Significant Court Case in Worker’s Compensation

Gallardo V. Marstiller

Can a state recover Medicaid’s payment of past medical expenses by taking funds from the portion of tort recovery that compensates for future medical expenses? That was the issue decided by the Supreme Court in Gallardo v. Marstiller.

Gianinna Gallardo was injured in 2008 when a pickup truck hit her after she got off the school bus. She remains in a vegetative state. Florida’s Medicaid program paid $862,668.77 for her medical care. Gallardo’s parents filed suit in state court on her behalf against the truck driver and the school district. She was awarded a total of $800,000 from the suit. However, only $35,367.52 were for past medical expenses. Florida attached a lien for the $862,688.77 while the case was pending. Florida’s Medicaid Act instructs the Florida Agency for Health Care Administration to seek reimbursement from third-party benefits to the limit of legal liability and for the full amount of third-party benefits.

Gallardo argued in US District Court that the cap on Florida’s reimbursement was $35,467.52. The district court agreed with Gallardo, but the 11th Circuit Court of Appeals disagreed and ruled for Marstiller (Secretary of the Florida Agency for Health Care Administration). Then the Supreme Court granted Certiorari.

Gallardo’s argument was that the Medicaid statutes permit states to reach only funds representing third-party liabilities for what Medicaid has paid, not for future medical expenses. Marstiller argues that Medicaid law requires state Medicaid programs to seek reimbursement from third parties liable for beneficiaries’ medical care.

The court ruled for Marstiller. In a 7-2 majority opinion, written by Justice Thomas, the court held that the Medicaid Act permits a state to seek reimbursement from settlement payments allocated for future medical care. Justice Sotomayer joined by Justice Breyer wrote the dissenting opinion. She said, “The majority’s holding is inconsistent with the structure of the Medicaid program and will cause needless unfairness and disruption.”