Gedulig

In this appeal, we consider the validity of the lien created by a notice of levy of unpaid California tax against the right of an assignee of Medi-Cal accounts receivable pursuant to a security interest perfected prior to the lien. We conclude that, since Welfare and Institutions Code section 14115.5 renders the assignment unenforceable against the State of California, the lien created by the notice of levy is valid and the assignee for security has no right to the funds which are the subject of the levy.

The facts of the case at bench are stipulated. On October 18, 1971, GAB Corporation, doing business as Manchester Community Hospital (Hospital), assigned to appellant as security for a loan all of its present and future accounts receivable. The security interest of appellant was duly perfected by a filing with the Secretary of State. From October 18, 1971, until the date of trial, Hospital was indebted to appellant in an amount exceeding $50,000. Hospital failed to pay its unemployment insurance contribution for the second and fourth quarters of 1972 and the first quarter of 1973, and owed the California Department of Employment Development $14,384.37 by reason of that…