The budget deal signed into law by President Trump on February 9, 2018 permanently and retroactively restored protection of personal injury recoveries from State claims. Under the new law, States can only make claims against the medical expense reimbursement portion of personal injury judgments and settlements, protecting the rest of such recoveries, such as the portions representing compensation for pain and suffering from such claims.
The new law represents a permanent and retroactive repeal of the law that overturned the Supreme Court decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn 547 U.S. 268 (2006). Ahlborn had been overturned by Section 202 of the Bipartisan Budget Act of 2013 (BBA), which expanded states’ access to entire personal injury settlements and awards to recoup Medicaid costs spent on a beneficiary’s behalf. Originally set to take effect on October 1, 2014, it was twice delayed before finally coming into force late in 2017. The current bill eliminates the 2013 language that nullified Ahlborn.
In 2006 the Supreme Court issued its Ahlborn decision, finding that under the anti-lien restrictions of the Social Security Act states had a right to recover only from the portion of a settlement or award that was allocated to medical expenses. The remainder of the settlement went to help cover the recipient’s expenses not covered by Medicaid. Seven years later, in Wos v. E.M.A. 568 U.S. 627 (2013), the Court struck down a state statute imposing a mandatory Medicaid lien on up to one-third of a recovery, reiterating that "[a]n irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act's clear mandate that a State may not demand any portion of a beneficiary's tort recovery except the share that is attributable to medical expenses."
Following Wos, and without warning, Congress used the BBA to erase the protection Ahlborn and Wos afforded personal injury recoveries. The 2013 budget bill amended the Social Security Act to give states the right to recover from Medicaid beneficiaries' entire settlements. The BBA also gave states the right to place a lien on those settlements or awards.
From the beginning, the American Association for Justice (AAJ) has vigorously fought to eliminate the BBA provision. It managed to twice delay implementation -- first to October 2016, and then again to October 2017. Ever since last October’s delay expired, the AAJ has worked for repeal. “We believe this is a great victory that will ensure Medicaid recipients retain access to the courts,” said Linda Lipsen, AAJ’s Chief Executive Officer.
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