospital lien, in whole or in part. The trial court denied plaintiffs motion to expunge the County's lien. Plaintiff now appeals. Although we do not agree with plaintiff that the County's recovery should be limited to approximately $1,000 of its $58,000 claim, we do conclude that the court should have expunged a portion of the County's lien claim under Civil Code section 3045.1 et seq.; accordingly, we reverse.

FACTS AND PROCEDURAL HISTORY

Plaintiff suffered a slip-and-fall injury at her home on February 18, 2000, when she tripped over some loose linoleum tile. Plaintiff had rented the premises from La-Perle Clemons, and sued Clemons for negligence; she included theories of premises liability, breach of the implied warranty of habitability, and similar allegations. Plaintiff eventually reached a settlement with Clemons's insurer. The insurer agreed to pay the policy limits of $100,000, and plaintiff agreed to dismiss the action. Plaintiff filed the request for dismissal on January 10, 2002.

Plaintiff had received treatment for her injuries at the County's hospital. The problem here is the nature of the County's claim, if any valid claim exists, against the proceeds of plaintiffs third-party suit against Clemons. There are three potential sources of the County's right to recoup the costs of medical care it has provided.

First, plaintiff qualified for the MIA program. The state administers health care for public assistance recipients largely through the Medi-Cal program. "Health care for individuals ineligible for Medi-Cal, but unable to afford medical care," however, "[is] the responsibility of the counties pursuant to [Welfare and Institutions Code] section 17000. [Citation.] In 1982, the Legislature excluded from Medi-Cal most individuals who do not fall within the following categories: those at least 65 years of age; blind or disabled persons; and individuals eligible for AFDC. The excluded individuals, referred to as medically indigent persons, meet income and resource eligibility requirements for Medi-Cal, but do not fall within the specified categories. The Legislature transferred state funds to the counties for the purpose of providing health care services to these individuals." ¹

The funds transferred do not fully cover the costs of providing care to medically indigent persons. Thus, persons who qualify for the MIA program are required to sign an agreement to "reimburse the County" for the medical services provided, "from the proceeds of any litigation or settlement" they may receive from a third party, such as a tortfeasor, liable for the injury. Plaintiff executed such an agreement at the time she applied for medically indigent services.

In addition to the contractual agreement for reimbursement under the MIA program, the County's hospital was eligible to assert a lien against any judgment or settlement plaintiff obtained, pursuant to the Hospital Lien Act, under Civil Code section 3045.1 et seq.

Third, Government Code section 23004.1 gives a county a first lien, for the cost of medical care it has provided to an injured person, against any judgment the injured person recovers from a third person who is responsible for the injury.²

At the time plaintiff negotiated the settlement with defendant Clemons, the parties discussed the possibility of a "structured settlement" for paying the $100,000 policy limits, to take account of any lien the County may have. In December of 2001, plaintiff agreed with the insurer to issue the policy limits without a structured settlement; Clemons's insurer indicated, however, that the County's medical center was asserting an ostensible lien for $33,778.41. Plaintiff proposed that the insurer should issue two checks: one for the amount that undisputedly belonged to plaintiff, and a second check, payable jointly to plaintiff, her counsel and the County, for the amount of the alleged lien.

The insurer did send two checks. The first, payable to plaintiff, was for less than half the policy proceeds. The second, apparently for the County's asserted lien, was in the amount of $58,521.70, and made payable jointly to plaintiff, her counsel, and the County. Plaintiff discussed the matter with the County; the County refused to reduce the amount of its lien, even though the amount demanded exceeded 50 percent of the total settlement proceeds.

Plaintiff thereafter moved to set aside its dismissal of the Clemons action, and to expunge the County's purported lien, in whole or in part. Plaintiff asserted a number of theories upon which the lien should be expunged:

First, the County's claim was improper as one under the MIA program. While plaintiff signed a contractual agreement to reimburse the County for MIA expenditures from "the proceeds of any litigation or settlement" she might recover on account of her injury, the County's remedy is to sue to enforce the contractual agreement; there is no provision for asserting a lien.

Second, the claim was improper under Government Code section 23004.1. That provision establishes a "first lien" for the County for the cost of medical care provided, when the injury is caused by a third party. The lien provided in Government Code section 23004.1 also includes the full amount of the medical expenses incurred. This court has held in Mares v. Baughinan,³ however, that the third-party lien applies against judgments, but does not apply to settlements. Accordingly, the third-party lien under Government Code section 23004.1 is inapplicable here.

Third, the claim under the Hospital Lien Act was invalid, at least in part. Unlike the lien provided in Government Code section 23004.1, a hospital lien under the Hospital Lien Act applies to both judgments and settlements. However, as plaintiff pointed out, the California Supreme Court, in Mercy Hospital & Medical Center v. Farmers Ins. Group of Companies,⁴ had held that a hospital lien asserted under Civil Code section 3045.1 was limited to an amount which could be satisfied from 50 percent of the settlement proceeds. The County's asserted lien here, of over $58,000, exceeded the 50 percent limit, when the settlement proceeds amounted at most to $100,000.

Plaintiff also claimed that the County's lien was limited by another provision of the Hospital Lien Act: that is, the lien applies only for "emergency and ongoing medical or other services." Plaintiff urged that only approximately $1,000 of medical services had been furnished for "emergency or ongoing" medical treatment. She claimed that there had been an interruption in services while she sought chiropractic treatment for her injuries. Plaintiff acknowledged that the initial treatment she received at the County facility was for emergency medical care. She argued that the remainder of the treatment she received at the County facility was not "ongoing," however, because of the gap in treatment while she sought chiropractic therapy.

The County opposed the motion to set aside the dismissal and to expunge its lien. Its arguments did not make the subtle distinctions among the different theories of recovery; rather, the County simply asserted that plaintiff had signed the reimbursement agreement for the MIA program, the County had an enforceable lien under Civil Code section 3045.1, the 50 percent limitation under Civil Code section 3045.4 did not apply because the County was not suing the insurance carrier, the County retained statutory and common law rights to sue the patient for the full amount of the medical services provided, and the County did not rely on Government Code section 23004.1. The County further asserted that plaintiff was liable to the County for breach of the MIA reimbursement agreement, and that its lien should not be reduced by any amounts attributable to plaintiffs attorney fees (an issue not, so far as we can determine, asserted by plaintiff in her motion).

The trial court took the matter under submission. Ultimately, it denied plaintiffs motion: "Plaintiff[ ] argues that the § 3045.1 lien is valid only to the extent of 50% of the emergency treatment rendered to plaintiff. However, under § 3045.1, as amended in 1992, the lien includes treatment beyond the emergency care and includes ongoing care. Counsel's suggestion that the section remains applicable only to emergency care and care related to the emergency admission is without authority and is counter to the plain meaning of the statute. Mercy Hospital and Medical Center v. Farmers Insurance Group (1997) 15 Cal.4th 213, 61 Cal.Rptr.2d 638, 932 P.2d 210, dealt with the statute in its pre-1992 form. The court specifically noted: 'In 1992, sections 3045.1, 3045.3, and 3045.4 were amended to in part expand the lien's scope to...