In a potentially striking blow to the Pennsylvania Medicaid (Medical Assistance)Third Party Liability (“TPL”) collection practices, the Honorable Joy Flowers Conti, Judge for the United States District Court for the Western District of Pennsylvania, issued a Memorandum Opinion dated March 25, 2009 in the Tristani v. Richman et al. proposed class action. PAWD Civil Action No. 06-694. The Tristani Opinion fills the gap left by the United States Supreme Court’s Ahlborn Decision regarding a presumed “exception” in Federal Law permitting State Medicaid Agencies to effectuate mandatory TPL recovery through the imposition of liens on Medicaid recipients’ personal injury proceeds. 

The United States Supreme Court’s Ahlborn Decision "assumed" that Federal Law created an exception to the Anti-Lien and Anti-Recovery provisions because the parties therein had stipulated as much. The Tristani Opinion squarely addresses validity of such assumed exception, which the United State Supreme Court expressly noted it was forced to “leave for another day”. 547 U.S. 268, 284 n. 13 (2006)

In an opinion as dense as any law school hypothetical wrought with interpretations on due process, civil procedure, qualified immunity, takings and interpretations of Congressional intent, Tristani reasons that the Federal Anti-Lien and Anti-Recovery provisions, 42 U.S.C. §§1396p(a)(1) and 1396p(b)(1), preempt Pennsylvania State Law at 62 Pa. C.S. §§ 1409, et seq. under the Supremacy Clause of the United States Constitution inasmuch as Pennsylvania’s TPL statute permits liens on the personal injury actions/proceeds of Medicaid recipients.

Finding the Federal Anti-Lien and Anti-Recovery provisions to be unambiguous, the District Court gave no deference to the interpretations of the Department of Health and Human Services on which the State Medicaid Agency and Pennsylvania General Assembly ostensibly relied in passing the Pennsylvania TPL statute. The District Court found that Federal Law requires State Medicaid Agencies to commence direct actions against liable third parties for the cost of Medicaid to recipients, stating in no uncertain terms that the Pennsylvania Department of Public Welfare’s “free ride” was over. 

The District Court noted, however , that Federal Law did not leave State Medicaid Agencies without recourse. The Court reasoned that the Pennsylvania TPL statutory scheme permits the Department of Public Welfare to assert its own interests in personal injury actions against third party tortfeasors without violating the Federal Anti-lien and Anti-Recovery Provisions. Indeed, while the Court found that intervention in, rather than “liening”, settlement actions was the proper method of recovery, it also found that Pennsylvania’s statutory default calculation of 50% for “unallocated” settlements was a valid amount of recovery. 
The Tristani action also asked the District Court to, inter alia, determine whether Pa. C.S. § 1409(b)(7)(iii) contravenes Section 1396k(b).   Finding neither named plaintiff able to establish a cause of action in this regard, the Court left whether Pennsylvania’s statutory authorization for the collection of managed care organization expenditures, as opposed to capitation payments, open for another day.

The Tristani Opinion shakes the traditional method of TPL recover y in Pennsylvania to its core, and is likely to ultimately have long reaching effects for TPL recovery nationwide. A review of the docket reveals that steps are already in place to appeal the Opinion, and that some uncertainly exists as to the force of the Opinion inasmuch as it lacks the force of an "order".

Pending review of the Tristani Opinion and its effect, the State Medicaid Agency and Plaintiffs’
Counsel, in need of recouping monies for the fiscally strained Medicaid Program and for their wronged clients, respectively, may find themselves in a precarious position with tenuous options in situations which unfortunately demand action.