RESPONDENT: E. M. A., a Minor, By and Through Her Guardian ad Litem, Daniel H. Johnson, et al.
LOCATION: United States District Court for the Western District of North Carolina: Statesville Division
DOCKET NO.: 12-98
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Fourth Circuit
CITATION: 568 US (2013)
GRANTED: Sep 25, 2012
ARGUED: Jan 08, 2013
DECIDED: Mar 20, 2013
Christopher G. Browning, Jr. - for the respondents
Ginger D. Anders - Assistant to the Solicitor General, Department of Justice, for the United States, as amicus curiae, supporting the respondents
John F. Maddrey - Solicitor General, North Carolina, for the petitioner
Facts of the case
Emily M. Armstrong, daughter of Sandra and William Earl Armstrong, was born on February 25, 2000. She was seriously injured during her delivery resulting in mental retardation, cerebral palsy and several other medical conditions. Emily's mother applied for Medicaid two months after her daughter's birth. Since then the North Carolina state Medicaid program had paid over $1.9 million in medical expenses on Emily's behalf. Emily's parents and guardian sued the physicians for negligently delivering their child and won a settlement of $2.8 million. As a result, the North Carolina Department of Health and Human Services ("DHHS") placed a lien on Emily's settlement, looking to recover some of the money it paid for Emily's health care services. Under the North Carolina third-party liability statutes, when a patient wins an award of medical expenses, the DHHS has the right to recover either the total amount spent on the patient's health care, or one third of the patient's recovery payment, which ever is less.
Emily's parents and guardian brought suit against the DHHS, claiming that federal Medicaid law prevents the DHHS from taking her proceeds. Federal law prohibits recovery from any payments not made for past medical expenses. Since under North Carolina law a minor child is not allowed to recover for past medical expenses, Emily's settlement could not include such expenses. The United States District Court for the Western District of North Carolina disagreed with this argument and granted summary judgment to the state.
The Armstrongs appealed, and the United States Court of Appeals for the Fourth Circuit vacated the lower court's decision. While the appellate court agreed with the lower court that the DHHS has the right to recover from Emily's settlement, it remanded the case because the state failed to provide a mechanism for determining what part of a settlement covers past medical expenses. Since the North Carolina statutes do not attempt to recover payment for past medical expenses, they violate federal Medicaid law.
Does federal Medicaid law prohibit North Carolina's third-party liability statutes from mandating reimbursement of medical expenses from a patient's lump-sum settlement?
Media for Wos v. E.M.A. et al.Audio Transcription for Oral Argument - January 08, 2013 in Wos v. E.M.A. et al.
Audio Transcription for Opinion Announcement - March 20, 2013 in Wos v. E.M.A. et al.
Anthony M. Kennedy:
The second case is No. 12-98, WOS versus EMA.
When a Medicaid beneficiary is injured and later receives a tort judgment or settlement.
The Federal Medicaid statute requires states to seek reimbursement for the amount of the money the states expended for the beneficiary's medical care, at the same time, the Federal Medicaid statute prohibits states from placing a lien on any portion of the tort recovery not designated as payments for medical care.
A North Carolina law says that one third of any beneficiary's tort recovery represents payment for medical care.
Of course the state's share is capped so its recovery is the lesser, the full amount of its expenditure or one third of the beneficiary's tort recovery.
The question is whether this law is consistent with the anti-lien provision in the federal statute.
Respondent, E. M. A. and her parents sued her physician in a hospital where she was born after she suffered multiple serious birth injuries that left her deaf, blind and with little mobility.
She requires between 12 and 18 hours of skilled nursing care per day.
The lawsuit sought damages for E. M. A. and for her parents.
Though the damages sought were over $42 million, the suit was settled with the assistance of a mediator for $2.8 million and this amount apparently was driven in large part by the amount of insurance coverage that was available.
Under the statute here at issue, the state statute, North Carolina demanded one third of this amount as reimbursement for its expenses. E. M. A. and her parents argued that the state's one third rule violates the Medicaid anti-lien provision.
The Court of Appeals for the Fourth Circuit ruled that this North Carolina's law is invalid.
This Court agrees.
In the opinion filed today, the Court concludes that the federal anti-lien provision does preempt North Carolina's irrebuttable statutory presumption.
In an earlier case from this court called Arkansas Department of Health and Human Services versus Ahlborn, the Court held that the Federal Medicaid statutes says both the floor and the ceiling on a state's potential share of the beneficiary's tort recovery through federal law that requires an assignment to the state the right to recover the portion of a settlement that represents payments for medical care.
But that same federal law also prohibits the state from taking any part of the remainder of the settlement.
Under North Carolina statute however, when the state's Medicaid expenditures exceed one third of the beneficiary's tort recovery, the statute establishes a conclusive presumption that the one third of the recovery represents compensation for medical expenses.
North Carolina's law in some circumstances would permit the state to take a portion of the Medicaid beneficiary's tort judgment or settlement not designated for medical care.
The law sets forth no process for determining what portion of the beneficiary tort recovery is attributable to medical expenses.
Instead, the state has picked arbitrary percentage, and by statutory command labeled that portion of the beneficiary's tort recovery is representing payment for medical care.
The state may evade preemption through creative statutory interpretation or description.
The Court's opinion in Ahlborn contemplated the possibility of an allocation.
It envisage that a judicial or administrative proceeding would be necessary where a beneficiary and the state cannot agree on what portion of the settlement represents compensation for medical expenses.
North Carolina's irrebuttable one size fits all presumption is incompatible with the federal statute.
The judgment of the Court of Appeals is affirmed.
Justice Breyer has filed a concurring opinion.
The Chief Justice has filed a dissenting opinion in which Justice Scalia and Justice Thomas joined.