Medicare Compliance

The Supreme Court of the United States issued a decision affirming Medicaid’s right to seek reimbursement from a settlement amount allocated for past and future medical care. In Gallardo v. Marstiller, Gallardo suffered catastrophic injuries, resulting in permanent disability, when a truck struck her while exiting a school bus. Florida’s Medicaid agency paid initial medical expenses and continues to pay medical expenses related to this accident. Gallardo sued the owner and driver of the truck and the county school board. The litigation resulted in a settlement for $800,000.00, with $35,367.52 being allocated to past medical expenses. The settlement failed to allocate any amount for future medical expenses.

The Medicaid Act requires participating states to pay for needy individuals’ medical costs and then make reasonable efforts to recoup those costs from liable third parties. Florida’s Medicaid Third Party Liability Act automatically assigned to the state agency any right to third-party payments for “medical care.” This Florida statute allowed the agency to a portion of the tort recovery that is presumptively for “past and future medical expenses.”

Gallardo challenged the presumptive allocation and brought a law suit arguing that Florida was violating the Medicaid Act by trying to recover portions of the settlement compensating her for future medical expenses. The Eleventh Circuit concluded that a state is not prevented by the Medicaid Act from seeking such reimbursement. The Court agreed, noting that nothing in the Medicaid Act or lien provision limits such a mode of relief.

This decision reinforces perhaps a forgotten point to ponder in any workers’ compensation settlement. While a major focus has been on considering Medicare’s interests when a settlement involves future medical care, do not lose sight of Medicaid’s potential lien in your settlement analyses.