The U.S. Supreme Court Curtails State’s Method For Seeking Reimbursement Allocation From Third-Party Tortfeasors For Medical Expenses Paid On Behalf Of A State’s Medicaid Beneficiaries…(Could Administrative Boards Deciding Amount Of Liens Be On The Horizon?)

Baby was born with multiple birth injuries which require 12-18 hours of daily nursing care.  The baby and her parents filed a medical malpractice action against the delivery doctor and the hospital where she was born. Although the plaintiffs presented evidence of damages in excess of $42 million, they settled for $2.8 million, largely due to insurance limits, and the settlement did not differentiate between medical and nonmedical claims for allocation purposes. North Carolina’s Medicaid program pays part of the cost of her ongoing medical care. The trial court placed one-third of the settlement into escrow pursuant to North Carolina’s irrebuttable statutory one-third presumption that one-third is a reasonable amount owed to the State. The plaintiffs then brought a separate action in federal court seeking declaratory and injunctive relief, claiming the State’s reimbursement scheme violated the Medicaid anti-lien provision. The United States Supreme Court noted:  “The task of dividing a tort settlement is a familiar one. In a variety of settings, state and federal courts are called upon to separate lump-sum settlements or jury awards into categories to satisfy different claims to a portion of the moneys recovered.” The high court advised: “The State thus has ample means available to allocate Medicaid beneficiaries tort recoveries in an efficient manner that complies with federal law. Indeed, if States are concerned that case-by-case judicial allocations will prove unwieldy, they may even be able to adopt ex ante administrative criteria for allocating medical and nonmedical expenses, provided that these criteria are backed by evidence suggesting that they are likely to yield reasonable results in the mine run of cases. What they cannot do is what North Carolina did here: adopt an arbitrary, one size fits all allocation for all cases.” The Court held the scheme in question violated the anti-lien provision in 42 U.S.C. § 1396p (a)(1). Aldona Wos, Secretary, North Carolina Department of Health and Human Services v. E.M.A., a minor, (U.S. Sup. Ct.; March 20, 2013) 133 S.Ct. 1391, [185 L.Ed.2d 471].