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Accident Victim v. Medicaid Lien

Should the state Medicaid program be able to recover its full value of the lien asserted for medical care in a personal injury case despite the fact that it could potentially leave the injured party with nothing? Answer: No, according to the recent decisions rendered by the Unites States Supreme Court in the cases of Services v. Ahiborn, and Wos v. E.M.A..

Prior to the recent decisions from the highest Court in the US, it has long been established that states like New York, for instance, could enact statutes providing that a full value of the Medicaid Lien–or value Medicaid paid for treatment of Plaintiff, be recovered from the settlement or some portion thereof leaving injured party with nothing.

For example, a person who is on Medicaid gets injured while slipping on ice and winds up fracturing several bones requiring surgery. A law suit is filed. Medicaid pays out $125,000.00 for his medical treatment and surgery. Case is ultimately settled for $100,000.00. Prior to the recent decision of the highest court on the land, Plaintiff would recover nothing as the Medicaid would receive the balance of the settlement after deduction of attorneys’ fees since its lien is higher than the amount of settlement.

Recently, the Supreme Court held this to be unconstitutional. The Court ruled that the Federal powers preempt those of the States in deciding in Ahiborn case that states had the right to recover only from the portion of a settlement or award that was allocated to past medical expenses. Therefore, in our example, if the entire settlement award of $100,000.00 was deemed for “Pain and Suffering” and not past medical expenses, Medicaid would get nothing. In a recent case of Wos v. E.M.A., the Supreme Court struck down Arkansas State law which imposed a mandatory minimum of 30% from total recovery for medicaid liens.

Although there is some new government legislation on the horizon including a Bill signed by President Obama which seeks to give back the Medicaid Agency the power to recover its full value of the lien from settlements, this law bill has not yet gone into effect and will likely be challenged as “unconstitutional” once again by the United States Supreme Court if it was brought up for review.

Attorneys who know the law, will structure cleints’ settlements and trial verdicts in such a way as to ensure that the injured party gets the maximum amount of recovery at the expense of paying back Medicaid Liens.