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Last year, the U.S. Supreme Court limited reimbursement of Medicaid liens to the fraction of the total recovery that corresponds to medical expenses. Arkansas Department of Health and Human Services et al. v. Ahlborn, 547 U.S. 268 (2006). Measures can be taken, however, that dramatically limit government liens, preserving recoveries to enrich the quality of life of a severely disabled individual. An attorney can limit the Medicaid lien on a personal injury or wrongful death claim, as well as other federal liens, such as those arising from receipt of federal insurance payments, i.e., Champus benefits.
Ahlborn and Its Progeny
In Ahlborn, a 19-year-old student severely disabled in an auto accident incurred an Arkansas Medicaid lien of about $215,000. She settled her claims for about $550,000, although her case had a stipulated value of over $3 million. After settlement, Medicaid sought the full lien amount. The Supreme Court limited Medicaid reimbursement to the portion of the settlement amount corresponding to the plaintiff's medical expenses, refusing to allow the lien on portions of the total settlement amount allocable to damages for pain and suffering or future lost wages.
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