A Carluzzo Rochkind & Smith note: Following is an excellent article by Virginia Lawyers Weekly. Since 1987, our personal injury lawyers in Manassas have helped clients in Manassas, Prince William County, Fairfax County, and throughout Northern Virginia. If you have any questions or would like to schedule an appointment, please contact our law firm at (703) 361-0776.
Court properly apportioned personal injury settlement
By Virginia Lawyers Weekly – 2/28/2022
Where the Virginia Department of Medical Assistance Services asserted a Medicare lien of more than $96,000 on appellant’s $370,000 personal injury settlement, the evidence supports the trial court’s reduction of the lien to $85,000.
Contrary to appellant’s argument, there are no federal cases that compel the use of a formula that would have further reduced the amount available to satisfy DMAS’s lien.
Appellant Farah was severely injured in a head-on crash. The other driver was on the wrong side of the road. Farah received Medicaid benefits after the crash.
Farah sued for $3 million in compensatory damages and $350,000 in punitive damages. The case settled for $375,000.
DMAS asserted a $96,481 Medicaid lien on the settlement proceeds. Farah asked for an apportionment hearing after the parties could not agree on a lien reduction. The parties stipulated to Farah’s “extensive injuries,” his lost wages and his inability to work.
The court took testimony from “Brien Roche, an experienced personal injury attorney,” who valued Farah’s case at $4 million.
The court rejected Farah’s argument that federal case law required use of a formula that would have substantially reduced DMAS’s lien. “The court reviewed in detail Farah’s injuries, his pain and suffering, and his inability to work.”
The court apportioned Farah’s settlement by awarding DMAS $85,500 for its lien, $115,807 to Farah’s counsel for fees and costs, and $173,693 to Farah.
Medicaid helps residents of participating states who cannot afford medical care. States are required to recoup from liable third parties, when possible, funds spent on a Medicaid recipient’s care. Recipients must “sign over their rights to seek and collect payment for medical care from a liable third party to the State. …
“Another provision, 42 U.S.C. § 1396p(a)(1), known as the ‘anti-lien’ provision, limits a State’s ability to recover the full value of their lien in certain circumstances. This statute specifies that ‘[n]o lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan.’ …
“The third-party liability requirements can operate in tension with the anti-lien strictures when a Medicaid recipient receives a tort recovery that is insufficient to both cover Medicaid’s expenditures and to fully compensate the recipient for his or her other damages.”
In Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006), the state argued it was entitled to recover the entire lien.
“The Supreme Court rejected that argument, concluding that the anti-lien provision limits the State to a recovery of ‘that portion of a settlement that represents payments for medical care.’ … The State could not satisfy its lien by encumbering the plaintiff’s other recovered damages, such as lost wages or pain and suffering. …
“[I]n Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627 (2013), the Court examined whether a state could employ a lien allocation method that automatically attributed up to one-third of every judgment or settlement to its Medicaid lien. …
“The Court concluded that picking an arbitrary number, such as one third, was not a reasonable method of allocation. … The Court offered further guidance, noting that ‘[w]hen the State and the beneficiary are unable to agree on an allocation,’ the parties can ‘submit the matter to a court for decision.’ …
“The Court observed that ‘States have considerable latitude to design administrative and judicial procedures to ensure a prompt and fair allocation of damages.’”
Code § 8.01-66.9 is Virginia’s apportionment statute. It gives courts the power to reduce the amount of a Medicaid lien “as the equities of the case may appear, provided that the injured person … has made a good faith effort to negotiate a compromise[.]”
Farah proposes that U.S. Supreme Court case law requires a state to use an apportionment formula in which the total settlement is divided by the full value of the claim. The result is then multiplied by the Medicaid lien amount.
“We discern nothing in either Wos or Ahlborn that compels the use of such a formula. The Court itself expressly acknowledged that the decision in Ahlborn did not prescribe any particular method for apportionment of the Medicaid lien. …
“[F]ollowing Ahlborn and Wos, courts must examine the totality of a plaintiff’s damages, such as lost wages, and damages for pain and suffering, disfigurement, deformity, humiliation, and embarrassment, and make a reasonable allocation for what portion of the verdict, judgment or settlement is attributable to medical expenses paid for by Medicaid.”
Further, “the allocation decision should be based on the amount Medicaid has actually paid, not on amounts of medical expenses billed but not paid. …
“With these principles in mind, we now turn to the question of whether the circuit court’s judgment should be sustained. … We accord ‘[g]reat deference’ to a trial court’s factual findings.
“[T]he circuit court heard extensive evidence concerning Farah’s injuries. The record is clear that the court carefully considered this evidence. The court acknowledged the extensive nature of the plaintiff’s medical bills, his pain and suffering, and his inability to work. …
“The circuit court did order a reduction of the State’s lien. Following the reduction, the Medicaid lien constitutes approximately 23 percent of the settlement.” And the court was free to discount evidence. “For example, Mr. Roche testified that the full value of the case was $4 million, but the ad damnum of the complaint asked for $3 million.”
The deferential standard leads us to affirm the circuit court’s judgment.”
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