Latham v. Recovery Services
448 P.3d 1241
Utah2019Background
- John R. Latham suffered a stroke; Utah Medicaid paid $104,065.32 for his treatment.
- Latham sued the hospital for malpractice and settled the claim for $800,000; the parties agreed the total claim value was $7,257,972.52 (including $104,065.32 past medical and $6,430,614 future medical expenses).
- Under federal law, states must seek reimbursement from liable third parties for medical expenses paid by Medicaid and recipients must assign rights to such third-party payments.
- Utah’s Office of Recovery Services (ORS) had a collection agreement with Latham and sought reimbursement from the settlement, reduced for attorney’s fees ($34,688.44), leaving a maximum ORS claim of $69,376.88.
- The district court held ORS could lien and recover from the portion of the settlement allocable to all medical expenses (past and future), enabling full reimbursement.
- The Utah Supreme Court reviewed whether federal Medicaid law permits recovery only from settlement funds fairly allocable to past medical expenses or from funds allocated to all medical expenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ORS may place a lien on and collect from settlement funds allocable to future medical expenses as well as past medical expenses | Latham: ORS may lien only the portion of the settlement attributable to past medical expenses; applying ratio to limit recovery produces a small cap | ORS: May recover from settlement funds representing all medical expenses (past and future), so ORS can be fully reimbursed | The Court held ORS may place a lien and recover only from the portion of the settlement fairly allocable to past medical expenses; liens on funds for future medical care are not authorized under federal Medicaid law |
| Proper method to determine amount of settlement allocable to past medical expenses when settlement is lump sum | Latham: district court should use ratio (settlement/total claim * past medical expenses) | ORS: district court’s broader allocation methods permissible | The Court held no single formula is mandated; trial court must make a case-specific, fact-bound allocation (courts cannot use arbitrary presumptions) |
Key Cases Cited
- Arkansas Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (2006) (Supreme Court holds state may recover only the portion of a tort recovery allocable to medical expenses paid by Medicaid)
- Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627 (2013) (Supreme Court rejects arbitrary statutory allocation of a beneficiary’s recovery to medical expenses; requires case-specific determination)