The NCSL Blog

30

By Lisa Soronen

In Gallardo v. Marstiller, the U.S. Supreme Court will decide whether the federal Medicaid Act allows a state Medicaid program to recover reimbursement for Medicaid’s payment of a beneficiary’s past medical expenses by taking funds from the beneficiary’s tort recovery that compensate for future medical expenses.

US Supreme CourtThe State and Local Legal Center (SLLC) filed an amicus brief in this case arguing Medicaid should be able to collect from whatever portion of a tort settlement represents payment for medical care, including for future medical expenses, to pay for past medical expenses.

Gianinna Gallardo has been in a persistent vegetative state since she was hit by a pickup truck getting off the school bus. Florida’s Medicaid program has paid almost $900,000 for her medical care. Her parents settled a case against multiple parties for $800,000. Per the settlement agreement, about $35,000 was for past medical expenses. The settlement also said some of its balance may represent compensation for future medical expenses.

The Florida Agency for Health Care Administration (FAHCA) didn’t participate in the settlement.

The Medicaid statute requires states to enact third-party liability laws under which “the state is considered to have acquired the rights . . . to payment by any other party,” “to the extent that payment has been made under the State plan for medical assistance.”

Per Florida law, if a Medicaid recipient brings a tort action against a third party that results in a settlement, FAHCA is automatically entitled to half of the recovery (after 25% attorney's fees and costs), up to the total amount of medical assistance Medicaid has provided, from the settlement allocated for past and future medical expenses.  

FAHCA sought to recover not just the $35,000 specifically allocated by the parties for past medical expenses. It argued it was entitled to recover, to pay for past medical costs, the portion of the settlement representing compensation for Gallardo’s future medical expenses. The 11th Circuit agreed.

Before the Supreme Court, Gallardo argues the “plain language [of the Medicaid statute] limits the State to third-party payments for medical care for which ‘payment has been made’ by Medicaid—past medical expenses.”

FAHCA notes that per the Medicaid statute Medicaid may obtain “any rights” a beneficiary has “to payment for medical care from any third party.” According to FAHCA, “[t]hat broad language permits Medicaid to recover from any damages representing payment for ‘medical care.’”

The SLLC amicus brief agrees with FAHCA that the Medicaid statute “unambiguously treats all third-party payments for medical care as fungible, and entitles the States to seek reimbursement for the whole portion of a settlement attributable medical case, regardless of whether the care was provided in the past or will be provided in the future.” The brief points out that due to “the massive financial burden on States imposed by Medicaid, it is crucial that States have every option open to them to defray their costs.”

Christopher M. Egleson, Kelly A. Eno, James R. Horner and Cassandra Liu of Sidley Austin wrote the SLLC amicus brief which the following organizations joined: the National Conference of State Legislatures, National League of Cities, U.S. Conference of Mayor and Government Finance Officers Association. 

Lisa Soronen is executive director of the State and Local Legal Center and a regular contributor to the NCSL Blog on judicial issues.

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.