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Eleventh Circuit rejects Florida Supreme Court’s interpretation of federal Medicaid statute, rules that Florida Medicaid agency may seek satisfaction of lien from both past and future medical expense components of personal injury settlement

On June 26, 2020, in Gallardo v. Mayhew., No. 17-13693, the Eleventh Circuit Court of Appeals ruled that federal Medicaid law does not preempt Florida’s Medicaid agency from satisfying a lien for paid medical expenses from the future medical expense component of a personal injury settlement. The plaintiffs, the parents of a child who was seriously injured in a motor vehicle accident and remains in a persistent vegetative coma, settled the child’s personal injury case for $800,000, which they maintained was only a small fraction of the total damages she suffered. The agency that administers Florida Medicaid, the Florida Agency for Health Care Administration (“FAHCA”), did not participate in or agree to the terms of the settlement. Florida law grants FAHCA “an automatic lien for the full amount of medical assistance provided by Medicaid to or on behalf of the recipient for medical care furnished as a result of any covered injury or illness for which a third party is or may be liable.” § 409.910(6)(c), Florida Statutes. In accordance with these procedures, prior to the settlement FAHCA attached a lien for $862,688.77 representing expenses already paid on the child’s behalf. However, the settlement agreement included an allocation for past medical expenses of only of only $35,367.52. It further stated that although some of the balance of the settlement may represent compensation for future medical expenses the child will incur in the future, no portion of the settlement is reimbursement for future medical expenses because the child or others on her behalf have not yet paid any. After the settlement, the plaintiff put $300,000 in a trust account (the maximum amount that FAHCA could claim after reduction of attorney’s fees and costs and the statutory limits of Florida’s Medicaid statute) and commenced an administrative action to challenge the $300,000 claim. In the administrative action, FAHCA claimed that it was entitled to recover the amounts it paid not just from the $35,367.52 allocation for past medical expenses but also from the portion of the settlement representing compensation for the recipient’s future medical expenses. The plaintiffs then sued FAHCA in the U.S. district court under 42 U.S.C. § 1983, seeking a declaration that, under federal law, Florida is not entitled to reimbursement from anything more than the portion of the settlement representing compensation for past medical expenses. The district court granted the plaintiffs’ motion for summary judgment, concluding that Fla. Stat. § 409.910 is preempted by federal Medicaid law, and enjoining FAHCA from enforcing that law by “seeking reimbursement of past Medicaid payments from portions of a recipient’s recovery that represents future medical expenses.” While this appeal of that judgment was pending, the Florida Supreme Court held in an unrelated case that federal Medicaid law authorizes the state to obtain reimbursement out of personal injury settlements only from the portion of a settlement that represents past medical expenses. Giraldo v. Agency for Health Care Admin., 248 So. 3d 53, 56 (Fla. 2018). The Eleventh Circuit disagreed, noting that it is not bound by state court determinations in determining a question of federal law and concluding that the federal Medicaid statutes do not in any way prohibit FAHCA from seeking reimbursement from settlement monies for medical care allocated to future care. In addition, the Eleventh Circuit concluded that “[p]arties’ unilateral allocations as to what constitutes past medical expenses do not, and should not, bind FAHCA.” The Court was careful to note that the federal Medicaid statutes do clearly prohibit FAHCA from seeking reimbursement for future expenses it has not yet paid (which it is not seeking to do in this case).

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