Personal Injury Settlements Involving Medicaid

Russell v. Agency for Health Care Administration (Fla. 2d DCA 2010).  The Second District Court of Appeal, binding Lakeland and Polk County, has recently released a decision that determines when Medicaid is entitled to recover the full amount it has paid for the medical bills of a plaintiff in a personal injury settlement.  To give a brief background, whenever Medicaid pays the medical bills of a person involved in personal injury matter, Medicaid (just like Medicare or private health insurance) has a "lien" against any personal injury settlement reached for the actual amount of medical bills paid.  Private health insurance has a duty under Florida's "collateral source rule" to negotiate in good faith to reach an "equitable apportionment" of the settlement.  Under such "equitable apportionment," if the plaintiff only recovers a portion of his/her damages, then the lienholder (private health insurer) can only fairly recover in the same proportion of the bills it paid for the accident minus the cost of procurement of the settlement (attorney fees).  While a creature of the federal government, Medicare has similar duties and has done a good job in working with personal injury attorneys through the Centers for Medicare and Medicaid Services (CMS) and a department called MSPRC for third party liability recoveries.

With such a system already in place, it is striking the the Court institutes a 50% threshold before Medicaid must now negotiate in good faith, unlike Medicare and private health insurance.  In other words, if the total Medicaid lien is 50% or less than the total settlement, this new case does not require Medicaid to reduce its lien even if the Plaintiff/Claimant only recovered a small portion of his total damages for one reason or another (i.e. comparative fault, causation, pre-existing injuries, difficulty proving the case).  The overall problem with this decision is that it functions as a disincentive to settle and resolve claims because Medicaid does not have to negotiate.  Keeping in mind that the standard contingency fee in litigation is 40% plus cost, settling these cases will likely become significantly more difficult after this new rule of law.  Again, what is striking is that the Court did not adopt the exact same formulary that is already well established for Medicare for many years.

If you or a loved one has suffered an injury as the result of someone else's negligence, please contact an attorney from Moody Law to discuss your case.  The call is free and the consultation is free.  Please contact a lawyer by telephone or visit us on the web at www.moodylaw.com.