Relying on Ahlborn, NY Court Reduces Medicaid Lien

A New York court reduces the state Medicaid agency's lien on a settlement, finding that after the U.S. Supreme Court's decision in Arkansas Dept. of Health and Human Servs. al. v. Ahlborn, Medicaid liens can be recovered only from that portion of the settlement representing past medical expenses. Chambers v. Jain(N.Y. Sup. Ct. Queens, No. 1240/03, April 13, 2007). Unpublished.

A medical malpractice claim arising from the birth of Nicholas Chambers was settled for $1.7 million. The Department of Social Services (DSS) for the City of New York asserted a Medicaid lien totaling $141,638 for medical services the agency had paid on Nicholas's behalf. DSS moved to vacate the compromise order, arguing that it had not received proper notice. Nicholas countered that the agency had received adequate notice and that Arkansas Dept. of Health and Human Servs. al. v. Ahlborn, 547 U.S. ____ (2006) controlled the determination of how much of the settlement proceeds could be used to satisfy the lien.

The Supreme Court of New York, Queens County, denies the DSS's motion to vacate the compromise order, finding that the agency had adequate notice and that Ahlborn controls. The court notes that prior to Ahlborn, under New York case law the entire amount of a settlement was available to satisfy a Medicaid lien. Since Ahlborn, the court holds, the true value of a Medicaid lien is limited to the amount of settlement proceeds allocated to past medical expenses. The court notes that although Ahlborn did not mandate a formula, the court in Lugo v. Beth Israel Med. Ctr. 819 N.Y.S.2d 892 (N.Y. 2006), followed Ahlborn's formulaic ratio of the settlement amount to the actual value of the case, finding it to be rational. Here, the court finds that since the actual value of the case has been determined to be $6 million and the settlement amount $1.7 million, the ratio is 28.3 percent. Accordingly, the Medicaid lien is reduced to $40,083.55.

For the full text of this decision, click here.

Did you know that the ElderLawAnswers database now contains summaries of more than 1,200 fully searchable elder law decisions dating back to 1993? To search the database, click here.