lien

E.M.A., a minor, suffered catastrophic injuries during her birth due to the physician's negligence during delivery. As part of its Medicaid program, North Carolina paid for E.M.A.’s medical expenses upon her mother’s agreement to reimburse the Medicaid program for any recovery gained from a third party to cover E.M.A.’s medical expenses. When E.M.A. settled her claim against the physician for a fraction of her medical costs, North Carolina attached a lien equal to one third of the total settlement. In this case, the Supreme Court will resolve a conflict between the North Carolina Supreme Court and the United States Court of Appeals for the Fourth Circuit.  The Court will decide whether a North Carolina law that allows the North Carolina Department of Health and Human Services (“DHHS”) to assert a lien against a Medicaid recipient's recovery from a third party, when limited to the lesser of either the total amount of medical expenses or one third of the Medicaid recipient’s total settlement amount, violates the "no-lien" provision of the Medicaid Act. DHHS argues that the North Carolina statute is consistent with the Medicaid Act’s no-lien provision because it operates as an advanced agreement to apportion one third of the settlement toward medical expenses.  E.M.A. responds that the statute violates the Medicaid Act because it allows DHHS to recover a proportion of the settlement that is greater than her medical expenses.  This case will allow the Court to balance the interest that States have in maintaining solvent Medicaid programs against the interests of Medicaid claimants who fail to recover sufficient damages from third-parties to cover their medical costs.

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The Supreme Court will determine whether it is “appropriate equitable relief” under the Employee Retirement Income Security Act of 1974 (ERISA) to require a person to reimburse his benefits plan for medical expenses even though his settlement proceeds are dissipated. See Brief for Petitioner, Robert Montanile at i. ERISA governs the administration of private pension funds. ERISA section 502(a)(3) provides that “[a] civil action may be brought . . . by . . . [a] fiduciary . . . to obtain . . . appropriate equitable relief.” See 29 U.S.C. § 1132(a)(3). Robert Montanile received a $500,000 settlement in connection with injuries he sustained when he was in an accident with a drunk driver. Pursuant to an agreement, the Board of Trustees (the “Board”) of Montanile’s insurance plan sought to recover $120,044.02 from the settlement proceeds to reimburse the plan for covering Montanile’s medical expenses. When the parties were unable to settle, the Board sued Montanile under section 502(a)(3). But Montanile argues that reimbursement is not an appropriate equitable remedy here, because his settlement fund has been dissipated and an equitable lien by agreement can only be enforced against identifiable property and not Montanile’s general assets. See Brief for Petitioner at 29-32. The Board maintains that reimbursement is appropriate equitable relief, because the insurance plan has a reimbursement provision requiring Montanile to repay medical expenses. See Brief for Respondent, Board of Trustees of the National Elevator Industry Health Benefit Plan at 19. The Board contends that dissipation of the settlement fund does not nullify the insurance plan’s reimbursement provision. See id. The Court’s decision in this case could change benefit plans’ method of reimbursement and may cause beneficiaries to incur additional costs. See Brief of Amicus Curiae National Coordinating Committee for Multiemployer Plans, in Support of Respondent at 9-10, 12-15.

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