Doe v. Vermont Office of Health Access, 54 A.3d 474

Doe, a Vermont Medicaid recipient, was catastrophically injured as a child in 1992 and Medicaid paid medical expenses on his behalf.
Vermont OVHA asserted a lien against any third-party recovery to recover medical costs paid, under pre-2008 Vermont statute 33 V.S.A. § 1910(a).
Doe settled a NY third-party action in 2001 for $8.75 million; Doe paid OVHA $594,209.03 in full or final satisfaction of OOHA’s lien to that date.
Between 2001 and 2006, NYSTA litigation produced a 2006 settlement for $12 million; OVHA incurred about $771,111 in medical expenses in that interval.
The trial court allocated medical expenses between past and future costs and calculated OVHA’s lien as a percentage of the 2006 settlement, using 2004 Court of Claims findings; the court reduced the award to reflect reasonable costs and adjusted for present value and attorney’s fees.
The Vermont Supreme Court reversed in part, holding that (1) discounting future damages is not required as a general rule in Medicaid lien allocations; (2) OVHA could not recover against all past medical expenses paid by Doe beyond Medicaid payments under the 2001 lien; (3) the 2001 settlement was an accord and satisfaction; (4) the statute in effect in 2001 allowed reductions for attorney’s fees but the court erred in not deducting them; (5) remanded to recalculate the lien against $771,111 and deduct reasonable attorney’s fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether future economic damages must be discounted to present value for Medicaid lien allocation.	Doe argues discounting is required for fair allocation.	State contends present value reduction may be appropriate and was supported by some authorities.	Discounting not required; allocation approved without present-value reduction.
Whether the State may assert its lien against all medical expenses beyond those paid by Medicaid.	Doe argues the lien is limited to Medicaid-paid expenses.	OVHA claims entitlement to the portion of the settlement representing medical costs paid.	Statute pre-2008 allowed lien only to the extent of payments made by the agency; cannot reach non-Medicaid expenditures.
Whether attorney’s fees may be deducted from the State’s lien.	Doe contends attorney’s fees should reduce the lien.	State argues attorney’s fees are not subtractable under the statute in effect.	statute as changed is a change, not a clarification; but lien must be reduced to account for attorney’s fees.
Whether the 2001 settlement constitutes an accord and satisfaction that precludes reopening.	Doe seeks reconsideration of 2001 settlement in light of Ahlborn.	State argues the 2001 settlement was a final accord; Ahlborn not retroactive here.	There was an accord and satisfaction in 2001; remand to recalculate lien on 2006 settlement.

Ahlborn v. Health & Hosp. Corp. of Marion, 547 U.S. 268 (U.S. 2006) (limits Medicaid lien to medical-cost portion of settlement but not a bright-line rule for all allocations)
Price v. Wolford, 608 F.3d 698 (10th Cir. 2010) (discounting may be appropriate but not required; reliance on present-value figures varies)
Levine v. Wyeth, 2006 VT 107 (Vt. 2006) (discounts generally applicable to economic damages; not conclusive in this case)