In a decision that will likely have repercussions on medical malpractice cases in a number of states, the Supreme Court decided that a North Carolina law allowing it claim up to one third of medical malpractice settlements to recoup Medicaid expenses is unreasonable. The 6-3 ruling found that while states can indeed take a portion of a settlement, North Carolina law allows the state to collect an excessive and "arbitrary percentage."
The case was sparked by a dispute between the state and the family of a girl who received a $2.8 million medical malpractice settlement after they sued their obstetrician and the medical facility where he was employed. State officials cited a law allowing them to take up to one third of such settlements and placed a lien for $933,333.33 on the settlement in order to repay themselves for the $1.9 million in Medicaid funds they claimed the state had spent on the girl.
The girl's family argued that federal law protects Medicaid beneficiaries from liens on settlements awarded for pain and suffering, only allowing such actions on medical expenses. Although the Supreme Court ruled that the state of North Carolina is indeed entitled to some part of the girl's settlement, one Justice wrote that allowing states to set the size of this portion without proper reason would potentially allow them to "designate half, three-quarters or all of a tort recovery in the same way."
The North Carolina couple sued their medical care provider after their daughter, now 13 years old, was born with cerebral palsy following a Caesarian section delivery, causing her to suffer blindness, deafness and mental retardation. They blame her condition, which requires regular and extensive medical care, primarily on their obstetrician, who reportedly had a history of drug abuse at the time of the procedure.
Source: Charlotte Observer, "Supreme Court trims N.C. Share of disabled child's malpractice settlement," Michael Doyle, March 20, 2013