Bowmaster Decides Difficult Medicaid Lien Issues

On December 29, 2009, the Pennsylvania Supreme Court issued an opinion in E.D.B., v. Gerald Clair and Centre Community Hospital, No. 78 MAP 2008, that resolved a conflict in decisions issued by the Superior Court and the Commonwealth Court as to the extent of the statutory lien provided to the Pennsylvania Department of Public Welfare upon private litigation proceeds, for reimbursement to DPW of its expenses advanced to a Medicaid beneficiary.

The Court's ruling vacated the Superior Court’s prior holding in the case, and reinstated the Order of the Court of Common Pleas of Centre County, dated November 6, 2006.

The Supreme Court’s E.D.B. opinion settles the “incompatible--indeed opposite—holdings” reached by the two Pennsylvania lower appellate courts -- the Superior Court in Bowmaster v. Gerald Clair and Centre Community Hospital, 933 A.2d 86 (Pa.Super. 2007) [PDF, 11 pages], and the Commonwealth Court in Shaffer-Doan v. Department of Public Welfare, 960 A.2d 500 (Pa.Cmwlth. 2008) [PDF, 9 pages]. See also: Jordan v. Western Pennsylvania Hospital, ___ A.2d ___, No. 346 C.D. 2008, 2008 WL 4831303 (Pa. Cmwlth. Nov. 10, 2008) [PDF, 12 pages], and Galindo v. Crozier-Keystone Health System, No. 1136 C.D. 2008 (Pa.Cmwlth., January. 8, 2009) [PDF, 9 pages].

The Supreme Court majority sided with the Commonwealth Court's analysis by holding that a minor Medical Assistance (Medicaid) recipient has a cause of action against a third-party tortfeasor to recover, but then reimburse the Department of Public Welfare, for Medical Assistance benefits received during minority.

Specifically, the Court majority interpreted subsection 1409(b) of the Pennsylvania Fraud Abuse and Control Act to supersede, according to the dissent, “centuries’ worth of Pennsylvania jurisprudence which places the responsibility to raise a child upon her parents”. The Court majority favored the public interest of protecting taxpayers and the public treasury in the provision of Medical Assistance benefits, which historically were not considered in common law parental support principles.

Notably, the Supreme Court recognized that the General Assembly had enacted subsection 1409(b), conferring upon the Department of Public Welfare a statutory right to reimbursement from the “entire amount of any settlement” “notwithstanding any other provision of law”, prior to the United States Supreme Court’s monumental decision in Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752 (2006).

Because the operative facts of E.D.B.’s case arose pre-Ahlborn, the Court leaves the door open for post-Ahlborn challenges to claims for reimbursement by the Department when a beneficiary’s complaint unequivocally fails to assert damages for medical expenses incurred during minority.

Notably, the Department of Public Welfare appears to be proactively preempting the opportunity for any such argument by actively intervening in minors’ actions that do not seek recovery for medical expenses during minority, as contemplated in 62 P.S. 1409(b).

For the Department's general Statement of Policy in this regard see: Implementation of Third-Party Liability Provisions of Act 2008-44, published Saturday, November 1, 2008, 38 Pa.B. 5970, which states "how the Department will interpret and apply sections 1409 and 1409.1 of the Public Welfare Code (code) (62 P. S. §§ 1409 and 1409.1) to tort claims involving MA recipients."

Note: Thanks to Nora E. Gieg, Esq., of Tucker Arensberg, P.C., for contributing to this article, edited and expanded by Neil E. Hendershot, Esq. for this Blog.