This post is an update on an earlier post concerning changes to the law of Medicaid subrogation in North Carolina. The earlier post can be seen here: Medicaid: “Ahlborn hearings” are back thanks to the 2018 federal budget which makes Medicaid provide lien reduction hearings again. But watch the deadlines!

Here is the short version of the history: In 2013 NC amended the law on Medicaid subrogation to allow for a reduction hearing to determine Medicaid’s final lien in a third party injury case. That law stood until October 1 of 2017 when a small change to the Federal law had the effect of making the NC statute inapplicable. In anticipation of the Federal change, NC lawmakers had inserted a law in the July 2017 state budget that said in essence, “if the federal changes happen on October 1, then our law changes to this…”. The new state law eliminated the reduction hearings and also eliminated Medicaid sharing prorata with valid medical lien holders. 

Then on February 9, 2018, the Federal Budget was passed and it retroactively repealed the changes that went into effect on October 1 in the federal law. In my opinion, this had the effect of essentially time traveling back to the last day of September, 2017 and making the October 1 federal changes never happen. Which means, of course, that the NC changes conditioned on the Federal changes, never happened either.

The end result is that as of February 8, 2018, the Medicaid lien law in NC was back to the statute that existed since 2013. Or at least that’s what i thought.

That leads me to now. I filed a declaratory judgment suit and motion to determine Medicaid lien in March of 2018 to request a Medicaid lien reduction under the 2013 NC law. In the Compliant I set out all of the changes described above and that the law of NC had “reverted” to the pre-October 1, 2018 law.

The State of North Carolina filed an Answer to the complaint an unequivocally Admitted all of the following allegations in the Complaint.

Long story short, my legal theory set out above is correct.

Below are the legal allegations in the Complaint.

Jurisdiction, Venue, and Governing Law

1. This Court has subject matter jurisdiction over this action pursuant to N.C. Gen. Stat. §7A-240 and §7A-243. This Court has personal jurisdiction in this matter pursuant to N.C. Gen. Stat. §1-75.4.
2. Venue is properly laid in this Court pursuant to N.C. Gen. Stat. §1-80 and §1-82.
3. That NCGS §108A-57 governs Medicaid lien recovery in North Carolina.
4. That NCGS §108A-57 was written, in part, to comply with the requirements set out in Wos v. E.M.A., __ U.S. __, 133 S. Ct. 1391, 1402 (2013) which affirmed that Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U.S. 268, 284, 126 S. Ct. 1752 (2006) applied in North Carolina. Ahlborn established that the Department of Health and Human Services is prohibited from recovering “a portion of a Medicaid beneficiary’s tort judgment or settlement not designated as payments for medical care” because such recovery is barred by the federal Medicaid statute’s anti-lien provision, 42 U.S.C. § 1396p(a)(1).
5. That NCGS §108A-57(a2) provides a mechanism for a determination of the portion of the beneficiary’s gross recovery that represents compensation for the Medicaid claim and requires that an application for determining the lien under this subsection shall be filed with the court “no later than 30 days after the date that the settlement agreement is executed by all parties and, if required, approved by the court.”
6. That on October 1, 2017, NCGS §108A-57, was amended pursuant to NC Senate Bill 257. The amendment, which was conditioned upon changes to federal law going into effect the same day, said:
   
   “SECTION 11H.23. If Section 202(b) of the Bipartisan Budget Act of 2013, P.L. 113-67, takes effect on October 1, 2017, as provided in Section 202(c) of that act, as amended by Section 211 of the Protecting Access to Medicare Act of 2014, P.L. 113-93, and Section 220 of the Medicare Access and CHIP Reauthorization Act of 2015, P.L. 114-10, then G.S. 108A-57 reads as rewritten…”
   
7. On October 1, 2017, the changes to the federal law went into effect which triggered the changes to North Carolina law, eliminating procedure to request a court for the determination of a medicaid lien pursuant to NCGS §108A-57(a2).
8. On February 9, the United States Congress passed, and the President signed, H.R.1892 – Bipartisan Budget Act of 2018, which contained “SEC. 53102. THIRD PARTY LIABILITY IN MEDICAID AND CHIP”.
9. SEC. 53102 of H.R.1892, the Bipartisan Budget Act of 2018, repealed subsection (b) of section 202 of the Bipartisan Budget Act of 2013. The repeal stated that it “includ[es]any amendments made by such subsection” and the repeal “shall be applied and administered as if such amendments had never been enacted.”
10. The effect of all of these statutory changes on February 9, 2018 was that because the federal changes “had never been enacted” the changes to NCGS §108A-57 set out in NC Senate Bill 257 never took effect and the provisions of NCGS §108A-57(a2) allowing for judicial determination of Medicaid’s lien came back into existence on February 9, 2018.
11. That any matter settled between October 1, 2017 and February 9, 2018, could not apply for a lien determination during that time period and that NC DHHS properly refused to grant requests for reductions during that time frame.
12. That Plaintiff’s Workers’ Compensation case was approved for settlement in an Order of the Industrial Commission in IC. File No. Y26729 filed on January 24, 2018.
13. That upon the reinstatement of NCGS §108A-57(a2) on February 9, 2018, cases settled during the October 1, 2017 through February 9, 2018 period should have 30 days to file for hearings pursuant to NCGS §108A-57(a2) and that the first day they could request such hearing was February 9, 2018.
14. That Plaintiff in this matter has filed for this hearing pursuant to NCGS §108A-57(a2) within 30 days of February 9, 2018 and has satisfied the filing requirements of NCGS §108A-57(a2).

Again, all those allegations were ADMITTED by the State.

This should settle the question of what law applies now. I will also point out that the website for the General Assembly is still displaying the “new” (but incorrect) NCGS 108A-57. You can view the “old” (but now the current) NCGS 108A-57 in the body of the budget bill, Senate Bill 257 (2017) beginning at the very bottom of page 222 and continuing on to 223. All of the “repealed” portions in that Bill are now law again. Here is the link- go to page 222 or do a search for “subrogation” within the PDF. www.ncleg.net/Sessions/2017/Bills/Senate/PDF/S257v9.pdf

My firm is now taking in limited numbers of Medicaid reduction cases for other lawyers. Make sure you remember that you only have 30 days to file and serve your Motion to Reduce Medicaid lien beginning on the date that the client settles the case (signs the Release of Claims or a court approves a settlement).

Feel free to email me or call me if you have matter you think might qualify for a reduction. 

Chris Nichols
www.NicholsTrialLaw.com
Chris@NicholsTrialLaw.com

Here is the language from the proposed law:

In any medical malpractice action arising out of the furnishing or the failure to furnish services pursuant to obligations imposed by 42 U.S.C. § 1395dd for an emergency medical condition as defined in 42 U.S.C. § 1395dd(e)(1), the defendant health care provider shall not be liable for the payment of damages unless the trier of fact finds by the greater weight of the evidence that the health care provider’s deviation from the standard of care required under subsection (a) of this section constituted gross negligence, wanton conduct, or intentional wrongdoing. Nothing in this subsection shall be construed to change, alter, override, or otherwise affect the provisions of G.S. 90-21.14, 90-21.15, 90-21.16, or 20-166.”

42 U.S.C. § 1395dd is EMTALA , the Emergency Medical Treatment and Active Labor Act, and it says:

(b) Necessary stabilizing treatment for emergency medical conditions and labor (1) In general

If any individual (whether or not eligible for benefits under this subchapter) comes to a hospital and the hospital determines that the individual has an emergency medical condition, the hospital must provide either—

(A) within the staff and facilities available at the hospital, for such further medical examination and such treatment as may be required to stabilize the medical condition, or

(B) for transfer of the individual to another medical facility in accordance with subsection (c) of this section.

(e) Definitions

In this section:

(1) The term “emergency medical condition” means—

(A) a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—

(i) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy,

(ii) serious impairment to bodily functions, or

(iii) serious dysfunction of any bodily organ or part; or

(B) with respect to a pregnant woman who is having contractions—

(i) that there is inadequate time to effect a safe transfer to another hospital before delivery, or

(ii) that transfer may pose a threat to the health or safety of the woman or the unborn child.

Legal Slight of Hand

It certainly looks like the lobbyists for the medical community knew exactly what they were doing when they crafted this portion of the proposed law. The EMTALA definition is a little bit “loosey goosey” (mostly because it was intended as a way to be broad and make sure hospitals did not “dump” people who were uninsured in the middle of giving birth).

Because of this broad definition of emergency, and because our statute integrates that definition, most people undergoing any serious treatment in a hospital: delivering a baby, having a heart attack, bleeding profusely, etc, will be defined by EMTALA as being “in an Emergency” and thus, ANYONE treating them will have IMMUNITY.

I think the legal inquiry will be:

“When the alleged negligence took place, could the patient have been transferred to another facility pursuant to EMTALA?”

If yes—> no immunity
If no —-> Emergency under EMTALA = Immunity

Do you want just about every Obstetrician to have immunity if they make an error?

Also, because this “definitional slight of hand” is not as obvious as saying “doctors delivering babies have immunity” will the Medical Malpractice Insurance Companies use this “gray area” to say “Well, the Legislature didn’t give you outright immunity, so we can’t lower the insurance rates of OBGYNs because we don’t actually know if the immunity applies. We’d have to look at it on a case by case basis.”?

Bingo! The doctors will raise an “EMTALA Immunity Defense” in EVERY case, creating a cottage industry for Insurance Defense Lawyers to bill hundreds of thousands of dollars, the Medical Malpractice Carriers will continue to charge too much money to the Doctors while enjoying the “Immunity Defense” that will probably kill most claims, and the babies who are born maimed or injured or die- well, they will have no right to a jury trial.

Please contact a member of the Committee and voice your opinion on HB 542. Say no to IMMUNITY!

NC House Select Commitee on Tort Reform Contact Information

The main insurer for physicians, NC Medical Mutual, has just announced that they MADE so much money last year, they are issuing a refund to doctors. And guess what? This is NOT a result of tort reform. We have had no major laws pass in our state which resulted in “savings.”

In fact, based upon actuarial studies, the reality appears to be that when lobbyists for the insurance companies were screaming for tort reform, what they were doing behind the scenes was RAISING premiums for physicains to create what I would call a “manufactured problem.” The doctors’ own insurance company was gouging them, and then asking them to donate money to “tort reform” causes, which of course, are insurance company lobby groups.

Looks like the physicians have finally reigned in their own insurance company by realizing that the “crisis”, if there is one, is mostly in the minds (and wallets) of the insurance industry.

from the News and Observer

N.C. insurer to pay dividend

Medical Mutual will also pay off debt as drop in malpractice suits boosts profit

David Ranii, Staff Writer

The state’s largest medical malpractice insurer says that fewer lawsuits filed against doctors will allow it to pay its policyholders a $3 million dividend — its first dividend ever.

Raleigh-based Medical Mutual Insurance Co. of North Carolina said it posted a 7.4 percent increase in profit last year as the number of lawsuits filed against its policyholders fell to 298 last year. That’s down from 326 in 2006.

In addition to paying the first dividend since the company was founded in 1975, Medical Mutual also plans to erase its $10 million in debt this year. And, over the next four years, it plans to refund $12 million in capital supplied by its policyholders in 2003 as part of a plan to shore up the company’s finances and stabilize its premium rates.

In recent years the N.C. Academy of Trial Lawyers, whose members include the personal-injury attorneys who sue doctors for malpractice, has bashed Medical Mutual for charging rates that the lawyers’ group labeled excessive.

Medical Mutual’s CEO Dale Jenkins said the dividend and capital refund to shareholders demonstrates “we are a very good steward of the resources the [doctors] have provided to us. We recognize every day that it is their money.”

Medical Mutual hasn’t sought a rate increase from state regulators since 2005. The latest positive financial results will allow the insurer to hold rates steady again this year.

Medical Mutual’s dividend will be in the form of a credit that physicians receive when they renew their policies, said Jenkins. The average credit will be about 5 percent of the annual premium for most of the 6,300 North Carolina physicians who are policyholders. Medical Mutual is a mutual insurance company that is owned by its policyholders.

“We’re always glad to see a company … able to give money back to its shareholders,” said N.C. Insurance Department spokeswoman Chrissy Pearson.

Jenkins said the number of medical malpractice lawsuits has fallen nationwide. In addition, Medical Mutual has taken steps aimed at limiting lawsuits. The company has established stringent underwriting guidelines in order to avoid insuring doctors it considers high-risk, Jenkins said. “We do not take all comers,” he said.

The company also sends out teams of nurses to assess doctors’ practices and recommend ways to minimize risks, he said.

Profit last year totaled $26.1 million, up from $24.3 million in 2006, Medical Mutual reported. Assets increased by $44.9 million, to $416.2 million.

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Chris Nichols
www.NicholsTrialLaw.com