Written by attorney Taylor Burkhart Downs

Can Medicaid liens be limited in West Virginia?

After a tragic injury, many people turn to Medicaid for assistance in paying medical bills. When this occurs, liens are placed on an individual’s account in order to allow Medicaid to recover monies paid out for the healthcare.

For years, Courts in West Virginia have ruled that Medicaid had a priority lien giving it a right to full reimbursement from any settlement proceeds an individual may collect. However, recent a Court ruling has changed this. Now, individuals who are injured and have had Medicaid pay for health care will no longer have to deal with a priority lien from Medicaid.

In the recent West Virginia Supreme Court case I n Re: E.B., a minor, No. 101537 (W.Va. 6/21/12), the Court was confronted with a case where E.B. was born with debilitating brain damage which would require lifelong medical treatment and care. E.B.’s mother, Holly, applied for and received Medicaid benefits first in Ohio and then in West Virginia. After pursuing a lawsuit against health care providers for the brain damage, a settlement of $3,600,000.00 was reached. After settlement was reached, West Virginia’s DHHR made a claim for $557,000.00, which represented the amount of medical expenses it had paid on E.B.’s behalf. After negotiations with DHHR, DHHR agreed to a reduction in the lien amount to $289,000.00; the reduction was based on DHHR’s share of attorney’s fees and costs.

The reduction was objected to by Holly based on the United State Supreme Court Case Arkansas Dep’t of Health and Human Servicse v. Ahlbor, 547 U.S. 268 (2006). Holly argued that under Ahlborn, DHHR could not recover the full value of its lien, but could only recover a percentage of its lien based upon the true value of the underlying claim. After a hearing on the true value of the claim where evidence was provided from a life care plan that estimated the costs of 24-hour nursing care, medical equipment, a handicapped accessible home, and medical supplies, Holld argued that the claim’s true value was $25,000,000.00 and that the settlement represented only 14.19% of the true value of the claim. Under this logic, then, DHHR was entitled to be reimbursed for only 14.19% of its payments. The Court agreed with Holly’s position.

After hearing arguments from both the DHHR and Holly on E.B.’s behalf, the court held that under Ahlborn, DHHR only had a right of recovery for past medical expenses. Second, the Court held that W.Va. Code 9-5-11, which gave DHHR a priorty lien, struck down as it was inconsistent with the U.S. Supreme Court’s ruling in Ahlborn. Finally, the Court provided guidelines to trial courts and attorneys to help allocate damages so that Medicaid’s lien could be appropriately calculated and enforced.

The W.V. Supreme Court’s ruling in E.B., came as a bit of a surprise. However, given the Court’s holding in the case, individual’s who have been harmed and relied upon Medicaid for assistance in paying medical expenses now are able to negotiate a more fair settlement against DHHR liens, making the individual more whole than what prior Court rulings provided.

The Manchin Injury Law Group is focused on helping individual clients and entire families victimized by the negligence of others. For more information or to schedule a free consultation, call us at 304-367-1862.

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