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Medicaid: On the Supreme Court’s Docket Again

December 28, 2012

Medicaid was the show-stopper in the Supreme Court’s last term: the Court unexpectedly held in the Affordable Care Act case that requiring states to participate in the Medicaid expansion was unconstitutionally coercive.

Medicaid apparently was still on the Justices’ minds three months later when the Court, on its first day back in session, decided to hear another Medicaid case, albeit a much lower profile case. The State and Local Legal Center (SLLC) filed an amicus curiae brief with the Supreme Court, which NLC signed onto along with the rest of the Big Seven, SLLC associate member the Government Finance Officers Association, and the City of New York (the third biggest Medicaid spender in the United States).

So, what exactly does this case have to do with cities? Well, while it may not directly impact most cities, cities in general have an interest in the sustainability Medicaid.

Medicaid allows states to collect medical expenses from a Medicaid recipient who recovers from a tortfeasor. But how much can a state collect when a Medicaid recipient agrees to a lump sum settlement from tortfeasor, and it is unclear how much of the settlement is for medical expenses?

A North Carolina statute purports an answer this question by allowing the state to recover the lesser of actual medical expenses or one-third of a Medicaid recipient’s total tort settlement. In Delia v. E.M.A. the state paid $1.9 million on behalf of E.M.A., and her parents settled a medical malpractice claim for $2.8 million. The settlement didn’t allocate between medical expenses and other damages so the state asked for one-third of the settlement, over E.M.A.’s parents’ objections. The question the Supreme Court must answer in Delia v. E.M.A. is whether Medicaid preempts North Carolina’s statute.

The SLLC’s brief argues that Medicaid is a huge expense for states and that Medicaid grants states substantial discretion in how they pursue recovery from tortfeasors. The brief points out North Carolina’s statute encourages parties to allocate settlements and avoids states having to participate in burdensome settlement discussions or post-settlement allocation hearings. The brief also argues that allowing Medicaid recipients to keep two-thirds of their tort settlement is reasonable and fair.

Oral argument will be heard in this case on January 8, 2013. The Supreme Court will issue an opinion in this case by June 30, 2013.

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