Gallardo By and Through Vassallo v. Marstiller

• Decision Date: 06 June 2022
• Docket Number: 20-1263
• Citation: 142 S.Ct. 1751
• Parties: Gianinna GALLARDO, an incapacitated person, BY AND THROUGH her parents and co-guardians Pilar VASSALLO and Walter Gallardo, Petitioner v. Simone MARSTILLER, in her official capacity as Secretary of the Florida Agency for Health Care Administration
• Court: U.S. Supreme Court

142 S.Ct. 1751

Gianinna GALLARDO, an incapacitated person, BY AND THROUGH her parents and co-guardians Pilar VASSALLO and Walter Gallardo, Petitioner

v.Simone MARSTILLER, in her official capacity as Secretary of the Florida Agency for Health Care Administration

No. 20-1263

Supreme Court of the United States.

Argued January 10, 2022

Decided June 6, 2022

Bryan S. Gowdy, Jacksonville, FL, for petitioner

Vivek Suri, New York, NY, for United States as amicus curiae, by special leave of the Court, supporting petitioner.

Henry C. Whitaker, Solicitor General, for respondent.

Scott L. Nelson, Public Citizen Litigation Group, Washington, DC, Bryan S. Gowdy, Counsel of Record, Meredith A. Ross, Creed & Gowdy, P.A., Jacksonville, FL, Floyd Faglie, Staunton & Faglie, PL, Monticello, FL, for petitioner.

Ashley Moody, Attorney General of Florida, Henry C. Whitaker, Solicitor General, Counsel of Record, Daniel W. Bell, Chief Deputy Solicitor General, Christopher J. Baum, Senior Deputy Solicitor General, Office of the Attorney General, Tallahassee, FL, Tracy Cooper George, Chief Appellate Counsel, Florida Agency for Health, Care Administration, Tallahassee, FL, for respondent.

Justice THOMAS delivered the opinion of the Court.

Medicaid requires participating States to pay for certain needy individuals’ medical costs and then to make reasonable efforts to recoup those costs from liable third parties. Consequently, a State must require Medicaid beneficiaries to assign the State "any rights ... to payment for medical care from any third party." 42 U.S.C. § 1396k(a)(1)(A). That assignment permits a State to seek reimbursement from the portion of a beneficiary's private tort settlement that represents "payment for medical care," ibid. , despite the Medicaid Act's general prohibition against seeking reimbursement from a beneficiary's "property," § 1396p(a)(1). The question presented is whether § 1396k(a)(1)(A) permits a State to seek reimbursement from settlement payments allocated for future medical care. We conclude that it does.

I

A

States participating in Medicaid "must comply with [the Medicaid Act's] requirements" or risk losing Medicaid funding. Harris v. McRae , 448 U. S. 297, 301, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980) ; see 42 U.S.C. § 1396c. Most relevant here, the Medicaid Act requires a State to condition Medicaid eligibility on a beneficiary's assignment to the State of "any rights ... to support ... for the purpose of medical care" and to "payment for medical care from any third party." § 1396k(a)(1)(A) ; see also § 1396a(a)(45) (mandating States’ compliance with § 1396k ). The State must also enact laws by which it automatically acquires a right to certain third-party payments "for health care items or services furnished" to a beneficiary. § 1396a(a)(25)(H). And the State must use these (and other) tools to "seek reimbursement" from third parties "to the extent of [their] legal liability" for a beneficiary's "care and services available under the plan." §§ 1396a(a)(25)(A)–(B).

The Medicaid Act also sets a limit on States’ efforts to recover their expenses. The Act's "anti-lien provision" prohibits States from recovering medical payments from a beneficiary's "property." § 1396p(a)(1); see also § 1396a(a)(18) (requiring state Medicaid plans to comply with § 1396p). Because a "beneficiary has a property right in the proceeds of [any] settlement," the anti-lien provision protects settlements from States’ reimbursement efforts absent some statutory exception. Wos v. E. M. A. , 568 U.S. 627, 633, 133 S.Ct. 1391, 185 L.Ed.2d 471 (2013). State laws "requir[ing] an assignment of the right ... to receive payments [from third parties] for medical care," as "expressly authorized by the terms of §§ 1396a(a)(25) and 1396k(a)," are one such exception. Arkansas Dept. of Health and Human Servs. v. Ahlborn , 547 U.S. 268, 284, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). Accordingly, a State may seek reimbursement from the portion of a settlement designated for the "medical care" described in those provisions; otherwise, the anti-lien provision prohibits reimbursement. Id. , at 285, 126 S.Ct. 1752.

B

To satisfy its Medicaid obligations, Florida has enacted its Medicaid Third-Party Liability Act, which directs the State's Medicaid agency to "seek reimbursement from third-party benefits to the limit of legal liability and for the full amount of third-party benefits, but not in excess of the amount of medical assistance paid by Medicaid." Fla. Stat. § 409.910(4) (2017).¹ To this end, the statute provides that when a beneficiary "accept[s] medical assistance" from Medicaid, the beneficiary "automatically assigns to the [state] agency any right" to third-party payments for medical care. § 409.910(6)(b). A lien "for the full amount of medical assistance provided" then "attaches automatically" to any settlements related to an injury "that necessitated that Medicaid provide medical assistance." §§ 409.910(6)(c), (6)(c)(1), 409.901(7)(a).

Rather than permit the State to recover from a beneficiary's entire settlement, the statute entitles Florida to half a beneficiary's total recovery, after deducting 25% for attorney's fees and costs (i.e. , 37.5% of the total). See § 409.910(11)(f)(1). This amount presumptively represents the portion of the tort recovery that is for "past and future medical expenses." § 409.910(17)(b). Beneficiaries can rebut that presumption by proving with clear and convincing evidence "that the portion of the total recovery which should be allocated as past and future medical expenses is less than the amount calculated by [Florida's] formula." Ibid.

C

In 2008, a truck struck then-13-year-old petitioner Gianinna Gallardo after she stepped off her school bus. Gallardo suffered catastrophic injuries and remains in a persistent vegetative state. Florida's Medicaid agency paid $862,688.77 to cover her initial medical expenses, after WellCare of Florida, a private insurer, paid $21,499.30. As a condition of receiving Medicaid assistance, Gallardo had assigned Florida her right to recover from third parties. Because Gallardo is permanently disabled, Medicaid continues to pay her medical expenses.

Gallardo, through her parents, sued the truck's owner and driver, as well as the Lee County School Board, seeking compensation for past medical expenses, future medical expenses, lost earnings, and other damages. Although Gallardo sought over $20 million in damages, the litigation ultimately settled for $800,000—a 4% recovery. The settlement expressly designated $35,367.52 of that amount as compensation for past medical expenses—4% of the $884,188.07 paid by Medicaid and WellCare. The settlement also recognized that "some portion of th[e] settlement may represent compensation for future medical expenses," App. 29, but did not specifically allocate any amount for future medical expenses.

Under Florida's statutory formula, the State was presumptively entitled to $300,000 of Gallardo's settlement (37.5% of $800,000). Gallardo, citing the settlement's explicit allocation of only $35,367.52 as compensation for past medical expenses, asked Florida what amount it would accept to satisfy its Medicaid lien. When Florida did not respond, Gallardo put $300,000 in escrow and challenged the presumptive allocation in an administrative proceeding. There, Florida defended the presumptive allocation because, in its view, it could seek reimbursement from settlement payments for past and future medical expenses, and so was not limited to recovering the portion Gallardo had allocated for past expenses.

While the administrative proceeding was ongoing, Gallardo brought this lawsuit seeking a declaration that Florida was violating the Medicaid Act by trying to recover from portions of the settlement compensating for future medical expenses. The U. S. District Court for the Northern District of Florida granted Gallardo summary judgment. See Gallardo v. Dudek , 263 F.Supp.3d 1247, 1260 (2017). The Eleventh Circuit reversed, concluding that "the text and structure of the federal Medicaid statutes do not conflict with Florida law" because they "only prohibit a State from asserting a lien against any part of a settlement not ‘designated as payments for medical care.’ " Gallardo v. Dudek , 963 F.3d 1167, 1176 (2020) (quoting Ahlborn , 547 U.S. at 284, 126 S.Ct. 1752 ). The Eleventh Circuit explained that the relevant Medicaid Act provisions "d[o] not in any way prohibit [a State] from seeking reimbursement from settlement monies for medical care allocated to future care." 963 F.3d at 1178 (emphasis deleted). Judge Wilson dissented, contending that the Medicaid Act "limit[s] the state to the part of the recovery that represents payment for past medical care." Id. , at 1184.

Because the Supreme Court of Florida came to the opposite conclusion of the Eleventh Circuit, see Giraldo v. Agency for Health Care Admin. , 248 So.3d 53, 56 (2018), we granted certiorari, 594 U. S. ––––, 141 S.Ct. 2884, 210 L.Ed.2d 990 (2021).

II

Gallardo argues that the Eleventh Circuit erred by permitting Florida to seek reimbursement for medical expenses from settlement amounts representing payment for future medical care. According to Gallardo, the Medicaid Act's anti-lien provision in § 1396p forecloses recovery from settlement amounts other than those allocated for past medical care paid for by Medicaid. Thus, Gallardo concludes, the anti-lien provision preempts any state law that permits additional recovery.

We disagree. Under § 1396k(a)(1)(A), Florida may seek reimbursement from settlement amounts representing "payment for medical care," past or future. Thus, because Florida's assignment statute "is expressly authorized by the terms of ... [§]1396k(a)," it falls squarely within the "exception to the anti-lien provision" that this Court has recognized. Ahlborn , 547 U.S. at 284, 126 S.Ct. 1752.

A

The plain text of § 1396k(a)(1)(A) decides this case. This provision requires the State to acquire from each...