The Supreme Court of Vermont rules that the state cannot assert a Medicaid lien against the portion of a settlement attributable to past medical expenses that were paid by the personal injury victim. Doe v. Vermont Office of Health Access (Vt., No. 2011-045, March 9, 2012).
John Doe was seriously injured in a car accident in 1992. Doe settled part of a lawsuit stemming from his accident in 2001, and at that time he agreed to settle the Vermont Office of Health Access' $894,893 Medicaid lien for $594,209. In 2006, the U.S. Supreme Court issued a decision in Arkansas Department of Health and Human Services v. Ahlborn holding that a state could assert a Medicaid lien against only the portion of a personal injury settlement that was attributable to past medical expenses. In that same year, Doe's lawsuit against the remaining defendants went to trial and he received a $42 million verdict, which was settled for a final total of $12 million. The Office of Health Access attempted to collect an additional $506,810, representing the amount of money spent on Doe's care between the 2001 and 2006 settlements.
Doe challenged the state's claim based on the Supreme Court's decision in Ahlborn. Applying a version of a formula discussed in Ahlborn, the trial court reduced the state's lien to $377,171.46. (The court concluded that 46 percent of the state's medical expenses occurred between 2001 and 2006. It then multiplied the amount of the verdict attributed to past medical expenses, in this case $2.9 million, by 46 percent to arrive at the state's share of medical expenses, in this case, $1.3 million. The court determined that $1.3 million represented 3.17 percent of the total $42 million pre-settlement award, and therefore the court applied the same percentage to the $12 million settlement to obtain the final $377,171.46 figure). Both parties appealed.
Doe claimed that the trial court should have subtracted the medical expenses that his family paid out of pocket from the $2.9 million value of all past medical expenses. Doe also argued that the court should have retroactively applied the Ahlborn formula to his 2001 settlement, which would have resulted in a refund. The state claimed that the court should have used the present value of the settlement (which was much less than $42 million), and not the face value, which would have significantly increased the state's recovery.
The Supreme Court of Vermont first dismisses the state's argument regarding the present value discount, finding that "the differential between the parties' figures is colossal . . . [and] the State simply did not prove that [its] figure is more fair." The court goes on to rule that "the reimbursement provisions allow the state to assert a lien against the portion of the settlement representing actual payments made by Medicaid, but the anti-lien provision prohibits the state to go further. Because there is simply no principled way to distinguish between non-Medicaid medical expenses and any other economic costs, such as lost wages, the principles espoused in Ahlborn would prohibit encumbrances beyond medical payments made by Medicaid." The court refuses to review the 2001 settlement, finding that there was accord and satisfaction.
For the full text of this decision, go to: https://info.libraries.vermont.gov/supct/current/op2011-045.html
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