U.S. Supreme Court To Hear Florida Medicaid Dispute

After getting off a Lee County school bus in November 2008, Gianinna Gallardo was struck by a truck and suffered catastrophic injuries.

Now, more than a decade later, her case could lead to a U.S. Supreme Court decision that will affect Medicaid programs across the country.

The Supreme Court on Friday said it will take up a legal battle about how much money Florida’s Medicaid program should be able to recoup from a legal settlement that Gallardo’s parents reached after the accident left her in a vegetative state.

Attorneys for Gallardo’s parents and the state Agency for Health Care Administration asked the Supreme Court to resolve the issue because of conflicting court decisions about a reimbursement issue involving Florida’s Medicaid program --- and programs in other states.

“The uncertainty on the issue affects millions of Americans who rely on Medicaid for health care coverage,” attorney’s for the parents, Walter Gallardo and Pilar Vassallo, wrote in a March petition. “A beneficiary’s federal Medicaid rights should not depend on whether she lives in Idaho, West Virginia or Massachusetts. But until this (Supreme) Court resolves the question presented, identically situated Medicaid beneficiaries will receive different treatment under federal law.”

Medicaid, which is jointly funded by the federal and state governments, is operated through a maze of laws. But states are required to seek reimbursements of Medicaid payments for medical care if, in situations such as the Gallardo case, lawsuits result in settlements.

Documents filed by both sides show that the Agency for Health Care Administration, which runs Florida’s Medicaid program, paid $862,688 for Gallardo’s care after she was injured. Gallardo’s parents filed a lawsuit against the truck’s owner and driver and the Lee County School Board and ultimately reached an $800,000 settlement.

The petition filed in March at the Supreme Court said the settlement applied to claims for past medical expenses, future medical expenses, lost earnings and other damages. Under a formula used by the state Medicaid program, the Agency for Health Care Administration said it was entitled to $300,000 of the settlement --- including a portion of the settlement that was for Gallardo’s future medical expenses.

The legal battle centers on whether the agency is only entitled to recover money in the settlement representing past medical expenses --- or whether it can also tap into money in the settlement for future medical expenses.

U.S. District Judge Mark Walker in 2017 ruled in favor of the parents’ position that the agency should only be able to recover settlement money representing past medical expenses. But a panel of the 11th U.S. Circuit Court of Appeals overturned Walker’s decision and sided with the Agency for Health Care Administration.

Meanwhile, in a separate case, the Florida Supreme Court ruled that the Agency for Health Care Administration was only entitled to recover money in a settlement for past medical expenses --- creating a conflict between the state Supreme Court and the federal appeals court.

Describing the legal conundrum, attorneys for the Agency for Health Care Administration wrote in a June 1 document that under the appeals court decision, the state “has a duty to recover payments for future care. But if it fulfills that duty, it defies the Florida Supreme Court’s ruling.”

In arguing that the Supreme Court should come to the same conclusion as the appeals court, the agency’s attorneys pointed to potential major financial ramifications.

“First, states, the federal government, and Medicaid recipients have a substantial interest in state Medicaid agencies obtaining full reimbursement from liable third parties,” the June 1 document said. “Ensuring that Medicaid is a payer of last resort is critical not only to state and federal budgets but also to Medicaid’s longevity.”

But in his 2017 ruling, Walker wrote that Gallardo was 13 years old at the time of the accident and that her parents were living a “nightmare” as they continued battling with the agency.

Attorneys for Gallardo’s parents wrote in the March petition that the Supreme Court should overturn the appeals court decision. But the attorneys also pointed to a need for a final resolution of the issues in the case.

“Every state has passed some type of third-party recovery statute to comply with the mandates of the (federal) Medicaid Act,” the petition said. “Unless and until this (Supreme) Court resolves the conflict, the states and their legislatures cannot know what federal law requires of them. There is an urgent need for this court’s guidance on the question presented.”

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