Arkansas Depart. of Health & Human Servs. v. Ahlborn
In Arkansas Depart. of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (2006), the Arkansas state Medicaid program paid over $ 200,000 in medical expenses following the respondent's car accident. Respondent brought suit in state court against two alleged tortfeasors for personal injury damages including medical costs, pain and suffering, lost earnings, and lost future earnings, and settled out of court for a lump sum of $ 550,000, without the state's participation.
The state then sought to enforce its Medicaid lien. The trial court held that the state was entitled to be reimbursed for the entire amount of Medicaid expenses paid out. This ruling was reversed on appeal and the United States Supreme Court affirmed.
The Supreme Court held that the lien asserted by the state for the entire amount of medical expenses violated the antilien law as it required depletion of nonmedical expense compensation.
The Court noted with apparent approval that the parties had, in order to facilitate the trial court's resolution of the legal questions, stipulated as to the value of the claim and the percentage of that sum which was represented by the settlement figure, and the suggested figure representing the proportion of the total that should be allocated as repayment of medical expenses was thus less than $ 36,000 (547 US at 274).
Notably, the state agency conceded that had a jury or judge allocated a sum for medical payment out of a larger award, the agency would have been entitled to reimburse itself only from the portion so allocated, even if the amount were smaller than the total amount of the Medicaid expenses (547 US at 282 n. 11).