Ahlborn Does Not Require Reduction of Medicaid Recovery for Attorneys' Fees Where Already Provided by State Law

An Ohio appeals court rules that the U.S. Supreme Court's Ahlborn decision does not require the state to reduce its Medicaid recovery against third-party settlement funds in proportion to the attorneys' fees incurred to obtain the settlement because state law already provides for the payment of attorneys' fees before calculating the state's recovery.  Mulk v. Ohio Dept. of Job & Family Servs. (Ohio App., 10th Dist., No. 11AP-211, Nov. 10, 2011).

Yahya Mulk, Blair Hamren and Lisa Brown were injured by the tortious conduct of third parties and each received medical care that was paid for by Ohio's Medicaid system.  After the plaintiffs settled their claims and attorneys' fees had been paid, the state of Ohio requested repayment of the full amount of medical expenses it had paid on their behalf.  The plaintiffs filed suit, seeking a determination that the state was entitled to recover only the medical expenses it paid after a pro rata deduction of the attorneys' fees and costs incurred to obtain the settlement.

The trial court granted the state's motion for judgment on the pleadings, concluding that the plaintiffs had failed to state a claim upon which relief could be granted.  The plaintiffs appealed, arguing that the U.S. Supreme Court's decision in Ahlborn required the state to reduce its recovery to account for the plaintiffs' attorneys' fees and costs incurred to obtain the settlement.

The Court of Appeals of Ohio disagrees with plaintiffs' construction of Ahlborn and affirms the trial court's decision.  The court concludes that where, as here, a state law already provides for the payment of attorneys' fees and costs before calculating the state's recovery, Ahlborn does not require a pro rata reduction of the state's recovery of medical expenses.

For the full text of this decision, go to: https://www.sconet.state.oh.us/rod/docs/pdf/10/2011/2011-ohio-5850.pdf

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