Unfortunately, as part of the budget signed by President Obama on the 26th of December (Merry Xmas), a legislative fix for Ahlborn was made law. Now, Medicaid liens are like Medicare liens in the sense that they are super liens. Medicaid will be able to assert its lien against the entirety of the settlement instead of the portion attributable to past medical expenses. The new provisions go into effect on 10/1/14. The pertinent sections are found below.
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[From the Act as passed]
SEC. 202. STRENGTHENING MEDICAID THIRD-PARTY LIABILITY.
(b) RECOVERY OF MEDICAID EXPENDITURES FROM BENEFICIARY LIABILITY SETTLEMENTS.–
(1) STATE PLAN REQUIREMENTS.–Section 2 1902(a)(25) of the Social Security Act (42 U.S.C. 3 1396a(a)(25)) is amended–
(A) in subparagraph (B), by striking ”to the extent of such legal liability”; and
(B) in subparagraph (H), by striking ”payment by any other party for such health care items or services” and inserting ”any payments by such third party”.
(2) ASSIGNMENT OF RIGHTS OF PAYMENT.–Section 1912(a)(1)(A) of such Act (42 U.S.C. 1396k(a)(1)(A)) is amended by striking ”payment for medical care from any third party” and inserting ”any payment from a third party that has a legal liability to pay for care and services available under the plan”.
(3) LIENS.–Section 1917(a)(1)(A) of such Act (42 U.S.C. 1396p(a)(1)(A)) is amended to read as follows:
”(A) pursuant to–
”(i) the judgment of a court on account of benefits incorrectly paid on behalf of such individual, or
”(ii) rights acquired by or assigned to the State in accordance with section 1902(a)(25)(H) or section 1912(a)(1)(A), or”.
(c) EFFECTIVE DATE.–The amendments made by this section shall take effect on October 1, 2014.
In a message to its membership, the American Association for Justice had the following to say:
“The Bipartisan Budget Act (BBA) which was just approved by Congress and signed into law contains language damaging to plaintiffs covered by Medicaid … The provision in the new law overturns a unanimous 2006 United States Supreme Court decision in United States vs. Ahlborn. In Ahlborn, the Court ruled that only the portion of the settlement that represented payment for medical expenses could be claimed by the state Medicaid agency. The BBA allows a state to claim ALL of a settlement or judgment. The BBA also counters a 2013 Supreme Court decision (Wos vs. E.M.A.) that rejected (6-3) North Carolina’s lien on Medicaid claimants’ tort recoveries. We expect the result of the new law to be that plaintiffs who are Medicaid recipients will recover less and in many cases will be unable to pursue claims at all because any recovery would have to be reimbursed to Medicaid. … This provision was added because it was deemed to raise revenue by Congressional Budget Office economists, despite the fact that the provision will have the opposite effect.”
The end result of this legislation will be a chilling effect of suits brought on behalf of Medicaid recipients. It also is fundamentally unfair given the realities of what is many times a limited recovery on behalf of the injury victim which is now ignored with this change. Medicaid liens now become very similar to Medicare liens in terms of disregarding equity concerns.