The U.S. Supreme Court has granted cert in E.M.A. ex rel Plyler v. Cansler in which the 4th Circuit Court of Appeals upheld the pro rata formula in Ahlborn. Under Ahlborn when Medicaid pays accident related medical expenses and the Plaintiff subsequently obtains a recovery Medicaid may recover a proportionate share of the recovery. In the typical situation the injured victim sustain medical expenses, property damage, lost wages and intangible damages. The Ahlborn formula prevents Medicaid in the all-too-common situation where there is a limited recovery due to insufficient liability insurance from taking all of the insurance proceeds and leaving the Plaintiff with nothing in consideration of the other damages. For example, if an injury victim sustains $100,000 in medical expenses paid by Medicaid, $100,000 in property damage, and $100,000 in lost wages and there is only $100,000 in liability insurance then Medicaid would receive one third of the recovery. In such a situation Medicaid would like to take all the available funds and is challenging the limitation on Medicaid’s right to take all the funds.
To allow one interest holder to take all of the available funds is simply bad public policy. In such situation the injury victim, who advance all of the time, effort and expense in hope of recovering their damages, would have no incentive to pursue a claim and in the long run Medicaid would receive less overall recovery. This is a classic case of pigs get fat and hogs get slaughtered. If Medicaid gets its’ way then the Medicaid hog will be on its’ way to the slaughter house.
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