Supreme Court Helps Limit Medicaid Reimbursements – AGAIN

Medicare Set-Aside Blog on March 21, 2013 | Posted by


In a 6-3 decision yesterday, the Supreme Court in WOS v. E.M.A. further limited state Medicaid programs’ recoveries from tort recoveries. You will recall in Ahlborn, the Court held that the federal Medicaid statute set both a floor and a ceiling on the state’s recovery by allowing recovery only from payments specified for medical care and at the same time precluding attachment or encumbrance of the remainder of the settlement. Ahlborn did not, however, resolve how to determine what portion of a settlement represents medical. So some states, such as North Carolina, created laws to make such determinations simple – it established one third of any recovery as payment for medical expenses. Unfortunately, the law was written in such a way that the statute prevails even in instances where binding stipulation or judgement specified medical damages at less than a third. This appears to be the conflict with the federal Medicaid statute; thus, this case has made its way to the high court. 

The background of the case is a med mal claim for birth injuries leaving the child deaf, blind and unable to sit, walk, crawl or talk. She also suffers from mental retardation and a seizure disorder. She requires 12 to 18 hours of skilled nursing daily, estimated to cost over $37 million over her life expectancy. The life care plan totals $42 million and the state is shouldering the bulk of her ongoing care. The $1.9 million of expenses already endured by the state are the subject of this case as the state sought reimbursement for a little over $900,000. In November 2006, the court approved a $2.8 million settlement, dictated in large part by policy limits, without allocating money among the different claims for damages. 

Now the key difference between this case and Ahlborn is the fact that medical damages were expressly enumerated. However, neither case addresses the ridiculous nature of how the Ahlborn parties arrived at the $32,000 allocation to medical expenses compared to the state’s claim for $220,000 and that key problem will not be resolved by this case either. While arbitrary, the North Carolina statute at least put into play a known variable so that all of its citizens knew where they stood when seeking tort recoveries. Absent such a standard, you get the ludicrous outcomes we frequently see when faced with LMSA questions where the plaintiff prioritizes all damages other than medical, past or future, to the point where there is frequently nothing left for those claims. Because both sides continue to share in this tragedy through either involvement or enduring the expense, the only solution seems to be for all parties to shoulder an equal share. If we are able to quantify damages for purposes of making demands and exempting portions of insurance recoveries from tax liability, then these is no reason why we cannot equally apportion an insurance settlement over all claims for damages with policy limits or statutory caps to limit compensation. 

In case you’re wondering about my interest in Medicaid today, I like to watch outcomes of cases similar in nature to Medicare so see how the courts analyze the issues. I draw parallels to see if similar outcomes could be expected in our MSP cases. Unfortunately for purposes of MSP recoveries, the statutory scheme of the two programs is different and Medicare does not possess that same limiting language with regard to tort recoveries; therefore, this decision and Ahlborn have little effect on the MSP.

What I did enjoy though was the part in the majority opinion where the state demonstrated that its legislature relied upon CMS’ approval of the statutory scheme. After noting that the CMS documents in question “no longer reflected the agency’s position,” then discussing Chevron, Christiansen and Skidmore and calling into question agency deference, the Court stated that the CMS documents lacked persuasive force. That does help our cause if an MSA issue ever makes its way to the Supreme Court. Unfortunately, I was disheartened by the end of Justice Breyer’s concurring opinion in which he admits that his decision was influenced by CMS’ change of heart. He found it meaningful that change came about after the agency looked into the matter more thoroughly and, given the agency’s “expertise,” felt he should give weight to that “new and different” agency decision. That doesn’t bode well for an industry based upon the exercise of obtaining that same agency’s written opinion on a regular basis…


SUPREME COURT OF THE UNITED STATES
No. 12–98
ALDONA WOS, SECRETARY, NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SER- VICES, PETITIONER v. E. M. A., A MINOR, BY AND THROUGH HER GUARDIAN AD LITEM, DANIEL H. JOHNSON, ET AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
568 U. S. ____ (2013)
March 20, 2013