Virginia Supreme Court Holds Sovereign Immunity Bars Action Against State in Medicaid Lien Case

The Virginia Supreme Court rules that sovereign immunity bars the state's courts from hearing a declaratory judgment action challenging Medicaid's demand for full reimbursement of money paid on behalf of an injured child. Afzall v. Commonwealth of Virginia (Va., No. 060767, Jan. 12, 2007).

Adam Afzall was nine years old when he was seriously injured by the negligence of a third party. Virginia's Department of Medical Assistance Services (DMAS) paid $419,809.56 toward Adam's care. On his behalf, Adam's parents sued the negligent party and ultimately a settlement was reached and accepted by the court.

The Commonwealth of Virginia claimed a lien against the settlement for the full amount paid on Adam's behalf. Adam's attorney submitted a check for $277,791.94, representing the total amount due less 'the Commonwealth's share' of his attorney's fees. The Commonwealth returned the check and demanded full payment. Adam filed a declaratory judgment action asserting that a plain reading of the relevant state statute requires that a plaintiff's legal fees and costs be deducted from DMAS's share of any recovery. The trial court rejected the argument and Adam appealed.

On appeal, for the first time, the Commonwealth asserted that the doctrine of sovereign immunity 'bars a declaratory judgment against the Commonwealth or its agencies.' Adam claimed the doctrine did not apply in this case and attempted to distinguish it from cases relied on by the Commonwealth.

The Virginia Supreme Court dismisses Adam's appeal, ruling that the trial court was without jurisdiction to adjudicate Adam's claim because sovereign immunity applies in the case. Only the legislature has the authority to abrogate sovereign immunity and the legislature's intention to do so must be explicit, the court holds. Such intention will not be inferred from general statutory language and it cannot be waived, even by acquiescence, the court says.

To download the full text of this decision in PDF format, go to: https://www.courts.state.va.us/opinions/opnscvwp/1060767.pdf .
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