SUPREME COURT OF THE UNITED STATES
Syllabus
WOS, SECRETARY, NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN
SERVICES v. E. M. A., A MINOR, BY
AND THROUGH HER GUARDIAN AD LITEM, JOHNSON, ET
AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH
CIRCUIT
No. 12–98. Argued January 8, 2013—Decided March 20, 2013
The federal
Medicaid statute’s anti-lien provision, 42 U. S. C. §1396p(a)(1), pre-empts a
State’s effort to take any portion of a Medicaid beneficiary’s tort judgment
or settlement not “designated aspayments for medical care,” Arkansas Dept.
of Health and Human Servs. v. Ahlborn, 547 U. S. 268, 284. A North
Carolina statute requires that up to one-third of any damages recovered by a
beneficiaryfor a tortious injury be paid to the State to reimburse it for
paymentsit made for medical treatment on account of the injury. Respondent E.
M. A. was born with multiple serious birth injuriesthat require her to receive
between 12 and 18 hours of skilled nursing care per day and that will prevent
her from being able to work, live independently, or provide for her basic
needs. North Carolina’s Medicaid program pays part of the cost of her ongoing
medical care.
E. M. A. and her
parents filed a medical malpractice suit against the physician who delivered
her and the hospital where she was born. They presented expert testimony
estimating their damages to exceed $42 million, but they ultimately settled for
$2.8 million, due in large part to insurance policy limits. The settlement did
not allocate money among their various medical and nonmedical claims. In
approving the settlement, the state court placed one-third of the recovery
intoescrow pending a judicial determination of the amount of the lienowed by E.
M. A. to the State. E. M. A. and her parents then sought declaratory and
injunctive relief in Federal District Court, claimingthat the State’s
reimbursement scheme violated the Medicaid anti -lien provision. While that
litigation was pending, the North Carolina Supreme Court held in another case
that the irrebuttable statutory one-third presumption was a reasonable method
for determining the amount due the State for medical expenses. The Federal
District Court, in the instant case, agreed. But the Fourth Circuit vacated and
remanded, concluding that the State’s statutory scheme could not be reconciled
with Ahlborn.
Held:
The federal
anti-lien provision pre-empts North Carolina’s irrebuttable statutory
presumption that one-third of a tort recovery is attributable to medical
expenses. Pp. 4–16.
(a) In Ahlborn,
the Court held that the federal Medicaid statute sets both a floor and a
ceiling on a State’s potential share of a beneficiary’s tort recovery. Federal
law requires an assignment to the State of “the right to recover that portion
of a settlement that represents payments for medical care,” but also
“precludes attachment or encumbrance of the remainder of the settlement.” 547
U. S., at 282, 284. Ahlborn did not, however, resolve the question of
how to determine what portion of a settlement represents payment for medical
care. As North Carolina construes its statute, when the State’s Medicaid
expenditures exceed one-third of a beneficiary’s tort recovery, the statute
establishes a conclusive presumption that one-third of the recovery represents
compensation for medical expenses, even if the settlement or verdict expressly
allocates a lower percentage of the judgment to medical expenses. Pp. 4–7.
(b) North
Carolina’s law is pre-empted insofar as it would permit the State to take a
portion of a Medicaid beneficiary’s tort judgment or settlement not designated
for medical care. It directly conflicts with the federal Medicaid statute and
therefore “must give way.” PLIVA, Inc. v. Mensing, 564 U. S. ___,
___. The state law has no process for determining what portion of a
beneficiary’s tort recovery is attributable to medical expenses. Instead, the
State has picked an arbitrary percentage and by statutory command labeled that
portion of a beneficiary’s tort recovery as representing payment for medical
care. A State may not evade pre-emption through creative statutory
interpretation or description, “framing” its law in a way that is at odds with
the statute’s intended operation and effect. National Meat Assn. v. Harris,
565 U. S. ___, ___. North Carolina’s argument, if accepted, would frustrate
the Medicaid anti-lien provision in the context of tort recoveries. It lacks
any limiting principle: If a State could arbitrarily designate one-third of any
recovery as payment for medical expenses, it could arbitrarily designate half
or all of the recovery in the same way. The State offers no evidence showing
that its allocation is reasonable in the mine run of cases, and the law
provides no mechanism for determining whether its allocation is reasonable any
particular case.
No estimate of an
allocation will be necessary where there has been a judicial finding or
approval of an allocation between medical andnonmedical damages. In some cases,
including Ahlborn, this bindingstipulation or judgment will attribute to
medical expenses less thanone-third of the settlement. Yet even in these
circumstances, North Carolina’s statute would permit the State to take
one-third of the total recovery. A conflict thus exists between North
Carolina’s law and the Medicaid anti-lien provision.
This case is not
as clear-cut as Ahlborn was, for here there was no such stipulation or
judgment. But Ahlborn’s reasoning and the federal statute’s design
contemplate that possibility: They envisionedthat a judicial or administrative
proceeding would be necessarywhere a beneficiary and the State are unable to
agree on what portion of a settlement represents compensation for medical
expenses.See 547 U. S., at 288. North Carolina’s irrebuttable,
one-size-fits-all statutory presumption is incompatible with the Medicaid Act’s
clear mandate that a State may not demand any portion of a beneficiary’s tort
recovery except the share that is attributable to medical expenses. Pp. 7–10.
(c) None of North Carolina’s
responses to this reasoning is persuasive. Pp. 10–15. 674 F. 3d 290, affirmed.
KENNEDY,
J., delivered the opinion of the Court, in which GINSBURG, BREYER, ALITO,
SOTOMAYOR, and KAGAN, JJ., joined. BREYER, J., filed a concurring opinion.
ROBERTS, C. J., filed a dissenting opinion, in which SCALIA and THOMAS, JJ.,
joined.
