Court Opinion

ID: 6977465
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:13:33.518074+00
Date Added: 2024-06-11T16:09:02.628929
License: Public Domain

HEANEY, Circuit Judge,
concurring.
While I concur in the result reached by the majority, I write separately to highlight the state’s obligation with respect to attorney’s fees and costs under the federal scheme.
As the majority correctly points out, a Medicaid recipient under the federal scheme must “assign the State any rights ... to payment for medical care from any third party.” 42 U.S.C.A. § 1396k(a)(l)(A) (West 1992). A recipient is also required “to cooperate with the State in identifying, and provide] information to assist the State in pursuing, any third party who may be liable to pay for care and services available under the plan.” Id. § 1396k(a)(l)(C). After the state pursues such claims,
*335[s]uch part of any amount collected by the State under an assignment ... shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual with respect to whom such assignment was executed ... and the remainder of such amount collected shall be paid to such individual.
42 U.S.C.A. § 1396k(b) (West 1992). Implicit in these provisions is a state’s affirmative obligation to pursue causes of action against potentially liable third parties. In my view, a state is obligated to pursue such causes of action that have a reasonable likelihood of success, and while there may be cases in which it will be appropriate for a state to exercise discretion in foregoing fruitless suits, this is not one of them.
Here the state failed to pursue the claims against the potentially liable third parties identified by Lotzer and Lerud. While the federal scheme imposes an obligation on the states to pursue such claims, it is silent as to the consequences when a state does nothing and then seeks reimbursement from a plaintiff who was forced to vindicate his or her own rights. The majority declines to address Norwest’s challenge to the validity of Minn.Stat. Ann. § 256B.042 (West 1998). Even though I am inclined to consider Nor-west’s arguments as properly before this court, I limit my observations to the state’s share of the attorneys fees and costs.
A state’s Medicaid plan must conform with the requirements of federal law. See Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981). If a state statute fails to conform with federal law, it may be invalidated to the extent necessary to harmonize the state scheme with the federal scheme. Cf. Dalton v. Little Rock Family Planning Servs., 516 U.S. 474, 476, 116 S.Ct. 1063, 134 L.Ed.2d 115 (1996); Union Ctr. Redevelopment Corp. v. National R.R. Passenger Corp., 103 F.3d 62, 64 (8th Cir.1997). Thus, if there is any tension between the state and federal schemes, the state scheme must yield to the extent necessary to effectuate the federal scheme.
In addressing third party liability, Minnesota law provides that the state “shall have a lien for the cost of the care upon any and all causes of action or recovery rights” against liable third parties. Minn.Stat. Ann. § 256B.042 subd. 1 (West 1998). In the event the state foregoes its affirmative obligations under the federal scheme and seeks to cash in on a plaintiffs award, costs and attorneys fees are first deducted from the net settlement. See Minn.Stat. Ann. § 256B.042 subd. 5 (West 1998). The state may recover up to two-thirds of the remaining funds. See id. In Lerud’s case, for example, the gross recovery was $140,000. (See Appellant’s Reply Br. at 19.) Costs and attorneys fees totaled approximately $46,000, leaving a net recovery of $94,000. See id. Of the $94,000, the state is entitled to medical payments expended or up to two-thirds of the net recovery, whichever is smaller. See Minn.Stat. Ann. § 256B.042 subd. 5 (West 1998). If the state scheme were allowed to operate with full force, the state could recoup the entire $56,000 without having to bear any burden with respect to recovery costs. This is clearly inconsistent with respect to the federal scheme.
In my view, when a state fails to perform its duty of pursuing claims against potentially liable third parties that have a reasonable likelihood of success, the state must, at the very least, bear its portion of the attorneys fees and costs of recovering medical payments from liable third parties.8 Thus, rather than receiving the full $56,000, the state’s recovery should be reduced by the proportional share of costs required to recover that amount. Because $56,000 is forty percent of the gross recovery, the state would pay forty percent of the total attorneys fees and costs. Because the state’s share of those costs would be $18,400, the state’s total recovery would be $37,600. This result is - the very least required to effectuate the federal scheme, and while the state may have been *336able to pursue this action at less expense, because it violated its affirmative duty to do so, it is bound by the expenses incurred by the plaintiffs.

. It may be that when the parties have had the opportunity to fully brief the district court, the federal scheme requires the state to fund the total costs of recovery. Because the majority declines to address the issue, however, I limit my comments to the very least that is required by a state scheme.