From an editorial published in Fridays New York Times:
Under the federal Medicaid statute, states must seek reimbursement for medical expenses if the beneficiary also receives money from an insurance company or another third party. This week, the Supreme Court correctly slapped down a North Carolina law that could squeeze far more from beneficiaries than they actually owe.
By a 6-3 vote, the court ruled that the Medicaid law pre-empts a North Carolina law that, in effect, puts a lien on a beneficiarys property by automatically seizing one-third of an insurance settlement even though it includes payment for pain and suffering. Under Medicaid law, the state can claim reimbursement only for actual care. North Carolina had required the family of a girl known as E.M.A. to set aside one-third of a $2.8 million settlement for severe injuries suffered during birth that left her deaf, blind and unable to walk, talk or even swallow and required skilled nursing 12 to 18 hours a day.
E.M.A. and her parents sought damages for pain and suffering as well as skilled care, but the settlement did not say how the money was split between those elements. Justice Anthony Kennedy wrote for the majority that the states one-size-fits-all approach could mean that the one-third it claimed was a lot more than what it paid for medical expenses.
Sixteen states avoid this problem by holding a legal hearing about how damages are allotted.
In dissent, Chief Justice John Roberts Jr. defended the states approach as easy, cheap, and administrable laudable qualities in the context of a vast and intricate program.
Nor was he troubled, he said, by the question of where to draw the line. But North Carolina itself had conceded in oral argument that it could not get away with a law that claimed 90 percent of a settlement for medical expenses. Kennedy was right to say that the arbitrary number of one-third was no more defensible.