Settlement proceeds deposited in an escrow account have not yet been paid to the plaintiff and thus may be used to satisfy a Medicaid lien. Iannizzi v. Seckin (N.Y. App. Div., 2d, No. 2003-00436, March 15, 2004).
In 2001, a medical malpractice action against a hospital was settled and $2 million was deposited into an escrow account maintained by the attorney for the plaintiff, Gabrielle Iannizzi, a minor. The court ordered that no withdrawals be made from the account without further order. On July 2, 2002, Gabrielle's attorneys transferred $2,060,283.70 from the escrow account to Gabrielle's guardians' accounts without leave of the court. On July 8, 2001, the New York City Department of Social Services served a notice of Medicaid lien for $229,305. Gabrielle moved to vacate the lien, contending that it was untimely on the ground that Social Services Law § 104-b(2) provides that a notice of lien shall not be effective unless "served prior to the payment of any moneys to such injured party."
The Supreme Court denied Gabrielle's motion on the ground that the settlement proceeds were deposited in escrow, not paid to the plaintiff, and the transfer of funds from escrow to the guardianship accounts was not authorized by the court.
The Appellate Division of the Supreme Court affirms, agreeing with the lower court that payment of the settlement proceeds into Gabrielle's attorneys' escrow account is not payment to the plaintiff. The court adds that the dispersal of the escrow funds to the guardians violated the earlier settlement order.
For the full text of this decision, go to: https://www.courts.state.ny.us/reporter/3dseries/2004/2004_01742.htm
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