Doe v. Vermont Office of Health Access., No. 11–045.

Docket NºNo. 11–045.
Citation54 A.3d 474
Case DateJune 14, 2012
CourtUnited States State Supreme Court of Vermont

54 A.3d 474

John DOE
v.
VERMONT OFFICE OF HEALTH ACCESS.

No. 11–045.

Supreme Court of Vermont.

June 14, 2012.


[54 A.3d 475]


Karen McAndrew and Linda J. Cohen of Dinse, Knapp & McAndrew, P.C., Burlington, for Plaintiff–Appellee/Cross–Appellant.

William H. Sorrell, Attorney General, and Mark J. Di Stefano, Assistant Attorney General, Montpelier, for Defendant–Appellant/Cross–Appellee.


Present: REIBER, C.J., DOOLEY, SKOGLUND and BURGESS, JJ., and COOK, Supr. J. (Ret.) 1, Specially Assigned.

REIBER, C.J.

¶ 1. John Doe, a Medicaid recipient, and the State appeal the trial court's decision allowing the State to partially recover the amount of its lien against Doe's settlement with a third party. The trial court calculated the State's reimbursement pursuant to Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). We affirm in part, and reverse and remand in part.

¶ 2. The underlying facts are undisputed. In 1992, when Doe, a Vermont resident, was nine years old, he was catastrophically injured and paralyzed in an automobile

[54 A.3d 476]

accident. He was riding in the back seat of the family car when it left the New York Thruway and went down an embankment. The portion of the Thruway on which the accident occurred was supposed to have guardrails to prevent cars from going down the embankment. The New York State Thruway Authority (NYSTA) had previously contracted for the rails to be installed but, for whatever reason, they were not. Due to Doe's injuries, his mother applied for Medicaid on his behalf in 1994. Doe later brought suit in New York Supreme Court against alleged third-party tortfeasors. He also sued NYSTA in the New York Court of Claims. The State of Vermont notified Doe in January 2001 that it claimed a lien against any award, judgment, or settlement stemming from the accident.

¶ 3. In July 2001, Doe settled the lawsuit against the third parties for $8.75 million. The State had spent $894,893.11 in medical expenses for Doe at that point, and at the time of settlement the State and Doe communicated about Doe's obligation to reimburse the State. The parties came to agreement, and Doe paid the State $594,209.03 from the proceeds of the 2001 settlement.

¶ 4. The substance of Ahlborn and the structure of federal Medicaid law are important to understand before proceeding. The Medicaid program provides joint federal and state funding of medical care for those who cannot afford their own medical costs. Ahlborn, 547 U.S. at 275, 126 S.Ct. 1752. Medicaid was launched in 1965 and is administered by the United States Secretary of Health and Human Services (HHS), who exercises authority through the Centers for Medicare and Medicaid Services (CMS). Id. All states participate in the Medicaid program, though they are not required to do so. Id. Vermont is a participant, see 33 V.S.A. §§ 1901–1910, and has in place a statute regarding liens against proceeds from third parties for medical expenses, see id. § 1910. At the relevant time, this statute provided that the Office of Vermont Health Access (OVHA) “shall have a lien against a third party, to the extent of the amount paid by the agency, on any recovery for that claim, whether by judgment, compromise or settlement.” Id. § 1910(a).2

¶ 5. Both the states and the federal government pay a portion of Medicaid costs, with the federal government paying between fifty and eighty-three percent of costs incurred for patient care. Ahlborn, 547 U.S. at 275, 126 S.Ct. 1752. Each state must comply with federal requirements. One of these requirements is that the state in charge of Medicaid must “take all reasonable measures to ascertain the legal liability of third parties ... to pay for care and services available under the plan,” 42 U.S.C. § 1396a(a)(25)(A), and if liability is found, the state must “seek reimbursement for such assistance to the extent of such legal liability,” id. § 1396a(a)(25)(B). Each state must also require individuals to “assign the State any rights ... to support ... and to payment for medical care from any third party.” Id. § 1396k(a)(1)(A). These provisions together are known as the reimbursement and assignment provisions. Their purpose was to ensure that states could recover payments made on behalf of Medicaid recipients, and thus to

[54 A.3d 477]

prevent recipients from “receiv[ing] a windfall by recovering medical expenses they did not pay.” Tristani ex rel. Karnes v. Richman, 652 F.3d 360, 370 (3d Cir.2011). Also of significance is the anti-lien requirement, which provides that “[n]o lien may be imposed 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.” 42 U.S.C. § 1396p(a)(1). The anti-lien provision was incorporated into the Social Security Act in 1960, in order to insulate the personal assets of Medicaid recipients during their lifetimes. Richman, 652 F.3d at 371–72.

¶ 6. In Ahlborn, the U.S. Supreme Court addressed the interplay between the reimbursement and assignment provisions and the anti-lien provision. The Court held that states may claim a lien only on that portion of settlement proceeds that represents payment for medical expenses. 547 U.S. at 284–85, 126 S.Ct. 1752. The plaintiff in Ahlborn was injured in a car accident and became eligible for Medicaid, which paid providers on her behalf. Id. at 272–73, 126 S.Ct. 1752. When the plaintiff settled with a third party for damages totaling $550,000, the Arkansas state agency administering Medicaid asserted a lien in the amount of $215,645.30. Id. at 274, 126 S.Ct. 1752. The agency claimed a right to recover its lien against all damages for which recovery was paid on behalf of the plaintiff, which included damages for permanent physical injury, future medical expenses, past and future pain, suffering, and mental anguish, past loss of earnings, and permanent impairment of the ability to earn in the future. Id. at 274, 278, 126 S.Ct. 1752. The Arkansas statute allowed the state to impose a lien in an amount equal to the state's Medicaid costs. Id. at 272, 126 S.Ct. 1752. The parties stipulated that the plaintiff's entire claim was worth approximately $3 million, that the settlement was approximately one-sixth of that amount, and that the agency would therefore be entitled to only $35,581.47 if the Court held that the state could not recover more than the portion of the settlement representing payments for medical care. Id. at 280–81, 126 S.Ct. 1752.

¶ 7. The Court looked to the statutory scheme governing Medicaid and reasoned that the anti-lien provision places “express limits” on a state's right to reimbursement. Id. at 283, 126 S.Ct. 1752. It held that a state may not claim more than the portion of a settlement representing medical expenses; in other words, the anti-lien provision prohibits recovery of payments for damage items other than medical costs. Id. at 284, 126 S.Ct. 1752.3 The Court invalidated the Arkansas statute allowing for an automatic lien on settlements in an amount equal to all Medicaid costs. Id. at 292, 126 S.Ct. 1752.

¶ 8. In this case, Doe's suit against NYSTA went to trial, and the court concluded that NYSTA was negligent and that its negligence caused Doe's injuries. The Court of Claims engaged in a two-step process, through successive hearings, to determine damages. First, in 2004, the

[54 A.3d 478]

Court of Claims awarded Doe approximately $42 million and allocated approximately $2.9 million to Doe's past medical expenses from the date of injury to the date of trial. Then, in 2005, the Court of Claims held a New York Civil Practice Law and Rules (C.P.L.R.) Article 50–B hearing to convert the damages award into payments for Doe and his attorney. See N.Y. C.P.L.R. § 5041 (setting forth procedure for structuring payments to plaintiffs in personal injury cases). NYSTA appealed, and in 2006, while the appeal was pending, the parties reached a settlement in the amount of $12 million. Like the earlier settlement with third parties, this settlement did not identify the portion of the total damages attributable to past medical care. Between the 2001 and 2006 settlements, the State paid approximately $771,111 in medical expenses for Doe's care, in addition to the medical expenses paid up to the date of the first settlement. The State claimed a lien on the 2006 settlement for $506,810, which is the difference between the amount the State paid for Doe's medical care under Medicaid and the State's share of litigation expenses.

¶ 9. Doe sued the State of Vermont, seeking a declaratory judgment that he satisfied the State's lien by partial payment. Doe argued that the State recovered approximately $70,000 above the amount of its legally permissible lien out of the 2001 settlement for which he claimed a set-off. Doe urged the court to treat the 2001 and 2006 settlements together and to use the Court of Claims' 2004 opinion and allocations of the various elements of damage to determine the portion of the settlement that was for medical expenses. The State argued that it was entitled to recover an additional $506,810 out of the 2006 settlement, the full amount of its asserted lien. It contended that the court could not reexamine the 2001 settlement and that, with regard to the 2006 settlement, the court should have held a new hearing to determine which portion of the settlement constituted medical expenses, rather than adopting the Court of Claims' figures. The parties also disagreed as to how to use the Court of Claims' findings regarding damages, if the court adopted them.

¶ 10. On summary judgment, the court concluded that it would not undo the 2001 settlement because it was an accord and satisfaction of all claims paid for medical expenses incurred to that point in time. That is, in exchange for the State's agreement not to seek additional reimbursement, Doe paid the State $594,209.03. As for the 2006 settlement, the court held...

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12 practice notes
  • Zullo v. State, No. 2017-284
    • United States
    • Vermont United States State Supreme Court of Vermont
    • January 4, 2019
    ...by requiring that registration stickers be unobstructed. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 ("We presume that the Legislature intended to change the meaning of a statute when it amends it, but we will recognize clarification of the law where ......
  • Zullo v. State, No. 2017-284
    • United States
    • Vermont United States State Supreme Court of Vermont
    • January 4, 2019
    ...by requiring that registration stickers be unobstructed. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 ("We presume that the Legislature intended to change the meaning of a statute when it amends it, but we will recognize clarification of the law where ......
  • Zullo v. State, No. 17-284
    • United States
    • Vermont United States State Supreme Court of Vermont
    • January 4, 2019
    ...by requiring that registration stickers be unobstructed. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 ("We presume that the Legislature intended to change the meaning of a statute when it amends it, but we will recognize clarification of the law where ......
  • State v. Richland, No. 14–196.
    • United States
    • Vermont United States State Supreme Court of Vermont
    • September 18, 2015
    ...construed in the same manner as its strict liability counterpart. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 (presuming that when Legislature amends statute it intends to change its meaning).¶ 19. The State's remaining arguments center on its asserti......
  • Request a trial to view additional results
12 cases
  • Zullo v. State, No. 2017-284
    • United States
    • Vermont United States State Supreme Court of Vermont
    • January 4, 2019
    ...by requiring that registration stickers be unobstructed. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 ("We presume that the Legislature intended to change the meaning of a statute when it amends it, but we will recognize clarification of the law where ......
  • Zullo v. State, No. 2017-284
    • United States
    • Vermont United States State Supreme Court of Vermont
    • January 4, 2019
    ...by requiring that registration stickers be unobstructed. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 ("We presume that the Legislature intended to change the meaning of a statute when it amends it, but we will recognize clarification of the law where ......
  • Zullo v. State, No. 17-284
    • United States
    • Vermont United States State Supreme Court of Vermont
    • January 4, 2019
    ...by requiring that registration stickers be unobstructed. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 ("We presume that the Legislature intended to change the meaning of a statute when it amends it, but we will recognize clarification of the law where ......
  • State v. Richland, No. 14–196.
    • United States
    • Vermont United States State Supreme Court of Vermont
    • September 18, 2015
    ...construed in the same manner as its strict liability counterpart. See Doe v. Vt. Office of Health Access, 2012 VT 15A, ¶ 26, 191 Vt. 517, 54 A.3d 474 (presuming that when Legislature amends statute it intends to change its meaning).¶ 19. The State's remaining arguments center on its asserti......
  • Request a trial to view additional results

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