SCOTUS to determine the rights of state Medicaid agencies to recover from future medical expense settlements



By: Cara Crecelius  

Gallardo v. Marstiller was argued before the Supreme Court of the United States on January 10, 2022. The issue presented was whether the state of Florida’s Medicaid Agency was entitled to part of a settlement for future medical expenses as reimbursement for payments it had already made. In the case, a thirteen-year-old girl was injured and remains in a permanently vegetative state after she was struck by a bus. Florida’s Medicaid agency paid $862,688.77 for her medical care. The girl’s parents brought a civil action as her guardians and received an $800,000 settlement. Florida’s Medicaid agency filed a lien against the $800,000 settlement, of which, they would be entitled to approximately $300,000 under Florida’s lien reduction statute if they could claim payments from past and future medical expenses. The parents filed for a declaratory judgment against the agency, arguing that the agency could only recover from the amount of the settlement designated for past medical payments, which was approximately $35,0000, and not from the portion of the settlement designated for future medical expenses.  

The district court determined that the Medicaid Act did not allow the agency to be reimbursed from the settlement award for future medical expenses. The 11th Circuit Court of Appeals reversed that decision and found that the state could file a lien against the settlement award for the Plaintiff’s past and future medical expenses. The 11th Circuit Court of Appeals held that the federal statute allows for third-party reimbursement from the entire portion of the settlement that reflects medical expenses, not just past medical expenses. This ruling conflicts with a Florida Supreme Court decision from 2018 that held that the state’s Medicaid agency could only recover from the Plaintiff’s past medical expenses. Many jurisdictions apply the Medicaid Act differently when determining whether a Medicaid agency can file a lien against past and future medical expenses. The Supreme Court heard the case last week and will hopefully clarify for state Medicaid agencies whether they are entitled to recover from a settlement for both past and future medical expenses. 

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