08-27908

IN THE SUPREME COURT OF THE STATE OF NEVADA
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STATE OF NEVADA, DIVISION OF
HEALTH CARE FINANCING AND
POLICY
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Appellant,
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ED
Supreme Court Case No. 50924
oful i 0 200$
=CIE K, I Ent iEMAW
4", ' 4E eou
Eighth Judicial District
Court Case No. A459611
vs.
ci' 1?`t CLERK
CHRISTINE AMANTE, as Guardian
And Person Representative of the
Person and the Estate of EDGARDO
AMANTE; and EDGARDO AMANTE,
individually,
Respondent.
APPEAL FROM THE EIGHTH JUDICIAL DISTRICT COURT
APPELLANT' S OPENING BRIEF
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CATHERINE CORTEZ MASTO
Attorney General
SABRINA GRINDLE RAETZ
Deputy Attorney General
Nevada Bar No. 6464
555 E. Washington Ave., # 3900
Las Vegas, NV 89101
(702) 486-3083 Phone
(702) 486-3871 Fax
Attorneys for Appellant, State of Nevada
Division of Healtb-Qare Financing and Policy
AUG f `i 1006
TRACIE K. Lh.. MAN
CLERK OF SUPREME COURT
DEPUTY CLERK_,,, -
Robert L. Eisenberg, Esq.
Lemons, Grundy & Eisenberg
6005 Plumas Street, Suite 300
Reno, NV 89519
(775) 786-6868 Phone
(775) 786-9716 Fax
Attorney for CHRISTINE AMANTE, as
Guardian And Person Representative of the
Person and the Estate of EDGARDO
AMANTE; and EDGARDO AMANTE,
individually
08 -97908
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TABLE OF CONTENTS
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PAGE
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TABLE OF AUTHORITIES .................................................................................................................. ii
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1.
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW ..............................................1
5
A.
WHETHER, AS A MATTER OF LAW, THE DISTRICT COURT ACTED
IMPROPERLY BY DIRECTLY REDUCING NEVADA MEDICAID'S LIEN
AGAINST A MEDICAID RECIPIENT'S THIRD-PARTY SETTLEMENT, AND,
FAILING TO ALLOCATE MEDICAL DAMAGES IN THE SETTLEMENT.
B.
WHETHER, AS A MATTER OF LAW, THE DISTRICT COURT HAD
SUBSTANTIAL EVIDENCE TO SUPPORT THE MEDICAID LIEN REDUCTION
AND WHETHER THE DISTRICT COURT AFFORDED NEVADA MEDICAID
THE RIGHT TO PROCEDURAL DUE PROCESS.
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II.
STATEMENT OF CASE ..............................................................................................................1
III.
STATEMENT OF FACTS ........................................................................................................... 3
IV.
ARGUMENT .............................................................................................................................. 10
A.
Standard of Review ............................................................................................................10
B.
Medicaid Third-Party Liability Law and the U.S. Supreme Court's Decision in
Arkansas Dep't of Health & Human Servs. v. Ahlborn547 U.S. 268 (2006) .................. 10
C.
The District Court Erred in its Interpretation of the U.S. Supreme Court's
Decision in Arkansas v. Ahlborn by Applying the Formula Stipulated to by Heidi
Ahlborn and the State of Arkansas Prior to the Supreme Court Case ...............................15
17
1
D.
The District Court Improperly Acted Because it Lacked Jurisdiction to Directly
Reduce Nevada Medicaid's Lien and Failed to Allocate Medical Expenses .................... 16
E.
The District Court Decision was Unsupported by Substantial Evidence. In
Addition, the District Court Violated Nevada Medicaid's Right to Procedural Due
Process ............................................................................................................................... 22
F.
Nevada Medicaid's On-Third Allocation Policy for Medical Damages in Third-Party
Settlements is Good Public Policy ......................................................................................25
G.
If the Rules of Equity Do Apply, Equity Requires that Nevada Taxpayers are Paid
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Back in Full ........................................................................................................................ 27
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CONCLUSION ..................................................................................................................................... 28
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CERTIFICATE OF COMPLIANCE .................................................................................................... 29
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CERTIFICATE OF MAILING ............................................................................................................ 30
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TABLE OF AUTHORITIES
2
CASES
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PAGE
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Ahlborn v. Arkansas Dep't of Human Servs.
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397 F.3d 620 (8th Cir. 2005), aff d, 547 U.S. 268 (2006) ................................................................13
6
7
Andrews v. Havgood,
655 S.E.2d 440 (N.C. App. 2008) .....................................................................................................13
8
Arkansas Dep't of Health & Human Servs. v. Ahlborn,
547 U.S. 268 (2006).......
..................................3, 7, 10, 11, 12, 13, 14, 15, 16, 21, 26
9
Calvanese v. Calvanese,
12,15
93 N.Y.2d 111 (1999) ................................................................................................................12,
10
1
I
11
M
12
Camp v. Utah Dep 't of Soc . Servs.,
12,15
779 P.2d 242 (Utah 1989) ..........................................................................................................12,
13
Canfora v . Coast Hotels & Casinos,
121 Nev. 771, 121 P.3d 599 (2005) .................................................................................................14
14
Carson Ready Mix, Inc . v. First Natl . Bank of Nevada,
97 Nev. 474, 635 P.2d 276 ...............................................................................................................23
15
16
17
Copeland v. Toyota Motor Sales U.S.A., Inc.,
136 F.3d 1249 (10th Cir. 1998) ................................................................................18 , 19, 20, 21, 25
18
Coplien v. Department of Health & Soc. Servs.,
349 N.W.2d 92 (Ct. App. 1984) ......................................................................................................19
19
Horgan v. Felton,
20
170 P.3d 982 (Nev. 2007) ................................................................................................................23
21
Indiana Dep't of Public Welfare v . Larson,
486 N .E.2d 546 (Ind. 1985 ) .............................................................................................................17
22
23
In re California Dep't of Health Servs.,
Dec. No. 1504, 1005 WL 66334 (HHS Dept. App. Bd., Jan 5, 1995) ....................................... 11,16
24
In re Washington State Dep't of Social & Health Servs.,
25
Dec. No. 1561, 1006 WL 157123 (HHS Dept . App. Bd., Feb. 7, 1996 .................................... 11,16
26
In re Zyprexa Products Liability Litigation,
27
451 F. Supp.2d 458 (E.D.N.Y. 2006) ..............................................................................................25
28
1
1
-ii-
1
2
3
Kahrs v. Sanchez,
18,20
956 P.2d 132 (N.M. Ct. App. 1997) .......................................................................................... 18,
Lugo v. Beth Israel Medical Center,
13,16
819 N.Y.S.2d 892 (N.Y. Sup. 2006) ..........................................................................................13,
4
7
5
6
7
8
Martin ex rel . Hoff v. City of Rochester,
642 N.W.2d 1 (Minn. 2002) ..................................................................................................... .12, 15
Matter of Halverson,
123 Nev. 48, 169 P.3d 1161, 1178 (2007) .......................................................................................10
Nicoladze v. First Natl. Bank of Nevada,
94 Nev. 377, 580 P.2d 1391 (1978) .................................................................................................23
9
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12
0
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Pressler v. Reno,
118 Nev. 506, 50 P.3d 1096 (2002) ................................................................................................. 10
Schweiker v. Hogan,
457 U. S. 569 (1982) ........................................................................................................................... 3
State v. Peters,
2008 WL 2065851 (Conn. 2008) ................................................... ................................................. .14
14
15
D
106 Nev . 449 (1990 ) ........................................................................................................................17
16
State Dep't of Human Res. v. Ullmer,
17
10,11
120 Nev. 108, 87 P.3d 1045 (2006) ...........................................................................................10,
18
Summerfield v. Coca Cola Bottling Co . of the Southwest,
113 Nev. 1291, 948 P .2d 704 (1997) ...............................................................................................23
19
20
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State Dep't of Human Res. v. Elcano,
Turnbow v. State Dep't of Human Res.,
109 Nev. 493, 853 P.2d 97 (1993) ...........................................................................12,17,18,20,27
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22
Waldman v. Candia,
12,15
722 A.2d 581 (N.J. Super. Ct. App. Div. 1999) ........................................................................12,
23
Weaver v. Malinda,
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25
2008 WL 442538 (La. App. 5`h Cir. 2008 ) ......................................................................................14
West Virginia v. United States Dep't of Health & Human Servs.,
132 F. Supp. 437 (S.D. W. Va. 2001) ................................................................................................3
26
El
Zinman v. Shalala,
27
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67 F.3d 841 (9t' Cir. 1995) ..............................................................................................................14
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STATE STATUTES
Act 436 of 1987, § 5, 1987-I Ark. Acts 993 .........................................................................................16
Act 500 of 1981, § 5, 1981-I Ark. Acts 983 .........................................................................................15
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NRS 108.2275(6) ..................................................................................................................................19
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NRS 108.590 .........................................................................................................................................14
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NRS 108 . 590(1) ....................................................................................................................................19
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NRS 422.293 .........................................................................................................................3, 11, 14,15
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NRS 422.293(1) ........................................................................................................................11, 14, 17
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NRS 108.355(3) ....................................................................................................................................19
NRS 422.293(3) ....................................................................................................................4, 11, 17, 19
NRS 422.293(4) ...................................................................................................................................... 4
13
11,17
NRS 422.293(5) ..............................................................................................................................11,
14
3,4
NRS 422.293001 .................................................................................................................................3,
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NRS 422.293003 .....................................................................................................................................3
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NRS 422.293005 .....................................................................................................................................3
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S. Rep. No. 99-146 (1985 ) ......................................................................................................................3
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FEDERAL STATUTES
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42 U.S.C. § 1396a(a)(25)(A) ................................................................................................................10
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42 U.S.C. § 1396a(a)(25)(B) ................................................................................................................10
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42 U.S.C. § 1396a(a)(25)(H) ............................................................................................................3,3,10
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42 U.S.C. § 1396k( a) ............................................................................................................................11
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25
42 U.S.C. § 1396k(b) ............................................................................................................................11
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42 U.S.C. § 1396k(a)(1)(A) ..............................................................................................................4,4,10
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SECONDARY AUTHORITY
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16B Am. Jur.2d Constitutional Law § 945 (2008 ) ...............................................................................23
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16B Am. Jur.2d Constitutional Law § 946 (2008 ) ...............................................................................23
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27A Am. Jur.2d Equity § 28 ( 2008 ) .....................................................................................................17
ARTICLES
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Kathryn Bliss Holt, Medicaid Recovery in Nevada : Recouping Correctly paid Benefits, 8 Nev.
Lawyer 29 (2000) ..................................................................................................................................12
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Sean Sandison, Note, Keeping the Government Away From Medicaid Recipients ' Pocketbook:
Settlements In
Protecting Medicaid Recipient' s Rights to Proceeds of Third-Party
Arkansas Department of Health & Human Services v. Ahlbom, 58 Mercer L. Rev. 799 (2007)........26
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10
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Suzanne G . Clark, Note, An Accident Waiting to Happen : Arkansas Department of Health and
Human Services v. Ahlborn Exposes Inequities in Medical Benefits Legisl ation, 60 Ark. L.
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Rev. 533 (2007) .................................................................................................................................... 26
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1.
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STATEMENT OF ISSUES PRESENTED FOR REVIEW
A.
WHETHER, AS A MATTER OF LAW, THE DISTRICT COURT ACTED
IMPROPERLY BY DIRECTLY REDUCING NEVADA MEDICAID'S LIEN
AGAINST A MEDICAID RECIPIENT' S THIRD -PARTY SETTLEMENT, AND,
FAILING TO ALLOCATE MEDICAL DAMAGES IN THE SETTLEMENT.
.
WHETHER, AS A MATTER OF LAW , THE DISTRICT COURT HAD
SUBSTANTIAL EVIDENCE TO SUPPORT THE MEDICAID LIEN
REDUCTION AND WHETHER THE DISTRICT COURT AFFORDED
NEVADA MEDICAID THE RIGHT TO PROCEDURAL DUE PROCESS.
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II.
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STATEMENT OF CASE
On November 22, 2002, Respondents Edgardo Amante and Christine Amante, as guardian and
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personal representative of the Estate of Edgardo Amante (" Amante"), filed a Complaint against
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Defendants Ford Motor Company and Alfonso Tapia for injuries that Amante received in a motor
vehicle accident . Appellant' s Appendix ("AA"), Volume ("Vol.") 1 at 1. On June 14, 2007, the parties
arrived at a settlement agreement . AA, Vol . 1 at 131 - 32. In the settlement agreement , Ford Motor
Company agreed to pay Amante
184.
for a release of all claims against Ford . AA, Vol. 2 at
The State of Nevada, Department of Health and Human Services , Division of Health Care
Financing and Policy ("Nevada Medicaid") signed a confidentiality agreement as to the parties'
settlement amount on September 4, 2007. See AA, Vol. 2 at 184.
On September 27, 2007 , Nevada Medicaid filed a Motion to Intervene and to Enforce Medicaid
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Subrogation Lien under seal . AA, Vol. 1 at 114. On September 28, 2007 , Amante filed Plaintiff's
Motion for Equitable/Statutory Distribution of Health Care Liens . AA, Vol. 1 at 124.
On October 11, 2007, Amante filed Plaintiff' s Response Opposing the State of Nevada ' s Motion to
Intervene and to Enforce Medicaid Subrogation Lien. AA, Vol. 2 at 161 . On October 17, 2007, Nevada
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Medicaid filed its Opposition and Reply to Plaintiff's Response Opposing the State of Nevada 's Motion to
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Intervene and to Enforce Medicaid Subrogation Lien . AA, Vol . 2 at 170.
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On October 30, 2007 , Judge Timothy Williams granted Amante ' s Motion for Equitable/Statutory
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Distribution of Health Care Liens and deferred his decision on the State ' s motion to intervene and enforce
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its Medicaid subrogation lien. AA, Vol. 2 at 193. On November 16, 2007 , in a minute order, Judge
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Williams granted the State ' s Motion to Intervene . AA, Vol. 2 at 194. Judge Williams also granted the
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State's motion to enforce the subrogation lien in part and denied the motion in part. AA, Vol. 2 at 194; see
II
Page 1 of 30
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also AA, Vol. 2 at 232- 33. Judge Williams ordered that "[t]he Nevada Medicaid lien should be reduced
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from the sum of $106 ,805.38 to the sum of $20 ,435.00 , based upon equitable principles and the fact that
3
the settlement of this matter does not represent the full value of the case." AA, Vol. 2 at 194, 232-33. The
4
court found that economic damages exceeded
5
would be in excess of
6
represented only 19% of the full case value, Nevada Medicaid ' s lien should be reduced to 19% of its value
7
or $20,435. AA, Vol. 2 at 194, 233.
and that "the full case value , conservatively,
." AA, Vol. 2 at 194. Therefore, because the
settlement
8
On December 7, 2007, Nevada Medicaid filed an ex parte motion for order shortening time , motion
9
for clarification and motion to stay the judge ' s order pending appeal . AA, Vol. 2 at 195 . In the motion for
10
clarification, Nevada Medicaid moved to correct the amount of the Medicaid lien from $106,805.38 to
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$ 110,936.83. AA, Vol. 2 at 199.
12
On December 20, 2007 , Judge Williams granted the State ' s motion for stay. AA, Vol. 2 at 234-35.
13
Judge Williams also granted the State's motion to amend the December 12, 2007 order to correct the
Medicaid lien amount . AA, Vol. 2 at 234-35 . The amended order reduced Medicaid ' s $110,936 . 83 lien by
81% to $21 ,077.99. AA, Vol. 2 at 234-35. The State filed a notice of entry of order on December 27,
2007. AA, Vol. 2 at 248 . On January 9, 2008 , the State filed its notice of this Appeal and its case appeal
statement. AA, Vol . 2 at 252-56.
On April 29, 2008 , this Court issued an Order to Show Cause to the parties stating that the district
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court failed to enter a final, appealable judgment . See Order to Show Cause on file with this Court. On
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May 19, 2008 , Amante and Ford Motor Company entered into a stipulation and order to dismiss the district
21
court case with prejudice . AA, Vol. 2 at 275. On May 27, 2008 , the State filed a Motion to Enlarge Time
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with this Court. See Mot. to Enlarge Time . This Court granted the State ' s Motion on May 30, 2008 and
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the State filed its Response to the Order to Show Cause on May 30 , 2008 attaching the stipulation and
24
order to dismiss the district court case with prejudice . See Order dated May 30 , 2008 and State's Resp. to
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Order to Show Cause . On July 11 , 2008, this Court ordered the reinstatement of the briefing schedule and
26
allowed this appeal to proceed in normal course . See Order dated July 11, 2008.
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Page 2 of 30
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STATEMENT OF FACTS
2
The Medicaid program was established under Title XIX of the Social Security Amendments of
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1965. Arkansas Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006). Medicaid is a
4
welfare program "designed to provide medical assistance to persons whose income and resources are
5
insufficient to meet the costs of necessary care and services." Schweiker v. Hogan, 457 U.S. 569, 571
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(1982). Congress intended Medicaid to be a "payor of last resort, that is, other available resources must
7
be used before Medicaid pays for the care of an individual enrolled in the Medicaid program." S. Rep.
8
No. 99-146, at 312 (1985).
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III.
Medicaid is a joint state and federal program. Ahlborn, 547 U.S. at 275. Although states are
not obligated to provide Medicaid services, all states voluntarily participate in the program. Id.
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Medicaid costs are shared by both state and federal governments. Id. The Medicaid program
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provides that the federal government pay a portion of each state's incurred Medicaid costs ranging
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between 50% and 83%. Id.' In return, each state is required to pay the remaining portion of costs. See
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id. In order to receive federal funding, states are also required to comply with certain federal statutory
15
requirements that include program administration, eligibility determination, collecting and maintaining
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information and when applicable, the recovery of Medicaid funds. Id. States that fail to comply with
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the federal guidelines can be penalized by the withholding of federal funds.
18
1396a(a)(25)(H).
19
42 U.S.C. §
Although Medicaid is administered at both the federal and state level, states are primarily
West Virginia v. United States Dep't of Health &
20
responsible for the administration of the program.
21
Human Servs., 132 F. Supp. 437, 439-40 (S.D. W. Va. 2001)(noting that the federal Medicaid program
22
"authorized states to set up comprehensive plans for supplying medical services to indigents"). Each
23
state must enact its own laws within a broad federal framework. Id. Thus, Medicaid law and recovery
24
statutes vary widely from state to state. See id.
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In Nevada, Medicaid's third-party liability recovery program is administered by the Division of
26
Health Care Financing and Policy and accomplished under NRS 422.293.2 Persons interested in
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' In Nevada, approximately one-half of the state's Medicaid funding comes from the federal government.
2 In 2007, the Nevada Legislature slightly varied NRS 422.293 and added additional subrogation laws under NRS
422.293001, 422.293003 and 422.293005. The changes are insignificant to the issues presented in this case.
Page 3 of 30
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receiving Medicaid benefits submit applications to Nevada ' s Division of Welfare for a determination of
2
eligibility.
3
application and through the assigned case worker.
4
Medicaid program, applicants are required to assign their rights to payment for medical claims to the
5
state of Nevada. See 42 U . S.C. § 1396k(a)(1)(A).
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As a condition of eligibility for the Nevada
Once eligibility is determined and Medicaid funds are paid out on behalf of an individual,
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Medicaid recipients or their attorneys are required to notify Nevada Medicaid in writing before
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commencing any legal action or entering into any settlement agreement against any liable third-party
9
who may have caused the recipient ' s medical . injuries . NRS 422.293(4).3 After Medicaid provides
10
written notice of its claim for the incurred medical costs, Medicaid has a statutory lien upon the medical
11
proceeds of any recovery from the persons liable whether by settlement , judgment or otherwise. NRS
12
422.293(3).
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Applicants are informed of Nevada' s third- party recovery program in the Medicaid
On November 22, 2000 , Edgardo Amante received debilitating injuries as a passenger in a
AA, Vol. 1 at 53 , 126-27.
Edgardo Amante , through his representative,
14
motor vehicle accident .
15
applied for and received benefits from Nevada Medicaid from December 1, 2000 through May 31, 2001
16
as a result of those injuries. AA, Vol. 2 at 204-07 . Amante ' s medical bills totaled $406,859.82. AA,
17
Vol. 2 at 207. Nevada Medicaid paid Amante's medical bills at a reduced rate of $110 ,936.83, the
18
current lien amount. AA, Vol. 2 at 207 . Nevada Medicaid saved Amante $295 ,922.99 in medical
19
expenses that Amante would have incurred if he were not eligible for public welfare benefits.
20
In May 2001 , Amante left Nevada and relocated to the state of Rhode Island. AA, Vol. 2 at
21
238-43. Amante's medical bills continued to be paid by the public through Rhode Island's Medicaid
22
unit. AA, Vol. 2 at 209, 213.
23
On November 22, 2002 , Respondents Edgardo Amante and Christine Amante, as guardian and
24
personal representative of the Estate of Edgardo Amante , filed a Complaint against Defendants Ford
25
Motor Company and Alfonso Tapia for injuries that Edgardo Amante received in the November 22,
26
2000 motor vehicle accident . AA, Vol . 1 at 1. In the Complaint , Amante alleged negligence against
27
Alfonso Tapia and negligence and strict liability against Ford Motor Company . AA, Vol. 1 at 6-19.
28
3 This statute is now codified under NRS 422.293001.
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Amante sought general damages, punitive damages and special damages including past medical
2
expenses against Defendants . AA, Vol. 1 at 17-19.
3
On March 7, 2003, Amante filed an Amended Complaint . AA, Vol. 1 at 52. Defendant Ford
4
Motor Company filed an Answer to the Amended Complaint on March 24, 2003 . AA, Vol . 1 at 73. On
5
August 23 , 2006, Amante voluntarily dismissed Alfonso Tapia as a defendant in the case . AA, Vol. 1
6
at 84-85 .
7
Defendant Ford Motor Company .
8
Company ' s request for partial summary judgment on the punitive damages claim in a May 31, 2007
9
minute order . AA, Vol. 1 at 86.
Prior to the trial date , Amante also voluntarily dismissed the negligence claim against
See AA, Vol. 1 at 90 .
The district court granted Ford Motor
10
Thereafter, the remaining parties , Amante and Ford Motor Company, proceeded to trial on the
11
strict liability claims before Judge Charles Thompson .4 AA, Vol. 1 at 89-93 , 125, 162. On June 14,
12
2007 , the parties arrived at a settlement agreement . AA, Vol. 1 at 131.
for the release
To procure settlement , Ford Motor Company agreed to pay Amante $
13
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of all claims against Ford. AA, Vol. 2 at 184 . The lump sum $
15
any allocation for damages . AA, Vol. 2 at 188.
settlement did not contain
At the settlement hearing , Judge Charles Thompson approved the settlement . AA, Vol . 1 at 94,
16
Amante requested that the district court retain jurisdiction of the case in order to determine
17
140.
18
payment of the medical liens asserted against Amante ' s settlement award. AA, Vol. 1 at 137-38. Judge
Thompson agreed to retain jurisdiction of the case and stated that he would personally hear any issues
that could arise concerning the payment of Amante's medical liens . AA, Vol. 1 at 137-38 . The parties
also agreed to keep the settlement amount confidential . AA, Vol. 1 at 131, 133-34.
Three months after the settlement hearing , the Attorney General ' s office received a letter from
Amante dated September 11, 2007.
$106,805 .385 lien against Amante ' s $
1
AA, Vol. 2 at 184 .
Amante offered to resolve Medicaid's
settlement for $20 ,435.00 . AA, Vol. 2 at 189. In his
letter, Amante claimed that the settlement offer was reasonable based upon two separate proposed
"formulas" that Amante used to reduce Medicaid ' s lien. AA, Vol. 2 at 189.
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4 The case was assigned from Judge Timothy Williams to Judge Charles Thompson shortly before the trial date . AA, Vol. 1
at 143.
5 Amante incorrectly asserted that Nevada Medicaid ' s lien was $106 , 805.38 instead of the correct amount of $110,936.83.
AA, Vol. 2 at 207.
Page 5 of 30
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In the first formula, Amante alleged that the "actual value" of his case was in excess of $
2
dollars. AA, Vol. 2 at 189. Amante concluded that because he settled for only 19% of the "full
3
value" of his case, Nevada Medicaid was only entitled to 19% of its lien amount. AA, Vol. 2 at 189.
4
Therefore, Nevada' s lien should be directly reduced from $106,805.38 to $20,292.95. AA, Vol. 2 at
5
189.
In the second formula, Amante totaled Amante ' s past billed medicals, 3
6
7
Vol. 2 at 189 . The billed medicals included the amount of medicals actually billed to Nevada Medicaid
8
on behalf of Amante, $406,859 . 82. Amante then divided the total past medicals by the hypothetical
9
case value , $
to determine that past medicals would have accounted for 4 . 39% of the "actual
. = .0439). AA, Vol. 2 at 189. Amante then multiplied the
10
value" of the case (3'
11
$
12
attributable to past medical expenses . AA, Vol. 2 at 189. Finally, Amante determined that the actual
($106,805 . 38 _ $ ,
_
-% of the total past medical expenses
); therefore, Nevada was only entitled to
medicals and its lien should be directly reduced to $20 ,435.00 (
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of the settlement should be
settlement amount by 4.39% to determine that $
Medicaid lien amount, $ 106,805 . 38, was only equivalent to
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." AA,
)% x $, ,
% of the allotted
).7 AA, Vol. 2 at
189. The Administrator of Nevada ' s Division of Health Care Financing and Policy denied Amante's
17
reduction request . AA, Vol. 1 at 118.
18
On September 21, 2007 , the State of Nevada, Department of Health and Human Services,
19
Division of Financing and Policy ("Nevada Medicaid") filed an ex parte petition and order for the
20
district court's permission to file a motion to intervene under seal . AA, Vol. 1 at 96. Judge Timothy
21
Williams signed the order on September 19, 2007. AA, Vol. 1 at 97.
22
On September 27, 2007, Nevada Medicaid filed its Motion to Intervene and to Enforce
23
Medicaid Subrogation Lien under seal. AA, Vol. 1 at 114. In its Motion, Nevada Medicaid argued that
24
it had an unconditional right to intervene under NRS 422.293 and Nev. R. Civ. P. 24(a)(1). AA, Vol. 1
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6 Past billed medical expenses are the total billed medical expenses accrued by the recipient up to the time of settlement or
judgment. Nevada Medicaid does not agree with the total amount of billed medicals alleged by Amante.
Amante's calculation of this proposed "formula" was mathematically incorrect. Amante used Nevada's total billed amount
of medicals to determine the amount of Amante's total past medicals but then incorrectly used Nevada's paid amount to
in medical damages that Nevada was entitled to. A correct mathematical
determine what percentage of the $
% of the total billed amount
analysis would have concluded that Nevada's portion of the billed amount was
% of
($406,859.82 _
). Using Respondent's formula, Nevada would then be entitled to
.
or'
Page 6 of 30
1
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1
at 116. Nevada Medicaid also argued that Nevada Medicaid had a subrogation interest , a right of
2
assignment and a lien against Amante's 4'.
3
AA, Vol. 1 at 121.
settlement and that the lien should be paid in full.
4
Nevada Medicaid recognized the U. S. Supreme Court 's decision in Arkansas Dep't of Health &
5
Human Servs . v. Ahlborn, 547 U. S. 268 , 275 (2006), holding that Medicaid subrogation programs were
6
limited to recovering the portion of a third -party settlement allocated to medical damages . AA, Vol. 1 at
7
119-20. However, Nevada Medicaid argued that using a "formula" that would directly reduce a Medicaid
8
lien violated Nevada law. AA, Vol. 1 at 120. Instead, Nevada Medicaid argued that the court was not
9
bound by any particular allocation formula and urged the court to follow the Nevada Medicaid
10
Administrator's policy for medical allocations .' AA, Vol. 1 at 120-21 . Nevada Medicaid also argued that
11
because the Medicaid lien was only
12
at least
13
Medicaid argued that because Amante would continue to have his medical bills paid by government
% of the entire settlement amount, it was reasonable to assume that
% of Amante ' s settlement was for medical damages . AA, Vol. 1 at 120-21 . Finally, Nevada
settlement, the lien should be paid in its
welfare throughout his lifetime in addition to the
entirety. AA, Vol. 1 at 121.
On September 28, 2007 , Amante filed Plaintiff' s Motion for Equitable/Statutory Distribution of
17
Health Care Liens . AA, Vol. 1 at 124. Amante argued that both equity and the Ahlborn decision required
18
the court to substantially reduce or completely waive the Medicaid lien. AA, Vol. 1 at 126. Amante
19
argued that an evidentiary hearing was "necessary" to determine the "the appropriate equitable and legal
20
lien reimbursements, if any, required to be paid by the Plaintiff." AA, Vol. 1 at 126. Amante noted that at
21
the evidentiary hearing , he would "rely heavily on the trial testimony of the Plaintiff ' s experts which Judge
22
Thompson has already heard ." AA, Vol. 1 at 126.
23
On October 11, 2007, Amante filed Plaintiff' s Response Opposing the State of Nevada ' s Motion to
24
Intervene and to Enforce Medicaid Subrogation Lien . AA, Vol . 2 at 161 . Amante argued that Nevada's
25
motion to intervene was untimely. AA, Vol. 2 at 162-63 . Additionally, Amante argued that his settlement
26
offer to Medicaid was fair because the $
settlement did not represent the "full value" of
27
28
8 After the Ahlborn decision, the Administrator implemented a policy wherein Nevada Medicaid would agree to accept onethird (1/3) of the total settlement in third-party liability cases, or, the amount of its lien, whichever amount was less, to
resolve all Medicaid liens. AA, Vol. 1 at 121.
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Amante ' s case. AA, Vol. 2 at 163-65 . Amante' s brief did not inform the court as to what Amante
2
considered to be the "full value" of his case . See AA, Vol. 2 at 161-65. Finally, Amante argued that
3
Nevada law was irrelevant to the subject case . AA, Vol. 2 at 164-65.
4
On October 17, 2007, Nevada Medicaid filed its Opposition and Reply to Plaintiffs Response
5
Opposing the State of Nevada ' s Motion to Intervene and to Enforce Medicaid Subrogation Lien . AA, Vol.
6
2 at 170 . Nevada again argued that a hearing for the allocation of damages was not necessary in light of
7
the Administrator' s policy. AA, Vol. 2 at 173 . Nevada also argued that reducing the Medicaid lien in
8
comport with the formulas suggested by Amante in his letter to the State was bad public policy because it
9
required the court to use hypothetical values controlled by Amante with the purpose of diminishing
I
10
I
11
Interestingly, Amante never submitted the alleged "full case value" or the proposed "formulas" to
12
support Amante ' s lien reduction request on the record to the court. Amante ' s proposed "full case value"
13
and "formulas" were only made a part of the court record after the State submitted Amante ' s September
14
11, 2007 letter to the court as an exhibit to the State ' s Opposition and Reply brief filed on October 17,
15
2007 . AA, Vol. 2 at 189 . Although the original letter from Amante to the State contained enclosures
16
such as medical bill summary sheets and expert reports , the enclosures were not included in the State's
Medicaid' s lien. AA, Vol. 2 at 172-73.
exhibit and therefore , were never part of the district court record . See AA, Vol. 2 at 188, 184-90.
Amante offered no evidence on the record to show that the $
settlement did not already include
Medicaid' s full claim. In addition, Amante offered no evidence on the record to support his request to
U
reduce Medicaid ' s lien to $20,435.00 . All motions were set to be heard on October 30 , 2007. AA, Vol. 2
at 193.
On October 30, 2007, prior to oral argument, Amante surprisingly announced to the court that he
no longer wanted nor needed an evidentiary hearing. Judge Timothy Williams granted Amante ' s Motion
for Equitable/Statutory Distribution of Health Care Liens and deferred his decision on the State's motion to
intervene and enforce its Medicaid subrogation lien. AA, Vol. 2 at 193.
On November 16, 2007, in a minute order, Judge Williams granted the State ' s Motion to Intervene.
AA, Vol. 2 at 194 . Judge Williams also granted the State ' s motion to enforce the subrogation lien in part
27
I
I
and denied the motion in part . AA, Vol. 2 at 194, 229. Judge Williams ordered that "[t]he Nevada
II
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Medicaid lien should be reduced from the sum of $106 ,805.38 to the sum of $20 ,435.00, based upon
2
equitable principles and the fact that the settlement of this matter does not represent the full value of the
3
case." AA, Vol. 2 at 194. The order stated that Judge Williams relied heavily on the Ahlbom case in
4
reaching his decision. AA, Vol . 2 at 194, 229. The order also stated that the court was familiar with the
5
"facts and circumstances surrounding the instant litigation resulting in Plaintiff suffering severe,
6
catastrophic, and life long injuries necessitating life long care (brain damage, ventilator and permanent
7
vegetative state)." AA, Vol. 2 at 194. The court found that economic damages exceeded $
8
that "the full case value, conservatively, would be in excess of $
9
AA, Vol. 2 at 251 . Therefore , because the
10
." AA, Vol. 2 at 194 ; see also
settlement represented only 19% of the full case
value, Nevada Medicaid ' s lien should be reduced to 19% of its value or $20 ,435. AA, Vol. 2 at 194, 229.
11
The court never held an evidentiary hearing nor received any evidence on the record to support
12
Amante' s factual claims. The order was filed on December 12, 2007. AA, Vol . 2 at 228 . Amante filed a
13
notice of entry of order on December 14, 2007. AA, Vol . 2 at 230.
14
On December 7, 2007, Nevada Medicaid filed an ex parte motion for order shortening time, motion
15
for clarification and motion to stay the judge's order pending appeal . AA, Vol. 2 at 195 . In the motion for
16
clarification, Nevada Medicaid moved to correct the amount of the Medicaid lien from $ 106,805.38 to
17
$110,936.83 . AA, Vol. 2 at 199.
18
U
and
On December 11, 2007, Amante moved to approve the purchase of an annuity for Amante and
19
establish a special needs trust so that Amante could remain on public welfare despite the $
20
settlement. AA, Vol. 2 at 208 . On December 20, 2007, Amante filed a motion to reimburse Amante's
21
family members for "out-of-pocket" expenses incurred for the benefit of Amante . AA, Vol. 2 at 236. The
22
"out-of-pocket" expenses included air ambulance transport for Amante and "lost wages" to Amante's
23
guardian, Christine Amante , for quitting her job to attend to Amante ' s personal and financial affairs and to
24
provide "actual medical care" to her brother , Edgardo Amante . AA, Vol. 2 at 238-239 . Both orders were
25
granted and filed with the court on January 24 , 2008 . AA, Vol. 2 at 260, 265.
26
On December 20, 2007, Judge Williams granted the State ' s motion for stay. AA, Vol. 2 at 250-5 1.
27
Judge Williams also granted the State ' s motion to amend the December 12, 2007 order to correct the
28
Medicaid lien amount . AA, Vol. 2 at 251 . The amended order reduced Medicaid ' s $110,936.83 lien by
Page 9 of 30
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81% to $21 ,077.99. AA, Vol. 2 at 251. The State filed a notice of entry of order on December 27, 2007.
2
AA, Vol. 2 at 248. This appeal ensued. AA, Vol. 2 at 252.
3
IV.
ARGUMENT
4
A.
5
Questions of law are to be reviewed de novo. Pressler v. Reno, 118 Nev. 506, 509, 50 P.3d 1096,
Standard of Review
6
1098 (2002). Procedural due process is a question of law to be reviewed by appellate courts. See
7
Matter of Halverson, 123 Nev. 48, 169 P.3d 1161, 1178 (2007). In addition, issues of statutory
8
construction are subject to de novo review. State Dep't of Human Res. v. Ullmer, 120 Nev. 108, 87 P.3d
9
1045, 1049 (2006).
,
10
The district court held that equity and the Ahlbom decision required the district court to directly
11
reduce Nevada Medicaid's lien from $110,936.83 to $21,077.99. AA, Vol. 2 at 194, 229. The question of
12
whether Nevada Medicaid' s lien should have been reduced by the district court is a question of law. The
question of whether parties are afforded procedural due process is also to be review by this Court.
Therefore, the district court's order is subject to de novo review by this Court.
B.
Medicaid Third-Party Liability Law and the U.S. Supreme Court' s Decision in
Arkansas Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268 ( 2006).
Medicaid third-party liability law is codified under federal and state law and interpreted through
U
18
state and federal case law such as the U. S. Supreme Court' s decision in Arkansas Dep't of Health &
19
Human Servs. v. Ahlborn, 547 U .S. 268 (2006).
20
participating in the Medicaid program to "take all reasonable measures to ascertain the legal liability of
21
third parties ... to pay for care and services available under the plan." 42 U.S.C. § 1396a(a)(25)(A).
22
Where legal liability is found to exist and where it is cost-effective , "the State or local agency will seek
23
reimbursement for such [medical] assistance to the extent of such legal liability ."
24
1396a(a)(25)(B).
The federal government requires all states
42 U.S.C. §
25
To facilitate Medicaid recovery under this act, the federal government mandates that each state
26
plan require Medicaid recipients to assign their rights to medical reimbursement to the state . 42 U.S.C.
27
§ 1396k(a)(1)(A); see also 42 U.S.C. 1396a(a)(25)(H)( where a state pays out Medicaid funds to a
28
recipient for injuries caused by a liable third -party, the state ' s subrogation law is considered to be an
Page 10 of 30
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assignment; that is "the state is considered to have acquired the rights of' the recipient to payment by
2
the liable third-party).
3
obtaining third-party funds and provide information that may assist the state in recovery. 42 U.S.C. §
4
1396k(a); see also Ahlborn, 547 U.S. at 277.
Each state plan must also require recipients to cooperate with the state in
5
If Medicaid funds are recovered, each state retains its expended amount and distributes the
6
federal share back to the federal government. 42 U.S.C. § 1396k(b). Although states may compromise
7
the state's share of Medicaid funding in the settlement of Medicaid claims, it appears that states are still
8
not allowed to compromise the federal share of funds absent a showing that a recovery was not costeffective. See Ahlborn, 547 U.S. at 290 (citing to In re Washington State Dep't of Social & Health
Servs., Dec. No. 1561, 1006 WL 157123 (HHS Dept. App. Bd., Feb. 7, 1996); In re California Dep't of
Health Servs., Dec. No. 1504, 1005 WL 66334 (HHS Dept. App. Bd., Jan. 5, 1995)(stating that the
HHS Appeals Boards held that Washington and California could not compromise the federal share of
0
§
13
Medicaid funds). In Nevada, the funds retained by the state go back into the Medicaid program and
14
bolster the state budget so that the state may continue to help those in need of assistance. See Ullmer,
15
87 P.3d at 1050.
16
17
18
1
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422.293. Under NRS 422.293(1),
20
when a recipient of Medicaid ... incurs an illness or injury for which medical services are
payable by the department [of Health and Human Services] and which is incurred under
circumstances creating a legal liability in some person other than the recipient or a division
of the department to pay all or part of the costs of such services, the department is
subrogated to the right of the recipient to the extent of all such costs.
21
NRS 422.293(1). NRS 422.293(3) provides that where the department of Health and Human Services
22
("HHS") is subrogated to the rights of a recipient under NRS 422.293(1), HHS has a lien upon the
23
proceeds of any recovery from the liable third-party. NRS 422.293(3) further states that "[s]uch a lien
24
must be satisfied in full, unless reduced pursuant to subsection 5, at such time as" the proceeds are
25
distributed to the recipient or his attorney, or, the action has been dismissed by a court of law.
26
422.293(3). Subsection 5 of NRS 422.293 asserts that if HHS receives proper notice of the recipient's
27
third-party action, the director of HHS, or his representative, may, in consideration of attorney's fees and
28
costs, reduce the Medicaid lien. NRS 422.293(5).
19
I
Nevada participates in the federal Medicaid third-party liability program pursuant to NRS
Page 11 of 30
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1
Until May 2006, Nevada followed the majority of states in concluding that the state could recover
2
its lien from the entirety of a recipient's judgment, settlement or award, regardless of how the award was
3
characterized or allocated. See Tumbow v. State Dep't of Human Res., 109 Nev. 493, 496, 853 P.2d 97,
4
99 (1993)(holding that Nevada Medicaid may recover Medicaid funds from punitive damage award); see
5
also Kathryn Bliss Holt, Medicaid Recovery in Nevada: Recouping Correctly Paid Benefits, 8 Nev. Law.
6
29 (2000)(stating that Medicaid lien attaches to entirety of settlement or award, including any portion for
7
pain and suffering, loss of companionship or other pecuniary damages).
8
Calvanese v. Calvanese, 93 N.Y.2d 111, 117-18, 121 (1999)(holding that entire amount of Medicaid
9
recipient' s personal injury settlement was available to satisfy Medicaid lien and not just portion attributable
10
to past medical expenses); Waldman v. Candia, 722 A.2d 581, 586-87 (N.J. Super. Ct. App. Div.
11
1999)(holding that state had a right to recover from entirety of settlement because Medicaid statute did
12
not distinguish between categories of damages); Camp v. Utah Dep't of Soc. Servs., 779 P.2d 242, 245
For other states, see, M,
(Utah 1989)(holding that state is entitled to full, rather than equitable, reimbursement from a recipient
for all its Medicaid expenditures when the recipient proceeds against a third-party without the State's
consent). But see Martin ex rel. Hoff v. City of Rochester, 642 N.W.2d 1, 18 (Minn. 2002)(holding that
state Medicaid assignment provision that allowed recovery for expenses other than medical was
preempted by federal law).
1
1
w
18
In May 2006, the U.S. Supreme Court decided the case of Arkansas Dep't of Health and Human
19
Servs. v. Ahlbom, 547 U.S. 268, 126 S. Ct. 1752 (U.S. 2006). In Ahlbom, the Court held that a state
20
Medicaid subrogation program was limited to recovering the portion of a third-party settlement allocated to
21
medical damages. Id. at 292.
22
The respondent, Heidi Ahlborn, was a Medicaid recipient. Id. at 273. The state of Arkansas paid
23
$215,645.30 for Ahlborn's medical bills. Id. Ahlborn settled her case out of court for a lump sum of
24
$550,000.00. Id. at 274. Arkansas asserted a Medicaid lien against Ahlborn's settlement and argued that it
25
should be paid in full. Id.
26
However, prior to the hearing in federal district court in order to facilitate the "resolution of the
27
legal questions presented," Heidi Ahlborn and the State of Arkansas stipulated that only 1/6 of Ahlborn's
28
settlement or $35,581.47 constituted reimbursement for medical costs. Id. The parties arrived at the figure
Page 12 of 30
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by stipulating that the hypothetical value of Ahlborn's damages was $3,040,708.18 (of which $215,645.30
2
were for medical costs) and that Ahlborn would only be entitled to 1/6 of that amount because of
3
contributory negligence.
4
($215,645.30) by 1/6 or $35,581.47. Id. at 280-81. Heidi Ahlborn and Arkansas agreed without any input
5
whatsoever from the Court that $35,581.47 was a "fair and reasonable" amount for Ahlbom's past medical
6
expenses. See Ahlborn v. Arkansas Delft of Human Servs., 397 F.3d 620, 622, 627-28 (8' Cir. 2005),
7
affld, 547 U.S. 268 (2006).
Id. at 281 n.9.
The parties then proportionally reduced the Medicaid lien
8
In the parties' arguments to the Court, Ahlborn claimed that the state exceeded federal authority by
9
asserting its lien against Ahlborn's compensation for injuries other than past medical expenses. Id.
10
Arkansas argued that it was entitled to assert its lien against the entire settlement regardless of how the
11
funds were characterized. Id. at 278. Among other things, Arkansas also argued that "a rule of full
12
reimbursement was needed to avoid the risk of settlement manipulation." Id. at 288.
13
The Court held in favor of Ahlborn and held that Medicaid was only entitled to recover the portion
14
of the settlement allocated for medical damages. Id. at 275, 292.9 The Court then stated that because the
15
parties had previously stipulated to the medical damages in the case, the Court was bound by the
16
stipulation and had to limit the state's recovery to $35,581.47. Id. at 274-75, 292.
17
As to the risk of manipulation, the Court opined that although more colorable, any such risk could
18
be avoided by "obtaining the State's advance agreement to an allocation or, if necessary, by submitting the
19
matter to a court for decision." Id. at 288. The Court also noted that "although we express no view on the
20
matter, we leave open the possibility that [states may adopt special rules and procedures for allocating tort
21
settlements] to meet concerns about settlement manipulation." Id. at 288 n.17.
22
Since May 2006, only a few state court appellate cases have squarely examined Ahlborn in
23
relation to their own state third-party liability recovery statutes.10 States with legislative schemes that
24
9 It is important to note however, that unlike Nevada, the Arkansas Supreme Court previously ruled that Arkansas, in
addition to its right of subrogation, lien and assignment, had an independent, nonderivative right to recover Medicaid
benefits from the third-party tortfeasor. regardless of whether the Medicaid recipient also sued for medical expenses. Id. at
278 n.6. Therefore, even if Arkansas could not fully recover its Medicaid claim under its right of subrogation, Arkansas still
may have had the ability to pursue the remainder of its lien directly from the liable third-party.
10 A North Carolina court refused to apply Ahlborn on state law grounds. Andrews v. Haygood, 655 S.E.2d 440, 442-43
(N.C. App. 2008)(holding that district court would not limit Medicaid recovery to medical damages only in light of recent
state supreme court ruling that allowed otherwise). New York followed Ahlborn and has applied the formula stipulated to
e.g., Lugo v. Beth Israel Medical Center, 819 N.Y.S.2d 892,
by the parties in Ahlborn to determine medical damages.
897 (N.Y. Sup. 2006)(applying Ahlborn parties' formula to determine medical damages because formula is rational and
25
26
27
28
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control the allocation of damages in Medicaid third-party liability cases remain unchallenged in the
2
appellate arena. See,
3
state did not have to pursue third-party directly and did not have to reduce Medicaid lien for attorney's
4
fees and costs, and, recipient did not challenge state's third-party liability statute that allowed state to
5
retain up to 50% of recipient's net award after attorney's fees and costs).
6
Importantly, Medicaid is the only medical payor subject to the restrictions in Ahlborn. Other
7
entities such as private medical providers, Medicare, insurance companies, and even Medicaid paid
8
HMOs are not subject to the Ahlborn decision. See e.g., Zinman v. Shalala, 67 F.3d 841, 844 (9U' Cir.
9
1995)(holding that Medicare's has an independent right of recovery in addition to its subrogation right
10
and therefore, not subject to equitable principle of apportionment); Canfora v. Coast Hotels & Casinos,
11
121 Nev. 771, 778, 121 P.3d 599, 604 (2005)(holding that where there was no showing that insureds
12
were not fully compensated, employer-insurer was entitled to full compensation under insurance plan
13
without regard to allocation); NRS 108.590 (stating that hospital liens are against "any sum awarded the
14
injured person ... by a settlement ... to the extent of the amount due).
15
not necessarily limited to recovering from the portion of a settlement allocated to medical damages like
16
Medicaid.
Therefore, these entities are
17
In Nevada, the language of NRS 422.293 remains intact following the Ahlborn decision.
18
Although Nevada Medicaid previously interpreted NRS 422.293 to provide recovery from the entirety
19
of a recipient's award, the language of NRS 422.293 is similar to the federal third-party liability
20
language. The Ahlborn decision thereby limits Nevada's recovery language to recouping a recipient's
21
medical costs. See NRS 422.293(1)(stating that "when a recipient of Medicaid ... incurs an illness or
22
injury for which medical services are payable by the department [of Health and Human Services] and
23
which is incurred under circumstances creating a legal liability in some person other than the recipient or a
24
division of the department to pay all or part of the costs of such services, the department is subrogated to
25
the right of the recipient to the extent of all such costs")(emphasis added). The federal third-party liability
26
Supreme Court did not suggest that formula was improper). In an unpublished opinion, a Louisiana intermediate court of
appeals ruled that Medicaid was limited to the recipient's medical damages but also held that the court, ruling solely on the
concursus proceeding, lacked jurisdiction to rule on other issues including whether the state was entitled to collect its entire
lien, whether the formula used by the stipulating recipient and defendants was improper and whether the state had adequate
notice to intervene. Weaver v. Malinda, 2008 WL 442538, *5-6 (La. App. 5th Cir. 2008).
27
28
I
, State v. Peters, 2008 WL 2065851, *1 n.4, *6 (Conn. 2008)(holding that
II
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statute and the language of NRS 422.293, as interpreted by the Supreme Court in Ahlborn, provide that
2
Nevada Medicaid is limited to recovering the portion of a recipient's award or settlement apportioned to
3
medical damages.
4
C.
5
The District Court Erred in Its Interpretation of the U.S. Supreme Court's
Decision in Arkansas v. Ahlborn by Applying the Formula Stipulated to by
Heidi Ahlborn and the State of Arkansas Prior to the Supreme Court Case.
6
The district court misinterpreted the U.S. Supreme Court's decision in Ahlborn by applying the
7
formula that Heidi Ahlborn and the State of Arkansas used to allocate medical damages in Ahlborn's
8
settlement. The district court held in this case that Nevada Medicaid ' s lien should be reduced to 19% of
9
its value because Amante settlement of $
10
constituted only 19% of the "full value" of his
case, estimated by the district court to be in excess of $'
.. AA, Vol. 2 at 251. In reaching its
decision, the court relied heavily on the Ahlborn case. AA, Vol. 2 at 194, 251. In effect, the district
J
court's decision to reduce Nevada Medicaid ' s lien followed the exact same formula utilized by Heidi
Ahlborn and the State of Arkansas to allocate medical damages in the Ahlborn case.
However, the stipulation between Heidi Ahlborn and the State of Arkansas had nothing to do
with the Supreme Court' s decision in Ahlborn . The Supreme Court's decision in Ahlborn held that
Medicaid was prohibited from recovering the portion of any settlement or award that was not
designated as medical expenses. Ahlborn, 547 U. S. at 275 , 292. The stipulated formula used by the
18
parties in Ahlborn was a formula created by the parties for the sole purpose of allowing the Court to
focus on the legal issues in the case , that is, whether Arkansas Medicaid could recover from the entirety
I
of Ahlborn' s settlement amount. See id. at 274 . Although its is unclear why Arkansas agreed to abide
by these terms , it is apparent that the majority of states with the exception of Minnesota had interpreted
federal Medicaid law to conclude that each state was not only allowed , but required to recover from the
entire third-party settlement or award . See
24
, Calvanese, 93 N.Y .2d at 117-18, 121; Waldman, 722
A.2d at 586-87; Camp, 779 P.2d at 245; but see Martin, 642 N.W.2d at 18.
25
In fact, when third-party liability recovery laws were first enacted , Arkansas allowed recipients
26
to keep a minimum of one-third of their recoveries before the Arkansas' Medicaid program was
27
reimbursed. See Act 500 of 1981 , § 5, 1981-II Ark. Acts 983 , 984. Arkansas later amended its recovery
28
laws to require full reimbursement from the recipient' s entire settlement or award following the U.S.
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Department of Health and Human Services ruling that the states were not allowed to compromise the
2
federal share of Medicaid funding. See Act 463 of 1987, §5, 1987-I Ark. Acts 993, 996; Ahlborn, 547
3
U.S. at 290 (citing to In re Washington, Dec. No. 1561 (holding that Washington must demand
4
reimbursement from the entire proceeds of a Medicaid recipient's tort settlement); In re California, Dec.
5
No. 1504 (holding California must demand reimbursement from the entire proceeds of a Medicaid
6
recipient's tort settlement)). Although now deemed misguided, Arkansas had good reason to believe
7
that regardless of the amount that the state agreed to for Heidi Ahlborn's medical expenses, the
8
Supreme Court would follow the majority of cases and federal HHS policy and rule that Arkansas was
9
entitled to its entire lien amount.
10
Nevertheless, the Ahlborn decision did not mandate or sanction a formula for district courts to
11
determine when and how to allocate medical damages in settlements. Once the Supreme Court held that
12
federal Medicaid law prevented Arkansas from recovering from anything other than Heidi Ahlborn's
13
medical expenses, the Court was mandated to enforce the stipulation of the parties. Id. at 281 n.9.
14
To date, only one state has followed the Ahlborn parties' stipulated formula as a method of
15
allocating medical damages in settlement. See, M, Lugo v. Beth Israel Med. Ctr., 819 N.Y.S.2d 892
16
(N.Y. Sup. Ct. 2006). However, even that state admits that the Ahlborn Court did not create any "formula"
17
for allocating medical damages in third-party settlements. Id. at 896-97. The only application of the
Ahlborn case to the state of Nevada is that Nevada is now prevented from recovering from a recipient's
settlement not designated as medical expenses. The district court erred in interpreting Ahlborn to mean
that each settlement must be allocated and reduced according to the formula stipulated to by Heidi Ahlborn
and the state of Arkansas prior to their Supreme Court case. The district court order must be overturned.
22
D.
The District Court Improperly Acted Because it Lacked Jurisdiction to Directly
Reduce Nevada Medicaid's Lien and Failed to Allocate Medical Expenses.
23
I
I
24
The district court directly reduced Nevada Medicaid' s lien in violation of Nevada law. The district
25
court did not allocate for medical damages in the settlement. Although a district court has jurisdiction to
26
allocate medical damages in a settlement, a district court lacks the statutory authority to directly reduce a
27
Medicaid lien. The Nevada Legislature displaced the common law through the enactment of NRS 422.293
28
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which prescribes the Administrator as the sole authority to reduce a Medicaid lien; as such, the district
2
court's direct reduction of the Medicaid lien violated Nevada law.
3
Generally, when a "legislature provides a specific, exclusive and constitutionally adequate method
4
for the disposition of a particular kind of dispute, a party seeking relief must adhere to the statutory
5
procedures and a court has no jurisdiction to entertain an action of equity." 27A Am. Jur.2d Equity § 28
6
(2008). Where the legislature has otherwise enacted laws pursuant to a state Medicaid subrogation statute,
7
"[e]quitable principles and [a court's] discretion in determining reimbursement ... do not apply." Indiana
8
Dep't of Public Welfare v. Larson, 486 N.E.2d 546, 548 (Ind. 1985).
9
In Nevada, the Legislature has perfected the state's right to reimbursement from liable third parties
10
through assignment, subrogation and a statutory lien. NRS 422.293(1) provides that when a Medicaid
11
recipient incurs an injury for which a third-party is liable and Medicaid pays for those injuries, Medicaid is
12
subrogated to the extent of those medical costs. NRS 422.293(1).
13
Subsection 3 of NRS 422.293 states that "where the department is subrogated to the rights of the
14
recipient or his successors in interest ... the department has a lien upon the proceeds of any recovery from
15
the persons liable." NRS 422.293(3)(emphasis added). NRS 422.293(3) further states that a Medicaid
16
third-party liability lien "must be satisfied in full, unless reduced pursuant to subsection 5."
17
422.293(3)(emphasis added). Section 5 specifies the only way that a Medicaid third-party liability lien
18
may be reduced under Nevada law. Under Section 5, the "director or his designated representative may, in
NRS
consideration of legal services provided by an attorney to procure a recovery for the recipient, reduce the
lien on the proceeds of any recovery. NRS 422.293(5)(emphasis added).
In Turnbow v. State Dep't of Human Res., a Medicaid recipient argued that a district court had
jurisdiction to reduce a Nevada Medicaid subrogation lien under the "common fund" theory, an equitable
remedy. Turnbow, 109 Nev. at 495. The recipient argued that although NRS 422.293(5) authorized the
E
24
state welfare administrator to reduce a subrogation lien, NRS 422.293(5) did not preclude a state district
25
court from also reducing a Medicaid lien. Id.
26
decision in State Dep't of Human Res. v. Elcano, 106 Nev. 449 (1990), where the court applied the
27
common law common fund doctrine to Medicaid subrogation liens. Id.
28
///
The recipient relied on the Nevada Supreme Court's
Page 17 of 30
D
1
The Nevada Supreme Court held that in the area of Nevada's Medicaid subrogation liens, "the
2
legislature has preempted the common law common fund doctrine by enacting NRS 422.293(5)." Id. at
3
496. "Accordingly, NRS 422.293(5) is the only basis for reducing a lien in consideration of a party's
4
efforts to provide a recovery benefiting the Division." Id.
5
decided before the legislative enactment of NRS 422.293(5), the court concluded that the recipient's
6
reliance on the case was "misplaced." Id. n.3. The Nevada Supreme Court held that Nevada district courts
7
do not have jurisdiction to reduce a Medicaid subrogation lien for attorney's fees and costs. Id. at 496.
(Emphasis added.) Because Elcano was
8
At least one other court has recognized Nevada's third-party liability statute and the Turnbow
9
decision as preempting equitable principles by the codification of state law. In Kahrs v. Sanchez, the court
held that New Mexico's right to reimbursement through its third-party liability statute requiring recipients
to assign their rights to payment for medical care from personal injury actions to the state was subject to
equitable reduction by the courts. Kahrs v. Sanchez, 956 P.2d 132, 139 (N.M. Ct. App. 1997).
In arriving at this conclusion, the court compared its own third-party liability statute to other state
statutes including the state of Nevada. Id. The court noted that New Mexico's statute, unlike Nevada's
NRS 422.293, did not include a statutory lien to ensure "complete reimbursement of medical expenditures
16
in every case." Id. (Citing Turnbow, 109 Nev. 493, 853 P.2d 97, 99 (1993)). Citing Turnbow, the court
17
noted that "[t]hese cases illustrate the options that were available to our legislature if mandatory
18
reimbursement in full were intended." Id.
19
Mexico, lacked jurisdiction to reduce a Medicaid lien. See id.
Hence, Nevada courts, unlike the district courts in New
I
20
'
21
Medicaid recipient, appealed a district court decision that refused to apply equitable subrogation principles
22
to reduce or eliminate Medicaid's share of the recipient's third-party settlement. Id. at 1255. Copeland
23
argued that because the "full value" of her case exceeded $6.4 million and because Copeland settled her
24
case for only $250,000.00, Medicaid's lien should be eliminated. Id. In the alternative, Copeland argued
25
that because her settlement represented only 3.886% of her total alleged damages, Medicaid should only
26
recover 3.886% of its Medicaid lien. Id.
I
E
E
In Copeland v. Toyota Motor Sales U.S.A., Inc., 136 F.3d 1249 (10'x' Cir. 1998), Copeland, a
27
Interestingly, the district court held an evidentiary hearing where testimony was received regarding
28
the "full value" of Copeland' s case. Id. at 1255 n.2. The Tenth Circuit Court noted that the defendant,
Page 18 of 30
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J
1
Toyota, did not agree with Copeland's determination of the "full value" of her case. Id. However, the
2
district court made no findings as to Copeland's damages. Id. The Tenth Circuit held that it did not have
3
to make any findings as to Copeland's damages because its decision did not depend on the amount of
4
Copeland's total damages. Id.
5
The Tenth Circuit Court held that equitable principles did not apply to Kansas' Medicaid
6
subrogation statute; therefore, the district court lacked jurisdiction to reduce the Medicaid lien and properly
7
refused to do so. Id. at 1258. The court looked at the construction of the Kansas subrogation statute that
8
limited Medicaid's recovery in certain circumstances and emphasized full reimbursement. Id. The Court
9
noted that the statute's language indicated that the Kansas legislature did not intend to reduce or eliminate
10
Medicaid's recovery. Id. Instead, "the statute's provisions and specific language ... indicate that the
11
Kansas legislature has `weighed medical recipients' need to be compensated for their injuries against the
12
need for conservation of public funds,' and has determined that, in general, `the public funds have
13
priority."' Id. (Quoting Coplien v. Department of Health & Soc. Servs., 349 N.W.2d 92, 95 (Ct. App.
14
1984). The Tenth Circuit court held that the Kansas district court properly refused to assert jurisdiction to
15
proportionally reduce or eliminate Medicaid's lien under equitable subrogation principles. Id. at 1258.
Other statutory liens in Nevada bolster the view that district courts lack jurisdiction to reduce
16
For example, hospital liens against a
17
statutory liens unless specifically allowed under Nevada law.
18
patient's third-party liability settlement or award do not appear to be subject to reduction by district courts
19
unless the lien is not for the "reasonable value" of the hospital's service. See NRS 108.590(1)(stating that
20
the hospital lien against the third-party recovery is "to the extent of the amount due" for the reasonable
21
value of the hospitalization rendered.) In contrast, mechanics' and materialmen's liens are subject to
22
reduction by the court only if the lien is frivolous or found to be excessive. NRS 108.2275(6). The
23
Legislature specifically empowered justices of the peace to invalidate or amend lien amounts for liens on
24
manufactured houses. NRS 108.355(3). In general, the Legislature in Nevada has been very specific on a
25
court's jurisdiction to reduce statutory liens; in situations where the Legislature has allowed courts
26
jurisdiction to invalidate or change liens amounts, the Legislature has been even more specific in defining
27
the jurisdictional limits of those courts.
28
///
Page 19 of 30
1
For Medicaid third-party liability liens, the Nevada Legislature has displaced common law
2
principles of equity through the enactment of NRS 422.293(3) and (5); thus, district courts lack the
3
authority to directly reduce a Medicaid lien.
4
unambiguous. The Nevada Legislature intended that the state have a statutory lien on the proceeds of each
5
recipient's settlement or award and that each lien must be paid in full.
6
The legislative intent of NRS 422.293 is plain and
The statute does list one exception to the "payment in full" directive.
The statute allows the
7
Administrator of HHS to reduce the Medicaid lien for attorney's fees and costs. This single exception
8
bolsters the fact that the Legislature gave special thought to the vesting of authority to reduce a Medicaid
9
lien. Not only did the Legislature place the decision to reduce a Medicaid lien in the sole hands of the
10
HHS Administrator but the Legislature limited the Administrator's power to reduce by only allowing a
reduction for attorney's fees and costs. The Nevada Legislature intended that NRS 422.293 give Medicaid
a priority for payment in full and that the authority to reduce a Medicaid lien lies solely at the discretion of
the Administrator, not the district courts.
Turnbow and Karhs support this legislative intent. The Nevada Supreme Court refused to apply an
equitable principle of reduction, the common fund theory, to NRS 422.293 because the Nevada Legislature
preempted the common law doctrine with the enactment of NRS 422.293(5). Turnbow, 109 Nev. at 496.
LI
17
This Court held that the Administrator is the only person who has the authority to reduce a Nevada
18
Medicaid lien. Id. Because the Nevada Legislature has enacted otherwise, district courts lack the authority
19
to reduce a Medicaid lien in Nevada. In Karhs, the court recognized that NRS 422.293 and Turnbow
20
displaced principles of equity and concluded that district courts in Nevada, unlike New Mexico, lack
21
jurisdiction to reduce a Medicaid lien. Karhs, 956 P.2d at 139.
22
In addition, other courts, such as the Tenth Circuit, hold that where the legislature has specifically
23
enacted legislation indicating a purpose to displace equitable principles, traditional equitable principles do
24
not apply to a state's statutory subrogation right. Copeland, 136 F.3d at 1255, 1258. As in Copelan d,
25
Nevada's Legislature enacted specific language in NRS 422.293, specifically the "payment in full" clause
26
and the Administrator's sole ability to reduce for attorneys' fees and costs, indicating that the Legislature
27
intended to displace equitable principles with regard to NRS 422.293.
28
issue here, the Copeland court upheld a district court's decision to enforce full payment of the Medicaid
Page 20 of 30
With facts almost identical to the
E
l
1
1
1
lien and its refusal to proportionally reduce the lien when the recipient did not recover the "full value" of
2
her alleged damages . Id. at 1258.
3
Finally, other statutory lien language in Nevada bolsters the argument that the Nevada Legislature
4
has been very specific with regard to the issue of a court ' s jurisdiction and control over lien amounts.
5
Where the Legislature allows a court ' s jurisdiction to disallow or change a lien, the jurisdiction is
6
specifically promulgated and the limits have been carefully defined .
7
jurisdiction to directly reduce a Medicaid lien
Nevada district courts lack
In this case, the district court directly reduced the Medicaid lien in violation of Nevada law. In his
8
9
motion, Amante asked the district court to substantially reduce Medicaid's lien to $20 ,435.00 as "required"
10
by "general equitable principles" and the Ahlborn case. AA, Vol. 1 at 126. Thereafter, the district court,
11
without an evidentiary hearing, directly reduced Medicaid ' s lien from $106 ,805.38 to $20,435.00 as
12
Amante specifically requested . AA, Vol. 2 at 194.
However, the district court lacked equitable jurisdiction to reduce the Medicaid lien. Nevada law
preempts equitable doctrines that would allow the court jurisdiction to reduce Medicaid's lien.
The
Nevada Legislature's enactment of NRS 422.293 provided Nevada Medicaid a right of subrogation to the
"extent of all such [medical] costs" recoverable by a recipient. Nevada Medicaid's lien should be paid in
full to the "extent of all such [medical] costs." This Legislative directive, as interpreted through the
17
I
I
Ahlborn decision, provides Nevada Medicaid with priority in payment and trumps equitable reduction
theories.
19
Furthermore, the Legislative intent of disallowing district courts the jurisdiction to reduce a
Medicaid lien is bolstered by the Legislature's specific language stating that the Administrator is the sole
authority for allowing lien reductions. The district court did not have jurisdiction to reduce Medicaid's lien
from $106,805.38 to $20,435.00 or from $110,936.83 to $21,077.99.
1
1
Furthermore, the district court had the responsibility to allocate damages in the settlement and
failed to do so. The U.S. Supreme Court suggested in Ahlbom that where the parties could not agree in
advance to an allocation, the allocation could be submitted to the district court for a decision. Ahlborn, 547
I
1
U.S at 288. This case was submitted to the district court for that single purpose-to allocate the damages
in the settlement if necessary.
II
Here, the court did not allocate for medical damages; the court directly
Page 21 of 30
1
1
reduced the Medicaid lien. i t
Specifically, the district court should have determined what portion of the
2
1
I
settlement
3
should have been allotted to medical damages. The district court could have ruled as a matter of law that
4
up to one-third of the entire settlement or
5
accordance with the Administrator's policy as there was no evidence submitted by Amante indicating
6
otherwise. Because Medicaid's reduced lien amount, $110,936.83, would be less than the amount of
7
designated medical expenses, the district court should have ordered that Medicaid recover the full amount
8
of its lien. Using the Administrator's fair and predictable policy, an evidentiary hearing would not have
9
been necessary.
_
should be designated as medical expenses in
As an alternative, the district court could have held an evidentiary hearing to determine the total
past billed medical costs incurred by Amante including those bills not paid for by Nevada Medicaid. Once
the court determined the total amount, the court should have allowed Medicaid's entire claim as a priority
lienholder if the Medicaid lien was less than the amount of the allocated medical expenses. If Medicaid's
claim was more than the amount of dedicated medical expenses, Medicaid would be limited to recovering
up to the amount of the medical allocation under NRS 422.293. Instead, the court never made a
determination as to the medical costs in Amante's settlement and directly reduced Nevada Medicaid's
already discounted lien amount from $110,936.83 to $21,077.99.
There are a several methods or policies that a district court may follow to determine how to allocate
damages in a lump sum settlement where the parties themselves have failed to do so.
However, the
methods utilized by Nevada courts must comply with Nevada law and cannot usurp Legislative intent
under the guise of equity. The district court exceeded its statutory authority and failed to allocate for
medical damages in this case. The district court order should be overturned.
I
E.
In
The District Court Decision was Unsupported by Substantial Evidence.
Right
to
Procedural
Due
Addition, the District Court Violated Nevada Medicaid ' s
Process.
The district court's holding that Medicaid's lien should be reduced from $110,936.83 to
26
" Nevada Medicaid must assume that, due to the extensive amount of medical bills incurred by Amante that were not paid
by Nevada Medicaid, neither Amante nor the district court is contending that by reducing Medicaid ' s lien to $21,077.99, the
1 settlement. For
court is also holding that $21 ,077.99 is the total allocation for medical damages in Amante ' s
example , even Amante concedes in his September 11, 2007 letter to Nevada Medicaid that Amante ' s billed medicals
dollars and that, even after reducing the medicals according to Amante ' s proposed formula, the
exceeded g
medicals still exceed $'
. AA, Vol. 2 at 189.
27
I
I
28
II
Page 22 of 30
1
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I
was unsupported by the court record.
1
$21,077. 99 because the "full value" of the case was over $
2
See AA, Vol. 2 at 194, 251 . Furthermore, the State was denied its right to procedural due process because
3
the State did not have the opportunity to present evidence or oppose Amante ' s factual allegations
4
concerning Amante ' s hypothetical case values.
5
The Nevada Supreme Court may not consider matters that do not properly appear in the district
6
court record. Carson Ready Mix, Inc . v. First Natl. Bank of Nevada, 97 Nev. 474, 476, 635 P .2d 276, 277
7
(198 1)(holding supreme court could not consider appellant ' s objection to a jury instruction when objection
8
was made in district court chambers and not in record on appeal ). In addition, "[a] district court ' s findings
9
of fact may be set aside on appeal where they are clearly erroneous and not supported by substantial
10
evidence." Summerfield v. Coca Cola Bottling Co . of the Southwest, 113 Nev. 1291, 1294, 948 P.2d 704,
11
706 (1997). Substantial evidence "is evidence that ` a reasonable mind might accept as adequate to support
12
a conclusion."' Horgan v. Felton, 170 P.3d 982, 985 (Nev. 2007).
The constitutional guarantee of due process requires that each litigant be given a full and fair
opportunity to be heard . See Nicoladze v. First Natl . Bank of Nevada, 94 Nev. 377, 378, 580 P.2d 1391,
1
1391 (1978)(reversing district court decision holding appellant liable because district court failed to hold
evidentiary hearing or make any findings as to whether appellant was alter ego of corporation ); 16B Am.
In
Jur.2d Constitutional Law § 945 (2008). The right to be heard ensures that the duty of fair decision
18
making is followed before a person or entity is deprived the right of property . See 16B Am. Jur.2d
Constitutional Law § 946 (2008).
In this case , Judge Timothy Williams held that the "full value" of Amante ' s case was over
without any evidence on the record to support the court ' s fording other than Amante 's claim that
the "full value" of the case exceeded $
1
evidentiary hearing so that Amante could "rely heavily on the trial testimony of the Plaintiff' s experts
24
25
1
. See AA, Vol. 2 at 251. Amante originally requested an
which Judge Thompson has already heard ." AA, Vol. 1 at 126.
However, prior to the hearing, Amante withdrew his request for an evidentiary hearing and the
26
court never proceeded with the hearing . Therefore, no evidence was admitted into evidence at an
27
evidentiary hearing. Furthermore , Amante did not present any expert opinions , expert testimony or any
28
other document or evidence on the record at all to support his claims . See AA, Vols. 1 & 2.
Page 23 of 30
1
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1
1
1
Furthermore, Judge Timothy Williams decided the Medicaid lien issue , not Judge Thompson who
2
presided over the district court trial and heard the expert testimony in the case . AA, Vol. 2 at 193, 194,
3
251. Both Judge Thompson and Amante originally agreed that Judge Thompson should retain jurisdiction
4
of the case after settlement because Judge Thompson was "intimately familiar with this case as a result of
5
spending several weeks with the attorneys , hearing the witnesses and reviewing the evidence ." AA, Vol. 2
6
at 185 . However, it was Judge Williams that held that Amante ' s case value was in excess of t
7
AA, Vol. 2 at 251 . The district court lacked the substantial evidence needed on the record to support the
8
court order reducing Medicaid ' s lien. The district court ' s finding of facts should be set aside.
9
J
10
oppose any of Amante ' s factual claims . Amante clearly thought that an evidentiary hearing was in
11
order before the district court could decide the fate of the Medicaid lien.
12
Amante originally requested an evidentiary hearing in his motion for equitable /statutory distribution of
13
the medical liens so that the court could receive the factual evidence claimed by Amante. AA, Vol. 1 at
14
126-27.
15
moments before oral argument at the October 30 , 2007 hearing.
16
I
AA, Vol. 1 at 126-27.
Surprisingly, Amante confidently withdrew his request for an evidentiary hearing just
Although Nevada Medicaid did not specifically request an evidentiary hearing, Nevada
Nevada Medicaid did
17
Medicaid did not oppose Amante ' s request if a hearing became necessary.
18
continue to ask the district court to determine the medical damages in the case . AA, Vol . 1 at 121, Vol.
19
2 at 173 . Nevada Medicaid ' s prayer to the court was for payment of the Medicaid lien in full based
20
upon the diminutive amount of the lien compared to the total settlement amount, and, the
21
Administrator's one-third settlement policy. AA, Vol. 1 at 121-22, Vol. 2 at 173-74. In either case, an
22
evidentiary hearing was unnecessary.
23
n
Additionally, the State was denied the opportunity to submit its own evidence to the court or
Furthermore, Nevada Medicaid' s prayer for relief to the district court did not ask the district
24
court to make factual determinations or consider evidence that was not already in the district court
25
record. Therefore , Nevada Medicaid had little reason to request an evidentiary hearing ; nevertheless,
26
Medicaid did not oppose Amante ' s request for the hearing.
27
However, Amante ' s prayer for relief asked the district court to make factual determinations that
28
were not included in the court record such as the proportional reduction of the Medicaid lien according
Page 24 of 30
5
1
to the "full value" of Amante' s case. AA, Vol. 2 at 165 . If the district court were to rule against the
2
state as it did, then the district court should have properly ordered that an evidentiary hearing be held so
3
that the court could receive Amante ' s evidence regarding Amante ' s factual claims and allow the State
the opportunity to present its own evidence to the contrary . See Copelan d, 136 F.3d at 1255 n.2 (where
E
the district court held a hearing to receive evidence on Medicaid recipient ' s claim that Medicaid lien
should be proportionally reduced as recipient ' s settlement was only a fraction of the "full value" of her
claim although hearing was unnecessary to court ' s analysis). The district court did not do that in this
case. In this case , the district court held that Amante ' s case was really worth over $
settled for $
9
I
and only
.. AA, Vol. 2 at 251. As such, the district court reduced Nevada Medicaid's paid
10
lien amount by 81 % without a basis in fact and denied the State the opportunity to procedural due
11
process. AA, Vol. 2 at 251 . The district court ' s order should be overturned.
12
F.
Nevada Medicaid ' s One-Third Allocation Policy for Medical Damages in
Third-Party Settlements is Good Public Policy.
13
14
Nevada Medicaid's policy of allocating one-third of any third-party recovery to medical
15
damages is good public policy because it promotes a fair and predictable outcome for all Medicaid
16
recipients. On the contrary, the district court's lien reduction formula is costly for Nevada's taxpayers.
17
After the Ahlborn decision in May 2006, the Administrator had to promulgate a policy in order to
18
determine the reasonableness of allocations fashioned by plaintiffs' attorneys in recipients' third-party
19
liability settlements. The Administrator, noting examples set by other states where states agreed to limit its
I
20
recoveries to a portion of the recipient's gross settlement amount, instituted a policy of recovering up to
'
21
one-third of the recipient's gross settlement amount, or, the amount of the lien, whichever amount was less.
22
See In re Zyprexa Products Liability Litigation, 451 F. Supp.2d 458, 473-74 (E.D.N.Y. 2006)(noting how
23
different states, including Nevada, resolved to settle Medicaid liens in the Zyprexa litigation as well as
24
specific state laws on proportional Medicaid recovery).
25
was a reasonable balance between Medicaid's position as a "payor of last resort" and the recipient who
26
should be reasonably compensated and economically encouraged to litigate their claims.
P
1
7
D
I
The Administrator determined that this policy
Additionally, the Administrator's policy is cost-effective.
27
The Administrator's policy reduces
the need for parties to go to court and hold mini-trials on each Medicaid subrogation case in order to
28
I
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Page 25 of 30
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1
determine the hypothetical values of what cases are "really" worth. Nevada Medicaid would be forced into
2
hiring experts to counter evidence presented by Medicaid recipients, or, be forced to sit idly by due to a
3
lack of state funds and succumb to a recipient's biased estimate of his case value. This scheme is costly in
4
time and money for the Medicaid program, the taxpayers, the attorneys and the courts.
5
Although the state may avoid subrogation and assert its right to recovery as a party in a lawsuit, the
6
costs involved with "intervening and participating in all beneficiaries' third-party litigation makes this
7
option impractical." Suzanne G. Clark, Note, An Accident Waiting to Happen: Arkansas Department of
8
Health and Human Services v. Ahlbom Exposes Inequities in Medical Benefits Le gisl ation, 60 Ark. L.
9
Rev. 533, 556 (2007); see also Sean Sandison, Note, Keeping the Government Away From Medicaid
10
Recipients' Pocketbook: Protecting Medicaid Recipient's Rights to Proceeds of Third-Party Settlements In
Arkansas Department of Health & Human Services v. Ahlbom, 58 Mercer L. Rev. 799, 812 (2007)(stating
that the "underlying difficulty for the applicable state agencies, a difficulty that the courts do not appear to
recognize, is the resulting budgetary and resource drain such litigation would place upon state agencies).
Furthermore, unlike the state of Arkansas, Nevada's highest court has not ruled that Nevada
Medicaid has an independent right of recovery apart from the recovery rights of the recipient. See
Ahlborn, 547 U.S. at 278 n.6. Therefore, even if Nevada Medicaid were to proceed as a named party in a
E
17
recipient's lawsuit, there is no assurance that Medicaid's right to recovery would be independent of the
18
recipient's interest in the case. In other words, the parties may settle medical damages in the case without
any regard to Nevada Medicaid and Nevada Medicaid remains in the position as subrogee. Intervening as
a party in each recipient's lawsuit is impractical and may have very little impact without further direction
from this Court or the Nevada Legislature. The Administrator's policy is cost-effective and good public
policy.
E
Interestingly, the Administrator's policy also prevents plaintiffs' attorneys from being in the
arduous position of having to argue that the attorney failed to obtain a judgment or settlement for their
client that was even close to the actual value of the client's case. In addition, the policy prevents
attorneys from vehemently arguing for extensive medical damages at the onset of a client's case and
27
then arguing at a subsequent "mini-trial" that medicals only constitute a small portion of a client's
28
award.
Page 26 of 30
Finally, the Administrator's set policy is predictable and treats recipients uniformly.
1
The policy
2
provides plaintiffs' attorneys with the ability to predict outcomes in terms of negotiating settlements.
3
Medicaid recipients are treated uniformly regardless of which judge hears their personal injury case.
4
On the contrary, the district court's lien reduction formula guarantees that in almost every third-
5
party liability subrogation case, Nevada Medicaid will never recover its lien amount in full even if
6
Medicaid's lien is proportionately miniscule compared to the recipient's total recovery amount. In order
7
for Medicaid to be paid in full under this formula, the plaintiff would have to agree that the plaintiff
recovered the "full value" of the plaintiff's case. It is unlikely that many plaintiffs' attorneys will concede
that his or her client settled for or was awarded the "full value" of the client's case when negotiating a lien
with Nevada Medicaid or presenting those arguments to a court.
The district court's formula almost
guarantees that Nevada Medicaid's lien will be drastically reduced based on hypothetical values controlled
by recipients and their attorneys with the purpose of diminishing Medicaid's lien. The district court's
reduction formula assures that less money will be available to the state budget to provide necessary
medical benefits for other needy persons. The Administrator's one-third allocation policy is good public
policy.
G.
If the Rules of Equity Do Apply, Equity Requires that Nevada Taxpayers are Paid
Back in Full.
17
E
18
If the district court properly applied the rules of equity to this case , then equity requires that
19
Nevada' s taxpayers are paid back in full . In Turnbow, the Nevada Supreme Court opined that Nevada
20
Medicaid's lien should be paid in full because "[ f]airness to the taxpayers , who provided [the Medicaid
21
recipient] with crucial medical care , requires that they be the first to be reimbursed following an award
22
of punitive damages ." Turnbow, 109 Nev. at 496.
In this case, equity requires that Nevada Medicaid ' s entire lien be paid in full . Amante received
23
for the injuries that he incurred from the liable third -party. AA, Vol. 2 at 184. Amante
24
$
25
incurred over $406 ,859.82 in medical bills for his injuries . AA, Vol. 2 at 207 . If Amante did not
26
qualify for public welfare benefits, Amante ' s medical providers could have put a lien for the full
27
amount of his medical bills against not only Amante ' s entire settlement in this case but against
28
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Page 27 of 30
1
2
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Amante's personal assets. See e.g., NRS 108.590(1)(allowing hospitals liens against third-party
settlements and real property owned by patient).
3
However, because Nevada Medicaid paid Amante's medical bills at a reduced rate of
4
$110,936.83, Amante's lien debt has been reduced by $295,922.99. AA, Vol. 2 at 207. In addition,
5
Nevada Medicaid's lien represents just over
6
would surely require fairness to the Nevada taxpayers, who provided Amante with crucial medical care
7
at a time when Amante could not pay his own medical bills, to be paid in full. The district court's
8
decision should be overturned.
9
V.
% of the total settlement. AA, Vol. 1 at 121. Equity
CONCLUSION
10
The district court's decision should be overturned. The district court misinterpreted and then
11
misapplied the Ahlborn decision to this case. In addition, the district court reduced Nevada Medicaid's
12
lien from $110,936.83 to $21,077.99 in violation of Nevada law and failed to allocate medical damages
13
in Amante's settlement. Furthermore, the district court lacked sufficient evidence on the court record to
conclude that Amante's actual case value was worth over $
should thereby be reduced.
and that Nevada Medicaid's lien
The district court denied Nevada Medicaid's right to procedural due
process by ordering Medicaid's lien reduction without an evidentiary hearing.
The Administrator's
policy of allocating one-third of a recipient's third-party recovery to medical damages is good public
H
19
20
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1.
Reverse the district court's Order dated November 16, 2007 granting Amante's request to
reduce Nevada Medicaid's lien from the sum of $110,936.83 to the sum of $21,077.99 because Amante
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did not receive the "full value" of his case estimated to be in excess of I
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Medicaid's lien to be paid in full. Nevada Medicaid requests that this Court:
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Finally, if this Court determines that equitable principles apply, equity requires Nevada
policy.
2.
Remand this case back to the district court with the following instruction:
(a)
That the lien reduction formula stipulated to by Heidi Ahlborn and the State of
Arkansas in the Ahlborn case is not a formula adopted by the U.S. Supreme Court;
(b)
That the lien reduction formula stipulated to by Heidi Ahlborn and the State of
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Arkansas in the Ahlborn case is a violation of Nevada law because the district court lacks jurisdiction to
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directly reduce a Nevada Medicaid lien;
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(c)
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damages in a Medicaid recipient ' s third-party settlement or award when allocations are necessary;
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(d)
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That the district court follow the Administrator ' s policy for allocation of medical
That, in the alternative , the district court allocate medical damages by holding an
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evidentiary hearing to determine the full amount of the total billed medicals in the case in accordance
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with the mandates of procedural due process and Nevada law.
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3.
Any other relief that this Court deems proper.
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DATED this `
day of August, 2008.
CATHERINE CORTEZ MASTO
Attorney General
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SABRINA GRINDLE RAETZ
Deputy Attorney General
Bar No. 6464
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555 E. Washington, Suite 3900
Las Vegas, Nevada 89101
(702) 486-3083
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CERTIFICATE OF COMPLIANCE
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I, SABRINA GRINDLE RAETZ, hereby certify that I have read the foregoing appellate brief,
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and to the best of my knowledge, information and belief, it is not frivolous or interposed for any
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improper purpose. I further certify that this brief complies with all applicable Nevada Rules of
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Appellate Procedure, in particular NRAP 28(e), which requires every assertion in the brief regarding
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matters in the record to be supported by appropriate references to the record. I understand I may be
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subject to sanctions in the event this brief is not inconformity with the requirements of the Nevada
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Rules of Appellate Procedure.
DATED THIS J day of August, 2008.
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a^^ntyta
ABRINA GRINDLE RAETZ
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CERTIFICATE OF MAILING
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I hereby certify that I am employee of the State of Nevada Office of the Attorney General and
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day of August, 2008,1 served the foregoing APPELLANT'S OPENING BRIEF by
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that on the
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mailing a copy thereof to:
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Robert L. Eisenberg, Esq.
Lemons, Grundy & Eisenberg
6005 Plumas Street, Suite 300
Reno, NV 89519
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Employee of the Attorney General's Office
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