If resolving liens isn’t already difficult enough, the Eleventh Circuit Court of Appeals recently threw another wrench into the process, at least where Medicaid is involved. In Gallardo v. Dudek, the Eleventh Circuit reached a holding that’s exactly opposite of the holding reached by the Florida Supreme Court two years earlier in Giraldo v. Agency for Health Care Administration. The conflicting decisions mean that, in determining the amount of a Medicaid lien, state court is preferable to one party and federal court is preferable to the other; this, in turn, leads to “forum shopping in its purest form.”
We’ll start with a quick primer on Medicaid. It’s a joint federal-state cooperative program that helps participating states provide medical services to residents who can’t afford them. The federal Medicaid Act sets forth the regulations, and each state’s Medicaid agency – such as the Agency for Health Care Administration in Florida (AHCA) – must comply with them. This post concerns one such regulation – the anti-lien provision – and an exception thereto.
(The seminal cases on the anti-lien provision are Arkansas Department of Health & Human Services v. Ahlborn and Wos v. E.M.A., and, if you’re not already familiar with them, they’re a good place to start for this post.)
In short, the anti-lien provision prohibits a state Medicaid agency from imposing a lien against the property of a Medicaid recipient. Such property includes the funds of a recipient’s settlement of a personal injury claim. The exception to the anti-lien provision is the mandate that a state agency seek reimbursement of Medicaid payments for medical expenses caused by a third party legally liable for them, like the defendant in a personal injury claim.
What this means – and what everyone agrees on – is that a state Medicaid agency can impose a lien against a recipient’s settlement funds, but only to the extent those funds represent payment for medical expenses (as opposed to, say, payment for pain and suffering). Thus, to the extent that a state law permits its Medicaid agency to recoup monies from a settlement that exceed the amount allocated for medical expenses, it’s preempted by the anti-lien provision.
In Florida, what the parties – and the courts – do not agree on is the scope of this exception. On the one hand, Medicaid recipients contend that it applies only to past medical expenses. As expressed in Giraldo, the Florida Supreme Court agrees. On the other hand, AHCA contends that it applies to both past and future medical expenses. And, as expressed in Gallardo, the federal courts take this position as well.
This disagreement sets the stage for forum shopping. Specifically, Medicaid recipients will continue to seek recourse in the state administrative courts, which must follow the Florida Supreme Court’s holding in Giraldo (as shown in this final order). Conversely, AHCA will seek recourse in federal court so it can benefit from the Eleventh Circuit’s holding in Gallardo.
If AHCA wins the race to the courthouse, it could take its favorable federal judgment back to the state administrative court (in fact, it’s already admitted that it will do so). There, res judicata principles could compel the state administrative court to apply the Gallardo holding in lieu of the Giraldo holding. As a result, AHCA could impose its lien upon a greater amount of the settlement proceeds, thus leaving a smaller amount for the Medicaid recipient to recover.
While we can’t keep AHCA away from the federal courthouse, we can take the task of reducing Medicaid liens off your hands. Contact our lien resolution professionals today.
Update: On July 2, 2021, the United States Supreme Court granted Gallardo’s Petition for Writ of Certiorari, thereby agreeing to review and answer “whether the federal Medicaid Act provides for a state Medicaid program to recover reimbursement for Medicaid’s payment of a beneficiary’s past medical expenses by taking funds from the portion of the beneficiary’s tort recovery that compensates for future medical expenses.”
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