Georgia’s Medicaid Lien Attaches to Entire Recovery

In Richards v. Georgia Department of Community Health, 278 Ga. 757 (2004), a class of plaintiffs sued DCH contending that O.C.G.A. § 49-4-149 was illegal as applied. The Department’s position was that its claim for reimbursement applied to all funds received by a plaintiff through litigation against responsible third-parties. The plaintiffs argued that DCH’s claim was limited to that portion of the tort recovery denominated as a recovery for medical expenses. The Georgia Supreme Court found that Medicaid’s claim attaches to the entire recovery, that the plaintiff has assigned his/her rights to the claim at the time of application and, therefore, ownership of the claim has already been transferred to the Department.

Richards argued, among other things, that the State is prohibited from attaching its lien to all money recovered. The Supreme Court, noting that the money was recovered through a settlement, disagreed. “to adopt Richards’s preferred reading would allow a Medicaid recipient to negotiate a tort settlement structured in such a way so as to reflect no, or minimal, compensation for medical expenses, or to convince a jury to create such structures, and thereby gain a recovery that does not require any significant compensation to the taxpayers who funded his medical care.” Richards also argued that failing to pay its share of attorney’s fees was a “taking” in violation of the Fifth Amendment.

The Supreme Court rejected all of Richard’s argument.

“[W]hen GDCH obtains the funds, the Medicaid recipient has already received the full benefit of that which GDCH now receives. In Richards’s case, $24,947.13 has been expended on his behalf for his medical care, an amount actually more than the $ 21,205.06 GDCH accepted in satisfaction of the lien. Nor is there any question about this “taking” being done without due process of law; when he applied for Medicaid benefits, Richards was notified of this procedure, and has waived any due process rights he might have by accepting the assistance. See Greene v. Hundley, 266 Ga. 592, 595 (2) (468 SE2d 350) (1996). What Richards would have this Court ignore is that he has already benefited from the Medicaid program and that significant public funds have been expended on his behalf for his medical care. He has not had to pay anything to receive this benefit, nor is he obligated to do so. However, the relevant statutes set as a condition of receiving that assistance that if he gains a recovery stemming from his injuries, GDCH will have a lien to recover the value of the public funds expended on his behalf.”

This holding was reversed in Ark. Dep’t of Human Servs. v. Ahlborn, 547 U.S. 268 (2006). There, the U.S. Supreme Court held that Medicaid law does not authorize assertion of a lien in excess of the amount paid for medical expenses and that the anti-lien provisions of the Medicaid act prohibits the State from asserting a claim against those portions of the recovery attributable to pain and suffering or lost wages. Richards is cited in In re Zyprexa Prods. Liab. Litig., 451 F.Supp. 2nd 458 (E.D. N.Y. 2006). There, the district court stated:

In May 2006, the Supreme Court, in a unanimous decision, rejected the full reimbursement approach in the Medicaid program, holding that HN14 the federal Medicaid statute only permits a state to recover its Medicaid expenditures from the portion of a settlement attributable to medical costs. Alhborn, 126 S. Ct. at 1767. The Court first held that the assignment provisions of federal Medicaid law–requiring states to enact laws providing for assignment of Medicaid beneficiaries’ rights to seek and collect payment for medical care from a responsible third party–only provide for a limited assignment from the recipient to the state for payment for medical items and services from a liable third party. Id. at 1760-62. It then concluded that any state statute providing for a greater assignment or lien would be inconsistent with the Medicaid “anti-lien” statute, 42 U.S.C. § 1396p, which prohibits states from placing liens against or seeking recovery of benefits from a Medicaid beneficiary before her death. Id. at 1762-64.

As of September, 2022, Richards has been cited once in Georgia in Capp v. Carlito’s Mexican Bar & Grill #1, Inc., 288 Ga. App. 779 (2007). It was cited there as dicta to support a different proposition which was that an adoptive parent cannot recover a child’s medical expenses incurred prior to the adoption.