Attorneys Awarded $5.3M in Final Settlement of Maryland Class Action Over Pre-Eligibility Medical Expenses

A Maryland court has given final approval to the settlement of a class action lawsuit alleging defects in the state's calculation of medical expenses incurred by Medicaid recipients before they became eligible for benefits and in the recipients' contributions towards their cost of care. In addition the court awarded $5.3 million in attorney fees. The court preliminarily approved the settlement in March.

Smith v. Colmers (Md. Cir. Ct. Balt. City, No. 24-C-05-007421, May 12, 2010) brings to a close a long-running case in which a class of Maryland recipients of Medicaid long-term care benefits sued the state over its refusal to allow them to deduct from their patient pay amount health care costs that they had incurred prior to becoming Medicaid-eligible. In 2008, a federal appeals court upheld CMS's rejection of a Maryland State Plan Amendment that would have prohibited Medicaid beneficiaries from using their income to pay for such medical expenses.

The Smith court approved what is believed to be the largest settlement or judgment ever paid by the State Department of Health and Mental Hygiene. The state has agreed to contribute $16 million to a fund that will reimburse nursing home residents for pre-eligibility medical expenses that they were forced to pay directly to a nursing home after they became eligible for Medicaid. The fund will also help to reimburse nursing homes for unpaid resident bills. In return, up to $64 million in nursing home bills will be forgiven. The court also awarded $5.3 million in attorney fees to be paid out over three years.

The attorneys in the case are Maryland ElderLawAnswers member Ron M. Landsman; Cyril Smith and William Meyer of the firm Zuckerman Spaeder LLP; and longtime National Academy of Elder Law Attorneys member René H. Reixach, Jr., of the Rochester, New York, firm of Woods, Oviatt & Gilman LLP.

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