Ladonna Neal v. Detroit Receiving Hospital
329733
| Mich. Ct. App. | May 16, 2017Background
- Plaintiff (Neal) sued for medical malpractice; her medical care was paid by Meridian Health Plan (a Medicaid contractor). Meridian paid $110,283.19 and asserted a lien for that amount.
- Parties reached a confidential settlement; plaintiffs’ counsel allocated the settlement 55% non-economic, 40% economic, 5% medical (total medical allocation $26,775). Meridian did not participate in settlement negotiations.
- Plaintiff moved to reinstate the case so the court could resolve Meridian’s lien; Meridian intervened and sought full recovery of its paid medical expenses under MCL 400.106(5).
- Trial court granted Meridian the full lien ($110,238.19) without conducting an evidentiary allocation hearing and without reducing the lien for Meridian’s pro rata share of litigation costs/fees.
- Michigan Court of Appeals reversed in part: held MCL 400.106(5) is preempted to the extent it permits recovery from settlement proceeds not attributable to medical expenses and remanded for a hearing to allocate settlement proceeds and apply pro rata reductions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCL 400.106(5) is preempted by the federal Medicaid anti-lien (42 U.S.C. §1396p(a)(1)) | Michigan statute cannot let the state recover more than the portion of a tort recovery that represents payment for medical expenses (Ahlborn). | State statute authorizes full recovery of amounts paid and assigns recipients’ rights to the state; thus full lien recovery is permitted. | MCL 400.106(5) is preempted to the extent it permits recovery from portions of a settlement not attributable to medical expenses. |
| Whether the parties’ private allocation (5% to medical) binds Meridian | Plaintiff: the stipulated allocation should be respected; limits Meridian to $26,775. | Meridian: it didn’t agree to the allocation and was not a party to negotiations; allocations may be manipulative. | Private allocation not binding on the state unless the state agreed or a court (after hearing) approves it; remand for judicial allocation. |
| Whether trial court could award full lien without allocation hearing | Plaintiff: court must ensure allocation to medical expenses before enforcing lien. | Meridian: lien existed preexistingly and is a sum certain; court properly enforced full lien. | Trial court erred by enforcing full lien without a hearing to allocate settlement proceeds to medical vs nonmedical damages. |
| Whether Meridian’s lien should be reduced by pro rata share of fees/costs | Plaintiff: statute requires reducing lien by plaintiff’s and lienholder’s pro rata share of fees/costs. | Meridian conceded a pro rata share (~30%) but court did not apply reduction. | Remand to calculate and apply Meridian’s pro rata share of costs/attorney fees and adjust lien accordingly. |
Key Cases Cited
- Arkansas Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (federal anti-lien limits state recovery to portion of settlement representing medical expenses)
- Wos v. E.M.A., 133 S. Ct. 1391 (when no allocation exists, judicial determination required; binding stipulation/judgment ends dispute)
- Ter Beek v. City of Wyoming, 495 Mich. 1 (state-law preemption principles; state provision rendered "without effect" when preempted)
- Thomas v. United Parcel Serv., 241 Mich. App. 171 (statutory interpretation and de novo review of preemption issues)