California Welfare and Institutions Code Section 14019.4 - Interpretation
In Palumbo v. Myers (1983) 149 Cal. App. 3d 1020, the court evaluated whether section 14019.4, which excepted from the ban on balance billing the right to bill a "third party payer who provides a contractual or legal entitlement" to the costs of the health care, permitted the provider to seek recovery of the balance from a third party tortfeasor.
Although Palumbo decided the provider could not collect from the tortfeasor based on its interpretation of statutory language, deciding that the statutory "third party payer" language did not encompass a third party tortfeasor, it recognized that a "lurking preemption question" would arise if the federal payment-in-full provisions conflicted with a California statute purporting to expand the rights of a provider to collect beyond the amount paid by Medicaid. (Id. at pp. 1030-1034, fn. 10.)
The Legislature apparently recognized that these provisions were in conflict with the federal ban on balance billing, and specified that these provisions were not to become effective until "appropriate federal waivers" were obtained. (Stats. 1985, ch. 776, 6, p. 2515.)
The federal government denied the waiver requests in 1986, and these provisions never became effective. (Historical and Statutory Notes, 74A West's Ann. Welf. & Inst. Code (1991 ed.) 14019.3, p. 77.)