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Getting Medicaid’s Hand Out of


Your Client’s Pocket by Ron M. Landsman


State Medicaid programs, with Con-


gress’ blessing, have been ahead of the pack in seeking to share in the recovery generated by personal injury litigation. Now, when an injured person recovers compensation for damages he or she has suffered at the hands of a negligent or malevolent party, many whom have had to or whom might pay the injured person’s medical bills line up to take a piece of the action. This is true for government programs like Medicare1 and Medicaid2


and for private insurers


under ERISA.3 To satisfy their clients, personal in-


jury attorneys not only have to win the battle of the lawsuit, but also the war of distribution. Knowing these risks at the outset, and taking them into account, enables the personal injury attorney to deliver not just a legal victory, but a life victory for the client, as well. Medicaid’s first line of attack is


through subrogation claims, either when litigation is pending or resolved, seek- ing a share of what it has already paid out for your client’s care at the time of settlement or judgment. By statute, State Medicaid programs are required to claim reimbursement for the costs they paid because of defendants’ negligence. A second line of attack comes after your client’s death. Medicaid can recover much of what it has paid out by claims against your client’s probate estate or, if one was established, from the special needs trust that held his or her recovery. While this is somewhat removed from


1


Title XVIII of the Social Security Act of 1935, as amended, 42 U.S.C. § 1395 et seq.


2


Title XIX of the Social Security Act of 1935, as amended, 42 U.S.C. § 1396 et seq.


3


Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.


Fall 2008


To satisfy their clients, personal injury attorneys not only have to win the battle of the lawsuit, but also the war of distribution.


paid for, the State Medicaid program is subrogated to the Medicaid beneficiary’s right to recover from the third party the cost of that care. Congress has long required State Medi caid programs to shift liability for costs to third parties by “tak[ing] all reasonable measures to ascertain the legal liability of third par- ties ... to pay for the care and services available under the [Medicaid State] plan,” 42 U.S.C. § 1306a(a)(25)(A); see also 42 C.F.R. § 433.136. It requires


4


Unlike Medicare, Medicaid is a Federal- State joint venture where Congress establishes minimum program require- ments and provides half (or more) of the funding for State medical welfare pro- grams for the elderly and disabled poor. Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498 (1990). It was always the step-child of Medicare, the residue of New Deal and Great Society compromises that limited Federal efforts for the poor to funding existing state programs. State control in the 1930s meant, among other things, the freedom to discriminate and avoid having national values imposed on State programs.


Trial Reporter


Health-General Code, § 15-120. The Federal statute plainly requires


that there be a causal connection be- tween, on the one hand, the services for which Medicaid paid and for which it seeks recovery and, on the other, the tort that gave rise to the plaintiff ’s claim. Medicaid is merely subrogated to the plaintiff ’s right, and has no greater right to recover for the cost of the medical care it paid for than the plaintiff does. The clarity of this limitation is reflected in the unanimity of the Sup reme Court’s decision in Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268, 164 L.Ed.2d 459, 126 S.Ct. 1752 (2006). The Court rejected the argument that a State Medicaid program had the right “to more than the portion of [a beneficiary’s] settle ment than represents medical expenses” for which it, Medic- aid, had paid. 126 S.Ct. at 1760. The facts in that case were largely


stipulated. Plaintiff, a young woman, 19 years old, was perman ently injured in an automobile accident; her claim was ultimately settled for $550,000. The State


41


the trial attorney’s primary focus, it is not at all removed from client’s concerns about their welfare and that of their families after they are gone, and how a case is settled may affect the client’s ability to attend to that.


Medicaid Subrogation Liens If a third party caused injury that gave


rise to the need for care that Medi caid4


beneficiaries to assign to the States their rights to such recovery, and to agree to cooperate with same. Id., § 1396k(a). State Medicaid programs are required to seek to recover from personal injury settlements what it has paid for the cost of medical care provided by the pro- gram. Maryland requires, as provided, for Medicaid subrogation against third parties liable for the cost of the care that was paid for by the program. Maryland


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