Tennessee Quickly Settles Pre-Eligibility Medical Expense Suit

Ron M. Landsman

Chalk up another victory for the “PEME Team.”  Tennessee has settled a lawsuit filed in May over its refusal to deduct “pre-eligibility medical expenses” (PEMEs) from Medicaid recipients' patient pay amounts (PPA).

“It is satisfying to see a state agency recognize its error and respond so quickly,” Maryland ElderLawAnswers member Ron M. Landsman, told ElderLawAnswers.  “I think the people of Tennessee were well-served all around.” 

Landsman has teamed with elder law litigator René H. Reixach, Jr., and local attorneys to persuade Tennessee and two other states, Maryland and Florida, to adhere to federal law regarding PEMEs.  Maryland settled in 2010.  Landsman said Florida claims to be coming into compliance, but it appears to be more to thwart the broader reach of the lawsuit. He noted that he and his team may be filing similar suits against at least two other states.

The Tennessee case had its origins when Kerry Growdon, a woman with disabilities, entered a nursing home in July 2010.  After incurring $21,723.66 in nursing home bills that she had not paid and that the nursing home had not written off, Ms. Growdon became eligible for Medicaid in September 2010.  For two years Ms. Growdon attempted to have these PEMEs deducted from her PPA, but the state refused, citing a 2011 policy memorandum stating that PEMEs from three months prior to a Medicaid application are deductible only if "the person would have been income and resource eligible [i.e., eligible for Medicaid] at the time the expense was incurred."

Landsman and Reixach filed suit in the U.S. District Court for the Eastern District of Tennessee requesting a permanent injunction allowing Ms. Growdon to deduct her PEMEs from her PPA, along with an order forcing the state to change its policy to comply with federal law.

The settlement agreement entered into on August 22, 2013, achieves both objectives.  The state has adjusted Ms. Growdon’s PPA to reflect the deduction of her PEME starting in May 2013, and has revised its policy memorandum to clarify that allowable medical expenses may be deducted regardless of the individual’s Medicaid eligibility at the time the expenses were incurred.

Landsman and Reixach were assisted in the Tennessee case by Robert Mark Addison, Stephen D. Barham and D. Aaron Love of the Chattanooga, Tennessee firm Chambliss, Bahner & Stophel, P.C. (Dana Perry of Chambliss, Bahner & Stophel is an ElderLawAnswers member attorney.)  

To read the settlement agreement, click here.