Personal Injury Liens and Estate Recovery

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1 Personal Injury Liens and Estate Recovery P R E S E N T E D B Y : G R E T C H E N G U N N M E R R I L L S e n i o r A s s i s t a n t A t t o r n e y G e n e r a l C i v i l E n f o r c e m e n t D i v i s i o n O r e g o n D e p a r t m e n t o f J u s t i c e A A P W A 4 6 T H A N N U A L N A T I O N A L T R A I N I N G A N D C O N T I N U I N G E D U C A T I O N C O N F E R E N C E N O V E M B E R 1 3,

2 Personal Injury Liens and Estate Recovery: Outline of Presentation Third-Party Personal Injury Liens Arkansas Dept. of Health and Human Services v. Ahlborn and Wos v. E.M.A. ex rel. Johnson decisions The future of third-party personal injury lien settlements Estate Recovery Recovery methods Expanded definition of estate

3 Third-Party Personal Injury Liens: Arkansas D.H.H.S. v. Ahlborn Arkansas Dept. of Health and Human Services v. Ahlborn (2006) 126 S.Ct. 1752, 547 U.S. 268, 164 L.Ed.2d 459. Court held that Medicaid law did not authorize ADHS to assert a lien on the settlement in excess of the stipulated to medical expenses. Additionally, when it is established that a settlement represents a particular percentage of the total value of the case, the State's Medicaid agency may recover only that percentage of the total amount it has paid. The Arkansas statute was unenforceable to the extent that it allowed ADHS to recover more than the medical expenses.

4 Third-Party Personal Injury Liens: Arkansas D.H.H.S. v. Ahlborn Cases since Tristani v. Richman, 2009 WL (M.D.Pa. March 25, 2009) While Ahlborn said that the state may not recover non-medical expenses, the state apportionment policy was valid so long as there was an administrative remedy for beneficiaries to use in the case of disagreement. Lugo ex rel. Lugo v. Beth Israel Med. Ctr., 13 Misc. 3d 681, 819 N.Y.S.2d 892 (Sup. Ct. 2006) Ahlborn must be read to limit the recoupment to the amount of the settlement proceeds allocated to past medical expenses and, when that is not stipulated to, the court is empowered to allocate.

5 Third-Party Personal Injury Liens: Wos v. E.M.A. Wos v. E.M.A. ex rel. Johnson, 133 S. Ct. 1391, 185 L. Ed. 2d 471 (2013) North Carolina statute entitled the state to one-third of a settlement or judgment that was attributable to medical expenses. The Supreme Court found that the statute was preempted by federal anti-lien provisions. An irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act s clear mandate that a state may not demand any portion of a beneficiary s tort recovery except the share that is a attributable to medical expenses. Wos, at 1399.

6 Third-Party Personal Injury Liens: Pre-Wos State Strategy Quota/Percentage System At least ten states (as of 10/1/13) use some version of a quota or percentage system in determining the amount the state can recovery against the settlement. State statutes vary from 33% to 100% of total settlement up to the amount that was spent on medical expenses. Examples Iowa Code 249A.6(1): One-third of the remaining balance [after fees and costs are assessed] shall then be deducted and paid to the recipient. From the remaining balance, the lien of the department shall be paid. Any amount remaining shall be paid to the recipient. Mass. Gen. Laws, ch. 118E, 22(c): [T]here shall be a presumption that the payment, settlement or compromise of claim or action, court award or judgment applies first to the medical expenses incurred by the claimant in an amount equal to the medical assistance benefits paid.

7 Third-Party Personal Injury Liens: Pre-Wos State Strategy (Continued) Administrative/Trial Court hearings for Rebuttable Presumptions Some states set out specific administrative or district court guidelines to rebut the presumption of medical expense recovery. Example Tennessee Code (g) After trial and at the time of the entry of the judgment or settlement in a case in which the state or any entity acting pursuant to subsection (f) has a subrogation interest under this section, it is the responsibility of the trial judge to calculate the amount of the subrogation interest and incorporate the court's findings concerning the subrogation interest in the final judgment or settlement.

8 Third-Party Personal Injury Liens: Post-Wos State Strategy State District Courts beginning to rule against state statutes that are now preempted by Wos. Wisconsin Ka Yang v. Portage Cnty., Wis., 12-CV-797-BBC, 2013 WL (W.D. Wis. July 19, 2013) Wisc. Stat (5) previously stated that 100% of medical expenses were to be repaid. States amending previous quota/percentage based systems to provide an administrative remedy for beneficiaries. Florida passed Fla. Stat , amending their previous rebuttable presumption system. Beneficiaries must file a petition for administrative hearing with the Division of Administrative Hearings in Tallahassee, Fla., and prove by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for medical expenses than the amount asserted by the agency. Fla.Stat (17)(a)(1). The new statutory procedure is the [e]xclusive method for challenging the amount of third-party benefits payable to the agency, Fla.Stat (17)(a), and the beneficiary bears its own fees and costs for any such administrative proceeding. Fla.Stat (17)(a)(4).

9 Third-Party Personal Injury Liens: Oregon Post-Wos Oregon successfully recovered $2,226, in the 2013 fiscal year Current policy OAR There is a rebuttable presumption that the entire proceeds from any judgment, settlement, or compromise, are, unless otherwise identified, in payment for medical services. Post-Wos Options Legislative New statute laying out particular path towards administrative hearing. (Something similar to Florida?) Administrative Rule

10 Estate Recovery: Oregon Definition Recovery of $21,599, in the 2013 fiscal year Expanded definition of estate facilitates recovery of Medicaid assistance paid regardless of how it passes upon a recipient s death. ORS (6) As used in this section, estate includes all real and personal property and other assets in which the deceased individual had any legal title or interest at the time of death including assets conveyed to a survivor, heir or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust or other similar arrangement.

11 Estate Recovery: Recovery Logistics Oregon makes claims either in probate or against property passing out of probate. Oregon has priority of creditors under ORS To be paid before [A]ll other claims against estate. Under an existing estate DHS sends in a notice of claim to the personal representative of the estate. If no existing estate, and it appears to be cost effective and is a small estate, DHS will appoint an affiant to proceed to open probate under ORS

12 Estate Recovery: Probate Process When the claim allowed in probate If DHS is not paid, DOJ files a petition for order or payment If full probate or petition for summary review, under ORS If small estate, under ORS DHS has a unique statute, ORS (2) which allows its certified copies of the supporting documentation to be prima facie evidence of what is in the documents. When the claim is disallowed DHS can file a Petition for Summary Determination If a regular estate, under ORS If a small estate, under ORS PSD s result in final and non-appealable decisions, so, depending on circumstances, DHS may choose to file a separate action to preserve appeal rights under ORS (1)(b).

13 Estate Recovery: Expanded Definition Life estates are available to Oregon Department of Human Services through State Depart ment of Human Services v. Willingham, 206 Or App 156, 136 P3d 66 (2006). For purposes of recovering from estate of medical assistance recipient, life estate is valued immediately prior to death regardless of when life estate was created. Also includes joint tenancy, tenancy in common, and living trusts. When there is real property involved DHS files a letter with the title companies They do not have a lien, but it puts the title companies on notice DHS has a claim it expects to be paid. Surviving Spouse recovery under OAR If there is a surviving spouse, the Department has a claim against the estate of the surviving spouse for public assistance paid to the surviving spouse. Only to the extent that the surviving spouse received property or other assets from the pre-deceased spouse through either probate, operation of law, and interspousal transfer.

14 Conclusion Third-Party Personal Injury Lien Settlement Following the Ahlborn and Wos decisions, states are moving away from percentage or quota based systems and towards administrative hearing alternatives to rebut any presumption. Estate Recovery Oregon has had a successful estate recovery system because of the use of the expanded definition of estate and recovery mechanisms.