March 22, 2013

U.S. Supreme Court Rejects State’s Attempt to Take Excessive Funds From Legal Recovery

by Levin & Perconti

We often point out how securing a successful verdict is sometimes only part of the legal battle. That is because securing a judgement which shows that you are owed money is only the first step in actually receiving that recovery. In some cases, the process is relatively straightforward, and insurance companies or other parties ensure their obligations are handled. At other times, more extensive efforts much be undertaken to force those responsible to pay what is owed.

Another complexity involves using those funds--either a settlement or verdict--to repay third parties who also have a stake in the matter. Most notably, this usually includes government sources which provided support following the harm, usually in the form of medical care. Reimbursing Medicaid, for example, can often result in delay and headaches for those merely wanting to end the matter and get on with their lives. Fortunately, the Centers for Medicare and Medicaid recently supported plans to change procedures in such a way that will hopefully eliminate delay in making reimbursement claims.

In addition, some state Medicaid programs often try to demand excessive reimbursements, adding even more controversy and delaying a final resolution even longer. For example, North Carolina came under significant scrutiny recently as a result of state laws which found an irrebuttable statutory presumption that Medicaid was entitled to one-third of any tort recovery for which funds were provided. Essentially, this means that the state could demand significant portions of any recovery for a plaintiff without clear explanation for why the state needed to be reimbursed that much. Because the presumption was irrebuttable, there was nothing that plaintiffs in the state could do to show how the one-third taking was excessive in their case.

Legal Challenge
Fortunately, legal advocates took up the matter and challenged the rule in federal court. The main argument was that the state requirements ran counter to federal laws, specifically the anti-lien provisions in federal Medicaid statutes. In most cases federal laws always “pre-empt” state laws on the same subject.

The case made its way to the U.S. Supreme Court (Wos v. E.M.A.). The high court ultimately upheld lower court rulings and struck down the state law. The court opinion explained how the federal law did not allow states to put liens on tort awards which were not specifically designated as necessary for medical care. The North Carolina law was a blanket one-third presumption, which would therefore not be tailored to the specifics payments for medical care provided to each plaintiff. This was a 6-3 opinion, with a dissent supported by Justices Roberts, Scalia, and Thomas.

The bottom line effect is a good one for judicial fairness and the rights of those harmed by the negligence of others in any manner of ways, including medical malpractice. Basically, this holding means that similar state laws will not be upheld. States will not be able to pass arbitrary rules so that they can take portions of a recovery without showing how taking those funds is specifically tied to reimbursement for medical expenses paid by the state program.

See Other Blog Posts:

Injuries Caused by Robotic Surgeries

The Dangers of “Cookbook” Medicine