In Lake v. Ronald Levy, Director of Missouri Department of Social Services, WD74306 (filed 01.15.2013), the Western District held the Medicaid reimbursement lien asserted by the Department of Social Services inferior to the attorney’s lien of counsel who brought the workers’ compensation claim. The court of appeals finds this to be fair since only by the efforts of the injured employee’s attorney did it come to pass that there was any money to reimburse the state. To have held the Medicaid lien superior would (at least in this case where the medical expenses part of the settlement monies paid by the employer/insurer was no more than the money for the employee’s medical expenses) leave counsel with little or no incentive to recover such medical expenses merely to benefit the state with reimbursement for Medicaid medical payments for treatment of the injured employee. From counsel’s perspective, if you aren’t going to get paid, why do the work?
Here the employee’s counsel settled the work comp claim and then filed suit in Missouri circuit court seeking in equity to enforce his attorney’s lien against the disputed medical expense portion of the workers’ compensation settlement. Ultimately, the trial judge ruled in favor of Social Services on motions for judgment on the pleadings (the question before the court being strictly one of law), giving the medicaid reimbursement lien priority over the attorney’s lien provided for in Missouri statute 484.130. This ruling denied the attorney’s claim in equity for a 25% fee of the $45,001 medical expense portion of the work comp settlement. Being so denied fees of $11,250, the lawyer for the injured employee did what lawyers do and appealed to the court of appeals.
On appeal to the Western District of that court, the parties both focused on subsection 7 of section 287.266 of Missouri Workers’ Compensation Law. That subsection reads:
“This debt due the state shall be subordinate only to the fee rights of the injured employee’s attorney pursuant to this chapter, and the state shall not be required to pay any portion of the fees or costs incurred by the employee or the employer.”
The attorney argued that the first portion of subsection 7 clearly gives his attorney’s lien priority over the state’s medicaid reimbursement lien. In straight-forward fashion, the court of appeals agreed, noting that without priority the attorney would have no reason to recover medical expenses in cases such as this one where no money would be left for the attorney as the medical reimbursement lien met or exceeded the amount of the medical expense portion of the work comp settlement. The state, however, argued that giving the attorney’s lien priority constitutes a payment of fees or costs in violation of the last part of subsection 7. Nevertheless, the court of appeals ruled for in favor of the attorney as the money due the attorney on the lien for his fee is his money and not the state’s money. Therefore, the state is not “paying” the attorney’s fees. Victory for the attorney!
This case puzzles in that the undersigned’s experiences with Medicaid in personal injury cases is that its third-party subrogation office will consider and agree to a pro-rata reduction of the amount of its lien and will reduce its share a further percentage to factor in the attorney’s efforts in pressing forward the claim or lawsuit that resulted in recovery of funds from which Medicaid is reimbursed. Perhaps a harder stance was taken by the state in this case in hopes that the above language of subsection 7 would afford the state more leverage and reason not to reduce medicaid reimbursement liens by an amount for the claimant’s attorney–at least in workers’ compensation cases.
Kurt H. King
Law Office of Kurt H. King, 20 E. Franklin, Liberty, Clay County, Missouri 64068
816.781.6000
Missouri Workers’ Compensation Claims, Personal Injury, General Litigation
The Law Office of Kurt H King 
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