eNotes: – Liability – July 2022 – Federal

SIGNIFICANT CASE SUMMARIES

FEDERAL CASE SUMMARY

Gallardo v. Marstiller
United States Supreme Court
No. 20-1263, ____ S. Ct. ____

Decided: June 6, 2022

The Medicaid Act permits a state to seek reimbursement from settlement payments allocated for future medical care.

Background

Gianinna Gallardo suffered catastrophic injuries when she was hit by a truck while exiting her school bus, leaving her in a vegetative state. Florida’s Medicaid agency (AHCA) covered her medical expenses in the amount $862,688.77. Ms. Gallardo’s remaining medical expenses of $21,499.30 were paid for by WellCare of Florida, a private insurer. Gallardo, through her parents, sued the truck’s owner and driver, as well as the Lee County School Board. She sought compensation for past and future medical expenses, lost earnings and other damages in the amount of $20 million. The parties reached an agreement to settle for $800,000. Of the total $884,188.07 paid by Medicaid and WellCare, $35,367.52 were expressly designated as compensation for past medical expenses – noted by the Court as a 4% recovery. The settlement did not specifically allocate any amount for future medical expenses. Subsequently, Florida’s AHCA sought reimbursement of 37.5%, or $300,000, the percentage the Florida law sets as presumptively representing the portion of the tort recovery that is for past and future medical expenses.

Gallardo filed suit in the United Stated District Court for the Northern District of Florida, contending that the federal Medicaid Act prohibits AHCA from recovering for future medical expenses under Florida’s third-party-recovery law. She argued that AHCA may only recover $35,367.52, which was the settlement amount designated as compensation for past medical expenses. The District Court granted her summary judgment. However, the Eleventh Circuit reversed, holding that Florida may seek reimbursement for medical expenses from settlement amounts representing payment for both past and future medical care. Thereafter, the United States Supreme Court granted certiorari.

The Supreme Court reasoned that the Medicaid Act requires participating states to pay for certain needy individuals’ medical costs and make reasonable efforts to recoup those costs from liable third parties. 42 U. S. C. § 1396k(a)(1)(A). Under Florida’s Medicaid Third-Party Liability Act, a beneficiary like Gallardo, who “accept[s] medical assistance” from Medicaid “automatically assigns to the [state] agency any right” to third-party payments for medical care. Fla. Stat. § 409.910(6)(b). Nothing in this provision purports to limit a beneficiary’s assignment to “payment for” past “medical care” already paid for by Medicaid. Applied to Gallardo’s settlement, Florida’s statutory framework entitled the State to $300,000, or 37.5% of $800,000, the percentage the statute sets as presumptively representing the portion of the tort recovery that is for “past and future medical expenses.” Id. §§409.910(11)(f )(1), (17)(b).

Holding

The Supreme Court affirmed in a 7-2 decision. The Court’s opinion was authored by Justice Thomas. Justice Sotomayor filed a dissenting opinion, in which Justice Breyer joined. The Supreme Court disagreed with Gallardo’s argument that the Eleventh Circuit erred by permitting Florida to seek reimbursement for medical expenses from settlement amounts representing payment for future medical care. Rather, the Court noted that under § 1396k(a)(1)(A), Florida may seek reimbursement from settlement amounts representing “payment for medical care,” past or future. Thus, because Florida’s assignment statute “is expressly authorized by the terms of . . . [§] 1396k(a),” it falls squarely within the “exception to the anti-lien provision” that the Supreme Court has previously recognized. Overall, the Court held that The Medicaid Act permits a state to seek reimbursement from settlement payments allocated for future medical care.

Questions about this case can be directed to Cameron Kockler at (412)-926-1428 or ckockler@tthlaw.com, or to law clerk, Matthew Mangapora, at (412) 926-1437 or mmangapora@tthlaw.com.