Lien on Me

Author: Marc L. Penchansky

For over thirty years, the Pennsylvania Department of Welfare has sought to recoup its Medicaid expenses by asserting liens against future settlements or judgments obtained by the patient/Medicaid beneficiary. This practice is commonplace in the United States. When three Medicaid beneficiaries filed a putative class action suit to challenge this long standing process, the Third Circuit had an opportunity to weigh in on the legality of the procedure. Previously, the Supreme Court had assumed without deciding that these liens, when limited to the portion of the award or settlement constituting reimbursement for covered medical costs, were an implied exception to the anti-lien and anti-recovery sections of the Social Security Act. See Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268, 280 n.9, 291-292 (2006).

In Tristani v. Richman the Court by a 2-1 margin upheld the process. The Third Circuit was faced with the task of reconciling seemingly contradictory provisions of the Social Security Act. The Social Security Act conditions Medicaid assistance by obliging the states to require individuals to assign to the state any rights to payment for medical care from a legally liable third party. 42 U.S.C. § 1396k(a)(1)(A). Further, the states are required to “ascertain the legal liability of third parties to pay for care and services under the plan” and, “in any case where such a legal liability is found to exist after medical assistance has been made ․ [, to] seek reimbursement to the extent of such legal liability.” Id. at § 1396a(a)(25)(A)-(B). The Act does not define the method to seek recovery. However, the plain language of the anti-lien and anti-recovery provisions does seem to limit that method.
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