Medicaid Liens in North Carolina Injury Cases — U.S. Supreme Court rules

Very courageous attorneys from North Carolina at Kirby & Holt, L.L.P recently had a rare opportunity.  They were able to help shape the law across the country by challenging North Carolina’s interpretation of medicaid reimbursement in accident and injury cases.  Their argument was that North Carolina’s procedure was arbitrary and often hurt those needing help the most; children. In WOS v. EMA 568 U. S. ____ (2013) the court held; “The task of dividing a tort settlement is a familiar one. In a variety of settings, state and federal courts are called upon to separate lump-sum settlements or jury awards into categories to satisfy different claims to a portion of the moneys recovered.  Indeed, North Carolina itself uses a judicial allocation procedure to ascertain the portion of a settlement subject to subrogation in a workers’ compensation suit. It instructs trial courts to “consider the anticipated amount of prospective compensation the employer or workers’ compensation carrier is likely to pay to the employee in the future, the net recovery to plaintiff, the likelihood of the plaintiff prevailing at trial or on appeal, the need for finality in the litigation, and any other factors the court deems just and reasonable.” N. C. Gen. Stat. Ann. §97- 10.2(j) (Lexis 2011). North Carolina would be on sounder footing had it adopted a similar procedure for allocating Medicaid beneficiaries’ tort recoveries. It might also consider a different one along the lines of what other States have done in Medicaid reimbursement cases. The State thus has ample means available to allocate Medicaid beneficiaries’ tort recoveries in an efficient manner that complies with federal law. Indeed, if States are concerned that case-by-case judicial allocations will prove unwieldy, they may even be able to adopt ex ante administrative criteria for allocating medical and nonmedical expenses, provided that these criteria are backed by evidence suggesting that they are likely to yield reasonable results in the mine run of cases. What they cannot do is what North Carolina did here: adopt an arbitrary, one-size-fits all allocation for all cases.”  WOS v. EMA 568 U. S. ____ (2013) Any reader of our blog knows we constantly address the issues involved in how workers’ compensation liens work within third party (accident and injury) cases. The Supreme Court continued; “North Carolina’s statute, therefore, is pre-empted if, and insofar as, it would operate that way.And it is pre-empted for that reason. The defect in §108A-57 is that it sets forth no process for determining what portion of a beneficiary’s tort recovery is attributable to medical expenses. Instead, North Carolina has picked an arbitrary number–one-third–and by statutory command labeled that portion of a beneficiary’s tort recovery as representing payment for medical care. Pre-emption is not a matter of semantics. A State may not evade the pre-emptive force of federal law by resorting to creative statutory interpretation or description at odds with the statute’s intended operation and effect.” “North Carolina’s argument, if accepted, would frustrate the Medicaid anti-lien provision in the context of tort recoveries. The argument lacks any limiting principle: If a State arbitrarily may designate one-third of any recovery as payment for medial expenses, there is no logical reason why it could not designate half, three-quarters, or all of a tort recovery in the same way.”  WOS v. EMA 568 U. S. ____ (2013) Thanks to these courageous attorneys who have spend incalculable hours helping a client, a child and a state.