Medicaid’s Right to Recovery in Workers’ Compensation Claims

While employers and insurers are quite familiar with the impact of Medicare in the context of a workers’ compensation claim, Medicaid can also greatly affect the handling of a workers’ compensation claim as well.  Medicaid is a federal entitlement program which provides healthcare to the poorest population of the United States.  Many groups of people are eligible for Medicaid, including individuals who are age 65 and older, pregnant, blind, disabled and parents and children with very low or no income.  However, Federal law provides that Medicaid is the “payer of last resort.”  This means that if another insurer or program has a legal responsibility to pay for costs concerning a Medicaid-eligible individual, i.e. a “third party,” that entity is generally required to pay all or part of the cost of the claim prior to Medicaid making any payment.

Third parties that may be liable include settlements from a liability insurer and notably, “workers’ compensation.”  In Georgia, O.C.G.A. §9-2-21 provides that if a Medicare-recipient has also had their legal right “affected” (such as sustaining an on-the-job injury), prior to initiating a recovery action, the representative or attorney who has actual knowledge of the receipt of Medicaid benefits must notify the Department of Community Health of the claim.  However, Medicaid can also take action on its own to seek reimbursement.  Specifically, O.C.G.A. §49-4-149 provides that if Medicaid pays for medical treatment that concerns a workers’ compensation injury and a third party is found legally liable for that injury, the Department of Community Health can file a lien against that third party for the reasonable value of the medical assistance paid, but must do so within one year from the date the last item of medical care was furnished.  O.C.G.A. §34-9-206 also provides that a workers’ compensation carrier found liable for a workers’ compensation claim may be ordered to repay a health care provider, such as Medicaid, for expenses that provider incurred in treating a claimant’s work injuries.

Most recently, the Federal Bipartisan Budget Act of 2013 includes several provisions reinforcing third-party liability. While federal law previously allowed for Medicaid to collect “payment for medical care from any third party,” the recent budget change provides for collection from “any payment from a third party that has a legal liability to pay for care and services available under the plan.”  This provision appears to overturn Ark. Dep’t of Human Servs. v. Ahlborn, 547 U.S. 268 (2006) which limited State Medicaid agencies’ recovery to the medical expenses component of a beneficiary’s settlement.  Many advocacy groups have voiced their concern that if this change takes effect, third-party settlement funds meant to compensate individuals for pain and suffering, lost wages, or any damages other than medical expenses could be subject to the reach of Medicaid seeking recovery.   Furthermore, this latest change appears to conflict with O.C.G.A. §49-4-149, which only provides for recovery of the reasonable value of medical assistance.  Clearly, the implementation of the Bipartisan Budget Act of 2013 could greatly affect workers’ compensation claims, and particularly settlements of those claims, in Georgia.  HBS has and will continue to monitor this situation.

Written by: Lissa Klein, Esq.