Synergy Blog

Medicaid Liens – Congressional Reversal of Ahlborn & Wos

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.

– – – – – – – – – – – – – –

[From the Act as passed] 



(1) STATE PLAN REQUIREMENTS.–Section 1902(a)(25) of the Social Security Act (42 U.S.C. 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. 


"Coincidentally, on the day of a recent Synergy Seminar on Medicare & ERISA lien resolution I received a letter on an ERISA lien. This letter followed much back and forth between myself and the recovery vendor for BCBS. Despite my efforts they were adamant there would be no (zero)(zilch)(nada) reduction and provided case law to support their position. I tried Synergy’s Lien Resolution Services since I had just heard their Director of Lien Resolution speak. Synergy got them to reduce their claim by a third in less than ten (10) days. The result was quick and the fee very reasonable. If you have a tough ERISA lien and your typical efforts don’t work, give Synergy a try."

Michael S. Smith, Esq.
Lesser, Lesser, Landy & Smith, PLLC

Thank you so much for the services your firm provided to our client. Should the need arise again, we will ALWAYS use Synergy. Your customer service was outstanding and the guidance and instructions your office gave us with our client's Medicare waiver application was instrumental in getting a FULL waiver of his Medicare lien. I know our clients were very grateful for your help, too. And, I just wanted to write and let you know how happy we were with your services. We will always recommend your company to any other plaintiff's attorneys that need help with lien reduction or waivers. Thank you again!

Peggy Rothenberger, Legal Assistant to Henry Moore
Law Offices of Henry Moore

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