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U.S. COURT RULES FEDERAL MEDICAID LAW PREEMPTS FLORIDA'S REIMBURSEMENT STATUTE

In Gallardo v. Dudek (N.D. Fla., No. 4:16-cv-116-MW/CAS, April 18, 2017), a federal district court ruled that federal law prohibits the state of Florida from seeking reimbursement for Medicaid payments it made on a recipient’s behalf from portions of the recipient’s personal injury settlement that were allocated to future medical expenses. Florida’s reimbursement statute uses a uniform formula in which the recipient’s gross settlement is first reduced by twenty (25%) percent to account for attorney fees, the remainder is divided in half (1/2), and the Agency for Health Care Administration (AHCA), Florida’s Medicaid agency, is then entitled to recover the lesser of its total medical payments or one half (1/2). Under this formula, AHCA would recover $323,508.29 in medical payments from Gianinna's settlement. Gianinna’s parents filed suit against the agency in federal court seeking an injunction and a declaration that Florida’s reimbursement statute violates federal law inasmuch as it allows the state to recover from the portion of her settlement beyond that allocable to past medical expenses. AHCA countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses. The parties filed cross motions for summary judgment. The U.S. District Court, N.D. Florida, granted the Gallardos’ motion for summary judgment and denied AHCA’s motion. The court held, consistent with the U.S. Supreme Court’s decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)), that the AHCA is entitled to recover for past medical payments it made on Gianinna’s behalf only from that portion of the settlement allocated to past medical expenses. The court held that where the state reimbursement law explicitly allows for recovery from the portion of the settlement attributable to future medical care, that portion of the state law violates, and is preempted by, federal Medicaid law.