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Medi-Cal Liens and the case of Martinez v. Department of Healthcare Services

Let’s discuss Medi-Cal liens and the case of Martinez v. Dept. of Healthcare Services 2017 Cal App. Lexis 1167.

Mr. Martinez filed a medical malpractice action and ultimately settled it for $150,000.00. The settlement did not apportion the $150,000 among medical expenses and other damages. After settlement, Martinez attempted to negotiate his Medi-Cal lien with the Department of Healthcare Services (DHCS), without success.

Eventually, DHCS brought a motion to have the Court determine what amount was owed under their lien. By way of background, his total medical bill was $171,000 with Martinez being responsible for $86,676.46 after write-offs.

To determine the value of the Medi-Cal lien, the trial court took the $86,676.46 lien and added it to $250,000.00, the maximum amount of general damages allowable under MICRA. The result was $336,676.46. The Court compared this number to the $150,000 settlement and determined that the settlement was 45% of the value of the case. The Court then determined that DHCS should be entitled to 45% of their lien – $39,004.41.

The plaintiff appealed this ruling, arguing that the actual value of his case was $3,000,000.00, including the full amount of his medical bills ($171,000), $300,000 for lost future wages and $2.5 million in general damages. Using these figures, Martinez argued that the settlement was a much smaller portion of the value of the case and thus the DHCS lien should be reduced accordingly.

The Court of Appeal disagreed. First, it indicated that it was inappropriate to use the full amount of the medical bills ($171,000) since Martinez was only responsible for $86,676.46. Second, the loss of earnings claim of $300,000 was without any evidence to support it. Last, the Court held:

Martinez’s claim that the court erred in not valuing his noneconomic damages at $2.5 million is unsupportable. Crediting Martinez with more in noneconomic damages than he could possibly have recovered is not a rational approach…
Martinez v. Department of Health Care Services 2017 Cal. App. LEXIS 1167, at 4.

Since MICRA caps general damages at $250,000.00, Martinez could not claim the value of the case (as far as general damages is concerned) exceeded that amount.

The Court of Appeal did note though that the trial court should have reduced the lien amount by 25 percent for attorney fees as required by Welfare & Institutions Code § 14124.72(d).

The Court determined DHCS’ lien to be $29,253.31.

If you have a personal injury case, it is likely that any settlement or judgment will require the negotiation of liens. You should hire attorneys experienced in negotiating liens such as Heiting & Irwin.

Mr. Serrano has been admitted to practice before California State and Federal Courts. He was named to the Super Lawyers’ 2012, 2013, 2014, 2015, and 2016 Southern California Rising Stars List, an honor awarded to no more than 2.5% of attorneys in Southern California each year. View Attorney Jean-Simon Serrano's Attorney Bio Here.

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