Nursing Home Litigation
Slip op. at 24 (emphasis added). Finally, the court rejected the plaintiff ’s argument that the
Maryland subrogation statute required a reduction for attorney’s fees and costs, either as an interpretation of the meaning of Health-General § 15-120(c) or as a violation of Ahlborn. What the court did not do was conduct the kind of hearing or make the determination that the Supreme Court said was critical – determine how much of what the plaintiff recovered in the settlement was for medical expenses. Every time the court discussed the Medicaid agency’s claim, it referred to what the agency paid, and either assumed that the plaintiff recovered the full amount from the defendant in that element of its claims or failed to appreciate that there might be a difference. By contrast, an unpublished 2010 decision from the
Eastern District of Pennsylvania is a clear example of how a court should approach the abstract but not unsolvable question of how much of a settlement reflects, e.g., past medical expenses. In McKinney v. Philadelphia Housing Authority, 2010 WL 3364400 (
E.D.Pa.), an individual who suffered permanent brain damage as a result of a respiratory incident due to damp and mold conditions in a home settled a claim for $11,913,000, unallocated except for fees and expenses. Te person had received Medicaid benefits of $1,265,896.16, and Medicaid claimed that amount. Te Pennsylvania regulation provided for an allocation to
uses language similar to that ... in 42 U.S.C. § 1396a(a) (25(B) [the federal recovery provision], which requires that the state ‘seek reimbursement o[f] such assistance to the extent of such legal liability... .’
Slip op. at 17. Although the statute quoted refers to “the extent of legal liability,” the court refers to “the amount that the Department has expended for medical care,” as though that were the same thing, an ambiguity that pervades the decision. Te court also rejected the argument that the anti-lien provisions meant that state Medicaid agencies were required to proceed against the original tortfeasor, not the plaintiff-beneficiary.1 In rejecting the plaintiff ’s third argument, that DHMH is not entitled to recover from the portion of the settlement reflecting damages for future medical expenses, the court at first appeared to agree that the state is limited to recovery for past medical expenses. But the court failed to see the distinction between what the state paid and what plaintiff received from the tort-feasor defendant as compensation for past medical expenses. Again, it appeared to follow Ahlborn in acknowledging that it
must determination which portion of the settlement represents damages for past medical care expenses. Tis amount is not difficult to determine because the parties have stipulated that the Department spent $298,505.75.2
1 Tis was a holding in Tristiani v. Richman, 609
F.Supp.2d (
W.D.Pa. 2009), since reversed, ^. 2 Te figure cited as what the Department claimed for benefits paid was $298,585.75, slip op. at 3.
10 Trial Reporter / Fall 2011
Medicaid of one-half of the proceeds, net of fees and expenses “[i]n the absence of a court order ... .” Te court rejected the claim that the presumption had any role to play where a court was going to decide the allocation. It also rejected both the Medicaid agency’s argument that it could collect from the recovery for future medical expenses and the “ratio theory” urged by plaintiffs, that Ahlborn required it to apply the ratio of past medical expenses to total claim and apply that ratio to the settlement. In rejecting the ratio theory, the court said it would require a whole mini-hearing, replete with expert witnesses, to determine the “true value” of the case, “send[ing] judges on a quixotic intellectual journey in search of an illusory number.” 2010 WL 3364400 at 7. But the court then went on to explain a more nuanced approach. It correctly noted that among the problems with the ratio theory is
a logical failing. Why should one assume that simply because Plaintiffs settled for a fraction of the supposed “true value” of their claim, that this fractional reduction applies uniformly across the various heads of damage? For example, a plaintiff ’s past medical expenses can more easily be proven to a jury than can a plaintiff’s non-economic damages. Terefore,
plaintiffs face less uncertainty
regarding recovery of medical expenses and thus will be less willing during settlement talks to reduce their request for past medical expenses than for other, more uncertain heads of damage.
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