Subrogation Issues

What do residents of Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, Weatherford, and other cities in Texas need to know about subrogation? The answer is, a lot, unless you get an experieinced Insurance Law Attorney helping you.
Another important and potentially risky area of subrogation is Medicaid. Medicaid is a Federal program which is administered by the State. For us Texans, the program is administered by the State of Texas. Anytime you are discussing Federal Government liens and subrogation claims, such as Medicaid, Medicare, Veterans Administration, and a laundry list of others, it is wise to assume that such liens attach to claims and are superior to other liens, even if you have no actual notice of their existence.
Having said the above, it is important to realize that Medicaid and Medicare liens are very different creatures. This is expecially true in light of a recent United States Supreme Court case appealed from the State of Arkansas. This 2006 case is styled, Arkansas Department of Health and Human Services v. Ahlborn. A copy of the July 3, 2006 memo setting forth the Federal Government’s position on Ahlborn’s impact on Medicaid reimbursement / subrogation is available to the public on the Internet at:
http://www.nasmd.org/issues/docs/CMS_Advisory_Ahlborn_Settlement_Options_July%202006.doc.
This memo includes the following language about the Ahlborn decision: “A State’s lien laws may only operate to recover from that portion of a settlement that is allocated to healthcare items or services, even if it means that Medicaid must forego full recovery of its claim.” The memo included the following section:
What This Means for Medicaid Third Party Liability Recovery Programs:
Prior to the Supreme Court’s decision in Ahlborn, CMS had interpreted the Medicaid third party liability provisions to authorize States to pass laws permitting full recovery of Medicaid assistance payments from third party liability settlements, regardless of how the parties allocated the settlement. The Supreme Court rejected this interpretation of the Medicaid statute and held that to the extent State laws permit recovery over and above what the parties have appropriately designated as payment for medical items and services, the State was in violation of federal Medicaid laws.
For Texas, the Ahlborn decision means that insurance adjusters, individuals, or attorneys dealing with a Medicare or Medicaid lien have to familiarize themselves with the current interpretations of the Ahlborn decision under Texas law.
And finally, here is something very important to know: A Texas Medicaid recipient may commit a misdemeanor by failing to notify the Texas Department of Human Services of a tort claim or cause of action. This can be seen in the Texas Human Resources Code, Section 32.033(b) and the Texas Penal Code, Section 12.23. In other words, if you do not handle these federal benefits properly as it relates to their lien / subrogation interests, you may be guilty of a criminal offense.