Understanding Survivorship Claims and Medicaid Liens in Wrongful Death Cases

When navigating elder law, families often focus on protecting assets, ensuring healthcare coverage, and maintaining an independent quality of life. A lesser-known issue that can significantly impact families—especially those relying on Medicaid for long-term care—is how Medicaid estate recovery and liens interact with wrongful death lawsuits, particularly with survivorship claims. A recent case sheds light on this complex intersection, raising important considerations for families and their legal strategies. This article will explore survivorship claims, other components of wrongful death claims, and the implications of Medicaid liens, which can discourage families from pursuing such cases.

The Case: Survivorship Claims Vulnerable to Medicaid Estate Recovery

The case, In re Estate of Leonor R. Dizon, No. A-1724-23 (Apr. 8, 2025), a New  Jersey appellate court ruling,  addressed whether a survivorship claim, part of a wrongful death lawsuit, is considered an estate asset subject to a Medicaid lien. Leonor Dizon received Medicaid benefits from August 2006 to March 2018. She died after falling from her bed and fracturing her neck at the Trinitas Regional Medical Center. In August 2018, the surrogate’s court issued letters of administration to Teresa Finamore, Leonor’s daughter. The Division of Medical Assistance and Health Services (the Division) advised Leonor’s estate (the Estate) of a lien and asserted a claim against the Estate’s assets under 42 U.S.C. § 1396p and New Jersey’s estate asset statute for $214,391.00 expended by the state’s Medicaid program for medical and health-related services on Leonor’s behalf.

In 2019, the Estate filed a medical malpractice complaint that included survivorship claims, and the Division filed a lien against the Estate’s assets, including any award from the pending survivorship actions. The Estate petitioned the court to issue an order extinguishing the lien claim asserted against the Estate’s assets pursuant to the estate asset statute. It argued that a survivorship award was not subject to the Division’s lien under the estate asset statute because the survivorship claims were not assets of the Estate at the time of Leonor’s death. It claimed the Division was only entitled to reimbursement from an award for Leonor’s tort-related medical expenses from third-party medical malpractice defendants under another statute that specifically addressed third-party liability recovery. The court denied the Estate’s application to extinguish the lien, and the Estate appealed.

On appeal, the New Jersey Superior Court, Appellate Division, determined that the estate asset statute broadly defines an estate asset as all interests a Medicaid recipient possesses at death, including any interest in the Medicaid recipient’s medical malpractice claims. The administrator of Leonor’s Estate had the same standing to sue that Leonor had prior to her death; thus, Leonor’s interest in her medical malpractice claims passed to the Estate at her death, and the survivorship claims were estate assets.

The court also found no merit in the Estate’s argument that the third-party liability statute dictated the amount that the Division could recover on its lien because the source of the funds limited its ability to collect through its lien. Rather, a Medicaid recipient’s status as living, not the source of the funds, governs the Division’s authority to attach a lien for reimbursement: The federal anti-lien statute prohibits a lien from being imposed against a Medicaid recipient’s property prior to their death. Under the estate asset statute, the Division was authorized to seek reimbursement against the Estate’s assets for all Medicaid benefits paid on Leonor’s behalf after she turned 55, and it was not limited to reimbursement from recovery for tort-related medical expenses. As a result, the court ruled that the Division’s lien was valid against all the Estate’s assets, including any survivorship action award, under the estate asset statute and affirmed the lower court’s order denying the Estate’s application to extinguish the lien.

This ruling underscores the importance of understanding the components of wrongful death lawsuits and how Medicaid recovery rules apply, especially for families of Medicaid recipients.

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What Is a Survivorship Claim?

A survivorship claim, also known as a survival action, is a legal claim brought by the estate of a deceased person to recover damages the deceased suffered before their death. These damages may include:

• Pain and suffering endured by the deceased due to the injury or negligence that led to their death.
• Medical expenses incurred for treatment of the injury.
• Lost wages or earning capacity if the deceased was unable to work due to the injury.

Unlike a wrongful death claim, which compensates surviving family members for their losses, a survivorship claim seeks to address the harm the deceased experienced. Because these claims belong to the estate, any proceeds are distributed according to the estate’s probate process, making them vulnerable to creditors, including Medicaid liens.

A Wrongful Death Claim Distinguished From a Survival Action

A wrongful death claim, by contrast, is brought by the heirs or beneficiaries of the deceased to recover damages for losses they suffered due to the death. These may include:

• Loss of financial support: Compensation for the income or financial contributions the deceased would have provided to family members.

• Loss of companionship or guidance: Damages for the emotional and relational impact of the loss, such as the absence of a parent’s guidance or a spouse’s companionship.

• Funeral and burial expenses: Costs incurred by the family for the deceased’s funeral.

In many states, wrongful death claim proceeds are not considered estate assets because they belong directly to the heirs, not the deceased’s estate. However, as the New Jersey case illustrates, survivorship claims are treated differently, creating a potential financial risk for estates subject to Medicaid recovery.

Medicaid Liens and Estate Recovery: A Growing Concern

Medicaid, a critical lifeline for many aging adults who require long-term care, is a joint federal and state program that covers nursing home care, home-based care, and other medical services. Federal law requires states to recover certain Medicaid costs from the estates of recipients aged 55 or older after their death, a process known as the Medicaid Estate Recovery Program (MERP). This includes costs for nursing facility services, home and community-based services, and related hospital and prescription drug services. States may also recover additional expenses at their discretion, depending on local laws.

A Medicaid lien is one tool states use to recoup these costs. Liens can be placed on estate assets, including real property (like a home) or monetary assets (like lawsuit proceeds). In the context of survivorship claims, the New Jersey ruling clarified that because these claims are estate assets, they are subject to Medicaid liens. This can result in significant portions of a settlement or award being used to repay Medicaid, potentially leaving little for heirs or other estate beneficiaries.

The size of Medicaid liens can be substantial, especially for recipients who received years of long-term care. For example, monthly Medicaid payments for nursing home care can range from $6,000 to $12,000 or more, accumulating to hundreds of thousands of dollars over time. When a survivorship claim’s proceeds are subject to such a lien, families may find that the financial recovery they expected is drastically reduced.

Implications for Pursuing Wrongful Death Cases

The potential for large Medicaid liens to consume survivorship claim proceeds can discourage families from pursuing wrongful death lawsuits, even when they have a strong case. It may even deter trial attorneys, who work on a contingency fee basis from taking on such cases.  

Here are some key implications:

• Financial Disincentive: If a significant portion of a survivorship claim’s proceeds will go to Medicaid, families may question whether the emotional and financial cost of litigation is worthwhile. This is particularly true for smaller claims, where legal fees and Medicaid recovery could outweigh the net recovery.

• Complexity in Litigation Strategy: Families and their attorneys must carefully structure wrongful death lawsuits to distinguish between survivorship and wrongful death claims. Emphasizing wrongful death damages (which are often exempt from Medicaid liens) over survivorship damages may help preserve more of the recovery for heirs. However, this requires skilled legal counsel familiar with both elder law and personal injury law.

• Impact on Aging in Place Planning: For families planning to age in place, the threat of Medicaid estate recovery can complicate asset protection strategies. For example, a home owned jointly with right of survivorship may bypass probate and avoid Medicaid recovery in some states, but lawsuit proceeds from a survivorship claim do not enjoy the same protection. Families must work with elder law attorneys to anticipate these risks and explore options like trusts or exempt transfers during the Medicaid recipient’s lifetime.

• Emotional and Ethical Considerations: Pursuing a wrongful death lawsuit is often about seeking justice and closure, not just financial compensation. However, the prospect of losing much of the recovery to Medicaid may feel like an additional injustice, discouraging families from holding negligent parties accountable.

Strategies to Mitigate Medicaid Liens

To protect assets and maximize recovery in wrongful death cases, families can consider the following strategies, ideally with the guidance of an elder law attorney:

• Consult an Elder Law Attorney Early: Before applying for Medicaid or pursuing a lawsuit, consult an attorney to understand your state’s Medicaid recovery rules and plan asset protection strategies. For example, transferring assets to a disabled child or setting up a joint bank account with right of survivorship may shield certain assets from recovery.

• Structure Lawsuit Claims Carefully: Work with a personal injury attorney to emphasize wrongful death damages over survivorship damages, as the former are less likely to be subject to Medicaid liens. Ensure that settlement agreements clearly delineate the allocation of proceeds.

• Explore Hardship Waivers: Some states allow heirs to apply for an undue hardship waiver if Medicaid recovery would cause significant financial distress, such as displacing a dependent relative. For example, if a Medicaid recipient’s child provided caregiving and has no other residence, they may qualify for a waiver to protect the home or other assets.

• Use Non-Probate Assets: In states that limit Medicaid recovery to probate assets, titling assets like homes or bank accounts as joint tenants with right of survivorship, or using payable-on-death (POD) or transfer-on-death (TOD) designations, can help assets bypass the estate and avoid liens.

• Consider Medicaid Disenrollment: In cases where Medicaid benefits are minimal, particulalrly on a monthly basis (e.g., limited in-home care), families may consult an attorney about voluntarily disenrolling from Medicaid to avoid a large estate recovery claim later. This decision requires careful analysis of care needs and costs.

Conclusion: Planning Ahead to Protect Your Legacy

The New Jersey case highlights a critical intersection of elder law, Medicaid recovery, and wrongful death litigation. Survivorship claims, as estate assets, are vulnerable to Medicaid liens, which can significantly reduce the financial recovery families expect from a lawsuit. This reality can discourage families from pursuing legitimate claims, impacting both their financial security and their pursuit of justice.

Understanding these risks is essential. By working with an elder law attorney, families can develop strategies to protect assets, navigate Medicaid rules, and structure legal claims to minimize the impact of estate recovery. Proactive planning—whether through exempt transfers, non-probate asset titling, or careful litigation strategies—can help preserve your legacy and ensure that your family’s needs are met, even in the face of complex legal challenges.

If you’re concerned about Medicaid liens or planning for long-term care, contact a qualified elder law attorney in your state to discuss your options. 

PostScript- The Subject No One Wants To Discuss: Impact on Case Value

Before diving into the subject of values of awards and settlements, and how Medicaid Estate Recovery affects these, there is one thing to keep in mind: contingency fees for trial lawyers are usually paid from the gross settlement before satisfaction of any claims or liens.  This means, simply, that your lawyer is not dissuaded, financially, from pursuing a claim simply because a lien or claim against the proceeds exists.  This is very good news. 

The question arises: does Medicaid Resource Recovery potentially impact the more valuable possible recovery?  

Determining whether survivorship claims or wrongful death claims are likely to result in larger judgments depends on the specific circumstances of the case, including the nature of the damages, the evidence presented, and the jurisdiction’s laws. The age and impairment of the injured party, though, play significant roles in shaping the potential value of each type of claim. Below, we explore the factors influencing the size of judgments for each claim type, how age and impairment impact these awards, and practical implications for families navigating these waters.

Survivorship Claims vs. Wrongful Death Claims

Survivorship Claims: Factors Driving Larger Judgments

Survivorship claims are likely to result in larger judgments when the deceased endured significant suffering or incurred substantial costs before death. Key factors include:

• Duration and Severity of Pain and Suffering: If the deceased experienced prolonged or intense pain due to the injury (e.g., weeks or months of suffering from medical malpractice or a severe accident), juries may award significant damages. Pain and suffering awards are often subjective and can be substantial if the evidence is compelling (e.g., medical records or witness testimony).

• Medical Expenses: High medical costs, such as extended hospital stays, surgeries, or specialized care, can increase the claim’s value. For example, a case involving months of ICU care could lead to a large award.

• Lost Earnings: If the deceased was working or had earning capacity before the injury, lost wages from the injury to death can add to the claim. This is less relevant for elderly or fully retired individuals towards judgment amounts in most cases.  

• Evidence of Negligence: Strong evidence of egregious negligence (e.g., a nursing home’s failure to prevent severe bedsores) can lead to higher awards, including punitive damages in some cases.

Wrongful Death Claims: Factors Driving Larger Judgments

Wrongful death claims tend to yield larger judgments when the deceased was a primary financial or emotional provider for their family. Key factors include:

• Economic Dependency: If the deceased provided significant financial support (e.g., a breadwinner supporting a spouse and children), the loss of future earnings or benefits can result in a substantial award. Calculations often consider the deceased’s income, life expectancy, and the duration of dependency (e.g., until children reach adulthood).

• Loss of Companionship or Guidance: Non-economic damages, such as the loss of a parent’s guidance for minor children or a spouse’s companionship, can be significant, especially if the family can demonstrate profound emotional impact. These awards are often higher for younger decedents with long-term familial roles.

• Funeral Expenses: While typically a smaller component, funeral and burial costs can add to the award.

• Jurisdictional Caps: Some states impose caps on non-economic damages (e.g., pain and suffering or loss of companionship), which can limit wrongful death awards. For example, California caps non-economic damages in medical malpractice cases at $500,000 for wrongful death as of 2025 (adjusted for inflation under Medical Injury Compensation Reform Act (MICRA). Cal. Civ Code  § 3333 et seq.

General Trends

Survivorship Claims may yield larger judgments when the deceased suffered extensively before death, particularly if medical costs or pain and suffering were significant. These claims are often stronger in cases of prolonged injury, such as medical malpractice or nursing home neglect, where the deceased endured months of documented suffering.

Wrongful Death Claims often result in larger awards when the deceased was young, employed, or a primary caregiver, as the financial and emotional losses to survivors are greater. These claims are typically more valuable when the deceased had a long life expectancy and significant dependents.

Many cases are include combined claims.  In many wrongful death lawsuits, both survivorship and wrongful death claims are pursued together, maximizing the total recovery. The relative size of each component depends on the case’s facts.

Impact of Age and Impairment

The age and impairment of the injured party significantly influence the potential value of both survivorship and wrongful death claims, as they affect the types and extent of damages.

Younger Deceased: 

• Survivorship Claims: Younger individuals may have smaller survivorship awards if the injury led to a quick death, limiting pain and suffering or medical costs. However, if the injury caused prolonged suffering, awards can still be significant. Lost wages are more relevant for younger, working individuals.

• Wrongful Death Claims: Younger decedents typically lead to larger wrongful death awards because their dependents (e.g., spouse, minor children) face a longer period of lost financial support and companionship. For example, the death of a 40-year-old parent supporting a family could result in millions in lost future earnings, far outweighing a survivorship claim.

Older Deceased: 

• Survivorship Claims: Older individuals, especially those in nursing homes or receiving long-term care, may have stronger survivorship claims if they endured prolonged neglect or malpractice (e.g., untreated infections or falls). Pain and suffering awards can be significant, as elder abuse cases often involve egregious negligence. However, lost wages are rarely a factor for retirees.

• Wrongful Death Claims: Wrongful death awards for older decedents are often smaller because they are less likely to have dependents relying on their income. Loss of companionship damages may still apply (e.g., for a surviving spouse), but these are typically lower than for younger decedents with minor children. Jurisdictional caps on non-economic damages can further limit awards.

Pre-Existing Impairments: 

• Survivorship Claims: If the deceased had significant impairments (e.g., dementia, mobility issues), defendants may argue that their pain and suffering or life expectancy were already limited, potentially reducing awards. However, severe neglect or injury exacerbating these impairments (e.g., untreated pressure ulcers in a bedridden patient) can still lead to substantial pain and suffering damages.

• Wrongful Death Claims: Impairments may reduce wrongful death awards if they limited the deceased’s ability to provide financial support or companionship. For example, if the deceased was fully disabled and not contributing financially, economic damages may be minimal. However, emotional damages for loss of companionship can still be significant, especially for close family members.

Injury-Related Impairments:

• Survivorship Claims: If the injury caused severe impairments before death (e.g., paralysis or cognitive decline from a medical error), pain and suffering damages can be substantial, as the deceased endured significant harm. Medical costs for treating these impairments also increase the claim’s value.

• Wrongful Death Claims: Injury-related impairments may have less direct impact on wrongful death claims, as these focus on the survivors’ losses. However, if the impairment reduced the deceased’s ability to interact with family before death, it could strengthen claims for loss of companionship.

Practical Examples:

• Young, Healthy Deceased: A 35-year-old worker killed in a car accident after a brief hospital stay may have a modest survivorship claim (e.g., $100,000 for pain and suffering and medical costs) but a large wrongful death claim (e.g., $2 million for lost earnings and companionship for a spouse and children).

• Elderly, Impaired Deceased: An 85-year-old nursing home resident with dementia who suffered months of neglect before dying from untreated infections may have a large survivorship claim (e.g., $500,000 for pain and suffering and medical costs) but a smaller wrongful death claim (e.g., $150,000 for a surviving spouse’s loss of companionship).

• Middle-Aged, Disabled Deceased: A 60-year-old with pre-existing mobility issues who died due to medical malpractice after a prolonged ICU stay may have a balanced claim, with a significant survivorship award (e.g., $400,000 for pain and suffering and medical costs) and a moderate wrongful death award (e.g., $300,000 for loss of companionship and limited financial support).

Implications of Medicaid Liens

Survivorship claims are estate assets and thus subject to Medicaid liens, which can be substantial (e.g., hundreds of thousands of dollars for long-term care). This reduces the net recovery for heirs, potentially discouraging families from pursuing these claims, especially if the survivorship component is the primary basis for the lawsuit. Wrongful death claims, often exempt from Medicaid liens, may be more appealing to pursue, as heirs retain more of the proceeds. For elderly or impaired Medicaid recipients, families must weigh the potential award against the lien’s impact, particularly for survivorship claims.

Conclusion

Neither survivorship nor wrongful death claims consistently yield larger judgments; the outcome depends on the case’s facts. Survivorship claims are stronger when the deceased endured prolonged suffering or high medical costs, often seen in elder abuse or malpractice cases involving older, impaired individuals. Wrongful death claims are typically larger for younger, financially active decedents with dependents, due to significant economic and emotional losses. Age and impairment shape these outcomes by affecting life expectancy, earning capacity, and the nature of damages.

For families navigating elder law, the threat of Medicaid liens on survivorship claims can discourage litigation, particularly for elderly Medicaid recipients. Consulting both personal injury and elder law attorneys is crucial to maximize recovery, protect assets, and make informed decisions about pursuing justice.

Original Source: ElderLawAnswers.com, “Survivorship Claims Are Estate Assets Subject to Medicaid Lien.”