A federal district court rules that federal law prohibits the state of Florida from seeking reimbursement for Medicaid payments it made on a recipient’s behalf from portions of the recipient’s personal injury settlement that are allocated to future medical expenses. Gallardo v. Dudek (N.D. Fla., No. 4:16-cv-116-MW/CAS, April 18, 2017).
In 2008, then 13-year-old Gianinna Gallardo was struck by a vehicle after getting off of a school bus, leaving her in a persistent vegetative state and unable to care for herself in any manner. Her parents filed a lawsuit against the driver of the vehicle, the school bus driver and the school district. The case eventually settled for $800,000, or about 4 percent of the case’s $20 million value. Because Medicaid had provided $862,688.77 in medical payments on Gianinna’s behalf, her attorney advised the Agency for Health Care Administration (AHCA), Florida’s Medicaid agency, of the settlement. The attorney also advised the agency that $35,367.52 of the settlement represented past medical expenses that were recoverable by AHCA.
Florida’s reimbursement statute uses a uniform formula in which the recipient’s gross settlement is first reduced by 25 percent to account for attorney fees, the remainder is divided in half, and AHCA is then entitled to recover the lesser of its total medical payments or one half. Under this formula, AHCA would recover $323,508.29 in medical payments from Gianinna's settlement.
Gianinna’s parents filed suit against the agency in federal court seeking an injunction and a declaration that Florida’s reimbursement statute violates federal law inasmuch as it allows the state to recover from the portion of her settlement beyond that allocable to past medical expenses. AHCA countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses. The parties filed cross motions for summary judgment.
The U.S. District Court, N.D. Florida, grants the Gallardos’ motion for summary judgment and denies AHCA’s motion. The court finds that, consistent with the U.S. Supreme Court’s decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)), AHCA is entitled to recover for past medical payments it made on Gianinna’s behalf only from that portion of the settlement allocated to past medical expenses. The court rules that where, as here, the state reimbursement law explicitly allows for recovery from the portion of the settlement attributable to future medical care, that portion of the state law violates, and is preempted by, federal Medicaid law.
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