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Trump Judge Allows State to Seize Payments for Future Medical Needs of Medicaid Recipients: Confirmed Judges, Confirmed Fears

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Trump Judge Allows State to Seize Payments for Future Medical Needs of Medicaid Recipients: Confirmed Judges, Confirmed Fears

Confirmed Judges, Confirmed Fears” is a blog series documenting the harmful impact of President Trump’s judges on Americans’ rights and liberties. Cases in the series can be found by issue and by judge at this link.

Trump Eleventh Circuit judge Elizabeth Branch refused to reconsider a decision she had written which, as the dissent put it, allows Florida to continue “robbing its [Medicaid] recipients of tort payments paid for their future medical burdens.” The October 2020 ruling was in Gallardo v. Dudek.

 As explained in the original three-judge court ruling in the case, Gianinna Gallardo was “grievously injured” when she was hit by a pickup truck when she got off her school bus in 2008 and remains in a “persistent vegetative state” today. Florida’s Medicaid program has paid significant amounts for part of the costs of her care. Gallardo’s family settled a lawsuit against the truck driver and the school for $800,000, which her parents view as covering “only a small fraction” of the damages she suffered and the costs of her future care. The settlement explicitly allocated just over $35,000 for past medical expenses. It also stated that although some of the rest “may represent compensation for future medical expenses, no portion” of the settlement “represents reimbursement for future medical expenses” that have not yet been incurred.

Medicaid law calls for state Medicaid programs to be reimbursed for past medical costs out of the proceeds of lawsuits like the Gallardos filed. In accordance with state law, the state Medicaid agency (FAHCA ) attached a lien on the proceeds of the Gallardo lawsuit while it was pending. The Gallardos placed a large amount in a trust account after the lawsuit was settled in accord with state law and filed an administrative action in which they maintained that only the $35,000 specifically allocated to cover past medical costs should be paid to Medicaid. FAHCA contended, however, that it was entitled to a much larger amount because it should be able to collect an amount “representing compensation for the recipient’s future medical expenses.”

The Gallardos filed suit in federal court against FAHCA. The district court agreed with their position and ruled that no matter what state law said, federal  law “prohibits” the state from collecting for anything other the amount attributed to the costs of past medical care  out of the proceeds of the Gallardos’ settlement. FAHCA appealed. While the appeal was pending, the Florida Supreme Court essentially agreed with the district court, ruling in a different case involving a Medicaid recipient that under federal law, FAHCA can obtain reimbursement out of a personal injury settlement “only from the portion of a settlement that represents past medical expenses.”

Despite the Florida Supreme Court decision, Trump judge Branch wrote a decision ruling that FAHCA could properly seek to seize part of the Gallardos’ settlement amount representing future medical care costs and reversed the district court. Branch claimed this was permitted by the “text and structure” of the federal Medicaid law, relying largely on a part of the law that requires Medicaid recipients to assign to the state “’any’ of their rights to ‘payment for medical care from  any third party’” as a condition of receiving Medicaid benefits. Branch dismissed the Florida Supreme Court ruling, claiming that the state court “made the same mistake” about federal law that the district court did and that as a federal court, the 11th Circuit was “not bound by a state court’s interpretation of federal law.”

Although agreeing with the part of the majority opinion concerning the process by which Florida took part of the settlement proceeds, Judge Charles Wilson strongly disagreed that money can be taken by Florida from the settlement for future medical costs. Judge Wilson pointed out that a different part of the Medicaid law, enacted after the part relied on by Branch, states specifically that “to the extent that payment has been made” under a state Medicaid plan for health care, the state can recover third-party payments made “for such health care” only. A decision by the Supreme Court and rulings by “most other courts,” Wilson went on, have recognized that Medicaid authorizes a state to “claw into a recipient’s coffers” only under such limited circumstances. And by contradicting the Florida Supreme Court ruling, Wilson went on, Branch’s decision “has sown the seeds for forum shopping,” under which recipients will “rush to state court,” the state will “rush to federal court,” and “whoever gets the ruling first will win” in an “arbitrary outcome.”

Despite these problems, the majority denied a request to rehear the case. In Branch’s brief opinion, she commented only that the disagreement between the federal and state courts and the forum-shopping problem was “unfortunate.”

Judge Wilson again dissented. He explained that the result was much more than “unfortunate.” Instead, he wrote, it promotes the very “type of evil” the Supreme Court tried to limit in a similar state vs federal court ruling in the late 1930s. As a result of the majority’s ruling, he explained, “randomness and inequity abound,” and the decision will “’empower strong, sophisticated and well-off parties’ — like a state – to the detriment of ‘paradigmatically worse-off part[ies]’ – like a Medicaid recipient.” In short, he concluded, Branch’s decision “awards first place not to the winner of the case, but to the winner of the race to the courthouse” and contradicts the principle that “the Medicaid Act prevents Florida from robbing its recipients of tort payments paid for their future medical burdens,” like Gianinna Gallardo.


Confirmed Judges Confirmed Fears, Eleventh Circuit Court of Appeals, Elizabeth Branch, Healthcare