In California tort litigation arising from a wrongful death, the question often arises as to whether plaintiff claimants bear legal responsibility for the pre-death medical expenses of their decedent.

Frequently, this question arises in the context of the presentation, during litigation, of a lien by a health care provider, such as Medi-Cal, a hospital, or a health insurance plan. However, sometimes the question first arises after settlement. The settling defendants may then, for the first time, present a draft release form that would require the plaintiffs to pay the decedent’s pre-death medical bills, and to hold the defendants harmless from any such claims that might be made by decedent’s medical creditors against the defendants.

Query: Are claims made by decedent’s medical creditors recoverable from the settlement or verdict proceeds of tort claims arising from the death?

To answer that question, it is first necessary to understand the distinction in California law between a statutory wrongful death claim, filed by a decedent’s statutorily defined heirs, seeking compensation for economic and non-economic losses; and a separate claim, filed by decedent’s personal representative or successor in interest, seeking compensation for special damages (medical bills and/or lost earnings), and perhaps punitive damages, all of which are incurred prior to the decedent’s death.

Wrongful death actions, which belong to (and can be filed only by) statutorily defined heirs, are purely statutory in nature. Garcia v. Douglas Aircraft Co. (1982) 133 Cal.App.3d 890, 893. In a wrongful death action, economic and non-economic damages are recoverable, as may be just; but there is no recovery for damages that the decedent sustained or incurred before death, such as pre-death medical expenses or loss of earnings. Code Civ. Proc. § 377.61.

Unlike such wrongful death claims, which belong to the affected heirs, claims for pre-death medical bills, lost earnings, punitive damages, or even property damage, belong to the decedent. These claims must be pursued by either the decedent’s court-appointed personal representative (the court appointed executor or administrator) where applicable, or by the decedent’s statutorily defined successor in interest. Code Civ. Proc. § 377.30. See Quiroz v. Seventh Ave. Center (2006)140 Cal.App.4th 1256, 1264, stating:

“Unlike a cause of action for wrongful death, a survivor cause of action is not a new cause of action that vests in the heirs on the death of the decedent. It is instead a separate and distinct cause of action which belonged to the decedent before death but, by statute, survives that event.”

This distinction, between the two different types of tort claims that might arise upon death, provides the basis for the answer to the query stated above: Wrongful death claimants bear no legal responsibility to pay for a decedent’s pre-death medical expenses; but the decedent’s personal representative does. So, in order to assess potential legal responsibility for these bills when a death action is resolved by settlement or judgment, one must determine who the recovering third party plaintiffs are, and in what capacity they are recovering.

The leading case is Fitch v. Select Products Co., (2005) 36 Cal.4th 812, 819. There, Medi-Cal sought the recovery of a lien (for health care services rendered to the deceased), after trial, and after a judgment was entered in favor of certain wrongful death claimants. In Fitch, there was no cause of action presented on behalf of, or judgment entered in favor of, the decedent’s personal representative.

The Supreme Court held that the Department of Health Services was not authorized to assert a Medi–Cal lien against this wrongful death recovery: “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.” Fitch, 36 Cal.4th at 819.

Significantly, the Supreme Court in Fitch (p. 821) distinguished, and found partially erroneous, an earlier appellate case, Shelton v. Fresno Community Hospital (1985) 174 Cal.App.3d 39, that had permitted such a recovery. In Shelton, the plaintiffs had pursued, in a single lawsuit, both a wrongful death cause of action and a “survivor” action, filed by the decedent’s personal representative (i.e., both of the distinct causes of action discussed above). Joinder of the two causes of action in a single lawsuit, where both are “arising out of the same wrongful act or neglect,” is specifically permitted by Code Civ. Proc., § 377.62.

The Supreme Court in Fitch said:

“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.”

The Supreme Court in Fitch went on to note that Shelton had erred in one respect: “In explaining why the DHS could assert the lien, however, the Court of Appeal mistakenly relied on [Health & Safety Code] section 14124.71, subdivision (b)(2), for the broad proposition that the DHS may assert a Medi–Cal lien against damages recovered in a wrongful death action.” Fitch, 36 Cal.4th at 819.

The “bottom line” of Fitch is that, where the decedent’s personal representative pursues a claim and recovers damages, he or she is legally responsible for medical creditors’ claims; but wrongful death claimants are not. Where the two actions are combined, the medical creditor can recover against the portion of the settlement payment which does not include the wrongful death damages. Parenthetically, in an unallocated settlement, ascertaining that portion may present further challenges.

These distinctions are of great import to plaintiffs’ counsel in pleading, and pursuing, their clients’ actions. While plaintiffs’ counsel’s first instinct, when representing relatives in a death action, may be to plead both a wrongful death cause of action and a “survivor” cause of action by the decedent’s personal representative, to do so might not always be the best strategy.

In cases where the decedent’s estate is impecunious, or where potential recovery against the defendants is potentially limited by their applicable policy limits, counsel’s inclusion of a claim by the personal representative might create a collectible medical creditor’s lien claim where none otherwise exists. This lien might compete against, and therefore lessen, the relatives’ potential recovery for their statutory wrongful death claims.

On the other hand, where the decedent’s estate is solvent (and so will likely have to pay the medical creditors’ claims anyway), or where the potential recovery against the defendants is unlimited by either insurance or collectability considerations, it may make sense for plaintiffs’ counsel to seek recovery of all claims arising from the decedent’s death in the same filed action.

Consideration of these legal distinctions might also become significant upon settlement of pending death actions. Frequently, a proposed form of release drafted by defendants’ counsel might include the plaintiffs’ promise to pay the decedent’s medical creditors, and to indemnify defendants from any such claims. If the plaintiffs have pleaded and pursued only wrongful death claims, and not a “survivor” claim on behalf of the decedent’s personal representative, they bear no such responsibility (for reasons set forth above), and they may not wish to agree to bear it in a release.

This issue might also arise if the defendants seek the signature, as releasee, of either the estate’s representative or the decedent’s successor in interest, as pre-condition to payment. That proposed signator may even be by one of the wrongful death claimants, acting in his or her separate capacity as representative, or successor interest, of the decedent. Absent such release, defendants bear potential liability to medical creditors of the decedent.

That exposure might be real: an estate for the decedent could be set up, if one has not yet been established, by a medical creditor for the explicit purpose of bringing such a claim. See, Probate Code §8461(q) (noting that creditors are among those that can be appointed administrator of an estate). See also, Silva v. Superior Court in and for San Joaquin County (1948) 83 Cal.App.2d 521, 525; and see, In re Lyons’ Estate (1955) 132 Cal.App.2d 790, 792 (finding that a creditor could set up estate, and potentially allow the debt, where “no one having a priority for such appointment had filed any petition therefor.”).

A wrongful death claimant who is also the decedent’s successor in interest (see Code Civ. Proc., §§ 377.30 and 377.32) should be wary of releasing defendants from liability to the decedent’s estate. Signing a release, in the capacity of decedent’s successor in interest, may inadvertently create a situation like that in Shelton, where both categories of claims are deemed to have been settled by the release. As in Shelton, taking that action might leave one or more recovering plaintiffs financially responsible to medical creditors of the decedent, under circumstances where they might otherwise have had no such liability. The recovering plaintiffs should be particularly wary of holding defendants harmless from such claims, in light of the possibility (discussed above) that those claims might later be pursued by medical creditors, acting on behalf of the decedent’s estate.

One caveat must be raised to this analysis: plaintiffs’ counsel’s raising these issues, in the context of discussion of a proposed settlement and release, may cause the defendants to reconsider their pending offer of settlement, especially if there has been a settlement offer for policy limits. That is true because, absent either release by the estate or indemnification from the recovering plaintiffs, defendants would still bear potential liability for subsequent claims by decedent’s medical creditors.

In pursuing and defending death claims, the optimum strategy on these issues will depend upon all the facts and circumstances surrounding a particular case, and how they interact. It is important that counsel understand the applicable law in order to make the decisions that best serve the interests of their clients.