Opinion ID: 2602444
Heading Depth: 2
Heading Rank: 1

Heading: federal medicaid provisions

Text: ¶ 15 The federal law structuring federal and state functions in administering Medicaid simultaneously imposes on states a duty to collect reimbursement and a limit on the means states can employ in fulfilling their collection obligations. States' collection efforts are limited both as to the sources to which they can look for reimbursement and as to the extent to which they may expect reimbursement for Medicaid funds expended. ¶ 16 Federal provisions requiring recipients to assign certain claims to the state suggest that states look for reimbursement to any third parties liable to pay for a recipient's medical expenses. States must condition Medicaid eligibility on assignment to the state of any Medicaid recipient's rights ... to payment for medical care from any third party. 42 U.S.C. § 1396k(a)(1)(A) (1992). While states are explicitly required to obtain an assignment of rights before an individual becomes eligible for Medicaid, the recipient's rights to payment for medical care are deemed assigned to the state in any event: (a) A state plan for medical assistance must ... (25) provide ... (H) that to the extent that payment has been made under the State plan for medical assistance in any case where a third party has a legal liability to make payment for such assistance, the State has in effect laws under which, to the extent that payment has been made under the State plan for medical assistance for health care items or services furnished to an individual, the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services. 42 U.S.C. § 1396a(a)(25)(H) (Supp.2002)(emphasis added). In acquiring a recipient's right to payment from third parties, the state also acquires the right to enforce payment through legal means. The provisions governing claims both actually assigned and those deemed assigned to a state unequivocally give states the right to pursue directly any liable third party for the costs expended by a state for a recipient's medical care. [1] ¶ 17 The federal scheme for reimbursement does not merely provide states with rights to recover their expenditures, it also imposes an obligation to do so. (a) A state plan for medical assistance must ... (25) provide ... (B) that in any case in which such a legal liability is found to exist after medical assistance has been made available on behalf of the individual... the State ... will seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. § 1396a(a)(25)(B) (Supp.2002)(emphasis added). While § 1396a(a)(25)(B) requires states to seek reimbursement, it does not appear to direct states to look to any particular source for that reimbursement. When read together with the preceding section, however, the contours of the federal collection scheme emerge in greater detail: (a) A state plan for medical assistance must ... (25) provide (A) that the State... will take all reasonable measures to ascertain the legal liability of third parties... to pay for care and services available under the plan, (i) including the collection of sufficient information . . . to enable the State to pursue claims against such third parties [.] 42 U.S.C. § 1396a(a)(25)(A) (Supp.2002) (emphasis added). ¶ 18 The state is thus directed in § 1396a(a)(25)(A) to gather information to enable the State to pursue claims against ... third parties, and, in the subsection immediately following, is required to seek reimbursement. 42 U.S.C. § 1396a(a)(25)(B) (Supp.2002). The implication is clear that a state's mandate to seek reimbursement is directed to action against third parties. Assignment provisions enable the state to take action directly against third parties, while reimbursement provisions require it to do so. ¶ 19 Two themes emerge from the foregoing examination of these provisions. States are explicitly required to pursue reimbursement for funds expended, and, while § 1396a(a)(25)(B) does not specify from whom that reimbursement is to be sought, reading § 1396a(a)(25)(A) and (B) together strongly suggests that it is third parties who are intended to be the source of reimbursement. [2] ¶ 20 The same passages that designate the liable third party as the proper source of reimbursement also set limits on the extent to which a state may recover; the measure of a state's recovery from third parties is not a state's expenditures for medical expenses, but a third party's liability for medical expenses. The federal assignment provision makes assignment of rights . . . to payment for medical care  a condition of eligibility for Medicaid. 42 U.S.C. § 1396k(a)(1)(A) (emphasis added). Similarly, the claims deemed assigned under § 1396a(a)(25)(H) are limited to the rights of such individual to payment by any other party for such health care items or services.  42 U.S.C. § 1396a(a)(25)(H) (emphasis added). These limits on the permissible extent of a state's recovery are recapitulated in those provisions imposing a duty on states to seek reimbursement. States are required to ascertain the liability of third parties to pay for care and services available under the plan, [3] and, when a legal liability is found to exist, to seek reimbursement for such assistance [as was provided by Medicaid] to the extent of such legal liability.  42 U.S.C. § 1396a(a)(25)(A) and (B) (emphasis added). Thus, the extent of a state's claim against a third party is limited by the third party's liability for medical expenses, not by the third party's total liability to a recipient or by the state's actual expenditures for medical expenses. ¶ 21 These implicit limits in the federal statutes on the sources to which a state may look for reimbursement and on the extent to which the state may recover are supplemented by an explicit limit on both source and extent of recovery: No lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan.... 42 U.S.C. § 1396p(a)(1) (Supp.2002). The prohibition on liens on a recipient's property compels states to pursue third parties rather than recipients and prevents states from augmenting from the assets of recipients any deficiencies remaining after collection from third parties. ¶ 22 The scheme set out in 42 U.S.C. section 1396 represents Congress' determination of the appropriate balance between a state's obligation to collect reimbursement for Medicaid expenditures and an individual Medicaid recipient's need to shield property from a state's collection efforts. The two interests serve to limit one another; the federal assignment provisions ensure that a Medicaid recipient cannot retain settlement or judgment proceeds designated for medical expenses, and the federal anti-lien provisions ensure that states cannot use portions of a settlement designated for damages other than medical expenses, belonging to a recipient, to reimburse itself for medical expenses. State laws that attempt to alter this balance by allowing a recipient to retain proceeds intended for medical expenses, or by allowing a state to reimburse itself from proceeds not intended for medical expenses, conflict with this scheme and are subject to preemption.