In the U.S. Supreme Court case of Wos v. E.M.A., (No. 12-98, March 20, 2013) the court ruled that the Federal Medicaid Act pre-empts a state’s authority to recover a portion of a Medicaid beneficiary’s personal injury settlement when the settlement does not designate the amount attributable to payment for medical care. The ruling prevents North Carolina from being reimbursed for the $1.9 million that was spent on a child’s medical treatment.
The 13-year old girl in this case, identified as E.M.A., suffered severe injuries during her birth. In 2003 E.M.A. and her parents filed a medical malpractice lawsuit. Although expert witnesses estimated the damages to be in excess of $42 million, the insurance policy limits of the physician and the hospital largely determined the amount of the settlement. After the family settled the case for $2.8 million, the State of North Carolina claimed a third of the settlement. The law of North Carolina allows for the Medicaid program to recover up to one-third of the total amount of any settlement or judgment in a medical malpractice case. However, the settlement did not identify the amount of the $2.8 million that accounted for medical vs. non-medical damages. The trial court ordered that one-third of the settlement be placed in escrow pending the determination of how much the North Carolina Medicaid program was entitled to be re-imbursed.
The U.S. Supreme Court held that the law of North Carolina conflicts with the federal statute. “The Medicaid anti-lien provision prohibits a State from making a claim to any part of a Medicaid beneficiary’s tort recovery not ‘designated as payments for medical care.'”