Federal Medicaid law requires states, in administering their Medicaid programs, to seek reimbursement for Medicaid covered medical expenses when beneficiaries later recover amounts for medical care from third-party tortfeasors. However, Federal law prohibits states from placing a lien against other property of a Medicaid beneficiary on account of medical assistance paid on behalf of the beneficiary under the state plan. These laws have been construed together to prohibit a state from making a claim to any part of a Medicaid beneficiary’s tort recovery not designated as payments for medical care. Left unresolved through litigation has been what portion of a settlement represents payment for medical care. On March 20, 2013, the Supreme Court provided clarification on this issue.

In Wos v. E.M.A., No. 12-98, 568 U.S. ___ (2013), the Court held that Federal Medicaid law pre-empts North Carolina’s irrebutable statutory presumption that one-third of any tort recovery by a Medicaid beneficiary is attributable to Medicaid expenses and thus subject to recovery by the state. According to the Court, there are several problems with North Carolina’s law. First, the law could result in recovery by the state of amounts not attributable to medical care. Second, the law provides no process for determining what portion of a beneficiary’s tort recovery is actually attributable to medical expenses. Third, the state selected an arbitrary number—one-third—for determining the amount of the recovery representing payment for medical care. In the end, the Court determined that an “irrebutable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act’s clear mandate that a State may not demand any portion of a beneficiary’s tort recovery except the share that is attributable to medical expenses.”

Justice Kennedy delivered the opinion of the Court, in which Justices Ginsburg, Breyer, Alito, Sotomayor and Kagan joined. Justice Breyer filed a concurring opinion. Chief Justice Roberts filed a dissenting opinion, in which Justices Scalia and Thomas joined.

A copy of the opinion can be found here.