Michigan Applies Ahlborn v. Arksansas

Another state has extended the Medicaid Lien limitations developed in Ahlborn v. Arkansas. This time, it’s our home state: Michigan, in a clear holding that seems to suggest Medicaid and Managed Medicaid Programs (like the respondent Meridian Health Plan) should work to settle their liens rather than force apportionment hearings.

If you practice in Michigan use this to help you. If you practice elsewhere use it as a reminder of how Ahlborn should work (and perhaps to remind Medicaid programs that Ahlborn is law).

Michigan’s Court of Appeals reversed a trial court decision in LaDonna Neal and Meridian Health Plan v. Detroit Receiving Hospital on May 16, 2017. This decision included three main holdings:

  1. The Michigan Medicaid Act conflicts with the Federal Anti-Lien Statute for Medicaid recovery where it fails to limit itself to recovery on just medicals;
  2. Like Ahlborn, settlement proceeds constitute property under the Federal law except that portion which is designated for medicals; and,
  3. Unilateral Apportionment is insufficient to bind the Medicaid programs (e.g., where Ms. Neal and Detroit Receiving Hospital decided the portion of settlement for medicals without including Meridian);

Interestingly, Medicaid liens would technically violate the Federal Anti-Lien provision in 42 USC 1396p(a)(1) that prohibits a lien “against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan[.]” However, that Act includes an exception. That exception is, of course, 42 USC 1396a(25) et. seq. which requires States create a system to recover Medicaid payments from liable third parties. That statute also appears to limit the recovery where it states that Medicaid should ascertain the legal liability of third parties that are “legally responsible for payment of a claim for a health care item or service.” Essentially, this is the limitation to recovery of just medicals. If a third party is responsible for other items then Medicaid cannot recover from that portion.

This holding is great, right? So what do you have to be concerned with as an attorney?

The Court was clear and repetitive when noting that apportionment must be fair. It repeated the Ahlborn and WOS v. EMA concerns regarding settlement manipulation. It dismissed concerns that mini trials would become necessary by strongly suggesting that plaintiffs and Medicaid simply negotiate. The Neal Court quoted WOS by stating: “When there has been a judicial finding or approval of an allocation between medical and nonmedical damages—in the form of either a jury verdict, court decree, or stipulation binding on all parties—that is the end of the matter.” Emphasis Added.

By reiterating that the stipulation must be binding on all interested parties, the Court notes that a stipulation between plaintiff and defendant is not enough. This is where Ms. Neal’s attorneys erred. They failed to include Meridian in the stipulation. Similarly, the Court seems to recognize that a settled, stipulated allocation between plaintiff and Medicaid will be a significant relief on other courts (in place of mini-trials for damage allocation).

Two final words of caution:

  1. The Court stated that a full lien is possible even with apportionment. It noted, “Meridian Health Plan would only be entitled to recover its entire Medicaid lien of $110,238.19 if that amount comports with a fair and proper allocation of damages as between plaintiff’s other losses—which is possible;” and,
  2. This decision technically can be overruled by Michigan’s Supreme Court.

We’re intrigued to see how this holding works with Michigan’s unlimited PIP coverage (for No-Fault motor vehicle accidents) – but that’s a topic for another day. Don’t want to wait for guidance or risk a higher allocation? Reach out to a lien resolution professional for assistance.

If you need help reducing Medicaid liens consider utilizing an expert service. For help with Medicare LiensMedicaid Liens and any other Health Insurance Lien , please contact us at (844) MED LIEN or (844) 633-5436.