WOS v. E.M.A. (USSC 2013)

The United States Supreme Court case of WOS v. E.M.A. involved a very important issue in personal injury cases, the issue of medical liens.  In that case, the Court addressed Medicaid liens in the context of a medical malpractice lawsuit involving very serious birth injuries.

The plaintiff’s attorney had asked for $42 million in damages.  The case eventually settled for only $2.8 million due to insurance policy limits issues.

The North Carolina Department of Health and Human Services claimed a lien for 1/3 of the total settlement.  The plaintiff filed a declaratory action in federal court arguing that the 1/3 presumptive lien on the total settlement violated the Federal Medicaid statutes’s anti-lien provision.  The case made its way all the way to the United States Supreme Court.

Essentially, the Court held that Medicaid could not claim a lien against proceeds unrelated to medical care.  In this case, unlike the prior case of Servs. v. Ahlborn upon which the court heavily relied, there was no designation as to what portion of the settlement was attributable to medical expense.

Despite the lack of specificity on what percentage of the settlement was attributable to medical care, the Court found that a non-rebuttable presumptive 1/3 lien was unjustifiable.  The Court noted if a 1/3 presumption was allowable, why not all of the recovery?

The Court reiterated that the Medicaid lien could attach only to those proceeds of the settlement designated or otherwise attributable to medical treatment.  In light of the huge damages suffered by the child and the fact that the case settled for much less than the actual damages, much of the settlement would arguably not be attributable to medical expense at all.    Recoverable damages in a birth injury case can be enormous going far beyond the future medical costs.  Arguably, in a case such as this, all damages might rightfully be attributed to non-medical damages.

As mentioned, the Court relied heavily on Ahlborn.   Ahlborn involved a case where a portion of the damages was specifically allocated to medical expense.   It did not address the situation where the damages were not attributed to medical expense by the parties, the court or jury.   However, Ahlborn did anticipate the situation along with the possibility that a judicial or administrative proceeding might be necessary for such an allocation.

Though North Carolina protested that such a judicial or administrative mechanism would be highly burdensome and require mini-trials on the allocation of awards, the Court dismissed the arguments.  The Court noted the reality that these allocations are necessary and quite common.  The Court noted further that many states already have those mechanisms in place without any indication of undue burden.

In sum, the Court reaffirmed Ahlborn in that a Medicaid lien can attach only to that portion of the settlement or judgment proceeds apportioned to medical expense and expanded it the case where no apportionment has been made.    If no such stipulation or finding is made by the parties, the court or the jury,  then a judicial or administrative proceeding must be held to make that determination.

To Read the Entire Opinion from the United States Supreme Court, go here:  WOS v. E.M.A.