The opinion
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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 16-CV-55
MAURICE F. NACCACHE, ET AL., APPELLANTS,
V.
ANGELA M. TAYLOR, APPELLEE.
Appeal from the Superior Court
of the District of Columbia
(CAM-8012-07)
(Hon. John Ramsey Johnson, Trial Judge)
(Argued September 20, 2017 Decided December 21, 2018)
Carl J. Schifferle, Assistant Attorney General, with whom Karl A. Racine,
Attorney General, Todd S. Kim, Solicitor General at the time the brief was filed,
and Loren L. AliKhan, Deputy Solicitor General at the time the brief was filed,
were on the brief, for appellants.
Keith W. Donahoe, with whom Frank R. Kearney was on the brief, for
appellee.
Before FISHER and BECKWITH, Associate Judges, and STEADMAN, Senior
Judge.
BECKWITH, Associate Judge: A Superior Court jury awarded appellee
Angela Taylor $6.5 million in damages following a trial at which she alleged that
appellant Maurice Naccache, an obstetrician employed by the District of
2
Columbia, had provided negligent prenatal care that led to her son’s premature
birth and his severe and permanent developmental injuries. The District of
Columbia, which participated in the trial on Dr. Naccache’s behalf and continues
to participate here, challenges two of the trial court’s orders pertaining to the jury
award. At issue in this appeal is the meaning of the statute providing for interest
on judgments against the District of Columbia “at the rate of not exceeding 4% per
annum,” D.C. Code § 28-3302 (b) (2018 Repl.), and the validity of a lien the
District imposed upon Ms. Taylor’s jury award in order to secure reimbursement
for all Medicaid expenses incurred by Ms. Taylor’s son following the entry of
judgment.
The jury’s award included damages “with interest, thereon at the statutory
rate and their costs of action.” Of the $6.5 million awarded, the jury allocated $3.3
million to future care costs, but did not allocate any portion of the judgment for
past Medicaid expenses.1 Two weeks after the October 2010 verdict, the District
filed a Health Care Reimbursement Lien—or Medicaid lien—on Ms. Taylor’s
judgment in the amount of $764,277.46 for Medicaid payments the District made
1
The jury also awarded $1.2 million for lost earnings and earning capacity;
$1 million for past physical pain, emotional distress, disfigurement and deformity;
and $1 million for future physical pain, emotional distress, disfigurement and
deformity.
3
for Ms. Taylor’s son’s medical care prior to the entry of judgment. The District
also filed a motion for a remittitur of $1.8 million in the award of “future care
costs.” After the trial court denied the District’s request to reduce the amount of
the jury award, the District twice amended the lien, first to $779,928.81 in August
2013 and then again to $851,233.07 in January 2015—figures that for the first time
included Medicaid expenses incurred after the verdict.2
In March 2015, more than four years after the verdict and almost two years
after this court affirmed the judgment on appeal,3 the court entered a consent order
establishing that the jury award would be “placed in a Special Needs Trust for the
sole benefit” of Ms. Taylor’s son,4 but that the amount the District asserted as a
Medicaid lien for pre- and post-judgment expenses—at that time, some
$850,000—would be placed into the court registry pending a final order on the
2
This latter figure thus included both the $764,277.46 in prejudgment
Medicaid expenses—for which the District no longer seeks reimbursement on
appeal—and $86,955.61 in post-judgment payments up to that point in time. In its
reply brief the District represented that as of the time of filing, the post-judgment
medical expenditures covered by Medicaid payments had increased further to
$115,881.89.
In their appeal from the jury’s verdict awarding Ms. Taylor $6.5 million,
3
Dr. Naccache and the District challenged the validity of the judgment on various
grounds. In Naccache v. Taylor, 72 A.3d 149 (D.C. 2013), this court rejected those
claims and affirmed the judgment.
4
A Special Needs Trust is sometimes also called a “supplemental needs
trust.”
4
validity of the lien. At oral argument, counsel for Ms. Taylor represented that prior
to this time, she had not received any portion of the judgment because the
judgment was automatically stayed when the District filed its first appeal, and that
as a result, in the interim, she had qualified for and collected Medicaid payments.
In the months following the issuance of the consent order, the trial court
issued two additional orders granting motions filed by Ms. Taylor: the first, in July
2015, approved costs and interest on the judgment at 4% per year pursuant to D.C.
Code § 28-3302 (b),5 and the second, in December 2015, granted declaratory and
injunctive relief striking as invalid the Medicaid lien the District had imposed on
the judgment. Dr. Naccache and the District now appeal from these orders. For
the reasons explained below, we affirm the trial court’s decision to strike the
Medicaid lien for all future care costs after the creation of the supplemental needs
trust, but reverse the order striking the District’s lien for medical care costs
covered between the entry of the judgment in 2010 and the establishment of the
trust in 2015. We also reverse the order awarding interest at 4% per year and
remand for clarification as to whether the trial court exercised its discretion in
making that award.
5
After Ms. Taylor filed this motion, the parties stipulated to, and the trial
court approved in a consent order, costs of $13,178.91 in the trial court and
$1,278.91 in this court, rendering the motion moot as to costs.
5
I. The Post-Judgment Interest Order
D.C. Code § 28-3302 (b) provides that “[i]nterest, when authorized by law,
on judgments or decrees against the District of Columbia, or its officers, or its
employees acting within the scope of their employment, is at the rate of not
exceeding 4% per annum.” At issue here is whether “not exceeding 4% per
annum” means that a trial court may award up to 4% interest or that it must award
exactly 4%. The District argues that the trial court erred by awarding Ms. Taylor
interest at a fixed rate of 4%, and that the court instead should have awarded
interest at the lower rate applicable in suits against private parties. Ms. Taylor
argues that § 28-3302 (b) required the court to award interest at 4% or,
alternatively, that it permitted the court to award interest at 4%, and so the trial
court did not abuse its discretion by doing so.
We review questions of statutory interpretation de novo. E.g., District of
Columbia v. Place, 892 A.2d 1108, 1110–11 (D.C. 2006); District of Columbia v.
Cato Inst., 829 A.2d 237, 239 (D.C. 2003). To interpret the language of a statute,
we start with “the plain meaning if the words are clear and unambiguous.” Place,
892 A.2d at 1111. “[T]he words of the statute should be construed according to
their ordinary sense and with the meaning commonly attributed to them.” Id.
(quoting Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 753
6
(D.C. 1983) (en banc)). Likewise, rather than reading statutory words in isolation,
we “consider not only the bare meaning of the word but also its placement and
purpose in the statutory scheme.” Tippett v. Daly, 10 A.3d 1123, 1127 (D.C. 2010)
(en banc) (quoting Bailey v. United States, 516 U.S. 137, 145 (1995)).
In common usage, the word “exceed” means “to extend outside of” or “to go
beyond a limit set by.” Webster’s Third New International Dictionary 791 (2002).
To “not exceed,” then, means that the rate of interest shall not “extend outside of”
or “go beyond the limit set by.” The statute is not ambiguous. The text of the
statute reflects that the D.C. Council’s intent was to set a cap on the rate of interest
on judgments against the District and its officers at 4%, and neither party offers a
competing interpretation of the plain language. The two other subsections in § 28-
3302 reinforce this understanding. Had the D.C. Council intended to set an interest
rate on judgments against government officials at 4%—no more no less—the
Council could have stated, as it did in subsection (a), that the rate “is” 4%, or
stated, as it did in subsection (c), that the rate “shall be” 4%. 6 Instead, the D.C.
6
For the same reason, we are unpersuaded by the District’s argument that
the trial court was required to apply the interest rate applicable to private parties,
subject to a 4% cap. Section 28-3302 (c) governing interest on judgments against
private parties expressly excludes interest on judgments against “the District of
Columbia, or its officers, or its employees acting within the scope of their
employment.” Moreover, as Ms. Taylor notes in her brief, the D.C. Council
considered and then chose not to enact a proposal to add to § 28-3302 (b)
(continued…)
7
Council instructed in § 28-3302 (b) that the interest imposed against government
officials “is at the rate of not exceeding 4% per annum,” and we are bound to
adhere to that language absent a compelling reason to the contrary.
The legislative history does not provide such a reason. Section 28-3302 (b)
originated from a subsection of an 1890 appropriations Act of Congress addressing
payments of judgments against the District of Columbia, which provided “[t]hat
hereafter interest, when authorized by law, on judgments against the District, in
suits begun after the passage of this act, shall be at the rate of not exceeding four
per centum per annum.” Act of Sept. 30, 1890, ch. 1126, 26 Stat. 504, 514. In
1901, Congress established a code of law for the District, which, among other
things, enacted the rate of interest to be allowed in judgments, setting it at 6%. See
Act of Mar. 3, 1901, ch. 854 § 1178, 31 Stat. 1377. The following year, Congress
clarified that its 1901 codification of a rate of interest in the District “shall not be
construed to amend, alter or repeal the rate of interest fixed at four per centum per
annum on judgments against [the District] by the Act approved September [30,
1890].” Act of July 1, 1902 ch. 1352, 32 Stat. 590, 610.
(…continued)
qualifying language that the rate “shall be at the rate described in subsection (c) . . .
provided that the rate shall not exceed 4%.” 2015 Washington D.C. Legislative
Bill No. 669, Section 1033, Fiscal Year 2017 Budget Support Act of 2016.
8
In Ms. Taylor’s view, this characterization of the 1890 act as having “fixed”
the interest rate at 4% demonstrates that Congress agreed the interest rate on
judgments against the District was required to be 4%. Based on the plainness of
the “not exceeding” language and the lack of any indication that Congress
perceived itself as clarifying an ambiguity in the 1890 act, however, we agree with
the government that the language from the 1902 act did not intend to dramatically
alter its meaning but simply described the prior law imprecisely. The subsequent
history of the law supports this. In 1964, Congress enacted D.C. Code § 28-3302,
which provided that “[i]nterest, when authorized by law, on judgments against the
District of Columbia, is at the rate of not exceeding [4%] per annum.” Act of Aug.
30, 1964, Pub. L. No. 88-509, 78 Stat. 667, 675. In the committee reports
Congress indicated that this codification was “not intended to make any
substantive change in existing law.” H.R. Rep. No. 88-1556 at 2, 11 (1964); S.
Rep. No. 88-1323 at 2, 10 (1964). And despite subsequent amendments to § 28-
33027 by the D.C. Council, the Council has maintained the “not exceeding”
language and done nothing to resurrect the counterintuitive notion suggested by
Congress’s 1902 interpretation that an interest rate “not exceeding” 4% is a rate
that is or shall be 4% and no less. Even if we accepted Ms. Taylor’s understanding
7
D.C. Law 4-70, § 2, 28 D.C. Reg. 5236 (1982); D.C. Law 7-82, § 2, 34
D.C. Reg. 8117 (1988).
9
of the 1902 act, we are not persuaded that a legislative statement made decades
prior to the most recently amended language by a different legislative body from
the one that passed the current law can thwart the plain language of this
unambiguously worded statute. See, e.g., Tippett, 10 A.3d at 1131; United States
Parole Comm’n v. Noble, 693 A.2d 1084, 1103 (D.C. 1997).
Ms. Taylor highlights our case law in contending that the statute should be
interpreted as a fixed rate and not a cap. But our case law does not necessitate this
conclusion. In Burke v. Groover, Christie & Merritt, P.C., 26 A.3d 292 (D.C.
2011), which addressed whether the rate of post-judgment interest under § 28-3302
(c) was variable or fixed, we held that it was “not fixed as of the date of judgment
but continues to fluctuate with the market during the period between entry of
judgment and satisfaction of the judgment.” Id. at 300. In reaching this
conclusion, we found it “significant that judgments against the government are set
at a fixed rate, while at the same time, ‘where the judgment or decree is not against
the District of Columbia’ . . . the rate of interest is variable.” Id. at 297 (quoting
§ 28-3302 (c)).
Focusing on the words “fixed rate,” Ms. Taylor argues that in Burke, we
specifically held that the interest rate on judgments against the District must be set
at 4%. As the District notes, however, this line in Burke may be read to say either
10
that the rate on judgments is “fixed” at 4% or that it is “fixed” at the time of
judgment. Given the court’s focus upon the fluctuation in interest rates on
judgments against private parties under § 28-3302 (c) between the time such
judgments are entered and the time they are satisfied, the better reading of the line
Ms. Taylor emphasizes is that the rate of interest against the District under § 28-
3302 (b)—in contrast to § 28-3302 (c)—is “fixed” at the time of entry and
therefore does not fluctuate before satisfaction of judgment. See also District of
Columbia Office of Human Rights v. District of Columbia Dep’t of Corr., 40 A.3d
917, 929 n.11 (D.C. 2012) (citing to Burke and referring to the 4% rate under § 28-
3302 (b) as a “cap”).8
The trial court in this case granted Ms. Taylor’s request for interest at 4%
per year, but it was not clear whether, in doing so, the court interpreted § 28-3302
(b) as a cap or as a fixed rate.9 We therefore remand to allow the court to explain
8
In District of Columbia v. Mitchell, 533 A.2d 629 (D.C. 1987), this court
addressed whether § 28-3302 (b), “which allows 4% interest on judgments against
the District while permitting interest at the prevailing rate on all other judgments,
violate[d] the equal protection guarantee in the due process clause of the fifth
amendment.” Id. at 654. The court’s conflicting characterizations of the parties’
arguments in terms of the legislature having “set the interest rate at 4%,” id. at 654
(emphasis added), and the statute being one that “limits interest on judgments
against the District to 4%,” id. at 633 (emphasis added), make it difficult for us to
glean much insight from Mitchell on the question before us.
9
Our uncertainty stems from multiple potentially conflicting statements.
(continued…)
11
how it arrived, in its discretion, at the rate of 4% or, if it viewed itself as having no
discretion, to now exercise such discretion in determining the rate of interest to
which Ms. Taylor is entitled.
II. The Medicaid Lien Order
The District also challenges the trial court’s order striking its lien
encumbering the judgment, which was imposed to reimburse the District for all
future post-judgment Medicaid expenses. The District argues that it is entitled,
under federal and local law, to collect from the judgment the costs it will incur for
continued health-care assistance to Ms. Taylor’s son for the duration of his life—
notwithstanding that the award has been placed in a supplemental needs trust—and
contends that the trial court will be able to determine how such an open-ended and
(…continued)
The trial court first stated “that the plain language of the statute provides a ceiling
of 4% per year for interest rates applying to judgments against the District . . . .
The language simply mandates that the interest rate applied is not to exceed 4%.”
The court then added, however—in expressing disagreement with the District’s
argument that the proper interest rate should be that applicable to private
litigants—that this court “has interpreted [the statute] as establishing a fixed rate of
interest,” citing Burke, 26 A.3d at 297–98 n.4, an opinion that we have noted could
be interpreted in two different ways. Finally, the court concluded that “[i]n light of
the Court of Appeals’ interpretation of this statute, as well as the plain language of
the statute itself, the Court declines the District’s request to apply an interest rate of
lower than 4% to this judgment.” On this record it remains unclear whether the
trial court reached this conclusion as a matter of discretion under one interpretation
of Burke or because it viewed Burke as compelling this conclusion.
12
forward-looking lien should operate. In the alternative, the District argues that it is
at the very least entitled to recover for the amount of Medicaid assistance provided
to Ms. Taylor’s son in the period between the entry of judgment in 2010 and Ms.
Taylor’s actual receipt of the judgment award in 2015, before the award was
deposited in the supplemental needs trust.
A. The Governing Framework
The Medicaid program10 “provides free medical care in the form of public
assistance” to those who qualify, based on financial need, “for receipt of such
benefits,” and the federal government and participating states divide the costs for
providing this care. District of Columbia v. Jackson, 451 A.2d 867, 875 (D.C.
1982) (Kelly, J. concurring). The program is a cooperative one, in that each state
that elects to participate—as the District of Columbia has—must administer its
own program under a plan that conforms to federal requirements. See 42 U.S.C.
§ 1396a. One such requirement is that each state seeking reimbursement for
Medicaid expenses must “take all reasonable measures to ascertain the legal
liability of third parties . . . to pay for care and services available under the plan,”
42 U.S.C. § 1396a (a)(25)(A), and then, “in any case where such liability is found
to exist after medical assistance has been made available[,] . . . seek reimbursement
10
42 U.S.C. §§ 1396–1396w-5 (2012).
13
for such assistance to the extent of such legal liability.” 42 U.S.C. § 1396a
(a)(25)(B). To the extent that the state provides medical assistance where a third
party is liable for those payments, the state must have in place laws establishing
that the state is “considered to have acquired the rights of such individual to
payment by any other party for such health care items or services.” 42 U.S.C.
§ 1396a (a)(25)(H). Similarly, “[f]or the purpose of assisting in the collection of
medical support payments,” each state plan must condition eligibility for medical
assistance by requiring Medicaid recipients to assign to the state any rights to
reimbursement “for medical care from any third-party.” 42 U.S.C. § 1396k
(a)(1)(A).
In compliance with these federal provisions, the District of Columbia
enacted its own third-party liability statutes to effectuate reimbursement. “As soon
as the District begins providing health-care assistance to a beneficiary, it shall
become subrogated to any right or claim that the beneficiary has against a third
party for the care and treatment it has undertaken to provide or pay for as health-
care assistance.” D.C. Code § 4-602 (b) (2012 Repl.). Pursuant to § 4-607 (a), the
District is entitled to a lien on “any judgment or settlement awarded or executed in
favor of a beneficiary against a third party for that amount of the judgment or
settlement that represents the care and treatment it has undertaken to provide or
pay for as health-care assistance.” The beneficiary of a judgment has the “right to
14
retain the amount of judgment or settlement that remains after the deduction” of
whatever amount is necessary to “reimburse the District for medical assistance
payments the District has made on behalf of the beneficiary.” § 4-607 (c).
The District’s right to reimbursement for Medicaid expenses is to some
degree limited, however, by the federal anti-lien provision contained in 42 U.S.C.
§ 1396p,11 which provides that “[n]o lien may be imposed against the property of
any individual prior to his death on account of medical assistance paid or to be paid
on his behalf under the State plan, except pursuant to the judgment of a court on
account of benefits incorrectly paid on behalf of such an individual” or in certain
other circumstances not relevant here. The Supreme Court first addressed the
tension between § 1396p and the third-party liability provisions in Arkansas
Department of Health and Human Servs. v. Ahlborn, 547 U.S. 268 (2006). There,
the Court reviewed an Arkansas law that automatically imposed a lien on a tort
settlement in an amount equal to Medicaid costs. Id. at 272. The plaintiff had
brought suit for injuries sustained in a car accident, seeking damages for past
medical costs, permanent injury, and future medical costs, among other expenses.
Id. at 273. The parties settled out of court, stipulating that approximately 6% of
11
Section 1396a (a)(18) requires that a state Medicaid plan comply with
§ 1396p.
15
the plaintiff’s settlement represented payments for medical costs. Id. at 274.
When the government asserted a lien against the settlement proceeds for the cost of
medical care payments, the plaintiff filed an action to invalidate the lien. Id. The
Court held that the third-party liability provisions, §§ 1396a (a)(25) and 1396k (a),
were exceptions to the anti-lien provision, but that these exceptions were limited to
payments for medical care. Id. at 284–85. In other words, a lien in an amount
equal to Medicaid costs could only be imposed on the portion of the settlement
specifically designated for medical costs, even if the expended Medicaid payments
exceeded the amount so designated.
The Court took this holding one step further in Wos v. E.M.A. ex rel.
Johnson, 568 U.S. 627 (2013).12 At issue in Wos was whether a North Carolina
statute “requiring that up to one-third of any damages recovered by a beneficiary
for tortious injury be paid to the State to reimburse it for payments it made for
medical treatment” was preempted by the federal anti-lien provision, given that the
statute applied regardless of what (if any) percentage of an award was designated
12
In October 2017, Congress passed the Bipartisanship Budget Act of 2013,
Pub. L. No. 113-67, § 202 (b), which effectively overturned the decisions in
Ahlborn and Wos by permitting states to attach a lien equal to the amount of
Medicaid costs regardless of whether a portion of an award was designated for
medical costs. On February 9, 2018, however, Congress confirmed in the
Bipartisanship Budget Act of 2018 that Ahlborn and Wos remained good law. Pub.
L. No. 115-123, § 53102 (b)(1).
16
to cover payments for medical care. Id. at 630. The Court held that the statute was
preempted because it selected an arbitrary number and “by statutory command”
labeled that number as representing payment for medical care, rather than
providing a process for actually determining what portion of a beneficiary’s tort
recovery was attributable to medical expenses. Id. at 636.
The parties dispute how this governing framework applies to the present
case, which in our view presents two questions: whether the District is entitled to
an open-ended lien for all medical costs that it will cover since Ms. Taylor placed
the award in a supplemental needs trust in 2015, and whether the District is entitled
to reimbursement for the medical care it covered from the time judgment was
entered in 2010 following the jury verdict until the time the trust was established in
2015.13
B. The Validity of a Lien on Post-2015 Trust Payments
The jury rendered its verdict in 2010, but Ms. Taylor represented at oral
argument, and the District has not disputed, that she did not actually take
possession of the award until satisfaction of the judgment in 2015—at which time
13
Whether the District is entitled to the lien it seeks to impose is a matter of
statutory construction, which we review de novo. Tippett, 10 A.3d at 1126.
17
she deposited the sum into a Medicaid supplemental needs trust.14 The District’s
position is that it is “entitled to reimbursement for any amount of the judgment that
represents medical expenses it will pay through Medicaid” by way of a lien. The
District does not say how such a lien would operate or from what escrow account
the funds would be drawn, but indicates that the trial court will be equipped to
make this determination on remand.
We begin with Ms. Taylor’s contention that Ahlborn clarified that federal
law limits a state’s recovery to proceeds shown to be properly allocable to past
medical expenses, and because the jury’s verdict did not include such an award,
Ahlborn precludes the District from asserting its lien. As some courts have noted
and as the split among various courts reveals, the decision in Ahlborn did not make
clear whether a state may assert a lien against settlement proceeds or a portion of a
judgment allocable to future medical expenses to reimburse medical expenses
already paid on behalf of a Medicaid recipient.15 But even those courts wrestling
14
As noted above, the court ordered that $850,000 of the jury award would
be placed into the court registry pending a decision on the amount of the District’s
asserted Medicaid lien.
15
Some courts have interpreted Ahlborn to limit the state’s recovery to
proceeds specifically allocated to past medical expenses. See, e.g., In re E.B., 729
S.E.2d 270, 299 (W.Va. 2012); In re Hudelson, 196 P.3d 905, 912–13 (Idaho
2008), abrogated on other grounds by Verka v. St. Alphonsus Reg’l Med. Ctr., 265
P.3d 502, 508 (Idaho 2011); Willoughby v. Agency for Health Care Admin., 212
(continued…)
18
with which post-allocation funds a state may reach readily conclude that the state is
entitled to reimbursement for medical expenses already provided.
We need not address whether a claim for a lien to cover future payments
may be permissible in circumstances other than those presented here.
Fundamentally, and ultimately dispositive on the issue in this case as to future
payments, Congress added a provision—in the same section as the anti-lien
provision of the U.S. Code—that allows parties who obtain a judgment to continue
to qualify for public benefits such as Medicaid while supplementing their future
care needs through the use of a Medicaid supplemental needs trust. See 42 U.S.C.
§ 1396p (d)(4)(A). Not just anyone may establish such a trust. Congress limits
(…continued)
So. 3d 516, 524 (Fla. Dist. Ct. App. 2017); Bolanos v. Superior Court, 87 Cal.
Rptr. 3d 174, 180 (2008); Price v. Wolford, 2008 WL 4722977, *2 (W.D. Okla.
Oct. 23, 2008); McKinney ex rel. Gage v. Philadelphia Hous. Auth., 2010 WL
3364400, *9 (E.D. Pa. Aug. 24, 2010). Other courts, in contrast, have interpreted
Ahlborn to allow the state to recover from proceeds allocable to future medical
care as well. See, e.g., Giraldo v. Agency for Health Care Admin., 208 So. 3d 244,
251–52 (Fla. Dist. Ct. App. 2016); In re Matey, 213 P.3d 389, 394 (Idaho 2009);
I.P. ex rel. Cardenas v. Henneberry, 795 F. Supp. 2d 1189, 1197 (D. Colo. 2011);
see also Special Needs Trust for K.C.S. v. Folkemer, 2011 WL 1231319, at *12 (D.
Md. Mar. 28, 2011) (holding, prior to the Supreme Court’s decision in Wos, that
the government might be permitted to recover for past medical care provided from
an unstipulated amount that might represent payments for future medical
expenses).
19
eligibility to those who are under age 65 and disabled16 and requires that the trust
actually be established for the benefit of such a person17 and that it be established
and maintained by a third party. Id; 42 U.S.C. § 1396p (d)(4)(C)(i). The entire
purpose of a supplemental needs trust is to ensure that those who sustain serious
injury continue to be able to meet their basic needs—out of the recognition that a
jury or settlement award may not adequately cover the “extraordinary costs” a
person with a lifelong serious disability is likely to incur in medical treatments and
other expenses. E.g., John Staunton and Leo J. Govoni, Special Needs Trusts:
Planning Vehicles That Have Come of Age, Marquette’s Elder’s Advisor, Vol. 3:
Iss. 4, Article 7 at 29–31, http://scholarship.law.marquette.edu/cgi/viewcontent.cgi
?article=1222&context=elders; In re D.M.B., 979 A.2d 15, 16 n.1 (D.C. 2009);
Jennifer Field, Special Needs Trusts: Providing for Disabled Children Without
Sacrificing Public Benefits, 24 J. Juv. L. 79, 79 (2004). To fulfill this purpose, the
statute provides that the state will receive whatever remains in the trust upon the
16
A person qualifies as “disabled” for purposes of this statute “if he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of not
less than twelve months.” 42 U.S.C. § 1382c (a)(3)(A).
17
42 U.S.C. § 1396p (d)(4)(B) defines under what circumstances a trust is
established “for the benefit of an individual.” The District does not dispute that the
trust in this case satisfies these or any other requirements.
20
death of the beneficiary, “up to an amount equal to the total medical assistance
paid on behalf of the individual under the State plan.” 42 U.S.C. § 1396p
(d)(4)(A).
Ms. Taylor argues that the District’s proposed forward-looking lien in the
amount of all medical care the District will provide from creation of the trust until
Mr. Taylor’s death would undermine the whole point of supplemental needs trusts
and the “statutory scheme established by Congress.” We agree. A jury determined
that Ms. Taylor’s son was disabled as a result of Dr. Naccache’s negligence and
awarded a judgment to compensate him for the resulting costs he will incur. No
one disputes that Mr. Taylor qualified for a supplemental needs trust, and with the
judgment assets now protected in such a trust, Mr. Taylor will continue to be able
to receive public benefits while supplementing those payments with the trust’s
funds, as intended by Congress.
The District contends that if it is not able to obtain reimbursement now and
moving forward for all future medical care it will cover, it is possible that the trust
will have no assets remaining to reimburse the District for any Medicaid
expenditures upon Ms. Taylor’s son’s death. This is precisely correct, but
essentially amounts to a recitation of the decision Congress made when enacting
§ 1396p (d)(4)(A). Congress specifically provided that the state (or District) is
21
entitled to all amounts remaining in a supplemental needs trust upon the death of
the beneficiary, “up to an amount equal to the total medical assistance paid on
behalf of the individual.” 42 U.S.C. § 1396p (d)(4)(A). Although it may be that
the trust could be depleted before the beneficiary’s time of death, leaving nothing
for the government to collect in reimbursement, that is the balance Congress chose
to strike. See In re E.B., 729 S.E.2d 270, 309 (W.Va. 2012) (Workman, J.,
concurring in part and dissenting in part).
The cases the District cites in arguing that a party may not “shelter”
judgments from parties imposing Medicaid liens do not support the District’s
contention that it should be entitled to place a lien on funds already in a
supplemental needs trust for an amount not yet even established. In Sullivan v.
Cty. of Suffolk, 174 F.3d 282 (2d Cir. 1999), for example, the court held that the
plaintiff was required to satisfy a Medicaid lien before using the settlement
proceeds to establish a supplemental needs trust. Id. at 286. But the lien in place
reflected known costs already incurred by the government in Medicaid expenses up
until the time of settlement, and the government sought to collect these assets from
an escrow account before the money had been placed in the trust. Id. at 284.18 The
18
See also Brief of Lienor-Appellee at 5, Sullivan v. Cty. of Suffolk, 174
F.3d 282 (2d Cir. 1999) (presenting the issue to be addressed as “whether liens of
the Medicaid Program encumbering personal injury actions of recipients must be
(continued…)
22
court rejected the argument that because the government may collect the assets
remaining in a trust upon a beneficiary’s death, the plaintiff was therefore entitled
to shield all assets awarded in a settlement from any preexisting Medicaid lien—an
argument that Ms. Taylor does not make here, as the District has waived its lien for
past medical care provided prior to the entry of judgment. The remaining two
cases the District relies on are similarly distinguishable. See Cricchio v. Pennisi,
90 N.Y.2d 296, 303, 307 (1997) (referring to assets only “earmarked” for a
supplemental needs trust and a lien to “recoup from responsible third parties the
medical assistance paid to the plaintiffs”); Northwest Bank of N.D., N.A. v. Doth,
159 F.3d 328, 333 (8th Cir. 1998) (again referring only to pre-settlement
expenditures).
The District further contends that absent a lien, it will have to pay the same
expenses twice, through the judgment and through Medicaid. This is again
correct—at least to the extent that any funds remaining upon the death of the
beneficiary are insufficient to cover such payments—and again in line with the
express purpose of a supplemental needs trust: that a beneficiary may retain an
award while still qualifying for public benefits, so that the award may cover all
(…continued)
satisfied before the recipient receives any money with which to fund a
supplemental needs trust.”).
23
expenses not covered by other payers. See In re Matey, 213 P.3d 389, 392 n.7
(Idaho 2009). If the District were permitted to calculate all future medical costs,
and subtract that amount from a trust, the purpose of establishing a supplemental
needs trust would be undermined. And if a party elected not to establish a
supplemental needs trust, he or she would in all likelihood no longer qualify for
Medicaid benefits in any case.
In sum, because we conclude that the District’s proposed open-ended lien on
funds now in the supplemental needs trust is contrary to Congress’s purpose for
establishing such trusts under § 1396p (d)(4)(A), we affirm the trial court’s order
striking the lien as to any amount that the District may cover in Medicaid payments
after the date of deposit in the trust.
C. Reimbursement for the 2010-2015 Medicaid Payments
Even if it is not entitled to recover for payments for medical care costs made
after the trust was established, the District contends that it at least is entitled to
recovery from the judgment for medical care payments made during the five-year
period prior to the establishment of the trust. We agree with the District on this
point.
As already indicated in the discussion above, while it may be disputed as to
the degree that a lien can reach future payments, it is another matter where, as here,
24
recovery is sought for payments actually made. By its wording, the District lien
clearly covers payments actually made. Nor do we find anything in the federal or
local Medicaid laws that would prohibit the District from seeking reimbursement
for post-judgment medical costs already paid. We note that Federal law requires
Medicaid recipients “to assign to the State any rights . . . to payment for medical
care from any third party,” 42 U.S.C. § 1396k (a)(1)(A) (emphasis added),
instructs them to assist the state in identifying and pursuing “any third party who
may be liable to pay for care and services available under the plan,” 42 U.S.C. §
1396k (a)(1)(B) (emphases added), and entitles states to retain such part of the
amount collected “as is necessary to reimburse it for medical assistance payments
made on behalf of an individual,” 42 U.S.C. § 1396k (b). The District’s health-
care assistance reimbursement statute, enacted in accordance with these provisions,
similarly provides that the District “shall have a lien . . . upon any judgment or
settlement awarded or executed in favor of a beneficiary against a third party for
that amount of the judgment or settlement that represents the care and treatment it
has undertaken to provide or pay for as health-care assistance.” D.C. Code § 4-
607 (a) (emphasis added). These provisions are not limited to reimbursement for
prejudgment medical payments.
Alternatively, Ms. Taylor argues that the District is estopped from asserting
any lien because it imposed the lien only after failing to obtain its requested $1.8
25
million remittitur, neglected to present any expert testimony related to its claim for
future expenses or apprise Ms. Taylor of its envisioned lien, and failed to request
an itemized verdict form to reflect future health care costs that would be covered
by Medicaid. We see no merit in this argument. It is undisputed that the judgment
was stayed until the final action of our court upholding the judgment. The right to
reimbursement was not contingent on the lien itself, D.C. Code § 4-602, and the
lien was perfected in the statutory manner prior to “payment of any part of a
judgment,” D.C. Code § 4-607.
In sum, we conclude that the District was entitled to reimbursement for
medical payments made after judgment was entered awarding Ms. Taylor $3.3
million for future care costs and before the supplemental needs trust was
established. Consequently, we hold that the Superior Court erred in striking that
portion of the District’s lien.19
19
Ms. Taylor argues that, even if the District could assert a lien on a
judgment for future medical expenses, it is not entitled to assert a lien on a
judgment for future care costs, which includes both medical and non-medical
costs. Here, it appears likely that the award for future care costs includes an award
for future medical expenses far in excess of the District’s lien. But to the extent
that this remains an issue on remand, the trial court may conduct further
proceedings to determine the proper allocation of the award for “future care costs”
to ensure that the District’s lien is limited to that portion of the judgment that is
“designated as payments for medical care,” Wos, 568 U.S. at 627 (quoting
Ahlborn, 547 U.S. at 284). See id. at 638 (“When the State and the beneficiary are
(continued…)
26
III.
For the foregoing reasons, we reverse the order granting interest on the
judgment at 4% per year and remand for further proceedings consistent with this
opinion. We affirm the order striking the District’s lien on the judgment for all
future care costs after the creation of the supplemental needs trust in 2015, but
reverse the order striking the District’s lien for the period between the entry of
judgment in 2010 and establishment of the supplemental needs trust in 2015.
So ordered.
(…continued)
unable to agree on an allocation, Ahlborn noted, the parties could ‘submit the
matter to a court for decision.’”) (quoting Ahlborn, 547 U.S. at 288) (alteration
adopted).