California’s Controversial Estate Recovery: A Class-Action Challenge Looms

The estate of a deceased nursing home patient, Theodosia Phillip, has spearheaded a class-action lawsuit against the State of California, alleging that the California Department of Health Care Services unlawfully recovers amounts from the estates of deceased Medi-Cal beneficiaries that significantly surpass the actual health care services costs. The State initially sued Phillip’s estate for amounts exceeding double the healthcare expenses they covered. In response, the Phillip family filed a cross-complaint which has now been certified as a class-action. The core issue revolves around the State demanding “capitation” payments, which are sums paid for enrolling beneficiaries in managed care plans, regardless of the actual cost of care provided. This potentially unlawful practice may have impacted over 4,000 claims, amounting to more than $68 million in excess recovery. A trial date is set for March 5, 2024. For more details, view the press release.