Health Care

States back Medicaid’s bid to access members’ legal settlements

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Fourteen states on Monday urged the U.S. Supreme Court to allow Medicaid agencies access to any portion of enrollees’ legal settlements intended to go towards their medical bills.

In an amicus brief led by Ohio and Utah, the Republican states argued Medicaid must be able to collect from any portion of a tort settlement representing payment for medical services, whether its future expenses or past treatment.

The justices are scheduled to hear arguments on the issue in January, and their decision will set the standard for state Medicaid programs nationwide.

The case stems from a complaint brought by the parents of Gianinna Gallardo, who has been in a permanent vegetative state after a truck struck her when she stepped off a school bus in 2008. Gallardo’s parents sued the truck owner, driver and Lee County School Board and ultimately reached an $800,000 settlement.

As part of the deal, Gallardo’s parents prevented the Florida Agency for Health Care Administration from receiving any money from the settlement directed towards her future care. But the state’s Medicaid program said it was entitled to $300,000 from the deal, which includes a portion of the settlement reserved for Gallardo’s future medical needs.

In 2017, U.S. District Judge Mark Walker ruled in favor of the parents, saying the agency should only be able to recover settlement money related to past medical costs. The 11th U.S. Circuit Court of Appeals overturned the decision and sided with the FAHCA, ruling that federal Medicaid law requires individuals to give their full payment rights to the state before they can receive care. This rule keeps the Medicaid program financially afloat, the 11th Circuit said.

In a separate case, the Florida Supreme Court ruled that the FAHCA was only able to recover settlement funds from past medical expenses.

States are pushing for the court to side with the 11th Circuit, saying that federal law trumps state law and that ruling in Gallardo’s favor could lead to Medicaid insolvency.

“Reading [the Medicaid Act] otherwise would empower settling parties to gerrymander around the states’ right to recovery by labeling the entire (or nearly the entire) settlement a payment for ‘future care,'” the amicus brief said.

The National Conference of State Legislatures, National League of Cities, Government Finance Officers Association and others have also supported the Florida Medicaid agency with a similar amicus brief.


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