New York's highest court rules that the entire amount of a personal injury settlement is available to satisfy a Medicaid lien, not just that portion of the settlement specifically allocated to past medical expenses.
Robin Calvanese and Frances Callahan received Medicaid benefits for injuries suffered allegedly due to the negligence of third parties. Their personal injury actions against the third parties were eventually settled. The net settlement proceeds were allocated to Calvanese's and Callahan's pain and suffering. Although a Medicaid lien was placed on both settlements, the New York Supreme Court approved the transfer of the funds to supplemental needs trusts for their benefit without satisfaction of the lien. In both cases, the Appellate Division reversed the Supreme Court orders establishing the supplemental needs trusts, ruling that all settlement proceeds are available to satisfy a Medicaid lien, not just that portion intended to compensate the plaintiff for past medical expenses. Calvanese and Callahan appealed.
The court finds that New York's assignment, subrogation and lien provisions give the Department of Social Services "broad authority to pursue any amount of third party reimbursement to which appellants are entitled." "Appellants' proposal," the court writes, "that courts--or Medicaid recipients acting in conjunction with responsible third parties--be allowed to compromise Medicaid liens by allocating settlements to specific categories of damages is contrary to statutory mandate." The court rejects the appellants' contention that allowing the Department to satisfy a Medicaid lien from all settlement proceeds will give Medicaid recipients no incentive to settle weak claims for an amount less than or equal to the amount of the Medicaid lien. This argument, the court holds, "ignores the public welfare official's powers both to fix the amount of the lien and to release and discharge it."
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