The New Hampshire Supreme Court rules that the state released its Medicaid lien against the estate of a smoker when it settled litigation against tobacco manufacturers. In Re Estate of Raduazo (N.H., No. 2001-189, Dec. 18, 2002).
Geraldine A. Raduazo, a lifelong smoker, died in December 1997. Ms. Raduazo had developed severe smoking-related health problems and had received Medicaid assistance amounting to $169,765. The state filed a statutory lien on Ms. Raduazo's estate for that amount. Before any monies were distributed to the state, it, along with forty-five other states and six territories, settled a lawsuit against a number of major tobacco companies in a Master Settlement Agreement (MSA). Included in the relief the state requested was that the court "award[ ] monetary relief . . . including but not limited to . . . the State's costs under the Medicaid program of providing medical care related to tobacco use." Under the settlement, New Hampshire will receive a stream of payments from the tobacco defendants valued at approximately $1.304 billion over twenty-five years.
Ms. Raduazo's estate petitioned the probate court for a declaration that the MSA released the state's lien on estate funds. The estate argued that the state recovered money from the tobacco defendants through an assignment of rights from Ms. Raduazo. The state countered that the tobacco litigation involved a direct action relating to damages it sustained as a result of actions by the tobacco companies, not an assigned cause of action. Therefore, it argued, none of the proceeds of the settlement were allocable to expenditures made on Ms. Raduazo's behalf. The probate court granted the state's motion for summary judgment, and the estate appealed.
The Supreme Court of New Hampshire reverses, holding that "the State's litigation against the tobacco companies was based, at least in part, upon Raduazo's statutorily assigned right to recover medical expenses from a liable third party."
"Under the settlement agreement," the court continues, "the State stepped into the shoes of the Medicaid recipients and obtained a settlement based upon their rights. In doing so, the State divested the Medicaid recipients suffering from tobacco-related illnesses of their right to pursue health care costs that were covered by the State's medical assistance programs and to recover damages in the amount of the medical expenses paid on their behalf. . . .To bar the Estate from demonstrating that the payments made pursuant to the MSA were made, in part, to reimburse the State for monies paid through the Medicaid program on Raduazo's behalf would effectively permit the State to collect the amount of money to which it is entitled twice, and unjustly enrich the State at the expense of the Estate.
For the full text of this decision, go to: https://www.courts.state.nh.us/supreme/opinions/2002/0212/radua164.htm
In a similarly premised action, Hawaii Medicaid recipients who suffer from tobacco-related illnesses filed a lawsuit against state officials alleging that a portion of MSA funds received by the state constitute amounts previously assigned to the state by them and other recipients when they received Medicaid benefits for their tobacco-related illnesses. They sought a portion of the settlement funds. Cardenas v. Anzai (9th Cir., No. 01-15297, Nov. 18, 2002). The Ninth Circuit Court of Appeals ruled that the plaintiffs' claims are precluded by Congress's 1999 amendment to the Medicaid statute, which provides that tobacco settlement funds received by a state may be used "for any expenditures deemed appropriate by the State." See 42 U.S.C. § 1396b(d)(3)(B)(ii). The court reaffirmed this holding in an "indistinguishable" Nevada case Anderson v. Willden (9th Cir., NO. 01-15986, Dec. 18, 2002).
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