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Martin v. City of Rochester8/15/2000
's "property", i.e., their cause of action.
The Utah Supreme Court recently addressed this issue in Wallace v. Estate of Jackson, 972 P.2d 446 (Utah 1998), cert. denied, 120 S. Ct. 42 (1999), and a companion case, S.S. v. State, 972 P.2d 439 (Utah 1998). The Utah court was presented with a challenge to the state's ability to assert liens against a Medicaid recipient's third-party tort recovery. That court upheld the statute by finding that
payments made by a third party do not legally become the property of the recipient until after a valid settlement which must include reimbursement to the State for Medicaid benefits. Wallace, 972 P.2d at 448.
In upholding the Utah lien statute, the Utah court relied in part on a decision by the New York Court of Appeals in Cricchio v. Pennisi, 683 N.E.2d 301 (N.Y. 1997), which stated that
settlement proceeds are resources of the third-party tortfeasor that are owed to [the state]. Accordingly, the lien on the settlement proceeds attaches to the property of the third party, and thus does not violate the statutory prohibition against imposing a lien against a beneficiary's property until after his or her death. The flaw in plaintiffs' theory that the lien cannot be satisfied until the recipient's death is that it fails to appreciate this critical distinction between the assets of a responsible third party and assets belonging to the Medicaid recipient. Id. at 305 (citations omitted).
The Second Circuit recently reached the same result, but on a rationale we find more persuasive. The Second Circuit stated:
Pursuant to federal law, Medicaid recipients must assign to the state their rights to seek and collect payment for medical care from a responsible third party. As part of its recoupment power, the [state agency] administering Medicaid may place a lien on the Medicaid recipient's personal injury claims against a tortfeasor in order to recover the agency's medical expenditures. [These] liens enjoy a specific exemption from the general rule that the state may not encumber a Medicaid recipient's property prior to death.
Sullivan v. County of Suffolk, 174 F.3d 282, 285 (2d Cir. 1999), cert. denied, 120 S.áCt. 372 (1999) (citations omitted).
In Norwest Bank v. Doth, 159 F.3d 328 (8th Cir. 1998), the Eighth Circuit, while applying Minnesota law, found that
a state may require a Medicaid lien imposed on the proceeds of a personal injury award or settlement to be satisfied before the remaining funds are placed in [a trust]. Id. at 333.
The Eighth Circuit, however, declined to address the specific preemption issue before this court.
The Minnesota medical-assistance-recovery statute contemplates alternative procedures that the state may utilize to recover reimbursement of medical assistance. The state may either bring its own action or impose a lien on any recovery the medical-assistance recipient might gain in the recipient's own action. The lien is simply a device to protect the state's legitimate subrogation interest. This lien does not have the effect of allowing the state to make a claim on property that is not connected to the medical assistance it has provided. Further, the lien allowance does not prevent all recovery to the injured party. Under the lien procedure, the plaintiff is guaranteed "at least one-third of the net recovery after attorney fees and other collection costs." Minn. Stat. §á256.015, subd. 5 (1998).
Minnesota's medical-assistance statute, thus, does not conflict with the federal Medicaid statutory scheme. See In re Estate of Turner, 391 N.W.2d 767, 770 (Minn. 1986) (medical assistance serves system "where
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