Tristani: If Upheld, a Major Change in How Medicaid Seeks Recovery

By Raymond J. Falcon, Jr.

In Tristani v. Richman (U.S. Dist. Ct., W.D., Pa., No. 06-694, March 25, 2009), a comprehensive 97-page opinion, Judge Joy Conti held that Pennsylvania Medicaid could not place a lien on, nor could it seek reimbursement from, monies received in settlement of a lawsuit for injuries that were covered by Medicaid payments for medical services.

Both plaintiffs, Rita Tristani and Joshua Valenta, settled cases for personal injury -- Tristani for medical malpractice and Valenta for injuries from a car accident. Attorneys for both parties followed the now-overturned Pennsylvania laws, which required that notice of the settlement be given to the state. The state notified the attorneys in each case that it maintained a lien on the settlements for medical expenses paid on behalf of Ms. Tristani and Mr. Valenta. In both cases, Medicaid received a portion of the settlement amounts in full satisfaction of its liens.

Subsequently, the plaintiffs sued the state to recover for the amounts paid to Medicaid, claiming, among other things, that the liens violated the anti-lien and anti-recovery provisions (42 U.S.C. 1396p(a)(1) and 1396p(b)(1)) of federal Medicaid law.

The Pennsylvania laws at issue were passed to bring Pennsylvania's practice into line with the procedures discussed by the Supreme Court in Arkansas Department of Health and Human Services, et al. v. Ahlborn, 547 U.S. 268 (2006) on the manner in which Medicaid should recover from a plaintiff's litigation settlement or awards monies. As in many other states, Pennsylvania required the plaintiff's attorney to advise Medicaid (in this case, the PA Department of Public Welfare) of the settlement so that Medicaid could present its statement for medical expenses incurred in connection with the injuries giving rise to the lawsuit. Medicaid would then recover from that portion of the settlement that represented reimbursement for medical expenses. Medicaid would also advise the plaintiff's attorney that Medicaid had a lien on the settlement proceeds, to ensure that the proceeds were not disbursed prior to reimbursing Medicaid.

Judge Conti threw out this entire process, finding that the Pennsylvania law allowing it was unconstitutional and preempted by federal law. Judge Conti held that federal law governing Medicaid recovery did not authorize Medicaid to seek recovery from, nor place a lien on, settlements received by injured persons who received Medicaid benefits in connection with their injuries. Rather, the recovery scheme in the federal law contemplated only that Medicaid would either sue the defendants directly for recovery of medical expenses or would intervene in the plaintiff's action at the outset to directly represent its own interests. It followed, then, that since the state had no protectible interest in the plaintiff's settlement or award, the state did not have a lien on the settlement or award proceeds. The court found that this was consistent with the anti-lien statute, which prevents Medicaid from asserting a lien against a person's estate while the person is alive and which contains no exception for Medicaid recovery.

Judge Conti noted that Ahlborn was not to the contrary -- that the U.S. Supreme Court just assumed for purposes of its analysis that Medicaid had both the right of recovery and a lien because of medical expenses. However, Judge Conti found that the Ahlborn court never actually ruled on whether the state had a lien or the right to recover medical expenses and that the issue remained open.

How should this affect our daily practice? If Tristani is appealed and upheld, it would represent a major change in the way Medicaid seeks recovery. Plaintiffs and their attorneys would then probably only be required to give Medicaid notice of the lawsuit so that Medicaid could intervene, but their obligations to Medicaid would end there. Of course, this case does not affect other requirements, such as the need to address the Medicare super lien or other statutory recovery and lien rules that may be in effect.

Plaintiff's attorneys should resist the temptation to flout Medicaid lien and recovery schemes in other states, at least for the time being. Until we learn whether Tristani will be appealed and the result of the appeal, it may be risky not to comply. However, the Tristani case could plainly be used as leverage in compromising Medicaid liens, at least until the law is better settled.

For the full text of this decision, go to: https://attorney.elderlawanswers.com/-i-tristani-v--richman--i---u-s--dist--ct---w-d---pa---no--06-694--march-25--2009--13563>