On March 20, 2013, the United States Supreme Court issued its decision in the case of Wos v EMA. Wos was the Secretary of the North Carolina Department of Health and Human Services, and EMA was the designation used for a minor who had sustained severe injuries as a result of a birth injury, requiring round-the-clock care on a permanent basis.
The Medicaid agency had paid over $1.9 million in medical benefits by the time the parties settled the personal injury case. The amount of the settlement was $2.8 million. Under a North Carolina statute, one-third of a settlement of a personal injury claim is irrebuttably presumed to be for medical expenses, and is used to repay Medicaid benefits that have been paid on behalf of the injured person.
The Supreme Court reiterated that the principle established in Ahlborn is that the Federal Medicaid statute prohibits a state Medicaid agency from imposing a lien on any “property” belonging to the Medicaid beneficiary. There is an exception for the reimbursement of medical expenses, but any reimbursement that goes beyond a fair reimbursement of the Medicaid agency for medical expenses is regarded as violating that key obligation.
The North Carolina law, it held, directly conflicts with the Federal Medicaid statute and is therefore preempted. Its irrebuttable presumption, which provides no procedure by which the Medicaid beneficiary may establish the amount of his or her loss, the amount by which he is compromising his claim by agreeing to a settlement, etc., is directly in conflict with the Medicaid statute as interpreted under the Ahlborn decision. Points that it made in support of its decision included:
- The statute lacked any “limiting principle”. If a state can determine that 1/3 of any recovery is reasonable as an automatic reimbursement amount, it could do the same for any other percentage.
- The state made no showing that the allocation is reasonable in the majority of cases.
- The statute does not permit a party or a judge to make a determination as to the reasonableness of the 1/3 allocation under the facts of a given case.
The Supreme Court invalidated the North Carolina statute and returned the case to the district court for a hearing on the amount that is reasonably reimbursable to the Medicaid program for the benefits that it had on behalf of EMA.