Filed 6/20/22 Kent v. Quesada CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from a judgment of the Superior Court of Los Angeles County, Michael J. Convey, Judge. Affirmed as modified.

Paul Kujawsky, for Defendants and Appellants.

Rob Bonta, Attorney General, Cheryl L. Feiner, Assistant Attorney General, Gregory D. Brown and Nicole J. Kau, Deputy Attorneys General, for Plaintiff and Respondent.

__________________________

Attorney Edward A. Quesada negotiated a $450,000 settlement for his client in connection with a personal injury lawsuit. The underlying lawsuit arose out a vehicular accident in which the client was seriously injured. Quesada deposited the settlement checks into his client trust account. The Department of Health Care Services, through its director, then brought suit against Quesada and his client, seeking reimbursement from the settlement proceeds for what the department had expended for the client’s medical care. The trial court granted summary judgment in favor of the department and entered judgment against Quesada and his client jointly and severally for the reasonable value of the benefits paid by the department plus costs, and prejudgment and postjudgment interest.[1] We modify the judgment by striking the prejudgment interest award. As modified, we affirm.

FACTS

In 2014, Rafael Rojas suffered significant injuries when he was hit by a semi-trailer truck while sitting in a wheelchair on the sidewalk. The department is the state agency responsible for administering the California Medical Assistance Program (Medi-Cal). It paid $84,043.46 for Rojas’s accident-related medical treatment. By law, the department is entitled to reimbursement for the reasonable value of the benefits it has provided less certain deductions. The department enforces its reimbursement rights by way of a lien filed in the underlying litigation in the name of the department’s director. (Welf. & Inst. Code, § 14124.70 et seq.)[2]

Rojas retained Quesada to represent him in a personal injury lawsuit against the driver and others and filed suit on October 29, 2018. As required by law, Quesada notified the department of the lawsuit. (§§ 14124.73(a), 14124.76, 14124.79.) Under section 14124.70, the director filed a Medi-Cal lien against any recovery Rojas received from the litigation. Months later, Quesada negotiated a $450,000 settlement for Rojas. The insurer for the defendants in the underlying litigation issued two checks to satisfy the settlement. One was made payable to Quesada and Rojas for $300,000. That check is not at issue in this appeal. A second check for $150,000 listed the payees as Rojas, Quesada, and the department, without indicating whether the payees were required to jointly endorse the check or a single endorsement was sufficient for bank payment. Quesada deposited the check into his client trust account at Wells Fargo Bank. It is undisputed Quesada’s client trust account contains funds to satisfy the lien.

On October 29, 2018, the department brought suit against Quesada, Rojas and Wells Fargo Bank alleging three causes of action: (1) satisfaction of the Medi-Cal lien against Rojas pursuant to Welfare and Institutions Code section 14124.70, et seq.; (2) common law conversion against Rojas and Quesada; and (3) conversion against Wells Fargo pursuant to California Uniform Commercial Code section 3420. The department alleged it was entitled to reimbursement of $62,377.90 from the settlement, calculated using a statutory formula. It further alleged the $150,000 check issued to Quesada, Rojas, and the department was wrongly deposited without the department’s endorsement. As to Quesada, the department alleged he, as Rojas’s agent and attorney, had a duty to satisfy the Medi-Cal lien on his client’s behalf.

Rojas failed to respond to the lawsuit, and the court entered his default. Wells Fargo successfully moved for summary judgment on the sole cause of action against it and is not a party to this appeal.

The department also moved for summary judgment on its claim against Quesada, the remaining defendant. It argued Quesada improperly converted the department’s lien interest in the $150,000 check when he deposited the check into his client trust account without satisfying the lien. The department presented evidence that it provided $84,043.46 in medical services to Rojas and, according to the statutory formula, was entitled to reimbursement of $61,677.45, approximately $700 less than what it had originally alleged in the complaint.

Quesada opposed. While he agreed the department was entitled to be reimbursed, he argued it had miscalculated the amount. By Quesada’s calculation, the lien should have been reduced to $0 because the department had failed to pay a $137,729 bill from Northridge Hospital Medical Center (Northridge Hospital) as well as other outstanding medical bills totaling $16,623. Quesada moved to compel production of documents from the department that related to the payment of medical bills. At the hearing on the summary judgment motion, he orally requested a continuance of the hearing pending the court’s ruling on his motion to compel.

Without expressly ruling on the continuance, the trial court granted summary judgment in the department’s favor, finding there existed no triable issue of material fact as to what was paid. The court observed Quesada provided no legal authority that obligated the department to pay all medical expenses incurred or that required the court to reduce the lien amount by unpaid medical expenses. The court pointed out that the absence of any authority supporting Quesada’s position was telling given that the statute of limitations had expired on any provider claims for payment of the hospital and medical bills.

The court concluded Quesada’s claim that “outstanding” bills had not been paid was speculative and without evidentiary support. Instead, the uncontroverted evidence was that the department had satisfied the medical bills. By his own calculation, Quesada had allocated $98,750 of the settlement for his client’s medical expenses, which would have limited the amount of reimbursement even if Medi-Cal had paid more. Because Quesada’s allocated amount was greater than both the total value of services provided ($84,043.46) and the department’s request for reimbursement ($61,677.45), the department was entitled to reimbursement for the entire $61,677.45 it had sought.

The trial court issued judgment in favor of the department, holding Rojas and Quesada jointly and severally liable for $61,677.45 plus $3,876.30 in costs as the prevailing party pursuant to Code of Civil Procedure section 1032, subdivision (a)(4). Judgment was entered against Quesada on July 23, 2020, and the court issued a default judgment in the same amount against Rojas several months later. On November 10, 2020, the trial court issued an Amended Judgment and Omnibus Award setting out Rojas’s and Quesada’s joint and several liability as well as the prejudgment and postjudgment interest award.

Quesada timely appealed.

DISCUSSION

On appeal, Quesada contends there are triable issues of material fact concerning the reimbursable amount to which the department is entitled. In particular, Quesada disputes the department’s claim that it paid $4,382.47 to Dignity Health to satisfy fully a bill from Northridge Hospital.[3] Quesada also contends triable issues of material fact exist as to (1) the accuracy of the Medi-Cal lien amount, (2) whether he was required to obtain the department’s authorization to deposit the settlement check, and (3) the percentage of the settlement attributable to past medical expenses.[4]

Quesada also contends the trial court erred when it awarded the department prejudgment interest under Civil Code section 3287. Because the department has waived its claim to prejudgment interest, we modify the judgment to strike the prejudgment interest award. (Code Civ. Proc., § 906.) We otherwise conclude Quesada’s arguments on appeal lack merit.

1. Medi-Cal Reimbursement Overview

The Medi-Cal program provides medical benefits to elderly and low-income individuals by making payments to health care providers who render services to these beneficiaries. (§ 14000 et seq.; Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 804.) If a beneficiary is injured by a third party and receives a settlement or other recovery from the third party, the director of the department may seek reimbursement from the settlement or recovery for the reasonable value of the medical benefits Medi-Cal has provided to the injured party. (§ 14124.71, subd. (a), 14124.75, subd. (a), 14124.76, subd. (a); see Ark. HHS v. Ahlborn (2006) 547 U.S. 268, 272–274; McMillian v. Stroud (2008) 166 Cal.App.4th 692, 698.)

The parties agree that the department’s claim for reimbursement in this instance is limited to the portion of the recovery representing past medical expenses, reduced by (1) 25 percent (the estimate of the department’s reasonable share of the attorney fees and costs incurred by the injured party), and (2) a proportionate share of the litigation expenses. (§§ 14124.72, subds. (c), (d), 14124.76, subd. (a); see Branson v. Sharp Healthcare Inc. (2011) 193 Cal.App.4th 1467, 1474.) The statute also provides alternative ways to calculate the amount of the Medi-Cal lien, none of which apply here. (See § 14124.78.)

The injured party must attempt to obtain the director’s agreement on what portion of the settlement is to be allocated to past medical expenses. Absent an agreement, the court decides the issue on motion of either party. (§ 14124.76, subd. (a); see Lopez v. DaimlerChrysler Corp. (2009) 179 Cal.App.4th 1373, 1387.) In ruling on the motion, “the trial court may determine the appropriate Medi-Cal lien amount by comparing the percentage of the settlement to the beneficiary’s total damages, and applying that percentage to the past medical costs for which the Department seeks reimbursement.” (Branson v. Sharp Healthcare, Inc., supra, 193 Cal.App.4th at p. 1471.) No settlement, judgment, or award “shall be deemed final or satisfied” until the director has had an opportunity “to perfect and to satisfy” the Medi-Cal lien. (§ 14124.76, subd. (a).)

2. Standard of Review

We “review the ruling on a motion for summary judgment de novo, applying the same standard as the trial court.” (Manibog v. Mediaone of L.A., Inc. (2000) 81 Cal.App.4th 1366, 1369.) A motion for summary judgment must be granted “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) The court shall consider all the evidence set forth in the papers, except that to which an objection has been sustained, and all inferences reasonably deducible from the evidence. (Ibid.) The moving plaintiff must prove each element of the cause of action and after this burden is met, the defendant has the burden to show that a triable issue of one or more material facts exists. (Code Civ. Proc., § 437c, subd. (p)(1).) The defendant shall not rely upon allegations or denials in its pleadings but shall set forth specific facts. (Ibid.)

Here, Quesada does not contend the department failed to meet its initial burden to prove its conversion cause of action. Thus, the burden shifted to Quesada to show triable issues of material fact exist to defeat summary judgment. We address each of Quesada’s contentions below.

3. There Is No Triable Issue of Material Fact Regarding the Department’s Payment to Dignity Health in Satisfaction of the Northridge Hospital Bill

Quesada challenges the department’s claim that it paid $4,382.47 in full payment of the bill from Northridge Hospital. First, Quesada questions the identity of the payee because the “itemized list” that supported the Medi-Cal lien identified Dignity Health as the payee, not Northridge Hospital. Second, he questions how much, if anything, was paid because there is no proof of payment to either Dignity Health or Northridge Hospital, such as a cancelled check, wire transfer receipt, or electronic billing receipt. Quesada supports this argument by relying on statements made by department representatives that it “appeared” nothing was paid to satisfy the Northridge Hospital bill. From this, he asserted in the trial court that, because a bill that exceeds the lien is still outstanding, the lien has a value of “$0.” Quesada’s arguments have no evidentiary support; to the contrary, the evidence shows the Northridge Hospital bill was satisfied.

1. Proceedings Below

In support of summary judgment, the department presented a declaration from a program analyst in its Third Party Liability and Recovery Division. The analyst stated the department provided $84,043.46 of medical services to Rojas from January 2014 to July 2015, for treatment of his accident-related injuries. Attached to her declaration was an itemized list of the services provided and the amounts paid by Medi-Cal to each provider. The department had previously provided the itemized list to Quesada as support for the department’s lien.

The analyst explained that the department’s records showed the payment of $4,382.47 to Dignity Health satisfied Northridge Hospital’s $137,729 bill under a managed care plan where the medical provider accepts a lesser amount from the department based on a fee for service model or capitation rate.[5] The analyst continued that Dignity Health was the national provider identifier for Northridge Hospital and was listed as the payee rather than Northridge Hospital in the department’s itemized list.

2. No Triable Issue of Fact Exists as to the Payee of the Northridge Hospital Bills

First, we dispense with Quesada’s contention that there is no evidence Dignity Health and Northridge Hospital are the same entity. Quesada ignores the evidence. The department’s analyst explained in her declaration that Dignity Health is the national provider identifier for Northridge Hospital. The department’s “Claims History Extension Detail Report,” shows $4,382.47 was made to “Billing Provider: Northridge Hosp Med Cntr.” This payment to Northridge Hospital in the extension detail report is identical to what was paid to Dignity Health in the itemized list. Quesada presented no evidence that contradicted the analyst’s declaration and interposed no objection to the declaration. Quesada failed to raise a triable issue of material fact.

3. No Triable Issue of Fact Exists as to the Amount of the Payment.

Quesada next argues there is no evidence the department actually paid $4,382.47 to any entity because the department has not provided proof of payment in the form of a cancelled check, a wire transfer receipt, or credit card receipt. Again, Quesada ignores the evidence. The department analyst affirmed the payment was made and explained why the department paid less than what was billed. The department’s records, including its itemized payment list, the “Claims History Extension Summary Report,” and the “Claims History Extension Detail Report,” all show a payment of $4,382.47 with $0.00 in patient liability. This evidence was before the trial court and was relied upon by Quesada himself.

We reject Quesada’s contention that this does not constitute evidence of payment and satisfaction of the Northridge Hospital bill. Quesada had the opportunity through discovery or other means to produce different evidence in an effort to create a genuine triable issue of fact, but he did not. (See Code Civ. Proc., § 437c, subd. (b)(1) [motion for summary judgement “shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken”].)[6]

We also reject Quesada’s argument that a dispute of material fact exists based on statements made by department representatives in 2016 and 2017 to Quesada’s legal assistant. The representative’s statement in 2016 to the legal assistant that “he doesn’t see that anything was paid on the hospital bill” is not, standing alone, evidence of nonpayment but a conclusory statement lacking foundation. Neither is a statement by a different department representative – that he “does see that some items were paid for Northridge . . .” – evidence of only partial payment. The evidence was that the representative indicated some items were paid. That those employees did not “see” evidence of full or partial payment is not the same as evidence that raises a factual issue that no payment was actually made.

4. No Triable Issue of Fact Exists as to the Accuracy of the Lien Amount

Aside from his challenge to the Northridge Hospital payment, Quesada claims there is a triable issue of fact as to whether the department accurately calculated the amount of the lien. The sole basis for this assertion is the simple fact that the department claimed three different lien amounts during the proceedings — $62,377.90 in the complaint, $63,748.44 in a January 5, 2016 letter, and $61,677.45 in the summary judgment motion.[7] According to Quesada, these discrepancies by themselves establish a dispute of material fact. This argument is meritless.

The department set forth evidence in its summary judgment papers that it paid $84,043.46 to various providers for Rojas’s medical care after the accident. It then subtracted $21,010.86 (25 percent of the total for its share of attorney fees and costs attributable to its recovery) and $1,355.15 (the department’s share of litigation expenses).[8] The difference is the awarded $61,677.45. (§ 14124.72, subd. (d).) Aside from Quesada’s challenge to the $4,382.47 payment for the Northridge Hospital bill, which we have rejected, Quesada has not created a triable issue of fact that the $61,677.45 figure is incorrect.

5. The Court Did Not Err in Not Continuing the Summary Judgment Hearing Pending a Ruling on the Motion to Compel Discovery

Quesada contends the trial court erred when it failed to continue the summary judgment hearing pending a motion to compel production of documents that could demonstrate no payment was actually made to Northridge Hospital or Dignity Health. Quesada failed to meet his burden to show that the trial court was required to grant a continuance to allow him to obtain evidence essential to his opposition. (Code Civ. Proc., § 437(c), subd. (h).)

On January 22, 2020, the department affirmed in its discovery responses that it had provided all documents relating to its payments for Rojas’s medical treatment and the Northridge Hospital bill in particular. On March 2, 2020, four days before the summary judgment hearing and over three months after the summary judgment motion was filed, Quesada moved to compel the production of documents related to the payment of the Northridge Hospital bill. He acknowledged in his motion that the department had stated it “has not withheld any documents responsive to your demand for production of documents,” but asserted that response was “nonresponsive, incomplete, and evasive.”

At the March 6, 2020 summary judgment hearing, Quesada orally asked the court to delay ruling on the summary judgment motion until after it had considered his motion to compel. That motion was not scheduled to be heard until April 2, 2020. Quesada did not file an affidavit under Code of Civil Procedure section 437c, subdivision (h) in support of the continuance. “When a party makes a good faith showing by affidavit demonstrating that a continuance is necessary to obtain essential facts to oppose a motion for summary judgment, the trial court must grant the continuance request. [Citation.] ‘Continuance of a summary judgment hearing is not mandatory, however, when no affidavit is submitted or when the submitted affidavit fails to make the necessary showing under [Code of Civil Procedure] section 437c, subdivision (h). [Citations.]’ Thus, in the absence of an affidavit that requires a continuance under section 437c, subdivision (h), we review the trial court’s denial of appellant’s request for a continuance for abuse of discretion.” (Park v. First American Title Co. (2011) 201 Cal.App.4th 1418, 1428.)

The department’s counsel argued a delay in order to decide the motion to compel would be fruitless because no other documents existed. Of equal significance, Quesada had known for three years before the department filed its summary judgment motion there was a question whether the Northridge Hospital bill had been paid. On December 20, 2016, Quesada wrote a letter to the department that stated in part: “That is, the DHCS cannot deny Mr. Rojas his ‘recovery’ of damages that were allocated for payment of medical expenses that were not paid by the Medi-Cal program. For example, Medi-Cal did not ‘cover’ the medical expenses which Mr. Rojas incurred at West Hills Hospital and Northridge Hospital, and they each hold outstanding medical liens in the sum of, respectively, $15,439.00 and $133,346.53 which are due and payable by Mr. Rojas.” Quesada had plenty of time to conduct discovery on whether the department was obligated to make additional payments to the hospital.

Given these circumstances, the trial court did not abuse its discretion when it impliedly denied the continuance (by failing to rule on it). (Menges v. Department of Transportation (2020) 59 Cal.App.5th 13, 25–26 [no abuse of discretion to deny an oral request for continuance of a summary judgment motion where plaintiff failed to disclose how a continuance would provide additional information, and the “request was untimely, failed to follow proper procedure, and lacked an essential basis”].)

4. The Remaining Issues Lack Merit

We next dispense with Quesada’s remaining contentions on appeal.

Quesada relies on section 14124.76, subdivision (a) to argue the trial court was required to, but did not, allocate a portion of the settlement to past medical expenses, and it should have done so pursuant to a motion filed under section 14124.76 rather than as part of a summary judgment motion. Quesada has forfeited these arguments by failing to raise them below. (Jones v. Dutra Construction Co. (1997) 57 Cal.App.4th 871, 876–877.)

Even if we were to address the merits, we would reject Quesada’s arguments: First, the record establishes the court made the allocation. The court stated that “the records show that Rojas recovered $198,250 total for his medical expenses aside from his contingency attorney’s fee to Quesada, cost of litigation, and loss of income.” While the court discounted Quesada’s “arbitrary” allocation of half of that amount to medical expenses, it properly observed that even if it had accepted Quesada’s allocation, Quesada’s figure ($98,750) was still greater than the amount sought by the department ($61,677.45). Given Quesada’s own allocation, a more formal judicial calculation under section 14124.76 was unnecessary.

We also see nothing in section 14124.76, subdivision (a) or elsewhere that forecloses the court from making the allocation in conjunction with a summary judgment motion. Quesada acknowledges he has found no authority to the contrary. By its own terms, section 14124.76, subdivision (a) contemplates that the court, not a jury, make this determination: “Either the director or the beneficiary may seek resolution of the dispute by filing a motion, which shall be subject to regular law and motion procedures.” This language does not limit the department to a motion specially denominated as one under section 14124.76.

Finally, Quesada attempts to bootstrap himself onto Wells Fargo’s successful summary judgment by claiming the trial court’s ruling on the conversion claim against Wells Fargo collaterally estopped the conversion claim against Quesada. It does not. The doctrine of collateral estoppel prevents the relitigation of an issue of ultimate fact between the same parties or privies. (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242, 249.) Here, the conversion claim against Wells Fargo was based on California Uniform Commercial Code section 3420 and rested on whether the bank had properly deposited the $150,000 check into Quesada’s trust account. The conversion claim against Quesada, on the other hand, rests on the department’s entitlement to a portion of the proceeds from the settlement and Quesada’s failure to reimburse the department.

5. The Department Has Waived Any Claim to Prejudgment Interest

In his opening brief, Quesada asserted as error the inclusion of prejudgment interest in the court’s judgment. In her respondent’s brief, the director states unambiguously: “The Department is willing to forego the awarded prejudgment interest and hereby waives any claim to collect prejudgment interest in this case.” That clear statement should have put the matter to rest. But, in his reply brief, even after he acknowledged the director’s concession, Quesada asks us nevertheless to determine that prejudgment interest may not be awarded: “The Department allows that it will forego prejudgment interest in this case. But it does not disclaim its entitlement to prejudgment interest. (Resp. Br. p. 31.) This suggests that in future lien cases the Department would again put a claim for prejudgment interest on the table. It would therefore benefit bench and bar if this court would clarify this important point of law.”

This we decline to do. Courts of Appeal do not decide abstract issues of law. (St. John of God Retirement & Care Center v. State Dept. of Health Care Services. (2016) 2 Cal.App.5th 638, 648 [a party’s concession mooted the controversy on appeal].) In a field of law as arithmetically challenging as this one, we choose to decide an issue of this nature only when the matter is actually before us.

DISPOSITION

The Amended Judgment and Omnibus Award filed November 10, 2020, is modified to strike sections 4b and 4c (awarding prejudgment interest) and, as modified, is affirmed. The department is to recover its costs on appeal.

RUBIN, P. J.

WE CONCUR:

BAKER, J. KIM, J.

[1] Quesada and his law firm, Edward A. Quesada, Attorney at Law, are the sole appellants. We refer to them jointly as Quesada. The client (Rafael Rojas) is not a party to this appeal, and Quesada asserts he has not communicated with him since October 2018.

The plaintiff in the lawsuit – respondent here – is the Director of the Department of Health Care Services. We refer to the director and the department interchangeably.

[2] All further undesignated statutory references are to the Welfare and Institutions Code.

[3] It appears Quesada has abandoned on appeal his claim regarding the other outstanding bills of $16,623.

[4] The parties address in their briefs whether Quesada was authorized to deposit the check without the director’s endorsement. We need not decide this issue as it is not necessary for the resolution of the appeal.

[5] “Capitation payments are made in connection with a risk-sharing arrangement between a health plan and a contracting medical provider under which the provider receives compensation on a ‘capitated basis.’ ‘ “[C]apitated basis” ’ is defined by regulation to mean ‘fixed per member per month payment or percentage of premium payment wherein the provider assumes the full risk for the cost of contracted services without regard to the type, value or frequency of services provided.’ (Cal. Code Regs., tit. 28, § 1300.76, subd. (d).)” (Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994, 1004 fn. 8.)

Quesada questions why the department’s records show $0.00 billed and $0.00 paid on 17 itemized entries for Northridge Hospital. Payment to satisfy the $137,729 Northridge Hospital bill under a capitation rate would provide a reasonable explanation as to why only one discounted payment is shown for multiple services provided.

[6] We discuss in Part 3(e) below Quesada’s argument that he was not permitted discovery that would have allowed him to raise a triable issue of fact on this point.

[7] At no time did the department seek a lien for $84,997.91, the amount it had initially claimed it had actually paid. As we have discussed, various deductions must be applied by law to the gross amount paid to providers. The net total after the deductions is the actual lien amount. In a February 13, 2019 email, counsel for the department wrote to Quesada, explaining, “there was an error in the prior lien issued, specifically with the Good Shepherd services. Attached is the corrected lien, and the difference from the original lien is $700.45.” The record does not contain a similar explanation for why the department sought a lower reimbursement amount from its 2016 lien but given the lack of evidence on the point, we find this of no consequence.

[8] The department must bear a proportionate share of the $7,256 litigation expenses (§ 14124.72). This is calculated by dividing the total amount of services paid by the department by the total settlement ($84,043.46/$450,000 = 18.6763 percent). This percentage is then applied to the total litigation costs of $7,256 to yield a deduction from the lien of $1,355.15.