21 March 2013

Law in Plain English: Wos v. E.M.A.

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.


E.M.A. was born with serious injuries, and part of her medical expenses were paid by North Carolina's Medicaid program. Her parents filed a medical malpractice suit against the doctor who delivered her and the hospital. They settled for $2.8 million, and the court placed a third of that amount into escrow pending a determination of how much should be reimbursed to the state's Medicaid program (North Carolina has a statute that presumes that one-third of a recovery or settlement is attributable to medical expenses). However, this one-third rule conflicts with a federal Medicare statute that prevents such liens for portions not "designated as payment for medical care." The problem here was that the North Carolina statute presumed one-third of the settlement was for medical care without any specific evidence. When state and federal statutes conflicts, the state statute is preempted by the federal one (on account of the Supremacy Clause). The question before the Court was whether the anti-lien provision of the federal Medicaid statute preempts North Carolina’s statutory presumption that one-third of any tort recovery by a Medicaid beneficiary is attributable to medical expenses. In a 6-3 decision, the Supreme Court ruled that the federal statute did preempt the North Carolina law. As a result, North Carolina's share of the settlement is likely to be less than the one-third their statute presumes. The practical impact of this decision is that states (many who have similar provisions) will be able to recover less expenses from such settlements, and families involved will be able to keep more of the settlement.
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