Stanford Law School - Robert Crown Law Library

Filed 8/1/05

IN THE SUPREME COURT OF CALIFORNIA

DAVID JAY FITCH, a Minor, etc., et al.,
Plaintiffs
and
Respondents,
S116223
v.
Ct.App. 4/2 E028592
SELECT PRODUCTS COMPANY,
San Bernardino County
Defendant;
Super. Ct. No. SCV18360
STATE DEPARTMENT OF
HEALTH SERVICES,
Claimant
and
Appellant.

May a Medi-Cal lien for costs incurred in treating a decedent’s final illness
be asserted against a recovery in a wrongful death action when that recovery does
not and could not include those medical expenses? The answer is “no.”
I
Elan Jay Fitch (Fitch or decedent) contracted cancer while working for the
Southland Corporation (Southland) as a diesel mechanic. Medi-Cal, a program
administered by the California Department of Health Services (DHS), paid the
medical expenses to treat Fitch’s cancer. When Fitch filed a workers’
compensation claim against Southland, alleging that workplace exposure to
carcinogenic chemicals was the cause of the cancer, the DHS filed a lien in the
workers’ compensation proceeding to recover $106,700.40 it had paid for Fitch’s
1

---

medical treatment. In September 1993, Fitch died of the cancer, survived by his
wife, Dianne, and three minor children.
On January 27, 1995, while the workers’ compensation proceeding was
pending, Fitch’s widow brought a tort action seeking damages resulting from
Fitch’s illness and death. She brought the action as an individual, as the
representative of her husband’s estate, and on behalf of the three minor children.
The complaint named Select Products Company (Select) as one of the defendants,
alleging that Fitch’s illness and death was caused by a coating product
manufactured by Select that Fitch had used in his work. In September 1996, the
trial court ruled that the statute of limitations barred the action by Fitch’s widow as
an individual and as the representative of Fitch’s estate; thereafter, this action
proceeded as a wrongful death action by Fitch’s three minor children, with Dianne
acting as their guardian ad litem.
On August 5, 1998, Dianne settled the workers’ compensation claim with
Fitch’s former employer, Southland. As part of the settlement, Southland agreed
to “pay, adjust, or litigate all liens . . . .” Southland then settled the DHS’s lien in
the workers’ compensation proceeding for $40,000, with the DHS reserving “all
rights to pursue reimbursement/recovery in any third party claim . . . .”
In October 1999, the DHS filed in the wrongful death action a Medi-Cal
lien in the amount of $66,795.98 (representing the amount the DHS claimed in the
workers’ compensation case, less the $40,000 that the DHS had already obtained
in the settlement of that proceeding). In March 2000, plaintiffs (the three Fitch
children) moved to strike the DHS lien, asserting that the lien violated the
workers’ compensation settlement agreement. The trial court declined to rule on
the motion, stating that the matter was within the exclusive jurisdiction of the
Workers’ Compensation Appeals Board (WCAB). Thereafter, in the workers’
compensation proceeding, plaintiffs asked the WCAB for a determination that
2

---

Southland’s $40,000 payment to the DHS in the workers’ compensation case had
fully satisfied and extinguished the DHS’s Medi-Cal lien. The WCAB concluded
that it lacked jurisdiction over the $66,795.98 lien the DHS asserted in plaintiffs’
civil wrongful death action.
Plaintiffs’
wrongful
death action proceeded to trial against Select alone
(other defendants had either settled or been dismissed). During the trial, the court
granted a defense motion to preclude plaintiffs from introducing evidence of the
DHS’s Medi-Cal lien. The court also ruled that defendant Select could not be held
liable in a wrongful death action for decedent’s medical expenses as those
expenses could only be recovered in an action by Dianne as the representative of
her husband’s estate, and the court had already ruled that such an action was
barred by the statute of limitations. The trial resulted in a judgment for plaintiffs
in the amount of $682,598.50.
After the trial, plaintiffs renewed their motion in the superior court to strike
the DHS lien. The court granted the motion, ruling that because the damages
recoverable in plaintiffs’ wrongful death action did not and could not include the
decedent’s medical expenses, the DHS could not recover such expenses by
asserting a lien against a recovery by plaintiffs in the wrongful death action. The
DHS appealed.
The Court of Appeal reversed. It held that the statutes governing third
party liability for Medi-Cal benefits imposed on the DHS a right and an obligation
to assert the lien in plaintiffs’ wrongful death action, that the exclusive jurisdiction
of the WCAB does not extend to Medi-Cal liens, and that federal law does not
preempt California’s Medi-Cal lien procedures. We granted review.
II
Plaintiffs contend that the statutes governing Medi-Cal liens in actions
against third parties do not authorize Medi-Cal liens in wrongful death actions in
3

---

which the plaintiff’s recovery does not include medical expenses incurred by the
decedent. The issue they raise, being one of statutory construction, is governed by
well-established principles. The objective of statutory construction is to determine
the intent of the enacting body so that the law may receive the interpretation that
best effectuates that intent. (Hassan v. Mercy American River Hospital (2003) 31
Cal.4th 709, 715.) “We first examine the words themselves because the statutory
language is generally the most reliable indicator of legislative intent. [Citation.]
The words of the statute should be given their ordinary and usual meaning and
should be construed in their statutory context.” (Ibid.) If the plain, commonsense
meaning of a statute’s words is unambiguous, the plain meaning controls. (In re
Jennings (2004) 34 Cal.4th 254, 263.)
The Welfare and Institutions Code authorizes the DHS to recover the value
of Medi-Cal-provided medical treatment from third parties who have caused the
injury that required the treatment. (Welf. & Inst. Code, § 14124.70 et seq.; unless
otherwise indicated, all statutory references are to the Welfare and Institutions
Code.) The statutory scheme permits the DHS to obtain this recovery either by
bringing its own action against the third party or by asserting a lien in another
person’s action against the third party, as discussed below.
Section 14124.71 provides: “When benefits are provided . . . to a
beneficiary . . . because of an injury for which another person is liable, . . . the
director shall have a right to recover from such person . . . the reasonable value of
the benefits so provided.” (§ 14124.71, subd. (a), italics added.) It also authorizes
the Attorney General (and certain other persons and entities) to bring a direct
action against the third party on behalf of the DHS: “The Attorney General . . .
may, to enforce such right, institute and prosecute legal proceedings against the
third person or carrier who may be liable for the injury in an appropriate court,
either in the name of the director [of the DHS] or in the name of the injured
4

---

person, his guardian, conservator, personal representative, estate, or survivors.”
(Ibid.)
Section 14124.71 also allows the DHS, acting through its director, to
“[c]ompromise, or settle and release any such claim, or [to] . . . [w]aive any such
claim, in whole or in part, for the convenience of the director, or if the director
determines that collection would result in undue hardship upon the person who
suffered the injury, or in a wrongful death action upon the heirs of the deceased.”
(§ 14124.71, subd. (b).) To further protect the interests of the beneficiary and his
or her estate and survivors, section 14124.71 states that “[n]o action taken in
behalf of the director [of the DHS] pursuant to this section . . . shall operate to
deny to the beneficiary the recovery for that portion of any damages not covered
hereunder.” (§ 14124.71, subd. (c).)
Section 14124.72 authorizes the DHS to assert a lien against a recovery
from a third party: “When an action or claim is brought by persons entitled to
bring such actions or assert such claims against a third party who may be liable for
causing the death of a beneficiary, any settlement, judgment or award obtained is
subject to the director’s right to recover from that party the reasonable value of the
benefits provided to the beneficiary under the Medi-Cal program . . . .”
(§ 14124.72, subd. (c).) When the beneficiary has brought the action in which the
DHS asserts a lien, and has incurred a personal liability for attorney fees, the
DHS’s recovery is “limited to the reasonable value of benefits provided to the
beneficiary under the Medi-Cal program less 25 percent[,] which represents the
[DHS’s] reasonable share of attorney’s fees paid by the beneficiary[,] and that
portion of the cost of litigation expenses determined by multiplying by the ratio of
the full amount of the reasonable value of benefits so provided to the full amount
of the judgment, award, or settlement.” (§ 14124.72, subd. (d).)
5

---

Finally, section 14124.70 defines “beneficiary” to mean “any person who
has received benefits . . . because of an injury for which another person or party
may be liable” and to include “such beneficiary’s guardian, conservator or other
personal representative, his estate or survivors.” (§ 14124.70, subd. (b).)
We conclude that the statutory scheme discussed above does not authorize
the DHS to assert a Medi-Cal lien against a wrongful death recovery that does not
include compensation for the Medi-Cal beneficiary’s medical expenses. To
understand why we reach this conclusion, it is necessary to examine the nature of
a wrongful death action under California law.
In California, a wrongful death action is “ ‘a new cause of action in favor of
the heirs as beneficiaries, based upon their own independent pecuniary injury
suffered by loss of a relative, and distinct from any the deceased might have
maintained had he survived.’ ” (Horwich v. Superior Court (1999) 21 Cal.4th
272, 283, quoting 6 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 1197,
pp. 632-633.) Because the damages awarded in a wrongful death action are for the
harm done to the survivors, not to the deceased, medical expenses for treating the
final illness or injury are not recoverable. (Gallup v. Sparks-Mundo Engineering
Co. (1954) 43 Cal.2d 1, 10-12; Aetna Casualty & Surety Co. v. Superior Court
(1980) 114 Cal.App.3d 49, 57; DeMeo v. St. Francis Hosp. (1974) 39 Cal.App.3d
174, 176; Pac. Emp. Ins. Co. v. Hartford etc. Ins. Co. (1956) 143 Cal.App.2d 646,
648; see Code Civ. Proc., §§ 377.34, 377.61.)
The key provision is subdivision (a) of section 14124.71, stating that
“[w]hen benefits are provided to a beneficiary . . . because of an injury for which
another person is liable . . . the director shall have a right to recover from such
person . . . the reasonable value of the benefits so provided.” (Italics added.)
Because the damages awarded in a wrongful death action are compensation for the
harm to the survivors rather than to the decedent, and because those damages do
6

---

not include medical expenses incurred in treating the decedent, to allow the DHS
to recover the decedent’s medical expenses from the wrongful death damages
would reduce those damages below the amount needed to fully compensate the
survivors for the harm done to them. Such a recovery would not be from the third
party tortfeasor, but from the decedent’s innocent survivors (see Olszewski v.
Scripps Health (2003) 30 Cal.4th 798, 820-822), and therefore it is not statutorily
authorized.
The provision dealing with Medi-Cal liens—subdivision (c) of section
14124.72—is consistent with this interpretation. It authorizes the DHS to use the
lien procedure to recover the value of Medi-Cal benefits only from “a third party
who may be liable for causing the death of a beneficiary,” not from the decedent’s
innocent survivors who have brought an action against that third party, and it
limits the recovery to “the reasonable value of the benefits provided to the
beneficiary under the Medi-Cal program.” (§ 14124.72, subd. (c).) Because this
subdivision authorizes the DHS to recover the benefits it has provided to the
beneficiary only from the third party that caused the beneficiary’s death, it
necessarily implies that lien recovery is permitted only when the damages
recovered from the third party include the cost of medical treatment or other
benefits provided by Medi-Cal.
This reading finds support in subdivision (c) of section 14124.71, which
declares that “[n]o action taken in behalf of the director [of the DHS] pursuant to
this section . . . shall operate to deny to the beneficiary the recovery for that
portion of any damages not covered hereunder.” (§ 14124.71, subd. (c).) Through
this provision, the Legislature expressed its intent that the DHS’s right to Medi-
Cal reimbursement must not operate to deny the beneficiary (which is statutorily
defined to include a beneficiary’s survivors) any damages that are “not covered”
by Medi-Cal. In this case, that means damages other than those awarded for the
7

---

cost of medical treatment. Because none of the survivors’ wrongful death
damages are attributable to the costs of the decedent’s medical treatment, the DHS
may not assert the Medi-Cal lien against those damages.
Urging a different interpretation of the Medi-Cal reimbursement statutes, the
DHS relies on Shelton v. Fresno Community Hospital (1985) 174 Cal.App.3d 39
(Shelton), in which a wrongful death action by the decedent’s minor son and
husband was combined with an action by the decedent’s husband, as the decedent’s
personal representative, for damages the decedent sustained before death. (See
Code Civ. Proc., § 377.62 [permitting joinder of such actions].) The parties settled
the personal representative’s action, which included a claim for the decedent’s
medical expenses, for $215,000, and they settled the wrongful death action for
$1,920,236. (Shelton, supra, at p. 42.) The DHS asserted a Medi-Cal lien for
medical expenses in the amount of $17,361.86. The plaintiffs, decedent’s minor son
and husband, brought a motion to extinguish the lien, the trial court denied the
motion, the plaintiffs appealed, and the Court of Appeal affirmed. (Id. at pp. 42-43.)
The
Shelton Court of Appeal reached the correct result, but it erred in the
portion of its analysis on which the DHS relies here. The result in Shelton was
correct, and the Medi-Cal lien was valid, because the action was not only a
wrongful death action but also an action by the decedent’s personal representative.
The settlement, which covered both actions, included compensation for the
decedent’s medical expenses, which the plaintiff husband had sought as the
decedent’s personal representative. The DHS was entitled to assert its Medi-Cal
lien against this portion of the settlement payment, which did not include the
wrongful death damages. In explaining why the DHS could assert the lien,
however, the Court of Appeal mistakenly relied on section 14124.71, subdivision
(b)(2), for the broad proposition that the DHS may assert a Medi-Cal lien against
8

---

damages recovered in a wrongful death action. (Shelton, supra, 174 Cal.App.3d at
pp. 42-43.)
Section 14124.71, subdivision (b)(2), grants the DHS’s director the
authority, in actions brought by the DHS directly against third parties, to waive its
reimbursement claim when “collection would result in undue hardship upon the
person who suffered the injury, or in a wrongful death action upon the heirs of the
deceased.” In other words, this provision allows the DHS to waive the Medi-Cal
recovery when its collection from the third party would impose undue hardship
upon the beneficiary’s survivors in the prosecution of a wrongful death action. An
example would be when the third party’s assets or insurance coverage would be
insufficient, after reimbursing the DHS for Medi-Cal benefits, to compensate the
wrongful death plaintiffs. The provision at issue simply allows the director to
waive the DHS’s rights in a direct action against a third party, if doing so would
prevent hardship to the beneficiary’s survivors. It does not, however, give the
DHS the authority to assert a lien in a separate wrongful death action, at the
expense of the beneficiary’s survivors.
The same is true of another provision that the Shelton Court of Appeal relied
upon—section 14124.72, subdivision (b), which provides that “[t]he death of the
beneficiary does not abate any right of action established by Section 14124.71.”
(See Shelton, supra, 174 Cal.App.3d at p. 44.) That provision merely authorizes the
DHS to bring an action to recover from a third party tortfeasor the costs incurred in
providing medical treatment to a beneficiary after the beneficiary’s death. It is not
authority for the broad proposition by the DHS that it can generally assert a lien
against a recovery in a wrongful death case brought by the decedent’s survivors that
9

---

does not include damages for the decedent’s medical expenses.1
Also unpersuasive is the DHS’s reliance on section 14124.78, which
provides: “Except as otherwise provided in this article, notwithstanding any other
provision of law, the entire amount of any settlement of the injured beneficiary’s
action or claim, with or without suit, is subject to the director’s claim for
reimbursement of the reasonable value of benefits provided and any lien filed
pursuant thereto, but in no event shall the director’s claim exceed one-half of the
beneficiary’s recovery after deducting for attorney’s fees, litigation costs, and
medical expenses relating to the injury paid for by the beneficiary.” Because this
provision applies only to settlements of the injured beneficiary’s action or claim
and this case does not involve settlement of an injured beneficiary’s action or
claim, it is not relevant here.
For the reasons given above, we hold that a Medi-Cal lien may not be
asserted in a wrongful death action when the damages recoverable by the plaintiff
in that action do not and could not include compensation for medical services
provided to the decedent by Medi-Cal.
DISPOSITION
The judgment of the Court of Appeal is reversed.
KENNARD,
J.
WE CONCUR:
GEORGE,
C.
J.
BAXTER,
J.
WERDEGAR,
J.
CHIN,
J.
MORENO,
J.

1
Shelton v. Fresno Community Hospital, supra, 174 Cal.App.3d 39, is
disapproved to the extent it is inconsistent with the views expressed here.
10

---

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Fitch v. Select Products Co.
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 108 Cal.App.4th 800
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S116223
Date Filed: August 1, 2005
__________________________________________________________________________________

Court:

Superior
County: San Bernardino
Judge: Christopher J. Warner

__________________________________________________________________________________

Attorneys for Appellant:

Bill Lockyer, Attorney General, Manuel M. Medeiros, State Solicitor General, Andrea Hoch, Chief
Assistant Attorney General, James Humes, Assistant Attorney General, John H. Sanders, John Venegas and
Karen Ackerson-Brazille, Deputy Attorneys General, for Claimant and Appellant.

__________________________________________________________________________________

Attorneys for Respondent:

Andrews & Hensleigh, Joseph Andrews and John J. Aumer for Plaintiffs and Respondents.

11

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

Karen Ackerson-Brazille
Deputy Attorney General
300 South Spring Street
Los Angeles, CA 90013
(213) 897-2448

Joseph Andrews
Andrews & Hensleigh
611 W. Sixth Street, Suite 2350
Los Angeles, CA 90017
(213) 236-2799

12

---

Opinion Information

Date:	Docket Number:
Mon, 08/01/2005	S116223

Disposition
Aug 1 2005	Opinion: Reversed

Dockets
May 27 2003	Petition for review filed   respondents David Jay Fitch, and Kaci Dee Fitch and Bonnie Ann Fitch
May 28 2003	Record requested
Jun 9 2003	Received Court of Appeal record   three boxes
Jun 9 2003	Received:   supplement to petition for Review, attorney J. Andrews for respondents
Jul 18 2003	Time extended to grant or deny review   to and inclulding 8/25/2003
Jul 30 2003	Letter sent to:   All counsel enclosing a copy of the grant order and the Certificate of Interested Entities and Persons Form
Jul 30 2003	Petition for Review Granted (civil case)   George, C.J. and Brown, J., were absent and did not participate. Votes: Kennard, ACJ., Baxter, Werdegar, Chin and Moreno, JJ.
Aug 4 2003	Order filed   In order to conform to the format prescribed by the California Style Manual (Cal. Style Manual (4th ed. 2000) Section 6:6), the above entitled matter is retitled as follows: DAVID JAY FITCH, a Minor, etc., et al., Plaintiffs and Respondents, v. SELECT PRODUCTS COMPANY et al., Defendants; STATE DEPARTMENT OF HEALTH SERVICES, Claimant and Appellant
Aug 12 2003	Certification of interested entities or persons filed   by John Venegas, Deputy Attorney General, counsel for Appellant Department of Health Services
Aug 14 2003	Certification of interested entities or persons filed   Adnrews & Hensleigh, LLP, attorneys for plaintiffs and respondents (David Fitch, Kaci Fitch and Bonnie Fitch)
Aug 28 2003	Request for extension of time filed   to file opening brief/meritis asking to September 12, 2003.
Sep 3 2003	Note:   Order prepared granting e.o.t. to 9/12/2003.
Sep 4 2003	Extension of time granted   On application of respondents and good cause appearing, it is ordered that the time to serve and file their Opening Brief on the Merits is extended to and including September 12, 2003.
Sep 12 2003	Request for extension of time filed   to file respondent David, Bonnie and Kaci Fitch's opening brief/merits to->Sept 26, 2003.
Sep 16 2003	Extension of time granted   On application of respondents and good cause appearing, it is ordered that the time to serve and file Respondents' Opening Brief on the Merits is extended to and including September 26, 2003.
Sep 29 2003	Opening brief on the merits filed   respondents David, Kaci and Bonnie Fitch
Oct 27 2003	Request for extension of time filed   answer brief/merits to 11-13-03>>appellant Dept of Health Services
Nov 4 2003	Extension of time granted   On application of claimant and appellant, State Departmentof Health Services, and good cause appearing, it is ordered that the time to serve and file Appellant's Answer Brief on the Merits is extended to and including November 13, 2003.
Nov 12 2003	Request for extension of time filed   to fiel Claimant, Depat. of Health Svcs. Answer Brief/Merits asking to Nov 28, 2003.
Nov 14 2003	Extension of time granted   to 11-28-03 for claimant/aplt Dept. of Health Services to file the answer brief on the merits.
Nov 20 2003	Answer brief on the merits filed   appellant Dept. of Health Services
Dec 10 2003	Request for extension of time filed   to file reply brief/merits asking to Dec. 24, 2003
Dec 17 2003	Extension of time granted   On application of respondents and good cause appearing, it is ordered that the time to serve and file the reply brief on the merits is extended to and including December 24, 2003.
Dec 24 2003	Reply brief filed (case fully briefed)   by David Jay Fitch, Kaci Dee Fitch and Bonnie Ann Fitch, as respondents
Jan 20 2004	Request for judicial notice filed (in non-AA proceeding)   Resp's. David Jay Fitch, Kaci Dee Fitch and Bonnie Ann Fitch ("The Fitch Children")
Jul 8 2004	Change of contact information filed for:   counsel for respondent, the Firm of Andrews & Hensleigh, LLP
May 3 2005	Case ordered on calendar   5/26/05, 1:30pm, S.F.
May 19 2005	Request for judicial notice granted   The request of David Jay Fitch, Kaci Dee Fitch, and Bonnie Ann Fitch for judicial notice, filed in this court on January 20, 2004, is granted.
May 26 2005	Cause argued and submitted
Aug 1 2005	Opinion filed: Judgment reversed   Court of Appeal Judgment. Opinion by Kennard, J. -- joined by George, C. J., Baxter, Werdegar, Chin, Moreno, JJ.
Aug 29 2005	Change of contact information filed for:   counsel fpr respondent Andrews & Hensleight, LLP
Aug 31 2005	Remittitur issued (civil case)   Certified copies sent to Fourth District, Division Two.
Sep 29 2005	Received:   Receipt for remittitur from 4 DCA Div. Two.

Briefs
Sep 29 2003	Opening brief on the merits filed
Nov 20 2003	Answer brief on the merits filed
Dec 24 2003	Reply brief filed (case fully briefed)

If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website