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Medicaid discount at issue in injury case.

Byline: Dan Heilman

Varying judicial interpretations of a Minnesota statute that oversees Medicaid discounts will lead to a personal-injury case being sent back down to a lower court.

In an opinion published last week, the Minnesota Court of Appeals ruled that, according to statute, discounts negotiated for Medicaid beneficiaries under Minnesota's Prepaid Medical Assistance Program (PMAP) are exempt from a collateral-source offset statute.

The case arose from a 2012 motor vehicle accident between appellant Ambree Getz and bus driver Eila Peace in Blue Earth County. Getz sued Peace and her employer, Palmer Bus Service of Maple River, and a jury returned a special verdict that assigned 20 percent fault to Getz and 80 percent fault to Peace. The jury also found that Getz had incurred medical expenses totaling $224,998.16.

As a medical-assistance enrollee, Getz received Medicaid benefits through contracted managed-care organizations operating under the PMAP statute. Peace and her employer wanted a determination of collateral sources and to limit the award of past medical expenses to the amount actually paid by Getz's managed-care group. That amount, $45,979.41, accounted for negotiated discounts under PMAP.

At first, a Blue Earth County district court reduced Getz's award for past medical expenses by $20,000 to offset the no-fault-insurance benefits she received. The court then reduced the amount of the total award by $45,979.41, interpreting the statute to mean it does not except from offset the discounts negotiated for Medicaid beneficiaries by a managed-care group operating under PMAP. The district court noted Getz's failure to offer evidence that the government obtained the discounts negotiated.

Getz appealed the district court's interpretation of the collateral-source statute, arguing that its offset calculation shouldn't have deducted from the jury's damages award discounts negotiated by managed-care organizations operating under the PMAP for the cost of her medical care.

"The statute couldn't be much clearer, but insurance companies are clever," said Nathan Bjerke of Bloomington-based TSR Injury Law, who helped represent Getz. "They have a lot to gain by muddying the waters, and by finding a judge sympathetic to their cause."

And indeed, the appellate court's task was to examine the statutory language to determine whether the words of the law were clear and free from ambiguity.

Citing the 1982 case Hueper v. Goodrich, the court noted that at common law, payments from collateral sources are not deducted from a plaintiff's damages awarded by the jury. The policy supporting the common-law rule, case law says, "is that the tortfeasor, as a wrongdoer who caused a particular harm, should not benefit from a tort plaintiff's ability to secure other compensation."

The court also looked at whether the discounts negotiated for Getz as a Medicaid beneficiary and PMAP enrollee were in accordance with the United States Social Security Act, which authorizes participating states to establish managed-care programs by contracting with private-sector managed-care organizations to deliver Medicaid benefits. Those organizations, in turn, provide or arrange for services for enrollees in exchange for capitation payments.

As a Medicaid beneficiary and PMAP enrollee, the discounts negotiated for Getz by her managed care groups were obtained according to the authority granted by the Social Security Act thus constituting payments made pursuant to the United States Social Security Act.

"Our opinion is that the appeals court glossed over some of the facts regarding how these things are negotiated," said Daniel J. Bellig, an attorney with Mankato-based Farrish Johnson, which represented Peace and Palmer Bus Service. "Once the insurance company is paid its capitated rate by the state, it's up the insurance company how it's going to make money. They have to be able to negotiate that."

Nonetheless, the Court of Appeals determined that the district court erred in its interpretation of statute because discounts negotiated for Medicaid beneficiaries under Minnesota's PMAP are pursuant to the U.S. Social Security Act, and thus collateral sources excepted from offset under Minnesota statute.

Bjerke, Getz's attorney, said his client's strategy likely won't change much now that the case has been remanded back to district court.

"We'll maintain the same position we've had all along that the statute is clear, and the appeals court saw that the district court erred," Bjerke said.

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Publication:Minnesota Lawyer
Geographic Code:1U4MN
Date:Sep 25, 2018
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