D.J. v. 636 Holding Corp.D.J. v. 636 Holding Corp.
Order, Supreme Court, Bronx County (Barry Salman, J.), entered December 29, 2015, which denied plaintiffs’ motion to vacate a Medicaid lien or, in the alternative, to reduce the lien amount by the same proportion by which the full value of the case was compromised, and thereby allowed the Department of Social Services of the City of New York (DSS) to recover the full amount of the Medicaid lien, unanimously affirmed, without costs.
The minor plaintiff and his mother sued the owners of the apartment complex for negligently failing to maintain the premises in reasonably safe condition, and nonparty DSS filed a lien pursuant to
In May 2010, plaintiffs, then claiming damages in the amount of $25,000,000,1 settled the premises liability action with the defendant landlords for $4,350,000. After unsuccessful efforts between plaintiffs and DSS to resolve the lien, plaintiffs moved in December 2010 to vacate the lien entirely, contending, without supporting documentation, that the entire settlement was ascribed to plaintiff‘s pain and suffering, and no portion of it was attributable to payment of past medical expenses. In the alternative, plaintiffs sought to reduce the amount of the Medicaid lien to the same proportion of the settlement as the settlement bore to the $25,000,000 damages plaintiffs claimed during settlement discussions, which they characterized as constituting the true value of the case. Plaintiffs’ counsel averred that “[t]he low settlement value reflects the potential for a defense verdict in this premises liability case.”
DSS sought to enforce the full amount of its lien for medical expenses, based in part upon plaintiffs’ failure to allow them to participate in the settlement negotiations. DSS also argued that the settlement amount constituted the full value of the case, in view of plaintiffs’ concession that negligent security cases are difficult to prove. The agency further contended that public policy prohibited parties to a personal injury suit from avoiding Medicaid liens by allocating a settlement entirely to
On or about June 30, 2011, Supreme Court ordered a hearing to determine the full value of the case and the value of the various items of damages, and ordered related discovery. By October 2014, however, the parties had waived a hearing, agreeing to have the matter decided on the papers submitted.
In a December 17, 2015 decision and order on plaintiffs’ motion, Supreme Court determined DSS to be entitled under
On this appeal, the parties disagree as to the proper application of Ahlborn and its progeny in the present circumstances. On the record presented, we find that Supreme Court properly awarded DSS the full amount of its lien and properly declined to employ the formula used in Ahlborn.
Federal law provides that under Medicaid, the jointly funded federal and state medical assistance program for low income individuals, agencies which serve as its local administrators, such as DSS here, must comply with all federal requirements of the program or risk losing their federal funding (see Ahlborn, 547 US at 275-276). Among such requirements is the obligation of the state or local agency administering the program to “take all reasonable measures to ascertain the legal liability of third parties . . . to pay for care and services available under the
Federal law requires the state or local agency to recoup Medicaid funds from the responsible third parties and set up procedures for doing so (Cricchio at 305). DSS is authorized to impose a lien in a personal injury action against a third party who is legally liable for the Medicaid recipient‘s injury (
DSS is entitled to recover reimbursement only for the amount of medical expenses it paid, and not for other damages amounts, such as pain and suffering or lost wages (Wos v E. M. A., 568 US 627, 638 [2013]; Ahlborn at 280-282). The Supreme Court has recognized, however, “that Medicaid beneficiaries and tortfeasors might collaborate to allocate an artificially low portion of a settlement to medical expenses” (Wos at 634), to manipulate the settlement to “allocate away the State‘s interest” (Ahlborn at 288).
The Supreme Court had no occasion in Ahlborn to prescribe any particular method for determining the portion of a personal injury settlement attributable to medical care, as there the parties, including the state, stipulated that 6% of the settlement would be ascribed to past medical expenses. Although the Supreme Court in Ahlborn found the formula advanced by the plaintiff in that case (and urged by plaintiffs here), of applying the agreed proportion that medical expenses bore to the full value of the case to the amount of the settlement, to be an acceptable method of allocation, it did not adopt it as the exclusive method of making the determination. Indeed, in Wos, the Court rejected any “one-size-fits-all” approach to making the calculation (Wos at 639). Rather, in Ahlborn and later in Wos, the Court merely made clear that where the amount of a lump sum settlement attributable to medical expenses was not established by a verdict or by a stipulation binding on all parties, a judicial resolution of the issue was required (Wos at 638; Ahlborn at 288).
In this case, after the parties declined the opportunity for a hearing, the motion court properly considered all of the surrounding facts and circumstances in making its determination of the portion of plaintiffs’ $4.3 million settlement attributable to the medical expenses paid by Medicaid. Plaintiffs never proffered any breakdown of the settlement amount, nor disclosed its terms. Rather, plaintiffs characterized the entire payment as attributable to plaintiff‘s pain and suffering, notwithstanding the fact that in their complaint, plaintiffs had sought recompense for the medical care and attention he had incurred. The motion court reasonably rejected this characterization as an effort to deprive DSS of its Medicaid lien.
Further, plaintiffs had ignored the request by DSS that it be permitted to participate in settlement discussions. As noted, although the court ordered a hearing on the Ahlborn issue, plaintiffs waived their right to it. And the court noted that the Medicaid lien, representing $250,070 paid over nine years, constituted less than 6% of the total settlement and thus did not unduly prejudice plaintiff‘s recovery.
Under these circumstances, the motion court fairly determined that DSS was entitled to recoupment of its entire lien.
Plaintiffs’ reliance on Lopez v Daimler Chrysler Corp. (179 Cal App 4th 1373, 102 Cal Rptr 3d 285 [2009]), is misplaced.
Finally, plaintiffs failed to preserve any argument as to proper notice of the lien, not having raised it below, so it cannot be considered by this Court. If we were to consider it, we would reject it, as any failure to adhere to the statutory notice requirements for the lien would not void the lien, even under prior law. In any case, plaintiffs received sufficient notice in the April 23, 2010 letter to enable them to identify the injured party and the occurrence on which the claim was based for purposes of