D.J. v. 636 Holding Corp.
154 A.D.3d 453
N.Y. App. Div.2017Background
- Minor plaintiff (D.J.) was shot at defendants' premises, became a paraplegic; Medicaid paid $250,070 for nine years of care after private insurance was exhausted.
- Plaintiffs sued the landlords for negligent security and settled during litigation for $4,350,000 while originally claiming far higher damages.
- DSS filed a Social Services Law § 104-b lien for past Medicaid payments and notified plaintiffs' counsel of the lien and requested notice of settlement discussions; counsel did not involve DSS or attempt to negotiate the lien.
- Plaintiffs moved to vacate the lien or, alternatively, to reduce it proportionally to the ratio between the settlement and the plaintiffs’ claimed full value of the case, asserting the settlement was entirely for pain and suffering.
- Supreme Court ordered a hearing on allocation but parties waived an evidentiary hearing and submitted papers; the court found the settlement represented the case’s actual value, rejected plaintiffs’ claimed allocation, and allowed DSS to recover the full $250,070 lien.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DSS may enforce its full Medicaid lien against the lump-sum settlement | The entire settlement was for pain and suffering (no portion for past medicals); alternatively, lien should be reduced proportionally to plaintiffs’ asserted full value of the case | DSS argued it was entitled to full reimbursement because plaintiffs failed to allow DSS to participate, made no allocation evidence, and settlement amount reflected case value | Court upheld DSS recovery of the full lien; rejected plaintiffs’ proposed proportional formula and allocation claim |
| Proper method to allocate settlement to past medical expenses under Ahlborn and Wos | Apply proportion of medical expenses to plaintiffs’ claimed full case value to determine lien share | Judicial determination required when allocation not stipulated; no single formula mandated; consider surrounding facts and participation of DSS | Court declined to adopt one-size-fits-all formula; determined allocation on facts and allowed full lien given lack of evidence and DSS notice/participation failures |
| Effect of plaintiffs’ designation of settlement as pain and suffering on lien enforcement | Plaintiffs’ stated allocation (entirely pain and suffering) should defeat lien | Such form-based allocations may be disregarded if used to defeat DSS recovery; courts may look beyond settlement language | Court rejected plaintiffs’ form allocation as a sham and enforced the lien |
| Whether plaintiffs received adequate notice of the lien | (not preserved on appeal) Plaintiffs implied insufficient notice | DSS contended notice was sufficient (April 23, 2010 letter identified injured party and occurrence) | Issue not preserved; court said notice in April 2010 was sufficient if considered |
Key Cases Cited
- Arkansas Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (Sup. Ct.) (when allocation to past medicals is unresolved, court must determine portion recoverable by state but did not mandate a single allocation method)
- Wos v. EMA ex rel. Johnson, 568 U.S. 627 (Sup. Ct.) (rejected a one-size-fits-all allocation method for Medicaid liens against lump-sum settlements)
- Cricchio v. Pennisi, 90 N.Y.2d 296 (N.Y.) (Medicaid must be payer of last resort; state/local agencies must seek third-party reimbursement)
- Calvanese v. Calvanese, 93 N.Y.2d 111 (N.Y.) (DSS authorized to impose a lien in personal injury actions under Social Services Law § 104-b)
- Simmons v. Aiken, 100 A.D.2d 769 (1st Dept.) (settlement form or language cannot defeat recovery when used merely to avoid a lien)
- Matter of Homan v. County of Cattaraugus Dep’t of Social Servs., 74 A.D.3d 1754 (4th Dept.) (attorney’s mere declaration that settlement does not relate to medical expenses will not defeat a Medicaid lien)
- Miraglia v. H & L Holding Corp., 36 A.D.3d 456 (1st Dept.) (distinguishable facts; not controlling on allocation and lien enforcement)