State Medicaid Subrogation Expanded

By Ruth Baxter
Originally appearing in the Kentucky Justice Association’s Advocate (Nov./Dec. 2022). Shared with permission.

Does the federal Medicaid Act allow a state Medicaid program to recover reimbursement for its payment of a beneficiary’s medical expenses by taking funds from the portion of the beneficiary’s tort recovery that compensates for future medical expenses? Yes, the United States Supreme Court determined in Gallardo vs. Marstiller, a 7 to 2 decision issued on June 6, 2022.1 At issue was Florida’s Medicaid subrogation claim for reimbursement of all medical expenses paid to a seriously injured 13-year-old struck by a truck when she exited a school bus. The minor, through her parents, had sued the truck’s owner and the driver, as well as the local school board, for negligence for her catastrophic injuries that left her in a vegetative state. Although the lawsuit claimed damages of more than $20 million, the case was ultimately settled for $800,000, with $35,367.52 being designated under the terms of the parties’ settlement agreement for the child’s past medical expenses. Initial Medicaid expenditures for the child’s medical expenses, however, totaled $862,688.77, so the settlement only provided for four percent of the amounts actually paid for the child’s past care. The child’s parents offered Florida’s Medicaid office that $35,367.52 sum toward its subrogation claim since the settlement document only designated that amount for past medical bills, contending that amount would be all that the State would be entitled to receive under its subrogation laws.


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