Link v. Town of Smithtown

• Decision Date: 26 December 1997
• Citation: 175 Misc.2d 238,670 N.Y.S.2d 692
• Parties: , 1998 N.Y. Slip Op. 98,032 In the Matter of James H. LINK, as Conservator of the Property of Patricia Gibson, a Conservatee, Plaintiff, v. TOWN OF SMITHTOWN, Defendant, and Suffolk County Department of Social Services, Petitioner.
• Court: New York Supreme Court

Page 692

670 N.Y.S.2d 692

175 Misc.2d 238, 1998 N.Y. Slip Op. 98,032

In the Matter of James H. LINK, as Conservator of the Property of Patricia Gibson, a Conservatee, Plaintiff, v. TOWN OF SMITHTOWN, Defendant and Suffolk County Department of Social Services, Petitioner.

Supreme Court, Suffolk County.

Dec. 26, 1997.

Hoberman & Sussman, P.C., Brooklyn, for conservator.

Black & Black, Commack (Bronwyn Black, of counsel), for conservatee.

Alio, Leahy & Dent, Melville, for defendant.

Robert J. Cimino, County Attorney of Suffolk County (Paul G. Costello, of counsel), for petitioner.

Robert, Lerner & Robert, Rockville, Amicus Curiae.

H. PATRICK LEIS, Justice.

The instant matter was remitted to this Court by the Court of Appeals. The issue to be determined is whether the entire amount of a personal injury settlement obtained by a Medicaid recipient from a third party tort-feasor or only the portion attributable to past medical expenses is available to satisfy a lien filed by the Department of Social Services to recoup medical expenses paid on behalf of the recipient.

In 1982, plaintiff Patricia Gibson, then twenty-four years of age, was severely injured in an automobile accident alleged to have been the result of the negligence of a third party, the Town of Smithtown. An application for Medicaid was made on Ms. Gibson's behalf to the Suffolk County Department of Social Services, and she was determined to be eligible for such benefits. As a condition of Medicaid eligibility, plaintiff agreed to assign to the Department of Social Services her right to recover from any third party responsible for her injuries.

James Link, conservator of the property of Patricia Gibson, commenced the instant personal injury action on plaintiff's behalf against the Town of Smithtown. Thereafter, the Department of Social Services placed a lien against any monies recovered in the personal injury action in order to recover the medical assistance paid on plaintiff's behalf.

The parties agreed to a settlement of the action in the amount of $3,475,000.00, the net proceeds of which were to be placed into a supplemental needs trust for the benefit of Ms. Gibson. At the time the parties reached this tentative settlement in July of 1994, the Department of Social Services estimated that its lien for medical assistance for Ms. Gibson totaled $790,000.00.

Pursuant to the terms of the compromise order and judgment, dated September 24, 1994, the Supreme Court authorized the establishment of a supplement needs trust for Ms. Gibson and, at the same time, denied a request by the Department of Social Services for the immediate satisfaction of its lien from the full proceeds of the settlement. The Court determined that a lien for past medical assistance need not be satisfied prior to the establishment of a supplemental needs trust and that liquidation of the lien could be deferred until the termination of the trust (Link v. Town of Smithtown, 162 Misc.2d 530, 616 N.Y.S.2d 171 [1994], on reargument 162 Misc.2d 587, 620 N.Y.S.2d 729).

The Department of Social Services appealed the Supreme Court's determination and the Appellate Division, Second Department affirmed the Supreme Court's determination that satisfaction of a pre-existing Medicaid lien was not a precondition to the funding of a supplemental needs trust (Link v. Town of Smithtown, 226 A.D.2d 351, 640 N.Y.S.2d 768 [1996] citing Cricchio v. Pennisi, 220 A.D.2d 100, 640 N.Y.S.2d 573).

The Court of Appeals granted requests by the Department of Social Services of Kings County and Suffolk County, for leave to appeal from the Appellate Division, Second Department's determinations in the Cricchio and Link cases, respectively. The Court of Appeals reversed the Appellate Division in both cases determining that upon the application of both Federal and State statutes, a Medicaid lien imposed pursuant to Social Services Law § 104-b on the proceeds of a personal injury award must be satisfied before those funds may be transferred to a supplemental needs trust in accordance with EPTL § 7-1.12 (Cricchio v. Pennisi, 90 N.Y.2d 296, 660 N.Y.S.2d 679, 683 N.E.2d 301 [1997] ). The Court of Appeals then remitted the instant case to the Supreme Court, stating that, "[g]iven that the parties did not present any arguments to this Court concerning whether the entire amount of the personal injury settlement or only that portion attributable to past medical expenses is available to satisfy the lien, we do not pass on the question, which must be addressed in the first instance by the court on remittal" (Cricchio v. Pennisi, supra, 660 N.Y.S.2d at 684, 683 N.E.2d 301).

Upon remittal, plaintiff argues that the Court should limit the Department of Social Services in its recovery of medical expenses paid to that portion of the personal injury settlement earmarked as medical expenses after allocating what portion of the settlement represents plaintiff's "pain and suffering" versus medical expenses.

The Court has considered the applicable Federal and State statutes, the case law and all the arguments asserted on behalf of the plaintiff and the Department of Social Services as well as the amicus curiae brief submitted by Robert, Lerner & Robert Esqs. For the reasons set forth below, the Court concludes that all of the proceeds of the settlement agreement are available to satisfy the lien asserted by the Department of Social Services to recoup the Medicaid assistance afforded plaintiff.

Title XIX of the Social Security Act established the Medicaid program which is a jointly funded Federal and State medical assistance program aimed at providing necessary medical care for eligible individuals whose income and resources are insufficient to meet the costs of their medical care (42 U.S.C. § 1396 et seq ). An integral concept to the implementation of the Medicaid program and, thus, a major consideration in this determination is the Legislature's intent that Medicaid be the "payor of last resort", i.e., that Medicaid will not be furnished if the applicant has available resources (See Cricchio v. Pennisi, supra 660 N.Y.S.2d at 681, 683 N.E.2d 301).

In Cricchio v. Pennisi, the Court of Appeals determined that the right to recover from responsible third parties ¹ is derived from the assignment, subrogation and recoupment provisions set forth in the Federal statutes, 42 U.S.C. § 1396a and § 1396k and New York State's Social Services Law § 366[4][h][1] and § 367-a[2][b]. In interpreting the federal statutes, the Cricchio court determined that where, "Medicaid payments have been made under the State plan and a third party has a legal responsibility to pay for health care items or services furnished to an individual, 'the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services' (42 U.S.C. § 1396a[a][25][i] )" (Cricchio v. Pennisi, supra, 660 N.Y.S.2d at 681, 683 N.E.2d 301). In so finding, the Court of Appeals emphasized that recoupment from a responsible third party is necessary to ensure that the Medicaid program remain the "payor of last resort" (Cricchio v. Pennisi, supra, 660 N.Y.S.2d at 681, 683 N.E.2d 301, citing Matter of Costello [Stark] v. Geiser, 85 N.Y.2d 103, 106, 623 N.Y.S.2d 753, 647 N.E.2d 1261 [1995] ).

As a condition of eligibility for Medicaid, an applicant must assign to the Department of Social Services any rights he or she has to seek reimbursement from any third party up to the amount of medical assistance paid (See, 42 U.S.C. § 1396k[a][1][A]; 42 C.F.R. § 433.146(c); SSL § 366[4][h][1]; 18 NYCRR 360-7.4[a][6] ). So too, "when reimbursement is sought from responsible third parties through the assignment provisions, States are to first "retain" that portion 'of any amount collected ... as is necessary to reimburse it for medical assistance payments made on behalf of an individual with respect to whom such an assignment was executed ... and the remainder of such amount collected shall be paid to the individual' (42 U.S.C. § 1396k[b]) [emphasis supplied]. This provision indicates that the government has priority in recouping funds from third parties who are liable for a Medicaid recipient's medical expenses, and that only the remainder of those funds becomes available to the Medicaid recipient ..." (Cricchio v. Pennisi, supra, 660 N.Y.S.2d at 682, 683 N.E.2d 301).

In accordance with such directives, New York's statutory plan does, in fact, contain mechanisms for the recovery of Medicaid funds from responsible third parties. In particular, Social Services Law § 367-a[2][b] provides:

[U]pon furnishing assistance ... to any applicant or recipient of medical assistance ... the local social services district or the department shall be subrogated, to the extent of the expenditure by such district or department for medical care furnished, to any rights such person may have to ... third-party reimbursement (emphasis added).

Social Services Law § 366[4][h][1] further requires that an applicant for medical assistance shall, as a condition of initial eligibility for such assistance, assign to the appropriate social services department, "any benefits" which are available to him or her individually from any third party (emphasis...