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Ahlborn is Alive and Well

Since the landmark decision by the US Supreme Court in Arkansas Department of Health and Human Services v. Ahlborn in 2006, state Medicaid agencies have grappled with how to recover monies spent for injury related care through their third party liability statutes without violating the Ahlborn decision. Many states continued to apply third party recover statutes that seemingly violated Ahlborn. In the 2012 WOS v. EMA matter, the Supreme Court was asked to review one such statute from North Carolina. North Carolina’s statute required that up to one-third of any damages recovered by a beneficiary for their injuries must be paid to Medicaid to reimburse it for payments it made on account of the injury. The Supreme Court, in 2012, found that this statute was not compatible with the federal anti-lien provision and violated the holding of Ahlborn which “precludes attachment or encumbrance” of any portion of a settlement not “designated as payments for medical care”. WOS reaffirmed Ahlborn and strengthened the argument that Medicaid could only recover from the portion of the recovery that represented past medical expenses. After the WOS decision, Congress passed a law (Bipartisan Budget Act of 2013) attempting to legislatively overturn Ahlborn.

The Bipartisan Budget Act (BBA) passed and became law in 2013. The BBA included a provision overturning the Supreme Court decision Arkansas Department of Health and Human Services et al. v. Ahlborn (Ahlborn). Under Ahlborn, Medicaid could only seek reimbursement for medical care received by a Medicaid enrolled plaintiff from the portion of a settlement that was attributable to medical costs. The new provision in the BBA permitted Medicaid to seek full reimbursement for all related medical costs it covered. Section 202(b) of the Bipartisan Budget Act of 2013 made changes in three key areas:

  • Language was stricken from 42 U.S.C. § 1396a(a)(25)(B) so that the clause “to the extent of such legal liability” was removed;

  • Language was stricken and added to 42 U.S.C. § 1396a(a)(25)(B) so that rather than expressly limiting Medicaid’s reimbursement rights for payments made for “health care items or services” the language now has no limitation and Medicaid ‘s rights are against “any payments from [a] third party.” and;

  • Finally, 42 U.S.C. § 1396k(a)(1)(A) was changed to remove the limitation on Medicaid’s recovery rights which previously had stated that those rights extended only to payments for “medical care” now there is no limitation and their rights are against “any payment.”

AAJ was quick to understand the significance of the repeal of Ahlborn and in 2013 alerted the membership stating:

“The Bipartisan Budget Act (BBA) which was just approved by Congress and signed into law contains language damaging to plaintiffs covered by Medicaid … The provision in the new law overturns a unanimous 2006 United States Supreme Court decision in United States vs. Ahlborn. In Ahlborn, the Court ruled that only the portion of the settlement that represented payment for medical expenses could be claimed by the state Medicaid agency. The BBA allows a state to claim ALL of a settlement or judgment. The BBA also counters a 2013 Supreme Court decision (Wos vs. E.M.A.) that rejected (6-3) North Carolina’s lien on Medicaid claimants’ tort recoveries. We expect the result of the new law to be that plaintiffs who are Medicaid recipients will recover less and in many cases will be unable to pursue claims at all because any recovery would have to be reimbursed to Medicaid.”

Due to AAJ’s efforts and others who lobbied against its implementation, the BBA’s harmful Medicaid lien provisions never took effect and were finally permanently repealed this past week. After its latest victory on behalf of injury victims, AAJ’s CEO Linda Lipsen said:

“I am pleased to announce that after years of hard work, we were able to secure a permanent and retroactive repeal of the Bipartisan Budget Act (BBA) language that overturned the Supreme Court decision Arkansas Department of Health and Human Services et al. v. Ahlborn (Ahlborn).

In a 9-0 decision, the Court held in Ahlborn that Medicaid could only seek reimbursement from Medicaid enrollees from the portion of a settlement attributable to medical costs. The Ahlborn decision was universally lauded as promoting fair and proportionate settlements for Medicaid recipients. But, in 2013, the BBA was enacted and included a provision overturning Ahlborn. This granted Medicaid a right of first recovery for full reimbursement of covered medical costs before plaintiffs could receive any recovery for lost wages, non-economic damages, or any other type of recovery.

AAJ worked hard to delay implementation of the harmful BBA provision and it was initially delayed until October 2016. We secured a second delay which ran through October 1, 2017, but expired, effectively overturning Ahlborn. Since the expiration of the second delay, AAJ has been working around the clock to secure a permanent and retroactive repeal of the harmful BBA provision. This repeal was finally realized in the budget deal reached by the House and Senate this week.

We believe this is a great victory that will ensure Medicaid recipients retain access to the courts. I want to thank the AAJ staff, especially Sarah Rooney, who worked tirelessly to secure this incredible result!”

Synergy enthusiastically agrees with the AAJ’s comment that this is a “great victory” for Medicaid recipients and for the trial lawyers who serve them. Medicaid’s recovery rights now continue to be limited to only the portion of a Medicaid beneficiary’s tort judgment or settlement designated as payments for [past] medical care. Pursuant to WOS v. EMA, “[t]he federal Medicaid statute’s anti-lien provision, 42 U. S. C. §1396p(a)(1), pre-empts a State’s effort to take any portion of a Medi¬caid beneficiary’s tort judgment or settlement not “designated as payments for medical care,” Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U. S. 268, 284.” Synergy’s lien resolution group continues to fight on behalf of Medicaid beneficiaries when the state Medicaid agency attempts to take more than the law allows. Armed with Ahlborn and WOS, the fight is made easier.

When attempting to resolve a Medicaid lien regardless of Ahlborn, utilizing state law is now more important than ever. Many state statutes allow for attorney fee reductions, reductions for litigation costs, and even for compromises based upon equity. Often these reduction provisions are not known, and certainly not raised, by the various recovery vendors who work on behalf of state Medicaid agencies so it is very important to be informed and use the appropriate reduction arguments available.

An example of the type of issues that still remain in negotiating Medicaid liens, is whether or not the Medicaid plan is traditional Medicaid or a Medicaid HMO. In some states, such as our home state of Florida, this makes a significant difference as to the strength of the plan’s recovery rights and methods for seeking reduction.

To best address these complex issues for your clients we encourage you to contact one of Synergy’s Medicaid lien specialists.

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