Women-Owned Business


August 09th, 2016/By Admin/In Newsletter

Making Settlement Checks Jointly Payable May Get You Sued

Under Government Code section 23004.1, counties can seek reimbursement for medical expenses rendered at county expense to individuals injured by the acts of others.

In County of Santa Clara v. Javier Escobar, the County sued Escobar when it did not receive payment for a medical lien which it had properly asserted.  Previously, Escobar, an employee of Fresh Express, Inc., (“Fresh Express”) had injured a third party in a vehicle accident.  The injured party received treatment at Santa Clara Valley Medical Center which is owned and operated by Santa Clara County.  The value of the care and services provided by the County was $1,249,545.38.

The injured party sued Fresh Express and its driver Escobar, and recovered a $5,689,624.87 Judgment in that case.  However, the injured party’s attorney argued the County was not entitled to the full amount of its lien (even though he had stipulated at trial that the County’s bill reflected reasonable and necessary charges).  So, instead of paying the County the amount of its lien direct, Fresh Express delivered a check for the $1,249,545.38 to the injured party’s attorney, made payable to both the County and the injured party’s law firm.

The County then asserted causes of action against the Escobar and others for, among other things, statutory liability pursuant to section 23004.1.  Fresh Express demurred, arguing it had no further liability in the matter because an Acknowledgment of Satisfaction of Judgment had been entered by the Court.

The Trial court found that once a county lien is attached to a Judgment, the county’s independent right to action ceased to exist.  Accordingly, it sustained the demurrer without leave to amend. The County appealed.

The Sixth Appellate District found that the intent behind section 23004.1 is for a party in Fresh Express’ position to remain liable on the underlying statutory obligation until the lienholder’s claims are fully resolved; and that without the threat of such continuing liability there would be no incentive to comply.  The Appellate Court reversed the Trial court’s decision and directed it to overrule the demurrer.  It also suggested that Fresh Express commence an interpleader action to extricate itself from the dispute.  The County was awarded costs on appeal.

[This article is for informational purposes only and does not constitute legal advice. Do not act or rely upon any of the resources and information contained herein without seeking appropriate professional assistance.]

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