The Implications of Gallardo v. Marstiller

Created for Lawyers Mutual of Kentucky by Jennifer Lawrence and Trey Moore.

The following summary of the law is educational and intended for Kentucky lawyers.

This is not intended as legal advice.

On June 6, 2022, the Supreme Court of the United States decided the case Gallardo v. Marstiller, 142 S. Ct. 1751 (2022) interpreting the rights of the State of Florida in seeking reimbursement from a Medicaid beneficiary’s settlement. In Gallardo, the Supreme Court held that the State of Florida was entitled to reimbursement for all medical expenses that Florida had paid on behalf of a Medicaid recipient as opposed to the amount designated within a settlement as the portion to be reimbursed. Id. Fla. Stat. §409.910(6)(c), (6)(c)(1) and §409.901 (7)(a). Kentucky lawyers must be aware when settling claims as to Kentucky’s right of reimbursement involving claims paid by Medicaid. See Ky. Rev. Stat. Ann. §205.510 to §205.630.

What can you do as a practitioner in Kentucky?

  1. Know the law. The language of the Kentucky Medicaid Reimbursement statute differs from that of Florida. The Florida statute provides in part, “Medicaid is to be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid.” Stat. §409.910(1). The Kentucky statute provides: “Any settlement, judgment, or award obtained by a recipient or the recipient’s legal representative against a third party is subject to the cabinet’s claim for reimbursement for medical assistance paid on behalf of the recipient.” Ky. Rev. Stat. Ann. §205.626(2). Kentucky further provides that an attorney may receive a 25% reduction in the amount to be paid back to the cabinet. Id. at (3).
  2. Discuss the impact with clients. Have a conversation with clients and discuss the implications of any settlement on past medical expenses and future medical expenses when subrogation interests and lien holders such as Medicaid are involved. It is important for clients to understand that the right of Medicaid reimbursement is created through Rev. Stat. Ann. §205.510 to §205.630.
  3. Join as party to lawsuit. Bring the Kentucky Cabinet for Health and Family Services Department for Medicaid Services as a Party within your case.
  4. Court approval of distributions. Where appropriate seek District Court approval of distributions to Kentucky Medicaid, involving claims of minors, incompetent persons and those claims involving wrongful death.
  5. Hire a third-party company. Hire a third-party company to do an assessment of past medical expenses for unrelatedness and a projection of future medical expenses that will be necessary. There are companies that will consider different types of benefits and the true costs associated health care needs. There are other experts that can be hired to establish what type of care is not related and/or will not be necessary in the future.
  6. Establish a special needs trust. When representing an individual that is a Medicaid recipient it is usually advisable to have a special needs trust created to preserve future government benefits including future Medicaid payments.
  7. Create funds for future set asides. It may be advisable to project future costs of care using a life care planner and setting aside a portion of settlement funds in a designated set aside account, although if a Medicaid recipient, the funds would need to be placed within a special needs trust so as not to void Medicaid benefits.

If you have questions about the impact of Medicaid on your client’s settlement, please reach out to Jennifer or Trey for more information.


Jennifer Lawrence
The Lawrence Firm, PSC

Trey Moore
Moore & Moore PLLC