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Medicaid: 3rd Circuit Allows State to Place Liens

By Tanya Roth, Esq. on June 30, 2011 | Last updated on March 21, 2019

The Third Circuit Court of Appeals addressed the issue of Medicaid this week in a lawsuit discussing a federal law preventing Pennsylvania from placing liens against the properties of living Medicaid beneficiaries, writes the Pittsburg Tribune Review.

The Court of Appeals ruled that the law doesn`t prevent the state from collecting medical costs from the money beneficiaries receive from lawsuits.

The putative class action lawsuit was brought on behalf of three plaintiffs. Filed in 2006, the federal class action lawsuit claimed that the State of Pennsylvania had improperly taken some of the money that three Allegheny County beneficiaries received from settlements in lawsuits, namely medical malpractice and vehicle accident lawsuits.

According to the lawsuit, the plaintiffs argued that the anti-lien statute blocked the State of Pennsylvania from seizing money from their settlements and damage awards.

In its defense, the State of Pennsylvania argued that federal statute allowing Pennsylvania to recover medical costs from third-party payments to Medicaid recipients includes damage awards.

The case was never adjudicated fully before the District Court, as it is currently still pending in the lower court. Rather, the U.S. District Court judge presiding over the case permitted the question of applicable law to be answered by the Third Circuit Court of Appeals.

In resolving the question as to which federal statute applies, the court of appeals looked at congressional intent. The court stated that while the two statutes conflict, Congress didn't intend for the beneficiaries to get a windfall payment for medical costs they never paid, reports the Tribune Review.

The case will now be heard in District Court.

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