MEDICAID

The United States Supreme Court unanimously affirmed the decision in Arkansas Dep’t of Health & Human Services v. Ahlborn.  With this holding, a state’s Medicaid department will be limited to reimbursement from only that portion of a judgment or settlement that represents payment for medical expenses. States are prohibited from seeking reimbursement for Medicaid costs from settlement proceeds that were intended to cover items other than medical expenses, such as pain and suffering and wage loss.  

In the United States Supreme Court’s own words, states may not demand reimbursement from portions of the settlement allocated or allocable to nonmedical damages; instead, states are given only a priority disbursement from the medical expenses portion alone. Medicaid’s recovery rights now continue to be limited to only the portion of a Medicaid beneficiary’s tort judgment or settlement designated as payments for [past] medical care.

The Ahlborn decision was reaffirmed in 2013 by the United States Supreme Court in WOS v. EMA.  Similar to Ahlborn, the Wos Court discussed when the state may not demand recovery from a portion of the settlement allocated to non-medical damages. The court stated that when “there has been a judicial finding or approval of an allocation between medical and nonmedical damages—in the form of either a jury verdict, court decree, or stipulation binding on all parties—that is the end of the matter.”  “With a stipulation or judgment under this procedure, the anti-lien provision protects from state demand the portion of a beneficiary’s tort recovery that the stipulation or judgment does not attribute to medical expenses.”

As a trial lawyer, it is important to understand the underpinnings of the Ahlborn and Wos decisions so you can apply them to your State’s third-party liability recovery provisions.  The important thing to remember is that these cases limit a State Medicaid agency’s recovery rights related to a third-party liability settlement.  In order to reduce Medicaid liens, State specific statutes must be followed, but arguments to reduce should be based on the principles espoused in Ahlborn and Wos so that the Medicaid Liens are is reduced in proportion to the full value of damages versus what was received.