The United States Supreme Court In WOS v. E.M.A. Upholds The Ahlborn Principle That Medicaid May Not Recover More Than A Proportional Share Of The Recovery In Personal Injury Cases

The U.S. Supreme Court in WOS v. E.M.A. interpreted the Medicaid anti-lien statute set forth at 42 U.S.C. 1396p(a)(1), to limit the amount that Medicaid may recover from a tort settlement or judgment to a proportional share of the recovery. The statute states that Medicaid may not take any portion of the recovery which was not designated as payment for medical care for which Medicaid was responsible.

The problem arises from the fact that in many cases difficult liability or limited insurance results in settlements in amounts substantially less than the fair value of the victim’s injuries. In such cases most states have historically attempted to recover the full amount of the lien regardless of the amount of the recovery.

In WOS v. E.M.A., a North Carolina statute provided that regardless of the amount of the recovery Medicaid would recover one-third of the settlement or judgment. The U.S. Supreme Court ruled that in situation where the recovery is limited then the limitation applies equally to the Medicaid lien. For example, if an injured person has $1,000,000 in personal injury damages which includes $100,000 in accident related medical expenses but the case is settled for $200,000 because of insurance limits the Medicaid recovery would be limited to a proportional 10%, or $20,000, out of the recovery.

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