The Supreme Court of the United States (“SCOTUS”) recently issued a decision in Gallardo v. Matstiller, No. 20-1263 (June 6, 2022) that holds that the state can seek reimbursement for future medical care under the Medicaid Act.
Gallardo v. Matstiller – Background
Petitioner Gianinna Gallardo, a minor, sustained catastrophic injuries that left her permanently disabled when a truck struck her as she stepped off her school bus. Florida’s Medicaid agency paid over $862,000 to cover Gallardo’s initial medical expenses. Gallardo, through her parents, sued the truck’s owner/driver and the Lee County School Board, seeking damages for past medical expenses, future medical expenses, and other damages. The matter settled for $800,000.00 with $35,367.52 expressly designated as compensation for past medical benefits; there was no amount allocated for future medical benefits, though the settlement recognized that “some portion of the settlement may represent compensation for future medical expenses.”
State’s Medicaid Third-Party Liability Act vs. federal medicaid act
The State of Florida’s Medicaid Third-Party Liability Act permits the State’s Medicaid agency to seek reimbursement from third party benefits. The statute provides that when a beneficiary accepts medical assistance paid by Medicaid, the beneficiary automatically assigns the Medicaid agency “any right” to third party payments subject to a statutory formula. Under Florida’s statutory formula, the State of Florida was presumptively entitled to 37.5% of Gallardo’s settlement, or $300,000.00. Gallardo contacted the State to negotiate its potential lien. When the State did not respond, Gallardo put the presumptive allocation into escrow and challenged the presumptive allocation in an administrative proceeding.
Gallardo also brought a suit in federal district court seeking a declaratory judgment that the State of Florida was violating the federal Medicaid Act by attempting to recover from portions of the settlement compensating for future medical expenses. The U.S. District Court for the Northern District of Florida granted Gallardo’s Motion for Summary Judgment. However, the Court of Appeals for the Eleventh Circuit reversed, concluding that the text and structure of the federal Medicaid did not prohibit a state from seeking reimbursement from settlement monies allocated for future medical care. The Florida Supreme Court reached the opposite conclusion, so SCOTUS granted certiorari and heard the case.
SCOTUS decision
SCOTUS held that the plain text of the federal Medicaid Act decided the case. Section 1396(k)(a)(1)(A) requires states to acquire from each Medicaid beneficiary an assignment of rights of the individual for the purpose of medical care and for medical care from any third party. Nothing in the provision limits the beneficiary’s assignment to a state agency payment for past medical care paid by Medicaid. In fact, SCOTUS held that there is no distinction in the plain language of the statute between past and future medical care; the only distinction is between medical care and non-medical care. SCOTUS affirmed the judgment of the Court of Appeals.