Southwest Fiduciary v. AHCCCS (CA1 3/10/11)

This is just too boring and even we have limits. But it is important to the personal-injury practice. The holding is that when AHCCCS “has paid medical expenses for a victim who subsequently settles with a tortfeasor for less than the full amount of her overall damages”  it “may recover no more than the portion of the victim’s settlement that represents recovery of the plan’s payments on behalf of the victim, less a deduction for litigation expenses.” In other words, the amount due AHCCCS is based on the amount it actually pays, not on the face amount of the medical bills.

This is a consolidation of two cases. Plaintiff 1 had a claim worth 3 or 4 million; she settled it for 850,000 (we’re rounding off the numbers) because of “difficult liability issues.” She had total billed medicals of 920,000, which AHCCCS had satisfied for 250,000. Plaintiff 2 had a 250,000 claim that he settled for 100,000; AHCCCS had satisfied his 139,000 in billed medicals by paying 52,000. The superior court in each case held that AHCCCS’s lien would be reduced by the ratio that the settlement amount bore to the victim’s total claimed damages. AHCCCS didn’t object to that but argued that its lien was for the billed amount, not what it actually paid. The court disagreed, for reasons you can read about if you need to.

(link to opinion)