Ark. Dep't of Human Servs. v. Ahlborn
Encyclopedia
Ark. Dep't of Human Servs. v. Ahlborn, 547 U.S. 268 (2006), was a decision by the Supreme Court of the United States
involving the ability of a state
agency to claim a personal injury
settlement
as compensation for Medicaid
benefits provided for treatment of the injuries. The Court ruled unanimously that a federal statutory prohibition against liens on personal property
to recover Medicaid expenditures applied to settlements, so that only the portion of the settlement that represented payment for past medical expenses could be claimed by the state.
, suffered severe and permanently disabling injuries in a car accident
on January 2, 1996, and filed suit against those she believed responsible. Following her accident, Ahlborn was granted Medicaid
benefits to pay for her extensive medical treatment. The Arkansas Department of Human Services
(ADHS), which administers Medicaid in Arkansas with state and federal funds, intervened pursuant to Ark. Code § 20-77-310, et seq., which required anyone receiving third-party compensation for Medicaid benefits to assign
those rights to the State. ADHS accordingly sought to claim a lien
on any damages Ahlborn might recover from the defendants.
In 2002, an out-of-court settlement
was reached, under which the defendants paid a compromised sum of $550,000 to Ahlborn. Under Arkansas
law, Ahlborn's injuries gave rise to five discrete elements of damage, one of which was damages for past medical expenses. However, no effort was made to allocate by agreement or adjudication the proceeds of the compromise settlement among these elements of damage.
in the amount of $ 219,156.78 against the settlement proceeds. Ahlborn subsequently filed a declaratory action in the U.S. District Court for the Eastern District of Arkansas against the agency and its officials, arguing that ADHS could only recover that portion of her settlement representing payment for past medical expenses.
The parties characterized the sole issue in the case as one of statutory construction. Federal Medicaid statutes provided for the assignment of rights to third-party payments, but prohibited the placing of a lien on a Medicaid recipient's property. Ahlborn argued that the settlement was her "property," and that this prohibition accordingly limited the State's recovery to only those portions of the payments made for medical expenses. The parties stipulated
that the State would recover $ 215,645.30 if it prevailed on the statutory construction issue, representing the total amount the State paid in relation to Ahlborn's care, but only $ 35,581.47 if Ahlborn prevailed, representing 16.5 percent of the total, which was considered a fair representation of the percentage of the settlement constituting payment by the defendants for past medical care.
The parties filed cross-motions for summary judgment
, and the district court granted the State's motion. The court interpreted the relevant federal statutory provisions to mean that the State may recover from Ahlborn's settlement the sum stipulated as the total amount of Medicaid benefits paid to her, regardless of whether the settlement funds represented payments for the cost of medical services.
, the Eighth Circuit Court of Appeals
reversed. The court supported Ahlborn's interpretation of "property" in the Medicaid lien-prohibition provision as extending to the right to a settlement. It observed that the Arkansas assignment statute contemplates that the lien arises only after the injured party receives the settlement, and the court believed that the State could not circumvent this by requiring the assignment of rights before the settlement was liquidated and actually received as personal property.
John Paul Stevens
. The Court held that federal Medicaid
law did not authorize ADHS to assert a lien
on Ahlborn's settlement in excess of the stipulated amount for past medical expenses, and that the federal anti-lien provision furthermore affirmatively prohibited it from doing so. The state has no claim against those portions of a settlement the parties agreed were attributable to pain and suffering or lost wages, the high court ruled. The Arkansas statutes were therefore unenforceable to the extent they provided for a contrary result.
The opinion is also significant because the Court, without discussion, permitted a Medicaid suit to proceed where the cause of action was conferred by the Supremacy Clause. Most federal suits alleging violation of the Medicaid Act – which does not expressly confer a right of action – claim that the right of action is authorized by 42 U.S.C. § 1983
. In recent years, the Supreme Court has made it more difficult to sue under § 1983 for statutory violations, requiring that the statutory provision in question unmistakably focus on individual rights. While some Medicaid suits have been permitted under § 1983, certain Medicaid provisions have been held unenforceable.
However, this case shows an alternative route to federal court for public interest litigants. Where a state statute or regulation conflicts with or is preempted by federal law, the right of action arguably is conferred by the Supremacy Clause of the U.S. Constitution. Ahlborn implicitly supports this premise.
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
involving the ability of a state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
agency to claim a personal injury
Personal injury
Personal injury is a legal term for an injury to the body, mind or emotions, as opposed to an injury to property. The term is most commonly used to refer to a type of tort lawsuit alleging that the plaintiff's injury has been caused by the negligence of another, but also arises in defamation...
settlement
Settlement (law)
In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins. The term "settlement" also has other meanings in the context of law.-Basis:...
as compensation for Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
benefits provided for treatment of the injuries. The Court ruled unanimously that a federal statutory prohibition against liens on personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...
to recover Medicaid expenditures applied to settlements, so that only the portion of the settlement that represented payment for past medical expenses could be claimed by the state.
Injury and settlement
Heidi Ahlborn, a resident of ArkansasArkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...
, suffered severe and permanently disabling injuries in a car accident
Car accident
A traffic collision, also known as a traffic accident, motor vehicle collision, motor vehicle accident, car accident, automobile accident, Road Traffic Collision or car crash, occurs when a vehicle collides with another vehicle, pedestrian, animal, road debris, or other stationary obstruction,...
on January 2, 1996, and filed suit against those she believed responsible. Following her accident, Ahlborn was granted Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
benefits to pay for her extensive medical treatment. The Arkansas Department of Human Services
Arkansas Department of Human Services
The Arkansas Department of Human Services is a state agency of Arkansas, headquartered in Donaghey Plaza South of the Donaghey Complex, a five story building on the southwest corner of Main Street and 7th Street, in Little Rock....
(ADHS), which administers Medicaid in Arkansas with state and federal funds, intervened pursuant to Ark. Code § 20-77-310, et seq., which required anyone receiving third-party compensation for Medicaid benefits to assign
Assignment (law)
An assignment is a term used with similar meanings in the law of contracts and in the law of real estate. In both instances, it encompasses the transfer of rights held by one party—the assignor—to another party—the assignee...
those rights to the State. ADHS accordingly sought to claim a lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
on any damages Ahlborn might recover from the defendants.
In 2002, an out-of-court settlement
Settlement (law)
In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins. The term "settlement" also has other meanings in the context of law.-Basis:...
was reached, under which the defendants paid a compromised sum of $550,000 to Ahlborn. Under Arkansas
Arkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...
law, Ahlborn's injuries gave rise to five discrete elements of damage, one of which was damages for past medical expenses. However, no effort was made to allocate by agreement or adjudication the proceeds of the compromise settlement among these elements of damage.
District Court proceedings
ADHS had not asked to participate in the settlement negotiations, nor did it seek to reopen the judgment after the case had been dismissed. However, the agency subsequently asserted a claim or lienLien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
in the amount of $ 219,156.78 against the settlement proceeds. Ahlborn subsequently filed a declaratory action in the U.S. District Court for the Eastern District of Arkansas against the agency and its officials, arguing that ADHS could only recover that portion of her settlement representing payment for past medical expenses.
The parties characterized the sole issue in the case as one of statutory construction. Federal Medicaid statutes provided for the assignment of rights to third-party payments, but prohibited the placing of a lien on a Medicaid recipient's property. Ahlborn argued that the settlement was her "property," and that this prohibition accordingly limited the State's recovery to only those portions of the payments made for medical expenses. The parties stipulated
Stipulation
In the law of the United States, a stipulation is an agreement made between opposing parties prior to a pending hearing or trial. For example, both parties might stipulate to certain facts, and therefore not have to argue those facts in court. After the stipulation is entered into, it is...
that the State would recover $ 215,645.30 if it prevailed on the statutory construction issue, representing the total amount the State paid in relation to Ahlborn's care, but only $ 35,581.47 if Ahlborn prevailed, representing 16.5 percent of the total, which was considered a fair representation of the percentage of the settlement constituting payment by the defendants for past medical care.
The parties filed cross-motions for summary judgment
Summary judgment
In law, a summary judgment is a determination made by a court without a full trial. Such a judgment may be issued as to the merits of an entire case, or of specific issues in that case....
, and the district court granted the State's motion. The court interpreted the relevant federal statutory provisions to mean that the State may recover from Ahlborn's settlement the sum stipulated as the total amount of Medicaid benefits paid to her, regardless of whether the settlement funds represented payments for the cost of medical services.
Court of Appeal's decision
On appealAppeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
, the Eighth Circuit Court of Appeals
United States Court of Appeals for the Eighth Circuit
The United States Court of Appeals for the Eighth Circuit is a federal court with appellate jurisdiction over the district courts in the following districts:* Eastern District of Arkansas* Western District of Arkansas...
reversed. The court supported Ahlborn's interpretation of "property" in the Medicaid lien-prohibition provision as extending to the right to a settlement. It observed that the Arkansas assignment statute contemplates that the lien arises only after the injured party receives the settlement, and the court believed that the State could not circumvent this by requiring the assignment of rights before the settlement was liquidated and actually received as personal property.
The court's decision
The U.S. Supreme Court unanimously affirmed the Eighth Circuit's ruling in a decision delivered by JusticeAssociate Justice of the Supreme Court of the United States
Associate Justices of the Supreme Court of the United States are the members of the Supreme Court of the United States other than the Chief Justice of the United States...
John Paul Stevens
John Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
. The Court held that federal Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
law did not authorize ADHS to assert a lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
on Ahlborn's settlement in excess of the stipulated amount for past medical expenses, and that the federal anti-lien provision furthermore affirmatively prohibited it from doing so. The state has no claim against those portions of a settlement the parties agreed were attributable to pain and suffering or lost wages, the high court ruled. The Arkansas statutes were therefore unenforceable to the extent they provided for a contrary result.
The opinion is also significant because the Court, without discussion, permitted a Medicaid suit to proceed where the cause of action was conferred by the Supremacy Clause. Most federal suits alleging violation of the Medicaid Act – which does not expressly confer a right of action – claim that the right of action is authorized by 42 U.S.C. § 1983
Civil Rights Act of 1871
The Civil Rights Act of 1871, , enacted April 20, 1871, is a federal law in force in the United States. The Act was originally enacted a few years after the American Civil War, along with the 1870 Force Act. One of the chief reasons for its passage was to protect southern blacks from the Ku Klux...
. In recent years, the Supreme Court has made it more difficult to sue under § 1983 for statutory violations, requiring that the statutory provision in question unmistakably focus on individual rights. While some Medicaid suits have been permitted under § 1983, certain Medicaid provisions have been held unenforceable.
However, this case shows an alternative route to federal court for public interest litigants. Where a state statute or regulation conflicts with or is preempted by federal law, the right of action arguably is conferred by the Supremacy Clause of the U.S. Constitution. Ahlborn implicitly supports this premise.
See also
- Sereboff v. Mid Atlantic Medical Services, Inc.Sereboff v. Mid Atlantic Medical Services, Inc.Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 , was a case decided by the Supreme Court of the United States involving the ability of an Employee Retirement Income Security Act plan fiduciary to recover medical costs from a beneficiary who has been reimbursed for injuries by a...
, 547 U.S. 356 (2006), a case decided the same term involving the ability of an ERISA plan fiduciary to recover medical costs from a personal injuryPersonal injuryPersonal injury is a legal term for an injury to the body, mind or emotions, as opposed to an injury to property. The term is most commonly used to refer to a type of tort lawsuit alleging that the plaintiff's injury has been caused by the negligence of another, but also arises in defamation...
settlementSettlement (law)In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins. The term "settlement" also has other meanings in the context of law.-Basis:... - List of United States Supreme Court cases, volume 547
- List of United States Supreme Court cases