Medicaid can recoup settlement funds for future medical expenses - SCOTUS - Reuters.com

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  • Majority finds statute does not distinguish between past, future expenses
  • Sotomayor, in dissent, calls result "absurd" and unfair

(Reuters) - A state Medicaid program that pays for an accident victim's care can recoup settlement funds intended for future medical care to cover the cost of care it has already provided, the U.S. Supreme Court has ruled, siding with Florida against the family of a woman who was left in a vegetative state after being hit by a truck.

In the 7-2 decision , the court said the state could recoup up to $300,000 of an $800,000 settlement for Gianinna Gallardo. Gallardo's family had argued that Medicaid's recovery should be capped at the $35,000 explicitly set aside in the settlement for past medical care.

Justice Sonia Sotomayor wrote in dissent that the result was "absurd" and could discourage Medicaid recipients from seeking compensation in tort lawsuits in the future.

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"The decision, we believe, will harm Medicaid beneficiaries," Bryan Gowdy of Creed & Gowdy, a lawyer for Gallardo's family, said in an email. "We hope that Congress will consider amending the statutes."

Florida's Agency for Health Care Administration, which oversees the state's Medicaid program, did not immediately respond to a request for comment.

Gallardo, then 13, was hit by a truck in 2008 as she stepped off her school bus, leaving her in a persistent vegetative state. Florida's Medicaid program paid about $860,000 of her initial medical expenses, and has continued to cover her medical expenses since then, according to the opinion.

Gallardo's parents sued the truck driver and her school district, resulting in an $800,000 settlement.

The federal Medicaid statute forbids state Medicaid programs from placing a lien on any beneficiary's property in most cases, but also requires the programs to seek to recoup expenses from third-party settlements. Florida law states that 37.5% of a third-party settlement is presumed to be for medical expenses.

Gallardo's family sued the state in the Northern District of Florida, seeking a declaratory judgment that the state was entitled only to the $35,000 explicitly set aside for past medical expenses.

A district judge granted summary judgment to the family, but the 11th Circuit reversed. It noted that the federal statute instructed states to recoup settlements funds "for the purpose of medical care," without specifying past or future.

Justice Clarence Thomas, writing for the majority, agreed, saying the plain language of the statute supported the result.

Sotomayor, joined by Justice Stephen Breyer, said the ruling potentially allowed Medicaid programs to recover settlement funds for "future medical care for which Medicaid has not paid and might never pay."

The case is Gallardo v. Marstiller, U.S. Supreme Court, No. 20–1263.

For Gallardo: Bryan Gowdy of Creed & Gowdy

For the state: Florida Solicitor General Henry Whitaker

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.