SCOTUS Creates Potential Issues For Medicaid Beneficiaries’ Personal Injury Settlements

A recent decision by the U.S. Supreme Court during a historic summer session stands to frustrate and impact Medicaid beneficiaries who are involved in personal injury claims. In Gallardo v. Marstiller, the Court voted 7-2 that the Medicaid Act permits a state (which is responsible for administering Medicaid benefits) to seek reimbursement for any portion of a personal injury settlement allocated towards the cost of medical care, both past and future.

Prior to this decision, the accepted approach was that Medicaid’s “anti-lien” provision—codified in section 1396p(a)(1) of the Medicare Act—prohibited the recovery of medical payments from a beneficiary’s “property.” In other words, a state could recover only medical expenses paid prior to a settlement, with the remainder of settlement funds being classified as personal property and therefore not subject to reimbursement.

At issue in Gallardo was Florida’s “Medicaid Third-Party Liability Act,” which allowed the State to reclaim past medical expenses while also taking funds from the beneficiary’s settlement explicitly set aside for possible future medical expenses. The “anti-lien” provision previously used by the Court was found not to apply to state laws, which are expressly authorized by the terms of the Medicaid Act. Based on the Court’s opinion, it appears that Medicaid now possesses the right to reimbursement not only for money paid in the past, but also for any anticipated costs or medical treatment in the future.

According to the majority opinion, the relevant sections of the Medicare Act contain no “limiting language” which would demonstrate Congressional intent to limit Medicaid’s recovery only to past expenses paid. Taking some liberties with the “plain text” of Section 1396k(a)(1)(A), Justice Thomas found the grant of “any rights…to payment for medical care” most naturally implies not only the right to secure payment for past medical expenses, but also for those in the future. While the dissenting opinion written by Justice Sotomayor likened this interpretation to granting a blanket “lifetime assignment” of money to Medicaid for services and benefits which may never be paid for any number of reasons (death, change in finances, etc.), the majority opinion written by Justice Thomas disagreed or simply did not care.

While it remains to be seen if the Gallardo opinion will be implemented in states beyond Florida, and, if so, exactly how, this could cause a monumental shift in how personal injury settlements are resolved for Medicaid beneficiaries. That uncertainty is one more reason Medicaid beneficiaries should consult with a qualified attorney prior to settling a claim for personal injuries to ensure that they are getting the most out of a settlement.

For more information on how this opinion could affect your personal injury case, or if you have questions about any personal injury-related issue, please call or text our office at 585-475-1100.

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