Background
Subrogation by health care providers is a complex subject at the best of times. When the Federal government gets involved, it only gets worse. What is your obligation to reimburse Medicaid for treatment resulting from your client’s automobile accident? Well, the good news is that recent changes to Federal law have tilted the playing field in a personal injury claimant’s favor.
Initially, it is important to understand that Medicaid is a Federal program that is administered by the States according to Federal guidelines and provides health coverage for one in five Americans. Medicaid finances nearly a fifth of all personal health care spending in the U.S., providing significant financing for hospitals, community health centers, physicians, nursing homes, and jobs in the health care sector. As a result of the massive costs associated with the program, States are required to take all reasonable steps to recover costs for care and services provided to beneficiaries as a result of the actions of third parties. The practical result of this mandate is that, often, personal injury victims have been required to reimburse Medicaid despite being uncompensated for other economic and non-economic injuries.
The SCOTUS Decision
In 2006, the United States Supreme Court issued an opinion in the case of Arkansas Department of Human Services v. Ahlborn, 547 U.S. 268 (2006). This case involved the ability of a State agency to claim proceeds from a personal injury settlement as compensation for benefits provided to the personal injury plaintiff. Heidi Ahlborn was involved in an automobile accident on January 2, 1996. As a result, she suffered severe and permanently disabling injuries, and Medicaid paid for the vast majority of her treatment. She retained counsel, filed suit against the responsible party and negotiated a settlement of $550,000. The Arkansas Department of Human Services (ADHS), which administers Medicaid in Arkansas, intervened and attempted to claim a lien upon the settlement funds in the amount of $215,645.
In the litigation that ensued, the Supreme Court found in Ahlborn’s favor. Specifically, it held that ADHS could not assert a lien on Ahlborn’s settlement in excess of the amount that had been stipulated to by the parties for past medical expenses. In fact, the Federal anti-lien provision actually prohibited it from doing so and it had no claim against those portions of her settlement that represented pain and suffering or lost wages.
Statutory Abolition of Ahlborn and Recent Reinstatement
In 2013, Congress enacted legislation that effectively repealed the Ahlborn decision. The Bipartisan Budget Act (BBA) passed that year amended the Social Security Act to give States the right to recover entire settlements from personal injury claimants. It also gave States the right to place a lien on those settlements or awards. This legislation faced significant opposition, which was lead primarily by the American Association for Justice. It managed to twice delay implementation of this provision of the BBA, first to October 2016, and then again to October 2017. In 2018, Congress once again passed a Bipartisan Budget Act. Under Section 53102 of this Act, Section 202 of the 2013 BBA was not only repealed but was made void ab initio. Section 53102 provides that “the provisions amended by such subsection [Section 202] shall be applied and administered as if such amendments had never been enacted.” As such, Medicaid may only demand reimbursement from that portion of the award or settlement that represents damages awarded for medical expenses paid by Medicaid.
As a practical matter, it is difficult, if not impossible, to determine what percentage of any settlement funds are “attributable” to medical expenses. Most releases recite a lump sum settlement amount without delineating categories of damages being addressed. In the case of a verdict, it would seem to require a special verdict form that neither the plaintiff nor defendant typically has any motivation to request. Given the fungible nature of the vast majority of personal injury awards and settlements, Medicaid agencies would seem to have a herculean burden of proof. Conversely, personal injury attorneys now have a powerful tool with which to negotiate more reasonable reimbursements with these agencies.
