Article: Supreme Court of Pennsylvania Holds That Department of Public Welfare Can Obtain Reimbursement of Medicaid Benefits on Behalf of Disabled Minor

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Supreme Court of Pennsylvania Holds That Department of Public Welfare Can Obtain Reimbursement of Medicaid Benefits on Behalf of Disabled Minor

In E.D.B. v. Clair, the Supreme Court of Pennsylvania held that the Pennsylvania Department of Public Welfare (“DPW”) could obtain reimbursement from a tortfeasor for Medicaid expenditures made on behalf of a disabled minor even though the parents’ claim for those expenses was barred by the statute of limitations.

In E.D.B., the plaintiff was born in October, 1985, suffering from severe physical and mental disabilities. Nearly eighteen years later, in August, 2003, the plaintiff, by and through her parents and court-appointed guardians, commenced a medical malpractice action against the hospital where she was born, and her attending physician, asserting that her disabilities were caused by the defendants’ negligence. In her Complaint, the plaintiff specifically alleged that she had been forced to expend sums of money for medical care and treatment and may be forced to expend similar sums for additional care in the future and that her earning capacity had been severely and permanently impaired. Thereafter, the parties negotiated a settlement, which was approved by the court of common pleas in August, 2006. The settlement included the creation of a special needs trust for the plaintiff.

Because the plaintiff had been receiving medical assistance benefits through the Medicaid program, the plaintiff’s parents notified DPW of the plaintiff’s suit, as required by § 1409(b)(5) of the Fraud and Abuse Control Act (“the Act”). DPW responded by issuing a statement of claim, wherein it asserted a lien on any award or settlement resolving the litigation, for the amount that DPW had provided for the plaintiff’s care. The trial court then ordered the trustee of the special needs trust to reimburse DPW in the full amount of the lien.

The plaintiff filed an appeal to the Superior Court, which reversed and remanded, holding that DPW was entitled to be reimbursed only for those medical expenses that it paid on the plaintiff’s behalf after the plaintiff reached the age of majority. The Superior Court reached this determination after noting that a claim for medical expenses incurred by a minor because of personal injury in Pennsylvania belongs to the minor’s parents, not the minor herself. Therefore, because the statute of limitations had expired on the plaintiff’s parents’ claim for reimbursement for medical expenses when the plaintiff filed suit against the defendants, the Superior Court concluded that the parties’ settlement could not have included payment for the medical expenses that the plaintiff incurred while she was a minor. Accordingly, the Superior Court held that DPW could not satisfy its lien from the settlement funds. DPW then filed a petition for allowance of appeal to the Supreme Court, which was granted.

On appeal to the Supreme Court, DPW argued that the Act’s plain language conferred a cause of action to the plaintiff against her tortfeasors to recover the amount of Medicaid benefits she received as a child and to reimburse DPW for that amount. The Supreme Court agreed and held that the plaintiff possessed a cause of action to recover such amounts from her tortfeasors notwithstanding the common law rule in Pennsylvania that only the parents possess a claim for medical expenses paid on a child’s behalf before the child reaches the age of majority.

In reaching this holding, the Supreme Court initially noted that the plaintiff was considered a “beneficiary” under the Act, which defines “beneficiary” as: “[A]ny person who has received benefits or will be provided benefits under this act because of any injury for which another person may be liable. It includes such beneficiary’s guardian, conservator, or other personal representative, his estate or survivors.” The Supreme Court observed that “the statutory characterization of the guardian as the beneficiary’s guardian makes indisputably clear that the direct recipient of the medical benefits . . . is the primary beneficiary.” Accordingly, the Supreme Court concluded that both the plaintiff and her parents were considered beneficiaries of medical assistance benefits under the Act.

After determining that the plaintiff was a beneficiary under the Act, the Supreme Court concluded that the General Assembly intended to grant DPW the right to recover the reasonable value of Medicaid benefits paid to the beneficiary via a lien asserted on the parties’ settlement. In reaching this conclusion, the Supreme Court remarked that the Act expressly authorizes DPW to recover the value of benefits provided to a beneficiary from a liable third party. The Supreme Court also noted the Act provides DPW with a primary lien against any settlement or award in a suit against a liable third party or insurer for the amount of medical assistance benefits paid to the beneficiary. Finally, the Supreme Court observed that Act provides that, “notwithstanding any other provision of law, the entire amount of any settlement of the injured beneficiary’s action or claim, with or without suit, is subject to [DPW’s] claim for reimbursement of the benefits provided any lien filed pursuant thereto.” From the plain language of these subsections of the Act, the Supreme Court determined that the General Assembly conferred upon DPW a statutory right to reimbursement from a beneficiary’s settlement with her tortfeasor, regardless of whether the beneficiary is a minor or not. Moreover, the Supreme Court concluded that the public interest in protecting taxpayers from assuming Medicaid costs that should properly be charged against tortfeasors favors an interpretation of the Act that allows Medicaid beneficiaries to sue their tortfeasors to recover Medicaid expenditures made on their behalf while they were minors. Therefore, the Supreme Court reversed the Superior Court’s decision and held that DPW could satisfy its lien for Medicaid benefits paid to the plaintiff during her childhood from the parties’ settlement.

 

 
 

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