W.Va. SC remands case over Medicaid lien to circuit court

Chief Justice Menis Ketchum

CHARLESTON - The West Virginia Supreme Court of Appeals, in a ruling last week, reversed a lower court's judgment in favor of the state's Department of Health and Human Resources over a disputed Medicaid lien.

The petitioner in the case, identified as V.P.H. and described as a "disabled adult," appealed the Monroe County Circuit Court's Sept. 24, 2010 order granting summary judgment to the DHHR.

V.P.H. sustained what is described in the Court's filing as "catastrophic" brain injuries when she was ejected from a vehicle during an automobile accident.

P.D., the petitioner's mother, guardian and conservator, reached a settlement with the responsible driver's liability insurance carrier, State Farm Insurance Company, for $100,000, which was the policy limit under the driver's liability insurance policy.

The petitioner also reached a separate settlement with Nationwide Insurance Company for $200,000 in underinsurance benefits, and $1,000 in medical payments coverage, bringing the total settlement amount to $301,000.

The settlements did not make allocations among specific types of damages, e.g., medical expenses (past or future), or pain and suffering.

In turn, the petitioner filed a summary proceeding requesting judicial approval of the settlements. The DHHR moved to intervene, seeking reimbursement for its Medicaid lien pursuant to state code.

The DHHR argued that V.P.H. had received "extensive" medical treatment, and that the agency's Bureau for Medical Services -- West Virginia's designated state Medicaid agency -- paid $146,555.49 in medical expenses for her treatment.

The DHHR also informed the court that it had initially offered to reduce its lien to $96,238.76, which reflected a pro rata reduction for the petitioner's attorney fees and expenses.

After additional negotiations with the petitioner's counsel, the DHHR offered to reduce its Medicaid lien further, to $76,741.

The petitioner, in response, objected to paying the lien, but offered to pay the DHHR $29,000 in full settlement of the lien.

Unable to reach a mutual resolution, the petitioner asked the Monroe Circuit Court to approve the settlement, stating that while she contested the amount of the Medicaid lien, there was no dispute regarding the remainder of the settlement proceeds, and that she was willing to place the amount asserted by DHHR -- $76,741 -- in an escrow account until the court determined the amount that should be paid to satisfy the lien.

The circuit court held a hearing, approved the settlement and ordered that the $76,741 be placed in an escrow account pending further hearing.

However, efforts to resolve the dispute over the lien failed, and the parties both filed motions for summary judgment requesting the court to rule on the amount of reimbursement due the DHHR, if any.

The circuit court granted the state agency's motion for summary judgment.

The state's high court, in its three-page memorandum decision Thursday, reversed the court's order and remanded the case for a hearing.

"The record before us shows that the parties do not agree on the amount of the DHHR's Medicaid lien, and the circuit court failed to hold an evidentiary hearing to allocate V.P.H.'s settlement proceeds among her various items of damages, including past medical expenses paid by Medicaid," the justices wrote.

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