On May 1, 2006 the U.S. Supreme Court rendered a landmark Plaintiff’s rights decision relating to personal injury settlements.
The Court unanimously affirmed the Eighth Circuit’s decision in Arkansas Dept. of Health and Human Services v. Ahlborn.
Find th case here.
In summary, a State’s Medicaid department must be limited to reimbursement from only that portion of a judgment or settlement that represents payment for medical expenses.
States are prohibited from seeking to be reimbursed for Medicaid costs from settlement proceeds that were intended to cover items other than medical expenses paid. Thus, excluded from the claws of Medicaid will be pain and suffering as well as wage loss claims. The Court held that the federal anti-lien statutes serve to prevent States from attaching the non-medical components of any settlement or judgment.
Attorneys for injured consumers should look not only to the negotiation of the amount of any settlement, but consider first any initial classification of damages. You can expect a more thorough discussion of this ruling soon.
“[t]here is no question that the State can require an assignment of the right, or chose in action, to receive payments for medical care. So much is expressly provided for by §§1396a(a)(25) and 1396k(a). And we assume, as do the parties, that the State can also demand as a condition of Medicaid eligibility that the recipient “assign” in advance any payments that may constitute reimbursement for medical costs. To the extent that the forced assignment is expressly authorized by the terms of §§1396a(a)(25) and 1396k(a), it is an exception to the anti-lien provision. See Washington State Dept. of Social and Health Servs. v. Guardianship Estate of Keffeler, 537 U. S. 371, 383–385, and n. 7 (2003). But that does not mean that the State can force an assignment of, or place a lien on, any other portion of Ahlborn’s property. As explained above, the exception carved out by §§1396a(a)(25) and 1396k(a) is limited to payments for medical care. Beyond that, the anti-lien provision applies.” (Emphasis added).
So where are we now? In the U.S. Supreme Court’s own words, States may not demand reimbursement from portions of the settlement allocated or allocable to non-medical damages; instead, States are given only a priority disbursement from the medical expenses portion alone. Prior to this ruling, if, for example, an Arkansas Medicaid recipient settled her entire action against a 3d party for $20,000, and the State (Medicaid Department) paid that amount or more to medical providers on her behalf, nothing in the State statutes would preclude the State from receiving the whole settlement and the recipient would be left with nothing.