The Supreme Court of Idaho rules that the US Supreme Court's decision in Ark. Dep't of Health and Human Services v. Ahlborn does not overrule the portion of Idaho's Medicaid recovery statute establishing the presumption that the state has the primary claim against an accident settlement when the settlement does not specify the portion attributable to medical expenses. In Matter of the Person of Hudelson (Idaho, No. 34495, Oct. 16, 2008).
Jonathan Hudelson was seriously injured in a car accident and subsequently qualified for Medicaid. Several years after the accident, he settled his case for $1 million, which the court transferred into a qualified settlement fund without notifying the Idaho Department of Health and Welfare. The court also approved the settlement allocation. At the same time, Mr. Hudelson filed a petition to transfer a sizable portion of the settlement into a supplemental needs trust. The Department, now notified of the action, did not object to the establishment of the trust, but disagreed with the amount reserved to satisfy its claim for medical expenses.
After an evidentiary hearing, the court applied a complicated formula based on the allocation of medical expenses found in Ark. Dep't of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006) and awarded the Department $3,465 out of a total claim of more than $270,000. The Department appealed, arguing that in circumstances where a settlement does not properly allocate a portion of the award for past-due medical expenses, Idaho law establishes a presumption in favor of the Department's entire claim.
Mr. Hudelson replied that he was not bound by the statutory presumption because the court did not allocate the Department's share when the funds were originally transferred into the qualified settlement fund. He also argued that Ahlborn prohibits the Department from collecting the full amount of medical expenses owed. The Department countered that Ahlborn left open the possibility that states could provide their own formulas for allocating settlements when there is no specific provision regarding medical expenses within the settlement itself.
The Supreme Court of Idaho reverses the trial court and remands the case. The court determines that Ahlborn does not overrule Idaho's law regarding the primacy of the Department's claim, but rather that there is a presumption the Department is entitled to recoup amounts paid. However, if this presumption is successfully rebutted, the court approves the use of the formula derived from Ahlborn in determining the proper allocation. The court also finds that the trial court should not look at Mr. Hudelson's future medical expenses when calculating the government's share.
For the full text of this decision, go to: https://www.isc.idaho.gov/opinions/hudelson34495.pdf.
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