On June 6, 2022, the United States Supreme Court issued its decision in Gallardo vs. Marstiller. In an opinion written by Justice Clarence Thomas, the Court held that the federal health insurance law, specifically section 1396k(a)(1)(A), allows a state to seek reimbursement of settlement payments awarded for future medical care in a personal injury lawsuit. .
The dispute over a Medicaid lien made its way all the way to the Supreme Court following an $800,000 settlement in a personal injury lawsuit filed by Gallardo after she was hit by a school bus in Florida. The settlement specifically stated that $35,367.52 of the settlement amount represented compensation for past medical expenses and another portion could represent compensation for future medical expenses.
The State of Florida argued it could seek reimbursement of settlement payments for the past and future medical expenses. In response, Gallardo sued for a statement that Florida violated federal Medicaid law by trying to recoup settlement proceeds for future medical expenses.
By a 7-2 majority, the SCOTUS upheld the Eleventh Circuit’s ruling that settlement proceeds for future medical expenses were in fact recoverable. Writing for the majority, Judge Thomas interpreted the assignment provision, §1396k(a)(1)(A) of the Medicaid Act strictly, concluding that nothing in the wording of the provision limits the assignment by a beneficiary of the rights to payment of medical care from any third party to past medical expenses. Invoking the canons of construction, Judge Thomas also noted that the express reference to past medical expenses in other provisions of the Medicaid law indicate that its absence from §1396k(a)(1)(A) was intentional.
The court rejected Gallardo’s broader interpretation of §1396k(a)(1)(A), which read the provision in the context of other related provisions of the Medicaid law. For example, Gallardo argued that another provision expressly referring to past medical expenses is incorporated into §1396k(a)(1)(A). In support of his claim, Gallardo relied on an earlier U.S. Supreme Court case, Arkansas Department of Health and Human Services. versus. Ahlborn, noting that the two provisions echoed each other. However, the Supreme Court pointed out that Ahlborn dealt with the correlation of the provisions on a quite separate point.
Judge Sotomayor, dissenting, asserted that a state should only recover Medicaid amounts actually paid and noted that it would be fundamentally unfair for a state agency to share damages for which it provided no compensation. . In saying this, she referenced the Medicaid law’s prohibition against the state imposing a lien on non-medical settlement proceeds, such as lost wages or pain and suffering.
Following the Gallardo decision, Florida plaintiffs who are Medicaid recipients should expect that the portion of settlement proceeds allocated to past medical expenses may not be enough to satisfy a Medicaid lien.