January 2007 - General Employment Law - Fed. Ct.

Arkansas DHS v. Ahlborn
__U.S.__ 05/01/2006
STEVENS

Federal Medicaid law does not authorize Arkansas to assert a lien on a Medicaid recipient's third-party settlement in an amount exceeding medical costs, pursuant to the federal anti-lien provision.

The Court affirmed a lower court's ruling that struck down, as a violation of federal law, an Arkansas statute regarding liens on Medicaid recipients. Under the law, when Arkansas Medicaid patients obtain a third-party settlement, the state automatically imposes a lien equal to the amount of the settlement's medical costs. If the settlement medical costs do not cover the patient's Medicaid expenses, the state attaches a lien on other parts of the settlement, such as lost wages and future earnings, to make up the difference. The Supreme Court affirmed that these types of liens, which other courts have upheld, are not legal.

The plaintiff in the case became irreparably brain-damaged from a car accident at age nineteen. The Arkansas Medicaid program paid her medical costs of $215,645.30. It notified her that the state had a reimbursement claim from any third-party awards she might receive. The state based this on a provision of the Social Security Act, which provides that state Medicaid plans may pass laws to "assign to the State any rights...to payment for medical care from any third party." §1396k(a)(1)(A). The SSA also states that any money a state collects on such assignment is to be kept by the state to the extent it covers medical costs, the remainder to be paid to the recipient.

The Supreme Court agreed with plaintiff that the "Arkansas law goes too far" and plainly contradicts the SSA provisions by allowing the state to recover the entire amount of its Medicaid costs, not just the portion of a third-party payment that represents medical costs. As Justice Stevens pointed out, the federal reference to "legal liability of third parties" covers only the amount of liability the third parties accept for medical costs and nothing more.

The Court also found that the federal law expressly limits the power of states to pursue recovery of expenditures such as Medicaid. Specifically, states cannot place a lien on an individual's property to recover state-paid medical costs. They may be assigned rights to third-party medical payments, however, as an exception to the anti-lien provision. The Court rejected the state's argument around the anti-lien statute by claiming that the plaintiff had no property to be attached.

The Court rejected the state's assertion that the settlement money was not plantiff's property because it was assigned to the state, hence the anti-lien provision should not apply. Under the state law, however, the lien does not attach until the proceeds are realized by the plaintiff. Plus logistically, if the state claimed the money was its own all along, why would it need an attachment of its own funds?

The Court also dismissed the state's arguments that the anti-lien provision should not apply here specifically because the plaintiff breached her duty to cooperate in informing the state of all relevant third-party information, which leads to a default judgment for the state, or because there is "an inherent danger of manipulation" by parties in tort settlements without judicial oversight or state input. First, an individual's duty to cooperate arises principally in proceedings by states against third parties, and mainly requires that the individual comply in paying the state any assigned Medicaid funds. There was also no evidence of failure to cooperate here. To avoid manipulation, the state can submit the matter to a court.

Brown v. EMMC
__F.Supp.__ 07/18/06
KRAVCHUK

Claim of interference with rights under federal Family and Medical Leave Act because employer failed to notify employee of right to take intermittent leave allowed to proceed to trial, but claim under Maine FMLA dismissed because Maine law does not address intermittent leave.

The employee worked for Eastern Maine Medical Center as a nurse technician from 2002 until she was terminated in 2005. During her last year of work, she suffered from fatigue of uncertain origin, which led to tardiness and absenteeism. Her supervisor, aware she had a serious medical condition, offered her medical leave but the employee declined because she would have had to leave work altogether. She was never offered intermittent leave, which she states she would have used to cover for her tardiness. In November 2005, she was terminated for excessive tardiness.

The employee then filed a claim alleging that the employer interfered with her right to take intermittent leave under the federal and Maine Family and Medical Leave Acts. The employer moved to dismiss the claim on the basis that the FMLA does not require employers to notify employees of the right to take intermittent leave.

The Court allowed the employee's federal claim to proceed, however, based on the liberal requirements of a motion to dismiss as well as the decisions of the U.S. Supreme Court in Ragsdale v. Wolverine World Wide, Inc. (535 U.S. 81, 2002) and the Maine Law Court in Whitney v. Wal-Mart Stores, Inc.(895 A.2d 309, Me.2006). In Ragsdale, the U.S. Supreme Court noted that the federal FMLA requires employers to provide to employees excerpts or summaries of "the pertinent provisions" of the Act but does not state which provisions are pertinent. Thus, though it speaks of intermittent leave rights, there is no mandate that employers notify employees of this.

The Ragsdale Court also noted, however, that the failure to inform an ill employee of the right to take intermittent leave "could" constitute restraint or denial of FMLA rights. It provided the example of an ill employee who takes all 12 weeks of leave consecutively, leaving none for a future emergency, not knowing there was an alternative. The current Court refused to find this merely "unpersuasive dictum," as EMMC argued, but it also stressed that the employee cannot just show that the employer failed to notify her of intermittent leave rights but must also show she was prejudiced by this failure.

The employer relied on Whitney, in which the Maine Law Court held that federal regulations do not require notice of intermittent leave. As in Ragsdale, though, the Whitney Court stated that an employee can be prejudiced by the failure to be notified of intermittent leave, and it denied the employer's motion for summary judgment on that issue. The present Court thus allowed the employee to go to trial with the burden to prove that lack of notice of intermittent leave interfered with or restrained her rights under the federal FMLA.

The Court did dismiss the claim under the Maine FMLA, however, because that statute has no provision regarding intermittent leave, and as the Court stated, it would not impart into the law what the Maine Legislature did not adopt.