U.S. Supreme Court Issues Opinion on Medicaid Repayment

U.S. Supreme Court Issues Opinion on Medicaid Repayment

Trial Guides wants to inform our customers of a ruling that may impact Medicaid reimbursement in your cases. 

Today the U.S. Supreme Court issued a ruling in Gallardo v. Marstiller in a 7-2 decision authored by Justice Clarence Thomas. The Court's ruling holds "The Medicaid Act permits a State to seek reimbursement from settlement payments allocated for future medical care."  

Gallardo involves a plaintiff who suffered catastrophic injuries and permanent impairment when she was struck by a truck as she stepped off a Florida school bus. Florida’s Medicaid agency paid $862,688.77 to cover Gallardo’s past medical expenses, and the agency continues to pay her ongoing medical expenses. Gallardo's parents filed litigation against the truck’s owner and driver, as well as the Lee County School Board. She sought compensation for past medical expenses, future medical expenses, lost earnings, and other damages. That litigation resulted in a settlement for $800,000, with $35,367.52 expressly designated as compensation for past medical expenses. The settlement did not specifically allocate any amount for future medical expenses.

Florida state statute presumes that 37.5% of settlements related to an injury that requires Medicaid-covered care is designated for past and future medical expenses. While the Florida law allowed plaintiffs to rebut the state’s presumptive recovery of 37.5% of a settlement by clear and convincing evidence, Gallardo did not in this case. Florida sought $300,000 in reimbursement from the settlement for past and future care, rather than the $35,000 that had been expressly allocated for past medical care. 

Gallardo challenged this statute as violative of the Medicaid Act’s anti-lien provision, which prohibits states from recovering medical payments from a beneficiary’s property. However, there are certain exceptions, including for laws facilitating the Medicaid requirement that beneficiaries assign their rights to third-party payments for medical care to the state. The question before the Court was whether this exception encompasses state laws allowing reimbursement for potential future medical care. 

The Court held that such laws do fall under the exception because § 1396k(a)(1)(A) of the Medicaid Act provides only that states must be entitled to third-party “payment for medical care,” and does not differentiate between past and future care. The opinion notes that states are permitted to implement statutes allowing them to pursue reimbursement for potential future expenses, in addition to expenses already incurred. 

This decision has several concerning consequences for plaintiff lawyers and their clients, including those described in the amicus brief filed by the Florida Justice Association and American Association for Justice which you can access here. The ruling may encourage states to enact laws allowing state Medicaid reimbursement from settlements for future costs that they never actually incur. This is true because settlements often results in plaintiffs becoming financially ineligible for future Medicaid coverage. Furthermore, if states implement statutory presumptions that a large percentage of a settlement is designated for future medical care, plaintiffs may be discouraged from filing personal injury claims at all. 

Please review the requirements of both Medicare and Medicaid in terms of your responsibilities for repayment when settling your clients' cases. 


To discuss this decision, Trial Guides is hosting a free webinar with top Medicaid lien attorneys Paul Isaac and Paul Loudenslager, and moderated by lien and settlement expert, Jack Meligan on June 16th 2022.

The presenters will give a recap of the case, what the decision means, and will provide strategies for dealing with the result. Q&A session to follow.

Click here to register for this free webinar.