Court Says Providers Can’t Seek Extra Payments from Medi-Cal Beneficiaries’ Damage Awards

A state appellate court ruled yesterday that providers cannot supplement the Medi-Cal fees they receive from the state by filing liens against beneficiaries who are awarded damages as a result of accidents, the San Francisco Chronicle reports. The case arose in 1998, when a 16-year old girl injured in a car accident was treated at a ScrippsHealth clinic under Medi-Cal. Scripps and "another provider" then "filed a lien for $200,000 -- their estimate of the value of their medical services -- against any damages" that the girl "might recover in a suit against the driver of the other car." After the girl was awarded $410,000 in arbitration, a Superior Court judge upheld the lien, but that decision was overruled yesterday by a three-judge Court of Appeals panel in San Diego. The panel wrote that the 1992 California law allowing the process undertaken by Scripps "violates a federal law that prohibits ... providers from billing patients for amounts that exceed their state Medicaid fees." The court noted that damage awards in injury cases "are not limited to medical costs and typically include amounts for future expenses as well as pain and suffering," the Chronicle reports.

Mark Chavez, the attorney for the injured girl, said he "hoped the decision" would stop providers from employing the "leverage of the lien" against Medi-Cal beneficiaries. But Deborah Giles, the lawyer for Scripps, defended the California law, saying, "Hospitals have to treat anyone who walks in the door. The statute helps them recoup some of those losses. Without it, an already under-funded trauma system is going to be placed in greater jeopardy." She added that Scripps would "probably" appeal the ruling to the state Supreme Court (Egelko, San Francisco Chronicle, 5/10). The full opinion of Olszewski v. ScrippsHealth is available at http://www.courtinfo.ca.gov/opinions/documents/D034197.PDF. Note: You will need Adobe Acrobat Reader to view the opinion.