Supreme Court to NC: One-Third Is Too Much

This year, the U.S. Supreme Court handed down several well-publicized decisions pertaining to groups that have been struggling for their rights. But minorities and gay-rights advocates were not the only ones whose future was hanging in the balance ― a 13-year-old North Carolina girl, rendered blind, deaf, and mentally disabled at birth by a botched Caesarian section, also found herself at the center of a landmark decision. The result was good news for medical malpractice plaintiffs.

In a 6–3 ruling, the Court struck down a North Carolina law that allowed the state to take one-third of the amount of a medical malpractice award or settlement as reimbursement for Medicaid payments. The Court had ruled several years ago that states could only claim the portion of a malpractice recovery specifically attributable to medical expenses, not amounts awarded for non-monetary damages such as pain and suffering.

However, in cases where the total amount recovered was not allocated between monetary and non-monetary damages, North Carolina law permitted the state to assume one-third of the amount was attributable to medical expenses. The Supreme Court felt the one-third rule was arbitrary and unreasonable.

The facts of the case at hand:

• The severely disabled girl from Taylorsville, NC, received a $2.8 million settlement from the obstetrician whose negligence caused her to be born with cerebral palsy.
• The state, which had provided Medicaid payments of almost $2 million for the girl, asserted a lien on one-third of the settlement amount, more than $900,000.
• The parents of the girl contested the lien all the way to the Supreme Court.
• The Court, recognizing that the girl would require extensive medical care for the rest of her life, declared that states could not establish a standard lien percentage applicable to all medical malpractice cases.

The decision is a boon for clients of medical malpractice attorneys in North Carolina and other states that have similar laws, potentially allowing them to hold onto a larger portion of the damages they recover.