Ohio law now requires a Medicaid recipient to use an administrative appeals process when claiming the state recouped too much of the money a recipient received from a third-party wrongdoer, the Ohio Supreme Court ruled today.

A Supreme Court majority reversed an Eighth District Court of Appeals decision that allowed the certification of a class-action lawsuit by injured Medicaid recipients who maintained the state’s Medicaid recovery law is unconstitutional.

Writing for the Court majority, Justice Judith L. French stated Ohio lawmakers established an administrative appeal process as the “sole remedy” in disputes with the state regarding Medicaid recovery from civil lawsuits.

The Court’s decision directed the Cuyahoga County Common Pleas Court to determine if some of the potential members of the class-action lawsuit could still maintain class-action status.  

Chief Justice Maureen O’Connor and Justices Sharon L. Kennedy, Patrick F. Fischer, R. Patrick DeWine, and Melody J. Stewart joined the opinion. Justice Michael P. Donnelly concurred in judgment only.

Injured Recipients Challenge Fluctuating Medicaid Law
Michael A. Pivonka and Lisa Rijos were the named plaintiffs in a class-action lawsuit filed to declare that a Medicaid reimbursement law was unconstitutional. Medicaid was created by federal law in 1965 and is jointly funded by state and federal governments to cover the medical costs of low-income and disabled individuals.

Pivonka was on Medicaid when he was injured by someone, and Medicaid paid for Pivonka’s medical bills. In 2012, Pivonka reached a settlement with the wrongdoer who injured him. Citing the version of R.C. 5101.58 in effect at the time, the Ohio Department of Job and Family Services sent a demand letter to Pivonka notifying him that under the “subrogation statute,” the state could recoup the amount of Medicaid funds it paid for his injuries. The department collected $7,108 from his settlement with the wrongdoer.

Rijos was on Medicaid when someone injured her. A jury awarded her damages in 2013 from the accident. The department collected $703 of the verdict award paid by the wrongdoer.

In 2013, Pivonka and Rijos sought to certify a class comprised of anyone who, under the subrogation statute, had to pay back Medicaid funds to the department from April 6, 2007, to the present without the requirement of a court order.

The department disputed the formation of the class, arguing R.C. 5101.58 was constitutional. The department also maintained the updated version of the law after it was amended in 2015 required those who disputed the repayment to use an administrative procedure.

The trial court rejected the state’s arguments and ruled that some of the arguments could be raised after the class-action lawsuit commenced. The state appealed the decision to the Eighth District, which affirmed the trial court’s decision.

The state appealed to the Supreme Court, which agreed to hear the case.

State Adapted Law after Court Rulings
Today’s opinion explains how the Medicaid law was adjusted after U.S. Supreme Court decisions regarding Medicaid reimbursement laws passed by other states. Medicaid requires each state to adopt a law giving the state the right to recover certain costs paid by Medicaid that should have been paid by other sources.

When a wrongdoer injures a Medicaid recipient, the wrongdoer may be required to pay the medical costs for the injured recipients. When the costs are not paid by the wrongdoer, Medicaid pays the medical bills. Under the federal requirement, if the Medicaid recipient files a personal lawsuit against the wrongdoer, a portion of any settlement or award received by the recipient can be tapped by the state to recover the Medicaid funds used to pay the medical costs.

Other states, including Arkansas, had Medicaid subrogation statutes similar to Ohio’s. In 2006, the U.S. Supreme Court invalidated a portion of the Arkansas subrogation law. Although no court declared Ohio’s R.C. 5101.58 invalid, state lawmakers amended the law in 2007 to avoid having the same issue as Arkansas.

In 2013, the U.S. Supreme Court struck down a portion of North Carolina’s Medicaid subrogation law, which also was similar to the revised Ohio law. Ohio changed the law in 2013, and again in 2015. The 2015 version contained provisions of the subrogation law that gave the state the automatic right to recover medical costs from personal-injury lawsuits without getting a court order first.

The law presumed the state was entitled to half the amount of any award after attorney fees, legal expenses, and other litigation costs were paid. The 2015 version added a provision that allowed the Medicaid recipient to challenge the presumption through an administrative proceeding operated by the department. If the recipient disputed the department's final decision about how much it could recover, the person could  appeal the department’s decision to the common pleas court.

“The administrative process is, by its own terms, the ‘sole remedy’ available to those individuals,” the opinion stated.

Pivonka and Rijos argued they and the class members should not be required to follow the administrative procedure because the process allowing the state to recoup the money without a court order is unconstitutional and the department was not entitled to recoup any money.

The Court stated the class members cannot circumvent the administrative process by raising a constitutional challenge in common pleas court. Rather, the constitutional challenge can be raised after the recipient goes through the department’s appeals process. Then, the appeal reaches the common pleas court, the opinion concluded.

Because part of the changing Medicaid law did not apply to those who repaid money between April 6 and Sept. 28, 2007, the Supreme Court directed the trial court to determine whether those recipients could maintain an action in the common pleas court.

2019-0084. Pivonka v. Corcoran, Slip Opinion No. 2020-Ohio-3476.

View oral argument video of this case.

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