Delia v. E.M.A.

Whether the Medicaid Act’s anti-lien provision preempts a North Carolina statute allowing the Department of Health and Human Services to place liens on settlement proceeds.

Under North Carolina's third-party liability statute, the state is allowed to place a lien on a Medicaid beneficiary’s tortfeasor settlement for the lesser of the Medicaid beneficiary’s incurred medical costs or one-third of the settlement.

Respondent received a lump sum settlement of $1.9 million and Petitioner placed a lien on one-third of the settlement. Respondent sought relief in federal court, claiming that the Supreme Court holding in Arkansas Department of Health & Human Services v. Ahlborn that federal Medicaid law prohibits liens except to recover actual medical expenses preempted North Carolina’s statute under the Supremacy Clause.

The district court, followed a North Carolina Supreme Court ruling and found the state law consistent with the federal law. The Court of Appeals for the Fourth Circuit reversed and held that the federal law preempts state law and that a lien can only be asserted for recovery of medical expenses and that no recovery can be made until medical expenses have been specified.

On appeal Petitioner argues that the North Carolina statute and the Medicaid law as construed in Ahlborn are not in conflict and that the Court of Appeals decision is in direct conflict with a North Carolina Supreme Court ruling based on Ahlborn.