Andrews v. Haygood (N.C.App., No. COA06-1670, Jan. 15, 2008)

The North Carolina Court of Appeals finds that the state Medicaid program may seek reimbursement for medical expenses from a Medicaid beneficiary's entire malpractice settlement, not just the portion allocated for medical expenses. Andrews v. Haygood (N.C.App., No. COA06-1670, Jan. 15, 2008).

Katelyn Andrews was injured at birth and subsequently settled a multi-million dollar medical malpractice claim against her doctors and hospital. Since Katelyn was a Medicaid recipient, the North Carolina Division of Medical Assistance (DMA) sought reimbursement from her settlement for more than $1 million in medical expenses.

A trial court granted the DMA's motion and ordered the settlement trustee to reimburse the DMA out of the full settlement fund. The trustee appealed the ruling, arguing that the US Supreme Court's decision in Arkansas Department of HHS v. Ahlborn limits a state's recovery to the pro rata portion of the settlement representing medical expenses.

The Court of Appeals upholds the trial court's ruling, subrogating the settlement. The court points out that Ahlborn interprets an Arkansas statute, not a North Carolina law. The court also explains that the North Carolina Supreme Court decided a similar case (Ezell v. Grace Hospital Inc., 360 N.C. 529) in favor of the DMA shortly after the Ahlborn decision. Therefore, the Court of Appeals must follow the decision of the North Carolina Supreme Court and uphold the full subrogation of the settlement.