Armstrong v. Cansler, No. 10-1865

Decided Mar. 22, 2012

E.M.A., a minor, sustained serious injuries at birth due to medical negligence. As a result of E.M.A.’s injuries, the North Carolina Department of Health and Human Services (DHHS), through the state Medicaid program, paid more than $1.9 million in medical and health care expenses on her behalf. Meanwhile, E.M.A. through her guardian ad litem and her parents instituted a medical malpractice action in state court. The case settled for a lump sum of approximately $2.8 million. DHHS subsequently asserted a statutory lien on the settlement proceeds pursuant to the North Carolina third-party liability statutes, which provide that North Carolina has a subrogation right to, and may assert a lien upon, the lesser of its actual medical expenditures or one-third of the Medicaid recipient’s total recovery. Appellants brought this action in federal district court against the Secretary of DHHS seeking declaratory and injunctive relief, seeking to forestall payment of the amount claimed by DHHS on the basis of the provision of the federal Medicaid law known as the “anti-lien provision.” The district court granted summary judgment in favor of the appellee, Secretary Cansler. The Fourth Circuit Court of Appeals vacated the district court’s judgment and remanded the action for further proceedings. The Fourth Circuit held that the unrebuttable presumption inherent in the one-third cap on the state’s recovery imposed by the North Carolina third-party liability statutes was in fatal conflict with federal law.

Full Opinion

-Sara I. Salehi

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