March 21, 2013

162017_132140396847214_292624_nThe federal Medicaid law provides that all U.S. States must require Medicaid beneficiaries “to assign the State any rights . . . to support (specified as support for the purpose of medical care by a court or administrative order) and to payment for medical care from any third party.” 42 U. S. C. §1396k(a)(1)(A). U.S. States receiving Medicaid funds must also “ha[ve] in effect laws under which, to the extent that payment has been made under the State plan for medical assistance for health care items or services furnished to an individual, the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services.” §1396a(a)(25)(H).

However, a separate provision of the federal Medicaid law, known as the anti-lien provision, provides that “[n]o lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan.” §1396p(a)(1).

Thus, the federal Medicaid law requires an assignment to the State of “the right to recover that portion of a settlement that represents payments for medical care” but it also “precludes attachment or encumbrance of the remainder of the settlement” because the beneficiary has a property right in the proceeds of the settlement, bringing it within the ambit of the anti-lien provision, and that property right is subject to the specific statutory “exception” requiring a State to seek reimbursement for medical expenses paid on the beneficiary’s behalf (the anti-lien provision protects the beneficiary’s interest in the remainder of the settlement).

In a case decided by the U.S. Supreme Court on March 20, 2013, the Supreme Court had to decide whether a North Carolina statute that required that up to one-third of any damages recovered by a beneficiary for a tortious injury be paid to the State to reimburse it for payments it made for medical treatment on account of the injury was compatible with the federal anti-lien provision.

The North Carolina statute requires that “… Any attorney retained by the beneficiary of the assistance shall, out of the proceeds obtained on behalf of the beneficiary by settlement with, judgment against, or otherwise from a third party by reason of injury or death, distribute to the Department the amount of assistance paid by the Department on behalf of or to the beneficiary, as prorated with the claims of all others having medical subrogation rights or medical liens against the amount received or recovered, but the amount paid to the Department shall not exceed one-third of the gross amount obtained or recovered.” N. C. Gen. Stat. Ann. §108A–57(a).

The North Carolina Supreme Court had held that the statute “defines ‘the portion of the settlement that represents payment for medical expenses’ as the lesser of the State’s past medical expenditures or one-third of the plaintiff ’s total recovery.” In other words, when North Carolina’s Medicaid expenditures on behalf of a beneficiary exceed one-third of the beneficiary’s tort recovery, the statute establishes a conclusive presumption that one-third of the recovery represents compensation for medical expenses, even if the settlement or a jury verdict expressly allocates a lower percentage of the judgment to medical expenses.

The U.S. Supreme Court stated in its written opinion that the federal Medicaid anti-lien provision prohibits a State from making a claim to any part of a Medicaid beneficiary’s tort recovery not “designated as payments for medical care” and further stated that North Carolina’s statute, therefore, is pre-empted if, and insofar as, it would operate that way.

The Supreme Court held that the North Carolina statute is pre-empted by the federal anti-lien provision for that reason: “the defect in §108A–57 is that it sets forth no process for determining what portion of a beneficiary’s tort recovery is attributable to medical expenses. Instead, North Carolina has picked an arbitrary number—one-third—and by statutory command labeled that portion of a beneficiary’s tort recovery as representing payment for medical care. Pre-emption is not a matter of semantics. A State may not evade the pre-emptive force of federal law by resorting to creative statutory interpretation or description at odds with the statute’s intended operation and effect.”

The Supreme Court concluded, “The law here at issue, N. C. Gen. Stat. Ann. §108A–57, reflects North Carolina’s effort to comply with federal law and secure reimbursement from third-party tortfeasors for medical expenses paid on behalf of the State’s Medicaid beneficiaries. In some circumstances, however, the statute would permit the State to take a portion of a Medicaid beneficiary’s tort judgment or settlement not “designated as payments for medical care” … The Medicaid anti-lien provision, 42 U. S. C. §1396p(a)(1), bars that result.”

WOS, Secretary, North Carolina Department of Health And Human Services v. E.M.A., a minor, by and through her guardian ad litem, Johnson, et al., No. 12-98, 568 U. S. ____ (2013).

Click here to read the Supreme Court’s opinion

The case decided by the Supreme Court involved a medical malpractice settlement for a minor child in North Carolina that had been approved by the court but did not allocate what portion of the settlement was for medical expenses paid by Medicaid on behalf of the minor child.

If you may be the victim of medical malpractice in North Carolina or in another U.S. state, you should promptly contact a North Carolina medical malpractice attorney or a medical malpractice attorney in your state who may agree to investigate your medical malpractice claim for you and file a medical malpractice case on your behalf, if appropriate.

Click here to visit our website or call us toll-free at 800-295-3959 to be connected with North Carolina medical malpractice lawyers or medical malpractice lawyers in your state who may be able to assist you with your medical malpractice claim.

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