Pivonka v. Corcoran

• Decision Date: 30 June 2020
• Docket Number: No. 2019-0084,2019-0084
• Citation: 162 Ohio St.3d 326,165 N.E.3d 1098
• Parties: PIVONKA et al., Appellees, v. CORCORAN, Dir., Appellant.
• Court: Ohio Supreme Court

162 Ohio St.3d 326

165 N.E.3d 1098

PIVONKA et al., Appellees,

v.CORCORAN,¹ Dir., Appellant.

No. 2019-0084

Supreme Court of Ohio.

Submitted January 28, 2020

Decided June 30, 2020.

Dworken & Bernstein Co., L.P.A., and Patrick J. Perotti, Painesville; Garson Johnson, L.L.C., and James A. Deroche, Hudson; and McCarthy, Lebit, Crystal & Liffman Co., L.P.A., and Christian R. Patno, Cleveland, for appellees.

Dave Yost, Attorney General, Benjamin M. Flowers, State Solicitor, Michael J. Hendershot, Chief Deputy Solicitor, and Henry G. Appel, Assistant Attorney General, for appellant.

French, J. {¶ 1} In this appeal, we are asked to determine whether the common pleas court had subject-matter jurisdiction over a class action filed by plaintiffs-appellees, Michael A. Pivonka and Lisa Rijos. That class action seeks a declaratory judgment that former R.C. 5101.58, which relates to Medicaid reimbursements, is unconstitutional and also seeks to recover all sums paid to the Ohio Department of Medicaid (the "Department") under that statute.

{¶ 2} Because R.C. 5160.37 now provides the sole remedy for Medicaid program participants to recover excessive reimbursement payments made to the Department on or after September 29, 2007, we conclude that the common pleas court lacked subject-matter jurisdiction over the class action for the named and prospective class plaintiffs whose claims for recovery fall within the statute's express language. We therefore reverse the judgment of the Eighth District Court of Appeals affirming the trial court's decision to certify the class. We remand this cause to the trial court to determine whether unnamed prospective class plaintiffs who reimbursed the Department before September 29, 2007, can maintain an action in the common pleas court.

I. THE MEDICAID PROGRAM

{¶ 3} The federal government established the Medicaid program in 1965 through Title XIX of the Social Security Act, as amended in 42 U.S.C. 1396 et seq. Arkansas Dept. of Health & Human Servs. v. Ahlborn , 547 U.S. 268, 275, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). The program provides joint federal and state funding for medical care for individuals who cannot afford to pay their own medical costs. Id. States are not required to participate in the Medicaid program, but they all do. Id. ; see also Medicaid.gov, Program History: Medicaid , https://www.medicaid.gov/about-us/program-history/index.html (accessed June 18, 2020) [https://perma.cc/D8C7-YRTE]. Through the program, the federal government pays the majority of the costs that a state incurs providing medical care for Medicaid participants; the state pays the rest. Ahlborn at 275, 126 S.Ct. 1752. Each state must create its own scheme to oversee and administer the Medicaid program. 42 U.S.C. 1396a. In doing so, a state must comply with all federal statutory requirements for making eligibility determinations, collecting and maintaining information, and administering the program. Id.

{¶ 4} Federal law also requires that each participating state give itself subrogation rights to recover certain costs the state paid under the Medicaid program. This means that each state must enact legislation giving it the right to seek reimbursement from a third-party tortfeasor (that is, a third-party wrongdoer) for medical expenses that the third-party wrongdoer caused and the state paid on behalf of a Medicaid participant. 42 U.S.C. 1396a(a)(25)(H). The state must first take reasonable measures to determine whether a third party is liable to pay for a Medicaid participant's medical costs. 42 U.S.C. 1396a(a)(25)(A). This third-party liability can arise when a health insurer is responsible for paying the participant's medical costs. Id. But it can also arise if a third-party tortfeasor injures the Medicaid participant and the injury requires the participant to seek medical care. When a third party is liable to pay for the Medicaid participant's medical costs, the state must seek reimbursement for the medical costs that it paid under the Medicaid program. 42 U.S.C. 1396a(a)(25)(B). The state may seek reimbursement directly from the third party. Id. It may also seek reimbursement from a Medicaid participant who received payment from the third party for the medical costs. 42 U.S.C. 1396k(a)(1) requires that all participating states expressly condition an individual's eligibility for Medicaid on the individual's assignment to the state of any rights the individual has to recover medical costs from a third party.

II. OHIO'S MEDICAID SUBROGATION-RIGHTS STATUTES

{¶ 5} Ohio's Medicaid subrogation-rights statute was originally contained in former R.C. 5101.58, repealed in 2013 Am.Sub.H.B. No. 59. That statute gave the Ohio Department of Job and Family Services ("ODJFS" or "the Department")² a "right of recovery" against a third party's liability to a Medicaid participant for medical services and care resulting from an injury, disease or disability caused by the third party. Under that statute and prior to September 29, 2007, if the Medicaid participant brought an action against a third-party tortfeasor, the entire amount the participant received under a settlement or court judgment was subject to the state's right of recovery. 2003 Am.Sub.H.B. No. 95, 150 Ohio Laws, Part II, 1592-1594. The state could automatically recover up to the full amount of the costs it paid on behalf of the participant, even if the settlement, compromise, judgment or award excluded reimbursement for the medical costs or allocated a lesser amount to those costs. See id.

{¶ 6} Other states, including Arkansas, had similar Medicaid subrogation statutes allowing those states to recover up to the entire amount of the medical costs they paid on the Medicaid participant's behalf without regard to whether the settlement or court judgment allocated a lesser amount for reimbursement of medical expenses. In Ahlborn , 547 U.S. at 292, 126 S.Ct. 1752, 164 L.Ed.2d 459, the United States Supreme Court held that the federal Medicaid statute's anti-lien provision, 42 U.S.C. 1396p, prohibited Arkansas from enforcing its Medicaid subrogation statute because it allowed the state to assert an automatic lien on a beneficiary's settlement or judgment proceeds in excess of the portion of the settlement or judgment that expressly represented reimbursement for medical costs.

{¶ 7} Although no court declared Ohio's statute, R.C. 5101.58, invalid or unconstitutional after Ahlborn , the General Assembly amended the statute in 2007. 2007 Am.Sub.H.B. No. 119. Effective September 29, 2007, the amended statute continued to give the Department an automatic right of recovery over certain third-party payments to Medicaid participants, but it created a presumption regarding the amount of the settlement or judgment that was subject to reimbursement to the Department for its payment of medical costs if the settlement or judgment did not specifically allocate those sums. After deducting attorney fees, litigation costs, and other expenses from the total judgment, award or settlement, the statute provided that the Department was entitled to receive "no less than one-half of the remaining amount, or the actual amount of medical assistance paid, whichever is less." Former R.C. 5101.58(G)(2).

{¶ 8} In Wos v. E.M.A. ex rel. Johnson , 568 U.S. 627, 133 S.Ct. 1391, 185 L.Ed.2d 471 (2013), the United States Supreme Court struck down the portions of North Carolina's Medicaid subrogation statute that created a presumption similar to the one former R.C. 5101.58(G)(2) contained. The court held that a state could not comply with 42 U.S.C. 1396p by using a "conclusive presumption" that one-third of the participant's recovery represented compensation for medical costs. Id. at 635-636, 133 S.Ct. 1391. The presumption operated to allow the state to take a portion of the judgment or settlement that was not designated as reimbursement for medical costs. The North Carolina statute violated the Supremacy Clause because it failed to provide a process for determining the portion of a participant's recovery that was attributable to medical costs. Id. at 636, 133 S.Ct. 1391. Because the federal statute's anti-lien provision prohibits a state from claiming any part of a Medicaid participant's judgment or settlement not designated as payment for medical costs, it preempted North Carolina's Medicaid subrogation statute. Id.

{¶ 9} After the decision in Wos , and again without a court's declaration that former R.C. 5101.58 was invalid or unconstitutional, the General Assembly amended Ohio's Medicaid subrogation statute and renumbered it as R.C. 5160.37. The new statute took effect on September 29, 2013, see 2013 Am.Sub.H.B. No. 59, and the General Assembly amended it yet again on September 29, 2015, see 2015 Sub.H.B. No. 64. The 2015 version of R.C. 5160.37 still contained language similar to that in former R.C. 5101.58(A) and (G)(2), giving the Department an automatic right of recovery against liability for medical costs paid by a third-party tortfeasor. But the 2015 version of R.C. 5160.37 created a "rebuttable presumption" that the Department would receive no less than one-half of the remaining amount of the judgment, award or settlement after fees, expenses, and costs were deducted. R.C. 5160.37(G)(2). The statute also provided a mechanism for a Medicaid participant to rebut the statute's presumption by way of an administrative hearing. See R.C. 5160.37(L). Relevant to the class of plaintiffs involved in this case, the statute created a process to address overpayments made after the September 29, 2007 post- Ahlborn amendments to R.C. 5101.58 :

A medical assistance recipient who has repaid money, on or after September 29, 2007, to the department or a county department pursuant to the department's or county department's right of recovery under this section, section 5160.38 of the Revised Code, or former section 5101.58 or 5101.59 of the Revised Code may request a hearing to rebut the presumption in division (G) of

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