A California appeals court dismisses a challenge to a Medi-Cal lien on a personal injury settlement, finding that because a minor was involved and judicial compromise of the settlement was required, the U.S. Supreme Court's ruling in Ahlborn is inapplicable. Espericuenta v. Shewry(Cal. App., 2nd Distr., Div. 2, No. B200479, July 1, 2008).
As the result of an automobile crash, 11-year-old Guadalupe Espericuenta sustained severe and permanent injuries, including blindness and the loss of her right leg. The cost of Guadalupe's medical care was paid for by Medi-Cal, California's Medicaid agency. After settling a lawsuit with the alleged tortfeasors for $3.6 million, Guadalupe's mother, acting as her guardian ad litem, filed a petition to approve compromise of a disabled minor's claim. The petition provided that after deducting its share of the attorneys fees and litigation costs, Medi-Cal's lien would be reduced from $341,885 to $239,474.40 for medical expenses it paid on Guadalupe's behalf. The trial court approved the petition.
Six months later, Guadalupe filed a motion to extinguish Medi-Cal's lien or to limit the amount to $32,809. She argued that her case was worth more than $26 million dollars, and that in light of Arkansas Department of HHS v. Ahlborn, the Medi-Cal lien should be reduced by the ratio of the settlement to the value of her case. Medi-Cal opposed the motion and argued that Ahlborndid not support the claimed reduction.
The trial court found that Ahlbornwas inapplicable in that it involved a stipulation as to the value of the Medicaid beneficiary's damages, whereas here there was no support for the valuation of the case "beyond [Guadalupe's] supposition that the settlement was or should be allocated in the way she proposes." Guadalupe appealed.
The Court of Appeals of California affirms the order, if not the reasoning. Distinguishing Ahlborn, which involved a stipulation between the state Medicaid agency and the beneficiary as to the amount of the settlement that represented payment of medical expenses, here, because a minor was involved, court approval of the settlement was required. Moreover, "[the court is] at a loss to understand how a court can make an accurate liability analysis and fairly determine if a settlement is reasonable when the petitioner withholds evidence that a minor's case may be worth more than eight times the proposed settlement amount . . . "
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