The California Court of Appeal addressed a complication arising from a statute providing the government with compensation after paying for the medical treatment of tort victims. Government Code section 23004.1 gives counties a right of action against the tortfeasor, as well as a lien against judgments secured by the injured person against the tortfeasor. In this case, the tortfeasor issued a check in the amount of the lien but made it payable to the county and the injured person, who then refused to endorse the check to the county. The issue before the court was how to enforce the county’s right to recovery.
Jose Tinoco, while working for Fresh Express, injured Javier Escobar when he negligently operated a vehicle. Mr. Escobar was treated at Santa Clara Valley Medical Center, a hospital owned by the County of Santa Clara.
The value of the treatment and care was alleged to be $1,249,545.38. Mr. Escobar brought a lawsuit against Mr. Tinoco and Fresh Express and recovered a judgment for $5,689,624.87. The County of Santa Clara asserted a lien against the judgment, according to Government Code section 23004.1. Fresh Express paid the amount of $1,249,545.38 to Mr. Escobar’s attorney, made out to the County and to the law firm representing Mr. Escobar.
Santa Clara County brought a lawsuit against Fresh Express and Mr. Escobar for the money they held but had not provided to the County. Fresh Express contended that a satisfaction of judgment had been entered, and they were not subject to further liability. The trial court held that the County must seek enforcement of the lien and cannot pursue an action against Fresh Express. The County appealed.
The appellate court focused on section 23004.1, which provides a county with the right to recovery for the reasonable value of medical services the county had paid for. The statute makes clear that if the injured person brings an action, the county’s right to recovery abates during the action and continues as a first lien against judgment recovery by the injured person.
Turning to the abatement clause, the court stated that the county’s right of action is suspended during the injured person’s suit. Most importantly, abatement does not dispose of the merits and does not preclude further proceedings on the underlying cause of action. In other words, the Legislature did not intend the county to be barred by the injured person’s bringing of suit. Instead, their right is suspended. If the suit ends and the county’s lien is not satisfied, the county still has a right of action.
In this case, the County had the right to proceed upon its statutory right of action when Fresh Express did not pay it the liened amount.
The appellate court also rejected the finding by the trial court that once a county’s lien attaches to a judgment, the county no longer has a right of action. Here, Mr. Escobar’s action yielded a judgment, and the trial court found that the County could no longer pursue an action against Fresh Express but must seek to enforce the lien.
The court turned to the language of the statute, and it held that nothing within common usage requires a finding that when a county’s right of action continues as a lien, the former right of action “ceases to exist.” Regarding whether a county has a right of action that survives the creation of a lien on the injured person’s judgment, the court turned to extrinsic indications of legislative intent.
Here, when the action was filed, neither the County’s right of action nor its lien could have merged into a judgment. The county had not obtained a judgment but only had an abated right of action against Fresh Express and a lien on Mr. Escobar’s judgment. If the legislature intended to have a county’s statutory lien attach to a judgment, as the only remedy against a tortfeasor, it would have made that clear.
The court turned to the purpose of the statute, which is a remedial statute meant to compensate counties for expenses incurred by them and their taxpayers in providing medical services for injuries caused by tortious conduct. The law does not exist to permit judgment debtors to “wash their hands of the matter” by turning funds over to the injured plaintiff. Here, Fresh Express should be able to free itself from the dispute between Mr. Escobar and the County. They should be able to obtain a satisfaction of judgment by paying the full amount of the judgment. But this is not accomplished by writing a check payable to both claimants.
In conclusion, the court stated that interpleader would be the remedy of choice for Fresh Choice, or for an insurer against whom more than one claim is made. The disputed funds would be deposited and then constitute payment of the full amount by judgment. Fresh Express was now unlawfully attempting to limit the County’s statutory rights, due to their own failure to use the “escape routes” set forth by the code.
The court stated the County’s right of action under section 23004.1 survived the attachment of its lien, and the County was entitled to revive it once Fresh Express gave control of the funds to Mr. Escobar’s attorney. The trial court erred in sustaining Fresh Express’ demurrer.
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