The Supreme Court of the United States issued a ruling last week that dictates that a state’s Medicaid agency can recoup funds for benefits paid against an injured party’s settlement award for future medical expenses.

In this case, a Florida student was tragically injured and left in a vegetative state when she was hit by a truck after she stepped off her school bus. Her personal injury suit settled with an $800,000 award, of which roughly $35,000 was designated for past medical expenses. Instead of taking the amount designated for past medical expenses, the state Medicaid agency tried to attach $300,000 of the settlement proceeds.
The Medicaid Act requires states to seek reimbursement from third parties who are liable for a recipient’s medical care. As a result, Florida enacted the Medicaid Third-Party Liability Act, which automatically attaches a lien to settlement proceeds that an injured applicant receives from a case “that necessitated that Medicaid provide medical assistance.” (See Fla. Stat. §§409.910(6)(c), (6)(c)(1), 409.901(7)(a).) Generously, the state’s statute limits recovery to 37.5% of the injured party’s total recovery amount.

The plaintiffs argued that federal statute prohibited a state from attaching settlement funds for future medical expenses. While the Medicaid Act prohibits a Medicaid agency from seeking reimbursement from a recipient’s property, the SCOTUS interpreted 42 U. S. C. §1396k(a)(1)(A) to allow a state Medicaid agency to seek reimbursement for both past and future medical care expenses from a personal injury settlement.

Jill Roamer, J.D., ElderCounsel