Ahlborn Reduction Applied Retroactively in Blanton v. Dept. Public Health and Human Resources

Our job is not complete when we obtain a judgment or settlement for our clients. In fact, obtaining a settlement is sometimes the easier part of the case. The hard part comes when lien collectors come knocking on the door to claim a share of the settlement or verdict. Many times the lien collectors have no right to claim a lien, or claim too much of a lien. It is our job to make sure that only valid liens are paid, and that only the reasonable value of the lien is paid.

One type of valid lien is a Medicaid lien (commonly referred to in Arizona as an AHCCCS lien). When a Medicaid/AHCCCS beneficiary obtains a judgment or settlement for injuries for which Medicaid/AHCCCS paid for treatment, Medicaid/AHCCCS is entitled to be reimbursed for a portion of the medical expenses. Prior to the recent Ahlborn decision, AHCCCS was not required to take into account the context of the settlement versus the injury victim's overall recovery. Instead, AHCCCS would usually only reduce it's lien by a "common fund" reduction, i.e. by the percentage of attorneys' fees paid collecting the settlement or judgment. Ahlborn changed that. Now, Medicaid/AHCCCS is required to look into the amount the injury victim was able to collect versus the overall value of his or her case. For example, if the injury victim had a million dollar injury, but was only able to collect $100,000 of insurance coverage, then the victim was only able to collect 10% of the value of his claim. Ahlborn says that Medicaid/AHCCCS must also only collect 10% of the value of its lien before subtracting the "common fund" reduction. This equitable decision means that injury victims are able to keep more money in their pockets.

While Ahlborn was good news for injury victims after the decision was rendered, it meant that many prior Medicaid/AHCCCS beneficiaries had paid too much to resolve their Medicaid/AHCCCS liens. Because of this, a lawsuit was filed in Montana to reimburse those beneficiaries that had overpaid. Last week, the Montana Supreme Court issued an opinion that retroactively applied Ahlborn in Blanton v. Dept. Public Health and Human Resources, 2011 WL 2162724. The Montana Supreme Court approved a class action on behalf of approximately 2500 Medicaid beneficiaries against Medicaid for "monies improperly collected." This is further good news for all of our clients who may face a Medicaid/AHCCCS lien claim in their case.

Categories: Lien Reduction, Medicaid

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