Medicaid ruling nixes one-size-fits-all state liens

By Kimberly Atkins
The Daily Record Newswire
Several states will have to revisit their Medicaid reimbursement rules after the U.S. Supreme Court struck down a North Carolina law that set an automatic reimbursement rate for third-party tort awards as preempted by the Medicaid Act.

The court’s decision in Wos v. E.M.A (formerly Delia v. E.M.A.) means that states cannot authorize automatic liens on personal injury suits for Medicaid reimbursements without some determination of how much of the award is apportioned for medical expenses.

“Fundamentally, what the court was doing here was reaching a fair and equitable result,” said Louis M. Bograd, senior litigation counsel for the Center of Constitutional Litigation in Washington. “The court left open a wide variety [of ways] to fairly allocate the amount of the
reimbursement. But a state statutory scheme cannot arbitrarily dictate an allocation without negotiation with the injured person.”

The ruling could also cause state lawmakers to take a harder look at their Medicaid laws to avoid similar challenges in the future.

“I think the impact of the case will cause North Carolina lawmakers to write legislation in a careful way to ensure that it complies with federal law,” said Knicole C. Emanuel, an associate in the Raleigh, N.C. office of Ragsdale Liggett.

The case was a challenge to a North Carolina law authorizing the state to place a lien on any verdict or settlement award for a tortious injury for which the state’s Medicaid program paid medical or health care expenses. The law provided that the lien could be up to one-third of the award or the actual amount of its Medicaid payments, whichever was less.

The plaintiff was a child with multiple birth injuries who sought damages for medical expenses as well as for pain and suffering, lost wages to the child’s parents, emotional distress and other injuries.

The case ultimately settled for $2.8 million, but there was no judicial determination of how much was allotted for each category of damages.  The court ordered that $933,333 of the settlement be paid to the state, which had paid $1.9 million in Medicaid benefits to the child.

The child’s parents sued in federal court to stop the reimbursement, arguing that the state statute was preempted by the Medicaid Act.


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