A Federal “Made Whole” Doctrine from the U.S. Supreme Court?
posted on July 28th, 2008 in Subrogation by clintIn ADHS v. Ahlborn, 2006 WL 1131936 (U.S.), the plaintiff sued in Arkansas state court for the injuries she sustained in a car accident. She claimed damages not only for past and future medical costs, but also for permanent physical injury, past and future pain, suffering, and mental anguish, and lost earning capacity. Arkansas’s DHS (“ADHS”) intervened in her lawsuit to assert a lien on the proceeds of any recovery. ADHS received money from the federal government to pay for indigent care. Ahlborn settled her case for $550,000. The parties did not allocate the settlement between categories of damages. ADHS asserted a lien against her settlement proceeds in the amount of $215,645.30–the total payments made by ADHS for her health care. Ahlborn contended that ADHS’s lien violated the federal Medicaid laws because satisfaction of the lien would require depletion of compensation for injuries other than medical expenses. The U.S. Supreme Court held that ADHS was entitled only to that portion of the judgment that represented payments for medical care. This seems to be a “made whole” doctrine for Medicaid. Structuring your settlement in this way Ahlborn did without allocation for categories may beat a subrogation lien involving Medicaid.