March 8, 2018, Trial News
Bipartisan budget deal reinstates Ahlborn protections
Diane K. Zhang
On Feb. 9, President Donald Trump signed into law the Bipartisan Budget Act of 2018. The act eliminated the language from the Bipartisan Budget Act of 2013 that had repealed the U.S. Supreme Court’s holding in Arkansas Department of Health and Human Services v. Ahlborn. In that case, the Court held that a state can assert a Medicaid lien only on the portion of a settlement attributable to medical expenses.
On Feb. 9, President Donald Trump signed into law the Bipartisan Budget Act of 2018. The act eliminated the language from the Bipartisan Budget Act of 2013 that had repealed the U.S. Supreme Court’s holding in Arkansas Department of Health and Human Services v. Ahlborn (547 U.S. 268 (2006)).
In Ahlborn, the plaintiff, Heidi Ahlborn, who was permanently injured in a car crash, applied for and began receiving Medicaid benefits. She assigned her right to the entirety of any third-party payment to the Arkansas Department of Human Services (ADHS), which was required by state law. Ahlborn then received $555,000 in a lump sum settlement, which included lost wages, pain and suffering, and permanent disability, among other things—in addition to past medical expenses.
The ADHS asserted a lien of more than $200,000 for the benefits that it had provided. Ahlborn sued, arguing that the ADHS was entitled only to the much smaller amount apportioned to past medical expenses out of the total settlement. The Supreme Court agreed, ruling that the state could only assert a lien on her settlement for the amount of past medical expenses.
Section 202 of the Bipartisan Budget Act of 2013 overturned Ahlborn—under the section’s language, states could assert liens up to the entirety of a personal injury settlement. The 2013 Bipartisan Budget Act’s effective date, however, was delayed multiple times—although it was originally set to become effective in October 2014, it did not become effective until three years later in 2017.
After the Bipartisan Budget Act of 2018 eliminated the language in the 2013 bill that removed the Ahlborn protections, Ahlborn is once again in effect. Seattle attorney Maria Diamond noted its importance. “Ahlborn interjected fundamental fairness into the recovery rights of state Medicaid agencies,” she said. “Now that Ahlborn is law again, Medicaid agencies cannot assert liens against the entire settlement or judgment of Medicaid beneficiaries. Proceeds that compensate for damages other than past medical bills are not subject to Medicaid liens.”
Diamond added, “If you represent Medicaid beneficiaries, you must understand how to make sure your client recovers as much of the settlement as possible using Ahlborn. It’s not enough to simply state how you think damages should be allocated. You must be ready to prove the percentages—with supporting evidence—in a hearing. Medicaid agencies will continue to be aggressive in recovering their liens, especially in larger cases. You may need expert reports or testimony regarding future medical costs and future lost wages, among other things. There are many different ways to set up an Ahlborn allocation—just be sure to marshal your proof.”