Medical Malpractice and Medicaid - Oil and Water April 1, 2013.

Where does a jury award and Medicaid dues owed begin and end? The Supreme Court is trying to figure that out.

This story begins with the birth of Emily A, who was delivered by caesarian section, which did not go well. As a result of medical negligence, Emily was diagnosed as being profoundly disabled. She cannot talk, is blind, rarely moves, is subject to seizures and at times needs her airway cleared via suction. She requires around the clock care. Emily A is now 13-years-old and nothing will change for her anytime soon.

The legal drama in this case is when and how does a state take their share of medical malpractice payments awarded in cases like this. Emily A is a Medicaid beneficiary. The main issue is how to determine how much of the award or settlement may be earmarked as medical expenses, making it likely to be subject to a state claim. There seems to be no way to determine what is fair and appropriate. Given the nature of this legal question, no one expects an answer from the court until sometime in June.

Despite the question being contentious and difficult to solve, it is an issue that needs to be dealt with, as the decision will set precedent for how Emily A’s state, and others, reclaim a portion of Medicaid funds spent on medical care. Emily lives in North Carolina, and currently, the law permits the state to take back a one-third portion of such a settlement or award.

Emily came into this world in 2000 and the nature of her birth injuries led the parents to sue the obstetrician; a man with a history of abusing drugs. He voluntarily surrendered his license to practice at the time. Over the years, North Carolina has spent about $1.9 million for Emily’s care. In 2006, the family received a $2.8 million settlement that was promptly slapped with a lien by the state for one-third of that amount, or $933,333.33.
The A’s are arguing that an automatic one-third, in light of their daughter’s catastrophic injuries and 24/7/365 care, is over the top. They argue each case needs to be heard on an individual basis, according to the facts of the case. As it stands, the North Carolina law allows the state to take one-third no matter what the circumstances may be.

Interestingly, Medicaid does not actively monitor whether it is paying out money as a result of medical malpractice. Instead it relies on the patient and/or their family to investigate whether the patient was injured as a result of malpractice. If that appears to be the case, they are expected to hire an attorney to litigate the matter, incur the litigation costs and stress of the litigation and incur the risks associated with winning or losing the case. If the case is successful, Medicaid swoops in and takes one third or more of the recovery. This seems blatantly unfair.

The Supreme Court is not comfortable with the arbitrary nature of an automatic one-third award. In short, where does the law draw the line? When does expediency and efficiency for the state to collect money become injustice to a victim? Should a state even be allowed to collect on a damage award to a victim who has taken all the risks to sue for compensation? This is a case that will be well worth watching.