Cargill v. State of Wyoming, Department of Health, Division of Health Care Financing (Wyo., No. 97-315, November 9, 1998)

The Wyoming Supreme Court rules that the state's failure to file a lien against proceeds of a settlement does not bar the state from full reimbursement for Medicaid benefits paid. In fact, its failure to file shields the state from having fees and expenses deducted from the lien amount.

After Linda Cargill was burned by a home health provider, Medicaid paid for Ms. Cargill's medical treatment. Later, Ms. Cargill reached a settlement with the home health provider under which $70,000 would be placed into a special needs trust (SNT) for her benefit during her lifetime, with the Department of Health as remainderman. The settlement terms also provided that if the trust was not established, the money was to be paid to Cargill, "subject to the Medicaid lien claimed or which may be claimed by the State of Wyoming . . . " The Department intervened, seeking disapproval of the SNT and reimbursement for $13,580 it paid for medical services related to Ms. Cargill's burns.

At a hearing, Ms. Cargill argued that the Department should not be reimbursed because it had not filed a lien statement to perfect its lien. Ms. Cargill further contended that state statutes require that attorney's fees and expenses be deducted from the lien amount, which, in this case, would leave nothing for the Department. The district court ruled that the SNT was not permitted by Wyoming law and rejected Ms. Cargill's repayment arguments. Ms. Cargill appealed.

The court affirms, agreeing with the Department that in seeking reimbursement the Department can rely solely on statutes and rules providing for the automatic assignment of benefits upon application for Medicaid. "Clearly, perfecting and enforcing the Department's lien is optional," the court writes. The court further rules that the Wyoming statute calling for the deduction of fees and expenses from the lien amount applies only when the Department has exercised its option to file a lien statement. Since the Department did not file a lien, Ms. Cargill must repay the Department in full.