(Medi-Cal) After Dept. withholds Medi-Cal payments on suspicion of wrongdoing, it is not required to pay interest when payments are disbursed to provider

(Medi-Cal) After Dept. withholds Medi-Cal payments on suspicion of wrongdoing, it is not required to pay interest when payments are disbursed to provider. Chang Ho Yoo et al., v. Sandra Shewry, Director of the State Department of Health Care Services., No. B213759 California Courts of Appeal, Second Appellate District, Division Seven (June 29, 2010).

The question presented involves where the California Department of Health Care Services  (DHCS) suspects fraud and willful misrepresentation by a  Medi-Cal provider and the DHCS withholds Medi-Cal payments from the provider pursuant to the Welfare and Institutions Code section 104107.11, is the DHCS required to pay interest on the amount of withheld payments that are later disbursed to the provider after the DHCS has finished its investigation, where the DHCS delays unreasonably and making the disbursement.  In granting the petition, the Appeals Court reversed the trial court which concluded that payment of interest was compelled by Civil Code section 3287.  The Appeals Court found that interest on Medi-Cal payments that were inappropriately withheld and that Civil Code section 3287 was inapplicable in the case.    It  reversed the trial court’s order.  The court stated that section 3287 is only triggered when a person is entitled to recover damages, which occurs when a person suffers detriment from the unlawful act or omission of another.  The Appeals Court found that withholding payments neither requires nor permits the payment of interest on withheld Medi-Cal payments because if the Legislature intended DHCS to pay interest on withheld payments, it would have stated so.

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