Settlement resolves case over state Medicaid liens

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A federal court settlement ended a claim that the Missouri Department of Social Services filed liens against Medicaid recipients in violation of federal law.

In 2010, plaintiff Ramona Denise Wilhoite filed a class action suit against the department, which runs the state’s Medicaid program, MO HealthNet. The class members are Medicaid recipients who, after settling personal injury claims, had received liens from the state seeking reimbursement for the medical costs that MO HealthNet paid on their behalf.

The lawsuit alleged that the state statute permitting the liens was pre-empted by federal law. In 2006, in Arkansas Department of Health and Human Services v. Ahlborn, the U.S. Supreme Court upheld a ruling by the 8th U.S. Circuit Court of Appeals that a state can only seek a lien on the portion of a settlement that represented payment for past medical expenses.

U.S. District Judge Nanette Laughrey ruled in a summary judgment order that the state’s lien statute was too broad. Following mediation under Magistrate Judge William Knox, the parties settled the case in June. Laughrey conditionally OK’d the settlement in July and gave final approval on Nov. 25.

In court documents filed prior to the conditional settlement, the parties said the maximum benefit is “not likely to exceed $15,514,483,” though the actual amount paid out is still being determined.

Under the settlement, class members could opt either to receive lump-sum recoveries ranging from $50 to $1,000, or to seek larger payments from the state, which can contest those claims. According to court records, about 1,900 people took part in the lump-sum process, resulting in $143,675 in payments.

Another 154 claimants will have contested hearings. Nathan Duncan, of Douglas, Haun & Heidemann in Bolivar, an attorney for the plaintiffs, said the final amount of those claims won’t be known until next year, after hearings have been conducted.

The settlement also includes $780,000 in attorneys’ fees and administrative costs.

Duncan said the state will be able to recoup some of the settlement money from the federal government.

Eric Slusher, a spokesman for the Missouri Attorney General’s Office, which handled the case, declined to comment.

$15.5 million settlement

Medicaid liens

Breakdown: Payments of $80,550 (1,611 claimants who submitted $50 claims); $48,125 (275 claimants who submitted $175 claims); $15,000 (15 claimants who submitted $1,000 claims);

Venue: U.S. District Court for Western District of Missouri

Case Number/Date: 2:10-cv-3026/Nov. 25, 2013

Judge: Nanette Laughrey

Caption: Ramona Denise Wilhoite v. Missouri Department of Social Services

Plaintiffs’ Attorneys: Craig R. Heidemann and Nathan A. Duncan, Douglas, Haun & Heidemann, Bolivar

Defendants’ Attorneys: Joanna Trachtenberg, Missouri Attorney General’s Office, Jefferson City