The Supreme Court’s recent 7-2 decision in Gallardo v. Marstiller expands the scope of Medicaid lien claims and is likely to affect the settlement of Medicaid beneficiaries’ personal injury cases. The majority opinion holds that Medicaid agencies may reimburse themselves for past Medicaid expenses out of settlements and awards reserved for a beneficiary’s future medical expenses.
In this case, 13-year-old Gianinna Gallardo suffered catastrophic injuries when she was struck by a truck while stepping out of a school bus. Gallardo recovered $800,000 in a court-approved settlement, which applied to her past medical expenses, future medical expenses, lost wages, and other damages. However, the settlement amount covered only a small portion of each type of damages. Florida’s Medicaid agency paid $862,688.77 toward her past medical expenses, and under Florida law asserted a lien against the settlement for past medical expenses, as well as compensation for future medical expenses.
The question before the Supreme Court is whether the federal Medicaid Act provides for a state Medicaid program to recover reimbursement for Medicaid payment of a beneficiary’s past medical expenses by taking funds from the portion of the beneficiary’s tort recovery that compensates for future medical expenses.
In the majority opinion, the Court ruled that The Medicaid Act permits a state to seek reimbursement from settlement payments allocated for future medical care. Section 1396p(a)(1) of the Medicaid Act prohibits states from recovering medical payments from a beneficiary’s “property,” i.e., settlement amounts other than those allocated for past medical care paid for by Medicaid. But that provision does not apply to state laws expressly authorized under the Act. Florida’s Medicaid Third-Party Liability Act falls within this exception, with the language granting rights to payment of “any medical care” including both past medical payments and future medical payments.