On January 8, the U.S. Supreme Court heard oral arguments in Delia v. E.M.A., a case challenging North Carolina's Medicaid lien statute, which places a mandatory lien on a fixed share of any tort recovery.
In the case before the Court, Emily Armstrong settled a medical malpractice suit for $2.8 million against the doctor who delivered her -- far less than the cost of her future care. The parties did not stipulate what portion of the settlement represented payment for past or future medical expenses. The state, having already spent close to $2 million for Emily's care, asserted its lien for one-third of the settlement. (Under North Carolina law, the state is entitled to a lien on a Medicaid recipient's tort recovery for the lesser of the total cost of medical services provided or one-third of the recovery.)
Emily objected, claiming that the mandatory lien on one-third of the settlement violated the Supreme Court's decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn that limited the state's recovery from a Medicaid recipient to the funds she received as compensation for medical expenses. A federal district court granted summary judgment in favor of the state, but the U.S. Circuit Court of Appeals for the Fourth Circuit reversed the district court and remanded the case for a hearing that would allow Emily to rebut the state's one-third presumption. The state appealed to the U.S. Supreme Court.
At oral arguments, Emily's attorney, Christopher Browning, backed by the federal government as amicus curiae, faced off against the state's Solicitor General, John Maddrey. Maddrey initially appeared flustered as he faced a barrage of hostile questions from Justice Sotomayor, who wanted to understand how the state chose one-third for its lien amount. Sotomayor sounded incredulous, asking Maddrey "how can you, ex ante, predict -- particularly with a statute that wasn't based on any empirical data -- that 30 percent normally is the right amount? You just picked it out of the air? You could pick 40, 50, 60. How do we draw the line?"
Under questioning from Justice Alito, Maddrey argued that North Carolina’s statute affords Medicaid recipients certainty as to their liability to the state. Even if a jury or a judge determines that less than one-third of the settlement represented medical expenses, he said, the state would still be able to claim a one-third share, because "[t]he jury doesn't have any authority to countervene [sic] the statute, to enter a verdict in violation of -- of the statutory requirement. And here the statute tells the Medicaid recipient in advance how much of any recovery, whether that be from a settlement or a verdict, has to be allocated and paid back to the State."
Attorney Browning faced similar skepticism, especially from Justices Scalia and Roberts, when he claimed that a hearing to determine the amount of the state's recovery would not be cumbersome. Justice Scalia called the process "awfully time consuming" and "not very accurate." Browning conceded that "it is perfectly appropriate if the state wants to have a presumption. The problem is it can't be an irrebuttable presumption." This prompted Justice Breyer to question whether the parties to the lawsuit wouldn't be tempted to merely allocate nothing for medical expenses in order to reduce the defendant's costs and then rely on a hearing to keep the state's total recovery lower.
It's impossible to predict the outcome of the case given the back-and-forth nature of the argument, although in an argument preview SCOTUSblog contributor Ronald Mann said that North Carolina’s arguments are “surprisingly thin” and he believes that the Court will affirm the Fourth Circuit. A decision could come any time between now and June. In the meantime, the transcript of the argument is available here.
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