United States Supreme Court Strikes Down Arbitrary State Medicaid Recovery Legislation

Last month, the U.S. Supreme Court issued a landmark opinion in the case of Wos v. E.M.A. that protects the rights of those who receive settlements or judgements following an accident. Specifically, the ruling prevents states from taking unnecessary large portions of the award for Medicaid reimbursements.

In WOS a victim of medical malpractice and subsequent Medicaid recipient challenged a North Carolina statute requiring that up to one-third of any settlement recovered by a Medicaid beneficiary be paid to the State as reimbursement for payments made for medical treatment. The victim estimated her damages to exceed $42 million, but she eventually settled the claims for $2.8 million. The state court approved the settlement but put one-third of the recovery into escrow pending a determination as to the amount owed to North Carolina for Medicaid payments.

While the case was pending, the North Carolina Supreme Court issued an opinion holding that the irrebuttable statutory one-third presumption was a reasonable method for determining the amount due the State for medical expenses. The Federal District Court that originally heard WOS agreed with the North Carolina Supreme Court, but, on appeal, the Fourth Circuit Court of found otherwise. The U.S. Supreme Court granted certiorari to resolve the conflict between the Fourth Circuit and North Carolina Supreme Court.

In a previous case, the Supreme Court held that the federal Medicaid statute sets both a floor and a ceiling on a State’s potential share of a beneficiary’s tort recovery. The Court determined that federal law requires an assignment to the State of “the right to recover that portion of a settlement that represents payments for medical care,” but also “precludes attachment or encumbrance of the remainder of the settlement.”
Unfortunately, the earlier case did not establish how to determine what portion of a settlement constitutes payment for medical care, allowing North Carolina to adopt the statute presuming one-third a recipient’s the recovery represents compensation for medical expenses.
Writing for a 6-3 majority in WOS, Justice Kennedy stated that the statute’s arbitrary determination that one-third of every settlement was reimbursable to Medicaid constituted a violation of the Federal Medicaid anti-lien provision.


The Court opined that the state law had no process for determining what portion of a recovery is attributable to medical expenses, rather it picked an arbitrary percentage and labeled that portion of a beneficiary’s tort recovery as representing payment for medical care.

The holding in WOS is of particular importance here in Florida where the Medicaid reimbursement permits the State to claim up to one-half of any settlement as medical expenses. Beneficiaries will now be given the opportunity to argue the proper distribution of a settlement to reflect the amount actually paid in medical expenses.

As demonstrated by the decisions in this case personal injury cases involving Medicaid claims can be particularly complex. The Miami, Florida personal injury attorneys at Gerson and Schwartz, P.A. have extensive experience representing individuals seriously injured in car accidents and other accident claims. If you or a loved one were seriously injured and are dealing with a potential Medicaid claims, the Miami accident lawyers at Gerson and Schwartz, PA are here to help. For more information call 305-371-6000 or call us toll free at 1-877-47-2905.

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