Medi-Cal and Medicaid Liens
When Medi-Cal, California's Medicaid program, or another state's Medicaid program pays for medical treatment related to a personal injury claim, the state may assert a reimbursement claim against the resulting settlement, judgment, or award.
Although each state administers its Medicaid program under its own statutory framework, all remain subject to federal limitations on recovery. These protections can significantly affect the amount a state is legally entitled to recover.
For plaintiff attorneys, understanding these limitations is essential. A Medicaid reimbursement demand is not necessarily the amount that must ultimately be paid.
Understanding Federal Medicaid Recovery Rights
Federal Medicaid law establishes important protections governing the recovery of medical expenses from personal injury settlements.
Three U.S. Supreme Court decisions are particularly significant:
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Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006): Established that Medicaid reimbursement is limited to the portion of a settlement attributable to medical expenses. Recovery cannot extend to compensation for unrelated damages, including pain and suffering or lost earnings.
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Wos v. E.M.A., 568 U.S. 627 (2013): Reinforced these protections by rejecting a state's arbitrary statutory allocation that deprived beneficiaries of a meaningful opportunity to establish the portion of their recovery attributable to medical expenses.
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Gallardo v. Marstiller, 596 U.S. 420 (2022): Clarified that federal Medicaid law permits states to pursue reimbursement from settlement proceeds allocated to future medical expenses, in addition to past medical expenses. The extent of recovery remains subject to applicable state law.
Together, these decisions establish an important distinction between medical and nonmedical damages. They also make the proper valuation and allocation of settlement proceeds central to effective Medicaid lien resolution.
California's Medi-Cal Recovery Framework
In California, the Department of Health Care Services (DHCS) pursues reimbursement under Welfare and Institutions Code § 14124.70 et seq.
California law provides several protections that can materially reduce the state's recovery:
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Statutory Reductions: Section 14124.72 provides for a 25 percent reduction for attorney fees in qualifying cases, together with an applicable share of litigation expenses.
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Limitations on Recovery: Section 14124.78 restricts the amount DHCS may recover based on the beneficiary's recovery after attorney fees and litigation costs. Section 14124.785 requires application of the governing statutory limitations to determine the lesser recoverable amount.
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Allocation of Damages: Section 14124.76 limits recovery to the portion of the settlement attributable to medical expenses or care within the statute's scope and provides a mechanism for judicial determination when the parties cannot agree.
When negotiations fail to produce an appropriate allocation, plaintiff attorneys may seek judicial determination through a proceeding commonly referred to as an Ahlborn hearing.
These protections require careful application. A settlement amount, standing alone, does not establish the full value of a client's damages or the amount properly subject to Medicaid reimbursement.
Our Approach to Medi-Cal and Medicaid Lien Resolution
At The Lien Project, we assist plaintiff attorneys in evaluating, challenging, negotiating, and resolving Medicaid reimbursement claims in California and under applicable federal and state law.
Our services include:
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Claim Identification and Verification: Identifying the responsible Medicaid agency, obtaining itemized reimbursement demands, and evaluating the legal basis for recovery.
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Medical Charge Review: Examining treatment records and payment data, including applicable managed care payments, to identify unrelated, duplicative, or unsupported charges.
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Statutory Reduction Analysis: Calculating applicable attorney fee reductions, litigation expense adjustments, and statutory limitations to determine the appropriate reimbursement amount.
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Settlement Valuation and Allocation: Evaluating the full value of the client's damages, including medical expenses, lost earnings, pain and suffering, and other recoverable losses, to support an appropriate allocation.
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Negotiation and Compromise: Engaging DHCS and other state Medicaid agencies to pursue reductions based on statutory protections, disputed liability, limited insurance coverage, and the circumstances of the recovery.
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Judicial Resolution: When necessary, pursuing court intervention to challenge excessive reimbursement demands and establish the amount legally recoverable.
Practice Point: Settlement Allocation Matters
A compromised personal injury settlement often represents only a fraction of the claim's full value. Limited policy proceeds, contested liability, comparative fault, and substantial damages can all influence the amount ultimately recovered.
The settlement amount should not be confused with the full value of the underlying claim.
Establishing that distinction through medical evidence, damages analysis, and a defensible allocation can be critical to reducing a Medicaid reimbursement demand.
Equally important, plaintiff attorneys must comply with applicable notice requirements and allow the responsible agency an opportunity to perfect its claim before final disbursement.
Protecting Your Client's Net Recovery
Medicaid reimbursement claims demand more than administrative processing. Effective resolution requires statutory analysis, strategic negotiation, and, when necessary, litigation.
With more than 65 years of combined litigation experience, The Lien Project's attorneys bring a trial lawyer's perspective to Medicaid lien disputes. We work alongside referring counsel to challenge excessive demands, pursue every applicable reduction, and address the legal and administrative obstacles that delay settlement distribution.