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     CCL told a federal court that Nebraska had received sufficient compensation to offset its claim of $146,000 for past medical expenses paid on behalf of a catastrophically injured newborn when state law reduced her jury verdict by $15.5 million in a brief filed on the child’s behalf today.

     In S.S. v. Bellevue Medical Center, a child who suffered permanent brain damage in child birth due to substandard medical care won a $17 million verdict to cover a lifetime of care that the child will need. However, a Nebraska law mandated that the verdict be reduced to $1.75 million, a nearly 90 percent discount that will never be able to cover the child’s needs. CCL joined with the Omaha, Nebraska law firm of Cullan and Cullan, which tried the case, to challenge the reduction, but neither the federal district court nor the court of appeals were willing to be the first courts to apply recent Supreme Court precedent to invalidate the cap. The U.S. Supreme Court turned down review of the case.

    As the Supreme Court denied review, the Nebraska Department of Health and Human Services asked the federal district court to validate the State's entitlement of $146,000 of the remaining judgment. CCL opposed the motion on several grounds. Under Nebraska’s law capping damages in medical malpractice cases at $1.75 million, negligent health-care providers are responsible, through their insurance for the first $500,000. All amounts above $500,000 are paid by a state-run Excess Liability Fund. CCL's brief argued that the State itself benefitted from the reduction in the child’s compensation and any amount it might have claimed as a reimbursement for Medicaid expenditures from the lawsuit were more than satisfied by that reduction in the amount the State had to pay S.S.

      Alternatively, if the court were to determine that Nebraska still holds a valid lien against the judgment that was not satisfied when the verdict’s was diminished, CCL argued that, because Medicaid liens are only paid from the amounts allocated intended to compensate for past medical expenses the same proportionate reduction should apply to the lien. After all, the reduction was effectuated as a matter of state law. The same rule CCL described is typically employed when a case settles for less than full value. It should also apply here, reducing the $150,000 claimed lien to $15,000. In addition, any remaining lien should be further reduced proportionately by attorney fees and costs, under the common-fund doctrine. Finally, the CCL brief argues that no lien should be payable until the beneficiary’s death and, then, only to the extent that any monies from the judgment remain.

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On March 26, U.S. Law Week published a lengthy analysis of Wos v. E.M.A., the recent Supreme Court decision invalidating North Carolina’s Medicaid third-party reimbursement statute as inconsistent with the anti-lien provision of the federal Medicaid Act. Supreme Court Halts North Carolina Attempt to Recoup Medicaid Payouts From Tort Funds, U.S. Law Week (Mar. 26, 2013). The article relies heavily upon, and quotes extensively from, the reporter’s interview with CCL Senior Litigation Counsel Louis M. Bograd, who authored an amicus brief in the Wos case on behalf of the American Association for Justice.

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Last week, the United States Supreme Court decided Wos v. E.M.A., and struck down North Carolina’s Medicaid reimbursement statute. In Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006), the Court had held that the anti-lien provision of the federal Medicaid Act limited states to obtaining reimbursement for Medicaid services from that portion of a tort judgment or settlement that represented repayment for medical expenses incurred. North Carolina’s reimbursement statute, N.C. Gen. Stat. Ann. §108A-57, requires that up to one-third of any damages recovered by a beneficiary be paid to the State as reimbursement. In Wos, the state argued that the statute was a valid state rule or procedure for allocating tort settlements under Ahlborn.

In rejecting this argument, the Court twice relied on amicus briefs submitted by CCL on behalf of the American Association for Justice. First, the Court concluded that Ahlborn’s reference to “special rules and procedures” was meant to refer to judicial proceedings for allocating settlements, and proved this proposition by pointing to examples of such procedures cited by AAJ in its Ahlborn amicus, which the Court there cited. The Court also rejected North Carolina’s argument that post-settlement allocation proceedings would be “wasteful, time-consuming and costly,” in part by referencing a similar procedure already employed by North Carolina courts in allocating workers’ compensation settlements. AAJ  had alerted the Court to this procedure in its amicus brief in Wos.

The Wos decision, like Ahlborn, will likely prove critically important in protecting injured Medicaid beneficiaries from excessive reimbursement demands from state Medicaid agencies. The AAJ amicus briefs in both cases were authored by CCL Senior Litigation Counsel Lou Bograd.

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On January 8, 2013, the U.S. Supreme Court heard oral argument in Delia v. E.M.A., an important Medicaid lien case in which CCL had submitted an amicus brief on behalf of the American Association for Justice and North Carolina Advocates for Justice in support of Respondent. During argument, the Justices and counsel for respondent made several implicit references to the CCL brief. First, Justice Sotomayor told Petitioner’s counsel that the North Carolina statute at issue was not the sort of state procedure that the Court had cited favorably in its earlier Ahlborn ruling: adopting an argument made in the CCL brief, she said: “I don't see the North Carolina procedure referenced in Ahlborn as something that States could do. It wasn't referenced directly in the -- in the opinion, and it wasn't referenced indirectly by the amici. The amici were talking about substantially different procedures.” Later, counsel for Respondent engaged in a colloquy with Justices Sotomayor and Ginsburg about North Carolina’s statutory allocation procedure for liens in workers compensation cases; that statutory procedure had also been brought to counsel and the Court’s attention by the CCL amicus brief.

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On December 17, 2012, CCL filed an amicus brief on behalf of the American Association for Justice and North Carolina Advocates for Justice in support of Respondent in the case of Delia v. E.M.A., now pending before the U.S. Supreme Court. The Delia case involves Medicaid liens placed on tort recoveries obtained by Medicaid recipients from liable third parties. Federal law prohibits state Medicaid agencies from placing liens on any portion of a recovery that does not represent compensation for past medical expenses. The issue in Delia is whether a state may evade that requirement by unilaterally deeming a significant portion of any settlement as repayment of medical expenses without any consideration of the facts surrounding a particular settlement. CCL’s amicus brief, authored by CCL Senior Litigation Counsel Louis Bograd, argues that the anti-lien provision of the federal Medicaid act requires that third-party recoveries be fairly and equitably allocated between past medical expenses and other types of damages. The brief describes how numerous states employ evidentiary hearings to allocate Medicaid settlements and notes that North Carolina itself uses such a procedure to allocate damages in workers’ comp cases. The Supreme Court will hear argument in Delia v. E.M.A. on January 8.

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The American Association for Justice features CCL Litigation Counsel Valerie M. Nannery in a continuing legal education webinar on Medicare Secondary Payer issues.  Ms. Nannery discussed cases settled for less than the full value of the claims and how to assure that Medicare’s subrogation rights do not entirely preclude any recovery for the plaintiff, focusing her discussion on current and developing case law in this area, including the decision in Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010), a case in which CCL’s Robert S. Peck was counsel for the plaintiffs. 

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CCL’s Robert S. Peck spoke about Medicare liens and recent case developments during an American Bar Association continuing legal education teleseminar conducted Oct. 23. Peck who was counsel in the groundbreaking case of Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010), which held that Medicare was only entitled to its pro rata share of a settlement to reimburse it for medical expenses, rather than the entire settlement, as it had asserted.

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The West Virginia Supreme Court, in the case In re E.B., ruled today that the state Medicaid agency could only recoup Medicaid payments from that portion of a tort settlement representing payment for past medical expenses. Where a settlement is unallocated, and the parties can't agree, the trial court must hold an allocation hearing at which the state will bear the burden of proof regarding the portion of the settlement representing past medicals.

CCL’s Louis M. Bograd was lead appellate counsel for the plaintiffs.

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CCL’s Louis M. Bograd argued before the West Virginia Supreme Court of Appeals on behalf of plaintiffs in In re E.B, No. 09-P-47 M. The case concerns issues of first impression regarding reimbursements of medical expenses paid by Medicaid.

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