Appeals Panel Limits Amount Arkansas Can Recover from Suit Settlement

FEBRUARY 10, 2005 - Posted at 7:40 a.m. CST

LITTLE ROCK, AR - A federal appeals court has ruled the state Medicaid program can only recover a percentage of a settlement in an accident-injury case.  The court said the payment has to be in proportion to the settlement's share of actual damages.

All three judges on a panel of the Eighth U.S. Circuit Court of Appeals at St. Louis agreed Wednesday that the state could recover only a portion of the amount Medicaid paid out to treat Heidi Ahlborn of Newark.  Ahlborn was injured in an accident in 1996, when she was 19.

The state had sought to collect $215,645 in Medicaid costs from $550,000 paid to Ahlborn to settle a suit she had filed.

To receive the Medicaid benefits, Ahlborn was required to sign over to the state her right to any settlement, judgment or award she might receive stemming from the circumstances that caused her injuries.  The judges ruled the state can't circumvent the federal anti-lien statute.

DHS spokeswoman Julie Munsell says the decision could potentially cost the state millions of dollars in future cases.

(Copyright 2005 by The Associated Press.  All Rights Reserved.)