A Washington appeals court rules that a Medicaid recipient who had settled a Medicaid lien placed on her accident settlement in 2005 may not rely on the U.S. Supreme Court's 2006 decision in Ahlborn to void the settlement. Paopao v. State of Washington, Department of Social and Health Services (Wash.App. No. 59728-1-I, June 9, 2008).
In 2002, Karine Paopao was seriously injured in a car accident and had approximately $66,000 of her medical expenses paid for by Medicaid. In 2004, the Washington Department of Social and Health Services (DSHS) asserted a lien on Ms. Paopao's pending insurance settlement of $55,000. The settlement did not explain what portion of the funds was apportioned for medical expenses. In late 2005, Ms. Paopao and DSHS reached a lien settlement of $20,000 and DSHS released its lien in February 2006.
Three months later the U.S. Supreme Court issued its decision in Arkansas Dept. of Health & Human Services v. Ahlborn (547 US 268, May 1, 2006), which held that a state could only enforce its Medicaid lien against the portion of a beneficiary's accident settlement that represented medical expenses. Ms. Paopao filed suit in state court seeking to overturn her settlement based on unjust enrichment. She argued that, based on Ahlborn, DSHS lacked legal authority to settle the lien for the amount agreed upon. DSHS filed for summary judgment, which the trial court granted, relying on the principal of accord and satisfaction as well as Washington precedent in place prior to Ahlborn that permitted lien recovery from a full accident settlement (Wilson v. State, 142 Wash.2d 40, 2000). Ms. Paopao appealed.
The Court of Appeals of the State of Washington, Division One, agrees with DSHS and upholds the trial court's grant of summary judgment. The court finds that "Ahlborn was filed six months after the accord and satisfaction in this case was tendered and three months after the parties fully performed. The dispute was no longer pending when the decision was announced. Ahlborn does not apply retroactively to this case." The court goes on to hold that "at the time the parties settled, Wilson governed the interpretation and validity of Washington's [Medicaid] lien provisions . . . DSHS reasonably and justifiably relied on Wilson. Further, it appears that Paopao did not rely on Ahlborn."
For the full text of this decision, go to: https://caselaw.findlaw.com/wa-court-of-appeals/1189366.html
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