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Medicaid Decision

The Supreme Court today issued a major opinion that expands the scope of Medicaid “lien” claims and is likely to affect the settlement of Medicaid beneficiaries’ personal injury cases. The 7-2 decision in Gallardo v. Marstiller holds that Medicaid agencies may reimburse themselves for *past* Medicaid expenses out of settlements and awards reserved for a beneficiary’s *future* medical expenses.

In this case, 13-year-old Gianinna Gallardo suffered catastrophic injuries when she was struck by a truck struck as she stepped off her school bus in Florida. The state’s Medicaid agency paid $862,688.77 to cover her initial medical expenses, and continues to pay her medical expenses. A personal injury action against the truck’s owner and driver, as well as the Lee County School Board, resulted in a settlement of $800,000, with $35,367.52 expressly designated as compensation for past medical expenses; the settlement did not specifically allocate any particular amount for future medical expenses. Florida Medicaid sought reimbursement out of all settlement funds representing compensation for medical expenses, regardless of whether for past or future expenses and regardless of whether any future costs might actually be covered by the state program. Gaininna’s attorneys argued that the state’s lien was limited to the portion of the settlement specifically allocated to compensation for past expenses covered by Medicaid.

Today’s decision is likely to result in some confusion when settling personal injury cases for Medicaid beneficiaries, particularly with respect to Medicaid lien reductions mandated by the Court’s previous decisions in Arkansas Dept. of Human Svcs. v. Ahlborn and Wos v. E.M.A., and in arranging funding for Special Needs Trusts. Specific allocations of settlements, arbitration awards and trial verdicts to damages for past medical expenses will not limit the state’s claims for Medicaid reimbursement, and attorneys should use other approaches to contain Medicaid liens.

Click HERE to read the opinion!

For more information on how to protect these benefits post settlement, call Brett Newman at