What You Need to Look For when Negotiating Down MediCal when You Have a Personal Injury Settlement in California

When you have a Medi-Cal beneficiary obtaining a personal injury settlement in California, you have to be VERY mindful of Medi-Cal's lien interest; you have to insure that the appropriate Ahlborn reduction is applied to the lien being asserted on your client's injury case (by Medi-Cal).  

LEGAL AUTHORITY on negotiating down Medi-Cal:

You can use the following example language for your injured client's Medi-Cal covered personal injury case: 

"As you know, the Supreme Court’s holding in the Ahlborn case was codified in California in W&I 14124.76. Said section provides in pertinent part that, “Recovery of the director’s lien from an injured beneficiary’s action or claim is limited to that portion of a settlement...that represents payment for medical expenses...” (emphasis supplied) 

Usually, if you are reducing Medi-Cal, their lawyers will have the following case cited as their authority to counter you:   McMillian v. Stroud (2008), 166 Cal.App.4th 692. However, the McMillian case is not on point in most instances, and stands more for the proposition of the finality of court orders than the proper approach to calculating the Ahlborn reduction. Following, McMillian, the court in Bolanos v. Superior Court (2008) 169 Cal.App.4th 744 engaged in a detailed discussion of the proper way to calculate the Ahlborn reduction of a Medi-Cal lien."

The facts in Bolanos are factually similar to most of your efforts with Medi-Cal, as follows:

"The Bolanos court noted that, “While it is perfectly correct to speak of the ratio of the settlement to the total claim, it may be both easier and more accurate to determine what percentage the settlement is of the total claim, and then to apply that percentage to the sum paid by the director to the beneficiary.” id at 10 The court suggested (id at 11) that in most cases, “the formula used in Ahlborn produces a reliable approximation.” The court noted the significance of the U.S. Supreme Court finding that the apportionment formula devised by the parties in Ahlborn produced a “reliable result.” Id at 11. The court held that “in the final analysis, it is the trial court’s responsibility to ensure” that a rational and tolerably accurate allocation between past medical expenses and other damages in a settlement is made. Id at 11. The Bolanos court devoted an entire section of its opinion (at 14) titled, “The Court Must Determine the Total Amount of Bolanos’ Claim” (emphasis in original)"

"Finally, the court distinguished on their facts the two cases being advanced by Medi-Cal as controlling—Espericuenta v. Shewry (2008) 164 Cal.App.4th 615 and McMillian v. Stroud (2008) 166 Cal.App.4th 692 and determined that neither was controlling of a post-Ahlborn petition. The Bolanos court concluded that since the Ahlborn decision holding that the state Medicaid agency’s lien extended only to recovery of payments for medical care,

...this requires a determination of what portion of the settlement is attributable to medical expenses. The trial court did not take account of this further aspect of Ahlborn; in essence, we granted the petition to correct this error. Id at 6.

The entire Bolanos decision is replete with references that, in the absence of an agreed allocation, the trial court hearing an Ahlborn motion pursuant to Welfare and Institutions Code §14124.76 must use some form of apportionment to rationally determine the amount of the Medi-Cal lien that was actually recovered. Failure to do so is reversible error. Notably, the apportionment formula that has been proposed by plaintiff in the instant case is precisely the type that is expressly approved in Bolanos.

Following the Bolanos decision, two other courts have also held that the apportionment formula from Ahlborn should be applied to these reduction motions. See Lima v. Vous (2009) 174 Cal.App.4th 242 and Lopez v. Daimler-Chrysler (2009) 179 Cal.App.4th 1373. In Lima, the trial court was reversed for failing to make the “required allocation” of damages after determining that the beneficiary’s injury value was $14 million and the case settled for $950,000. The appellate court remanded, holding that, “Based o n the unchallenged findings of the trial court, plaintiff's computation using a ratio of 6.75 percent to reduce the amount of past medical expenses appears to be a fair approach to the allocation issue.” Id at 261.

In Lopez v. Daimler-Chrysler (2009) 179 Cal.App.4th 1373, the court affirmed the trial court’s reduction of a $547,680 Medi-Cal lien to $63,216, using the same apportionment formula as in Ahlborn and Bolanos. The court there noted that Medi-Cal was invited by the trial court to suggest some alternate apportionment mechanism but was unable to do so. This should not be surprising because there is no other known way of apportioning damages.

Based upon W&I 14124.76, Ahlborn, Bolanos, Lima and Lopez, it is absolutely clear that the court in the instant case will have to make the same apportionment using the same simple mathematic formula."  

Thus, based on the above, you could argue your client, "Mr. X’s case" was settled for $X amount plus $X amount in UM recovery, the only additional figure we need to determine precisely how much in medical expenses was recovered is the total value of his injury."  You can use the above to help reduce down the Medi-Cal lien interest!

The above article posting gives credit to the legal insight of fellow consumer injury advocate attorney Don M. de Camara.

Mark C. Blane is a San Diego Personal Injury Attorney, and the managing lawyer of the Law Offices of Mark C. Blane, a San Diego, California Personal Injury Law Firm dedicated to representing families of people injured in personal injury accidents including car accidents, slip and falls, dog bites, product defects, and the like. If you or a loved one has been killed or injured in an accident in San Diego, or Southern California, due to the negligence of another, please order your free copy of Mr. Blane's book, The 10 Secrets You Need To Know About Your Injury Case, BEFORE You Call A Lawyer. It is full of helpful information that will help you protect your legal rights and it normally sells for $16.95.  However, it is free to all California residents, or those injured in an California accident.