U.S. Supreme Court

Kagan joins majority as Supreme Court allows state to recoup Medicaid costs from injury settlement

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The U.S. Supreme Court ruled Monday that a state’s Medicaid program can seek reimbursement from lawsuit settlement payments allocated for the future care of accident victims.

The court ruled 7-2 for the state of Florida in a case that turned on statutory construction. Justice Clarence Thomas wrote the majority opinion.

A member of the court’s liberal wing, Justice Elena Kagan, joined the court’s conservatives in the ruling for the state. Justice Sonia Sotomayor dissented and was joined by Justice Stephen Breyer.

The high court ruled in the case of Gianinna Gallardo, who was 13 years old in 2008 when a truck struck her as she stepped off the school bus. She remains in a persistent vegetative state.

Florida’s Medicaid agency had already paid more than $862,000 for Gallardo’s initial medical expenses. The agency still covers her medical expenses.

Gallardo received a lawsuit settlement of $800,000, with more than $35,000 expressly designated as payment for past medical expenses. No specific amount was listed as compensating future medical expenses.

Florida sought a $300,000 reimbursement under a state law allowing reimbursement from settlement payments for medical care. The law entitles the state to half of a beneficiary’s total recovery, after deducting 25% for attorney’s fees and costs.

The federal Medicaid law requires states to pay needy individuals’ medical costs and then to make reasonable efforts to recoup those costs, according to the majority opinion by Thomas. Medicaid beneficiaries are required to assign the state “any rights … to payment for medical care from any third party.”

“That assignment permits a state to seek reimbursement from the portion of a beneficiary’s private tort settlement that represents ‘payment for medical care,’” Thomas wrote, “despite the Medicaid Act’s general prohibition against seeking reimbursement from a beneficiary’s ‘property.’”

The ban on property reimbursement is known as the anti-lien provision. It protects settlements from state reimbursement efforts absent some statutory exception, Thomas said. State laws requiring an assignment of the right to receive payments from third parties for medical care “are one such exception,” Thomas said.

In her dissent, Sotomayor said the majority’s reading of the law is “inconsistent with the structure of the Medicaid program and will cause needless unfairness and disruption.”

The case is Gallardo v. Marstiller.

Hat tip to SCOTUSblog, which covered the opinion announcements Monday.

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