eNotes: Liability – March 2022 – Virginia

VIRGINIA CASE SUMMARY

Farah v. Commw. of Va. Dep’t of Med. Assistance Servs.
Virginia Supreme Court
No. 201413

Decided: February 17, 2022

Virginia Supreme Court affirms settlement payout to Virginia Medicaid program.

Background

Amir Farah was seriously injured in a head-on car crash while working as a cab driver. The Commonwealth’s Medicaid program paid for a portion of his medical care. Mr. Farah’s injuries included fractures of the skull, face, leg, and foot bones and knocked out front teeth. He required over 20 surgery and was in the intensive care unit for over a month. Mr. Farah sued the driver who struck him, seeking $3 million in compensatory damages and $350,000 in punitive damages. Ultimately, the parties settled for $375,000.

The Virginia Department of Medical Assistance Services (DMAS) asserted a lien in the amount of $96,481.40 against the settlement proceeds that had been awarded to Mr. Farah. The parties were unable to come to an agreement regarding the amount of settlement proceeds to be paid to DMAS. Mr. Farah filed a Motion to apportion his settlement under § 8.01-669. Mr. Farah argued at the apportionment hearing that Supreme Court precedent compelled the use of a specific formula – [Total Settlement/Full Value of the Claim] x Medicaid Lien Amount = Amount Owed to Medicaid. This came from a similar case, Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006), which said that the State could not satisfy its lien by encumbering the Plaintiff’s other recovered damages, and that given the stipulated reasonable value of the case, the State could recover a proportional amount for its Medicaid lien. Mr. Farah presented evidence that his case was worth between $3 and $4 million dollars. Ultimately, the Circuit Court was not persuaded by Mr. Farah’s argument and apportioned the settlement with $85,000 to DMAS – approximately 23% of the settlement Mr. Farah received. Mr. Farah appealed.

Holding

The Virginia Supreme Court held that nothing in Ahlborn compels the Court to use a specific formula when determining the amount of a lien for medical expenses, and that the Supreme Court acknowledged that States have “considerable latitude” to develop their own allocation procedures. Rather, Courts should “reduce the Medicaid lien to a value that reflects that portion of a settlement that represents payments for medical care.” The Virginia allocation provision, § 8.01-669, which allows trial courts to reduce a Medicaid lien “as the equities of the case may appear,” does not conflict with Supreme Court precedent. Although Mr. Farah argued that the amount of the lien should be based on the value of the case, the Court pointed out that the lien is based on the amounts paid by the State’s Medicaid program. The Supreme Court also held that the Circuit Court’s findings of fact were not plainly wrong or without evidence, and therefore the Supreme Court affirmed the Circuit Court’s judgment.

Questions about this case can be directed to Kelly Crowe at (571) 464-0434 or kcrowe@tthlaw.com.