Gold v. United Health Servs. Hosps., 95 N.Y.2d 683 (2000)
Medicaid agencies possess independent rights of recovery against third parties for medical expenses paid on behalf of a recipient, and these rights are not limited by restrictions applicable to other forms of public assistance under Social Services Law § 104(2), even when the recipient is an infant.
Summary
The New York Court of Appeals addressed whether Social Services Law § 104(2), which limits recoupment from infants receiving public assistance, applies to Medicaid’s recoupment provisions. Two cases were consolidated: one involving lead poisoning and the other involving birth injuries. The court held that Medicaid’s recoupment rights are independent of Section 104(2) due to federal mandates requiring states to seek reimbursement from liable third parties. Thus, Medicaid can seek full recovery from settlements, even those awarded to infants, for medical expenses paid, reinforcing Medicaid as the payor of last resort. The court remanded one case for proper application of CPLR 1206 regarding the allocation of settlement funds for a supplemental needs trust.
Facts
In Santiago, an infant, Kimberly, received Medicaid benefits after lead poisoning. Her mother sued the landlord, settling for $140,000. The NYC Department of Social Services asserted a lien to recoup $12,877 in Medicaid benefits. In Gold, Abraham suffered from cerebral palsy due to alleged medical negligence during his mother’s pregnancy, resulting in a $5 million settlement. Since birth, Abraham received Medicaid benefits. Broome County DSS and the NY Office of Mental Retardation asserted liens totaling over $1.7 million.
Procedural History
In Santiago, the Supreme Court vacated the City’s lien, but the Appellate Division reversed. The Appellate Division granted leave to appeal to the Court of Appeals. In Gold, the Supreme Court denied the Golds’ motion to reduce the liens proportionally, allocating funds for attorney’s fees, Medicaid liens, a reserve for future medical care, and a supplemental needs trust. The Appellate Division affirmed, and the Golds were granted leave to appeal to the Court of Appeals.
Issue(s)
1. Whether Social Services Law § 104(2) limits Medicaid agencies’ ability to recoup expenditures from settlements awarded to infant recipients.
2. In Gold, whether the trial court properly ordered a reserve for future medical needs instead of directing funds to a supplemental needs trust.
Holding
1. No, because Medicaid agencies’ recoupment rights derive from independent statutory provisions related to assignment, subrogation, and recoupment, distinct from Social Services Law § 104(1).
2. No, because the trial court failed to properly exercise its discretion under CPLR 1206 regarding the allocation of funds, and instead made allocations mathematically without citing statutory authority.
Court’s Reasoning
The Court reasoned that federal law mandates states to seek reimbursement for Medicaid expenditures from liable third parties (42 USC § 1396a[a][25][A]-[B]). Medicaid applicants must assign their rights to seek reimbursement to the Medicaid agency (42 USC § 1396k[a][1][A]). The agency is subrogated to the recipient’s rights against third parties (42 USC § 1396a[a][25][H]). Citing Cricchio v. Pennisi, 90 N.Y.2d 296 (1997), the Court emphasized that the right to recover from third parties stems from Medicaid’s provisions, not Social Services Law § 104. The Court distinguished Baker v. Sterling, 39 N.Y.2d 397 (1976), noting that the regulatory scheme had significantly evolved since that decision. Medicaid remains the “payor of last resort.” The Court clarified that Social Services Law § 104(2) still applies when recoupment is sought under Section 104(1) for other forms of public assistance. Regarding the Golds’ argument, the court found the trial court failed to properly exercise its discretion under CPLR 1206, which governs the investment or disbursement of an infant’s recovery, and remitted the case for proper consideration.