Public Citizen in Your State: Florida Medicaid Lawsuit

Public Citizen News / September-October 2021

By Josephine Fonger

This article appeared in the September/October 2021 edition of Public Citizen News. Download the full edition here.

Public Citizen’s Litigation Group is serving as co-counsel for the plaintiff in a lawsuit addressing a conflict between federal and state law over whether Florida’s Medicaid program can reach into the pocket of an accident victim to reimburse itself for medical expenses paid on her behalf.

In 2008, 13-year-old Gianinna Gallardo was hit by a truck after getting off her school bus. She has remained in a persistent vegetative state ever since. The Florida state Medicaid program paid $862,688.77 towards Gallardo’s medical expenses, but she will need care throughout her lifetime. After parents and guardians filed a lawsuit in state court against the school board and truck driver, she received a court-approved settlement of $800,000. The money was allocated to pay for both past and future medical expenses, as well as lost earnings and other damages, but failed to fully compensate Gallardo for the damages she suffered.

The state of Florida filed a lien against Gallardo to recover past Medicaid expenses. Although the settlement specified that only about $35,000 represented damages for past medical expenses, Florida law permits the state to recover its past expenditures from the parts of damages awards or settlements that represent a defendant’s liability for future expenses. The law also incorporates a formula that presumes the state can take as much as half of a settlement (net of attorney fees and costs), which in this case would come to $300,000.

In 2017, Gallardo filed a federal lawsuit challenging Florida’s law. She argued that the language of federal law governing Medicaid limits the state’s recovery of payments made for past medical expenses to the parts of a settlement that correspondingly represent a defendant’s liability for past medical expenses. A federal district court agreed, but Florida’s Agency for Health Care Administration appealed to the U.S. Court of Appeals for the Eleventh Circuit, which in June 2020 reversed the district court’s decision, over a vigorous dissent by one judge. As the court of appeals acknowledged, it conflicted with a decision of Florida’s own supreme court in another case, which held that the state’s law is inconsistent the federal Medicaid Act.

On March 9, 2020, Scott Nelson, an attorney with Public Citizen’s Litigation Group, served as co-counsel for the plaintiff on her petition for certiorari to the U.S. Supreme Court. On July 2, 2021, the U.S. Supreme Court agreed to hear the case, called Gallardo v. Marstiller. Public Citizen is continuing to serve as co-counsel as the case is briefed this fall. The Court will hear oral argument in January 2022.

“Medical expenses that were paid by Medicaid accounted for less than 5% of Ms. Gallardo’s estimated damages, and because of limits on the resources of the wrongdoers who injured her, the settlement provided only a small fraction of what she will need to pay for her future care on top of what Medicaid will provide,” said Nelson. “Now Florida is attempting to take away her ability to pay for that additional care by grabbing more than its share of the settlement. Public Citizen got involved to try to prevent that kind of unfair overreaching by the government at the expense of our neediest citizens.”

“This is a case where the words of the Medicaid law, and the Supreme Court’s recent decisions interpreting them, line up with our position,” said Nelson. “In many cases, we don’t want the Supreme Court to take up issues we care about, but we are optimistic about the outcome of this case.”