In what is believed to be the largest settlement or judgment ever paid by Maryland's Medicaid agency, a Maryland court has given its preliminary 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. Smith v. Colmers (Cir. Ct. Balt. City, No. 24-C-05-007421, March 12, 2010).
A class of Maryland recipients of Medicaid long-term care benefits filed suit over the state's refusal to allow them to deduct from their patient pay amount health care costs that they had incurred prior to becoming Medicaid-eligible. In response to the state's failure to allow deductions for applications filed on April 1, 2004, and before, and its imposition of a three-month limit on prior medical expenses for applications after that date, the recipients sought damages and injunctive and declaratory relief. In 2008, the Circuit Court for Baltimore City held that the state's policy of denying pre-eligibility expenses violated the Medicaid statute and that the state did not promulgate the limits on pre-eligibility expenses in accordance with Maryland law.
After two more years of negotiations, the parties have reached an agreement that 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 proposal, which awaits final approval by the Circuit Court for Baltimore City in May, also requires the state to submit new regulations that will clearly document the amount of pre-eligibility medical expenses incurred by Medicaid applicants and confirm that "the [pre-eligibility medical expenses] deduction applies where an expense was incurred during a period under consideration of an application that has lapsed". For applications seeking eligibility after April 1, 2009, the state will have the right to limit the deduction to expenses incurred within 90 days prior to eligibility.
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.
We congratulate attorney Landsman and his co-counsels for a landmark conclusion to years of tireless work. Said Landsman of the case, "It is unfortunate that it takes four years of aggressive litigation to get Maryland to comply with clear Federal law, but this ends three decades in which Maryland shirked its obligation under the Medicaid statute."
For a copy of the Order Granting Preliminary Approval of Class Action Resolution, click here.
For a copy of the Cost Settlement Protocol, click here.
For a press release announcing settlement of the case, click here.
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