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Thirteen years ago, North Carolina resident Emily Armstrong was rendered blind, deaf, and mentally handicapped at the hands of the obstetrician who delivered her via Caesarian section. Her family sued the doctor, who had a history of drug abuse, and settled the medical malpractice claim for $2.8 million. Until recently, Medicaid could have seized one-third of that settlement.

Per state law, Medicaid was entitled to recover what it spent on the patient's care or one-third of the medical malpractice settlement, whichever was less. In this case, Medicaid paid $1.9 million for Armstrong's treatment, so it asserted a lien on $933,333.33, which amounted to one-third of the settlement.

In a 6-3 ruling last week, the Supreme Court said not so fast.

"If a state arbitrarily may designate one-third of any recovery as payment for medical expenses, there is no logical reason why it could not designate half, three-quarters or all of a tort recovery in the same way," Justice Anthony Kennedy wrote.

Eleven states, including Florida, Georgia, and Texas, filed briefs in support of North Carolina; however, according to Triangle Business Journal, "[F]our justices of the court’s liberal wing and Samuel Alito, generally considered a conservative, sided with Kennedy."

Now that $2.8 million settlement will go toward taking care of Emily, who has cerebral palsy and will need a nurse 12 to 18 hours a day for the rest of her life.

As Plaintiff's attorneys, we are all aware of the fact that Medicare, Medicaid and other ERISA backed health programs are entitled to recover in situations where the recipient recovers from a tort case. We are not arguing the legality of that here. It is refreshing to see that the US Supreme Court did what was right for this victim and we applaud their ruling.

About the Editors: The Shapiro Lewis Appleton & Favaloro personal injury law firm, whose attorneys work out of offices in Virginia (VA) and North Carolina (NC), edits the injury law blogs Virginia Beach Injuryboard, Norfolk Injuryboard, Eastern Shore Injuryboard, and Northeast North Carolina Injuryboard as a pro bono service.

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