Verdicts & Settlements August 27, 2009: Settlement reached with state over workers' comp liens
PrintByline: Mike Trask
Missouri Medicaid recipients settled a case with the state alleging it improperly seized workers' compensation settlements. A group of Missouri Medicaid recipients in August 2006 filed suit alleging the Department of Social Services improperly asserted liens and was recovering proceeds of their third-party workers' compensation settlements.
Because of these liens, the plaintiffs alleged the state was getting money in a way that violated federal law.
The plaintiffs subsequently dismissed the state court action, and,in August 2007, re-filed the case in U.S. District Court. Plaintiffssued the state pursuant to federal law, 42 U.S.C. Section 1983. Theysought injunctive relief and restitution of the funds the state seized from the plaintiffs' workers' compensation awards as well as from other Missouri residents who had money seized from their workers' compensation awards.
After an extensive briefing, U.S. District Judge Nanette K. Laughrey held that federal Medicaid law did not allow the state to assert liens on a Medicaid recipient's workers' compensation settlement in anamount that exceeded the reimbursement for medical payments the recipient made. The judge held also that the anti-lien provision in federal law affirmatively prohibits the state from doing so.
The court in May 2008 certified the case as a class action and defined the class as Missouri residents who received Medicaid and who from Aug. 15, 2001, had liens asserted or had money taken out of their third-party workers' comp settlements where those settlements were unrelated to medical care; and where the liens or monies taken by the state were in excess of the amounts of the settlements related to medical care.
Both parties filed cross motions for summary judgment. The court denied the state's motion and had not ruled on the plaintiffs' motion when the parties entered a settlement. The settlement provided for a cash refund of approximately 60 percent of the lien amount for those class members who qualified.
The court held a fairness hearing on March 10, and determined thatthe settlement was fair and in the best interests of the class.
"It came to our attention that in workers' compensation cases in Missouri, the state was routinely placing liens on people's disabilityawards," said plaintiffs' attorney Mitchell L. Burgess of Burgess & Lamb in Kansas City. "More often than not, when you get a disability award there's no medical part of that, so the state was receiving a lot of money and it was coming out of the workers' comp claimants'/Medicaid recipients' disability awards."
With workers' comp, the employer is the one who is supposed to paymedical expenses, Burgess said. "Our position was: 'Look state, if you're entitled to get money back, go after the employer or the employers' insurance company'" instead of going after the claimant.
The state thus far has refunded money to more than 1,000 individuals, Burgess said. "It was substantial for a number of individuals. Some people had a few hundred, some people had thousands of dollars of their money taken, and the state did refund that," he said. He said the total amount refunded is in excess of $750,000, but that figure could rise to about $1 million.
Also, Burgess said, the state agreed to modify its lien notice to indicate that if a claimant did not receive medical reimbursement as part of his or her recovery, then no lien was asserted on the claimant's portion of the recovery.
Burgess said the U.S. Supreme Court ruling in the case of ArkansasDepartment of Human Services vs. Ahlborn is important, and not just in workers' comp cases. "It also has some applications in nonworkers'comp settings, because that anti-lien statute applies to all third-party recovery cases," he said. "That's why Ahlborn is significant, and all practitioners need to be aware of it."
Repeated attempts to reach Missouri Assistant Attorney General Bart Matanic were unsuccessful. Phone calls to the Missouri Attorney General's Office seeking comment were not returned.
* $750,000 settlement
Class action
* Court: U.S. District Court Western District of Missouri
* Judge: Nanette K. Laughrey
* Case Number/Date: 07-04158-CV-C-NKL/ March 10, 2009
* Last Pretrial Demand: Not disclosed
* Last Pretrial Offer: Not disclosed
* Caption: Robin Doran, James Parsons and Charles Phillips v. Missouri Department of Social Services and Deborah E. Scott
* Plaintiffs' Attorneys: Mitchell L. Burgess and Keith C. Lamb, Burgess and Lamb, and Law Offices of Ralph K. Phalen, Kansas City
* Defendants' Attorney: Bart Matanic, Missouri Assistant Attorney General, Jefferson City
