Articles & Publications 08.23.22

United States Supreme Court Allows Reimbursement of Future Medical Expenses from Medicaid Recipients

The United States Supreme Court recently held that states participating in the Medicaid program may seek reimbursement of amounts which are designated for future medical expenses from Medicaid recipients.

In Gallardo v. Marstiller, a 13-year-old girl was struck by a truck when she stepped off her school bus. Her injuries left her in a persistent vegetative state. Gallardo filed suit through her parents, which ultimately resulted in a settlement in the amount of $800,000.00.  As part of the settlement, $35,367.52 was designated for past medical expenses and the agreement contained language that provided “some portion of the settlement may represent compensation for future medical expenses.”

The State of Florida asserted that it was presumptively entitled to 37.5% or $300,000.00 of the settlement, as it was entitled to reimbursement for past and future medical expenses. Plaintiff brought suit challenging Florida’s position, arguing that federal Medicaid statutes conflict with Florida law and prevent Florida from seeking reimbursement for future medical expenses.

Justice Clarence Thomas, writing for the majority, agreed with the decision of the Eleventh Circuit which held that a state may seek reimbursement for settlement amounts allocated to future medical expenses. The Court found that the plain language of the Medicaid statutes allows such reimbursement by the States. Specifically, the Statute requires that a State acquire from each Medicaid beneficiary an assignment “any rights… of the individual… to support… for the purpose of medical care… and to the payment of for medical care from any third party.” §1396(k)(a)(1)(A). The Court found that nothing in the Statute limits this to past medical expenses. Plaintiff argued that this language granted a lifetime assignment of benefits extending beyond a time where a person was a Medicaid beneficiary. The Court discredited this argument, finding that the statute is naturally read to only apply to “rights of the individual” while a Medicaid beneficiary.

Following this decision, we would expect that more settlements will contain specific breakdowns of amounts for both past and future medical care in a effort to limit the reimbursement sought by the states. It will be important to analyze the impact this decision has on future settlement releases and how States will approach reimbursement in the future which remains to be seen.