North Carolina Trial Law Blog

In the matter of Andrews v. Haygood, on December 12, 2008, the NC Supreme Court affirmed the court of appeals opinionwhich rejected the application of Ahlborn v. Arkansas to NC medicaid third party subrogation. Justice Newby wrote the opinion from which Justices Hudson, Brady and Timmons-Goodson dissented.

The gist of the majority opinion is that the majority interprets Ahlborn (which you will recall is a US Supreme Court decision) to say that NC Medicaid must have some mechanism to protect the injured party from giving ALL of their settlement or verdict to Medicaid.  The majority goes on to say that NC's 1/3 rule is just that stop gap measure and thus NC law is within the requirements of Ahlborn. 

Of course, the Ahlborn opinion actuallysays that Medicaid can only collect their prorata portion of a settlement as it relates to the medical bills Medicaid paid, but that was more or less ignored by our court.  Ahlborn boils down to this:  If the injured party collects 25% of the actual value of their case then EVERYONE, including Medicaid, should get 25% of what they are owed.  All boats rise and fall with the incoming tide.  Share and share a like.  What's good for the goose is good for the gander.  You get it, right?

Well, the majority didn't. 

They think that our "1/3 of the total settlement" cap on Medicaid recovery is the same thing as the Ahlborn "fair share" requirement.  How?  Well, because they said so, I guess.  In fact, they not only said so, but implied that the Legislature "may have" intended the "cap" to work in this fashion, despite the fact that the cap was enacted YEARS before Ahlborn.

A simple example of impossibility:

Person in wreck has $200,000 of medical bills.  Medicaid pays $100,000.  The defendant only has $50,000 in insurance.  What should Medicaid get, what should the client get?

Ahlborn Anlaysis:

1.  What's the case worth?  At least $200,000, probably more like $500,000 plus, but of course we can't know exactly.  So let's say $500,000.

2.  Ratio of settlement to Value:  $50,000 : $500,000  =  10%

3.  Medicaid lien of $50,000 x 10% = $5,000 to Medicaid (the fair share)

Andrews Analysis:

1.  What's the case worth?  Who cares!!  In Andrews, ask, how much was the settlement?  $50,000

2.  What is 1/3 of the settlement?  $50,000/3 = $16,666.66

3.  Is Medicaid's lien > 1/3?  If yes, pay only 1/3.   Medicaid will get $16,666.66 here.

My question:  How can $16,666.66 and $5,000.00 BOTH comply with Ahlborn (the law of the land)? 

ANSWER:  They can't, and the Minority opinion, written by Justice Hudson, points this out.  I'll discuss that in my next post.

CURRENT STATUS:  Petition of Cert. to the Supreme Court of the United States has been filed.

So what should a (or this Raleigh) personal injury lawyer do with similar Medicaid issues right now?  Well, I'd be in no rush to get them resolved in state court.  I think our Superior Court Judges are stuck with Andrews right now.  One might also consider going the Federal route.  Or waiting for the US Supreme Court.

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Nichols Law Firm

Chris Nichols