2015 COA 81
Colo. Ct. App.2015Background
- S.P., a paraplegic from a snowboarding accident, received Medicaid; Medicaid paid $142,779 in medical assistance.
- S.P. sued the ski area and settled a lump-sum for $1,000,000 without any allocation among damage categories.
- The Colorado Department of Health Care Policy and Financing (the Department) asserted a statutory Medicaid lien and sought reimbursement from the settlement; S.P. disputed the amount.
- The parties agreed a proportional-allocation formula should be used but disagreed on (a) whether the numerator should be amounts billed ($776,383) or amounts actually paid ($142,779), and (b) whether the allocation should apply to the gross or net settlement.
- The trial court used the amount Medicaid actually paid as the numerator, applied the resulting percentage to the gross $1,000,000 settlement, then reduced the lien by 12.5% as the Department’s share of attorney fees, ordering repayment of $25,875.
- Both parties appealed; the appellate court affirmed and remanded for release of registry funds.
Issues
| Issue | Plaintiff's Argument (S.P.) | Defendant's Argument (Department) | Held |
|---|---|---|---|
| Proper numerator for proportional allocation (billed vs. paid) | Use amount Medicaid actually paid ($142,779) as numerator | Use amount billed by providers ($776,383) as numerator | Use amount actually paid by Medicaid; trial court’s choice not clearly erroneous and not arbitrary |
| Apply allocation to gross or net settlement | Apply percentage to net recovery after attorney fees (S.P. received $442,213) | Apply percentage to gross $1,000,000 settlement | Apply to gross settlement; settlement funds remain S.P.’s property until attorney lien reduced to judgment |
| Whether collateral-source rule or other doctrines require different treatment | Argues allocation should reflect what S.P. effectively received (implicit) | Department invoked collateral-source principles (not preserved) | Court declined to consider collateral-source or make-whole arguments not raised below; Wos/Ahlborn do not mandate collateral-source application here |
| Accounting for attorney fees in lien calculation | Deduct fees from settlement before applying allocation | Department argued contribution approach or less reduction | Court applied statutory mechanism: reduce lien by Department’s share of attorney fees (trial reduced lien by 12.5%); statutory approach proper |
Key Cases Cited
- Christy v. Ibarra, 826 P.2d 361 (Colo. App. 1991) (describing Medicaid as cooperative federal–state program and state obligations)
- Arkansas Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (2006) (Medicaid lien limited to portion of third-party recovery attributable to past medical expenses)
- Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627 (2013) (states may not adopt arbitrary one-size-fits-all allocations; courts can judicially apportion settlements)
- Colo. Comp. Ins. Auth. v. Jones, 131 P.3d 1074 (Colo. App. 2005) (courts must determine damages by category and allocate settlements accordingly)
- E.M.A. ex rel. Plyler v. Cansler, 674 F.3d 290 (4th Cir. 2012) (state cannot recover more than portion of settlement representing payment for medical care)