United States District Court, D. Nebraska
DORAN SCHMIDT, Individually; and S.S., a minor, by and through Doran Schmidt, her natural mother and next friend; Plaintiffs,
BELLEVUE MEDICAL CENTER, L.L.C., Defendants.
MEMORANDUM AND ORDER
Smith Camp Chief United States District Judge.
matter is before the Court on the Motion to Determine Lien,
ECF No. 362, filed by Intervenor Nebraska Department of
Health and Human Services (DHHS). For the reasons stated
below, the Motion will be granted consistent with this
Memorandum and Order.
was born at the Bellevue Medical Center on November 2, 2012,
with severe brain damage. Plaintiffs brought suit against
Defendants Bellevue Medical Center, LLC; Heather Ramsey, the
treating certified nurse midwife; and The Midwife's
Place, where Doran Schmidt received her prenatal care as well
as care during the early stages of labor. Before trial,
Plaintiffs reached a settlement with Ramsey and The
Midwife's Place. On August 6, 2015, following a two-week
trial, the jury returned a verdict against the Bellevue
Medical Center in the amount of $17, 000, 000.00. On November
25, 2015, the Court reduced the jury verdict to $1, 750,
000.00, plus post-judgment interest, under the Nebraska
Hospital-Medical Liability Act (NHMLA), Neb. Rev. Stat.
§ 44-2825. ECF No. 290. The United States Court of
Appeals for the Eighth Circuit upheld the NHMLA's cap on
damages. See generally, Schmidt v. Ramsey, 860 F.3d
1038, 1047 (8th Cir. 2017), cert. denied sub nom. S.S. ex
rel. Schmidt v. Bellevue Med. Ctr. L.L.C., 138 S.Ct. 506
order to pay for S.S.'s medical expenses, Schmidt
received Medicaid benefits from DHHS. To date, DHHS has paid
$146, 180.89 of the $413, 350.44 in billed charges.
See Exhibit 4, ECF No. 363-3. DHHS now seeks full
recovery of its subrogation interests.
DHHS's Lien Under the Nebraska Medical Assistance
administers Nebraska's Medicaid program, known as the
Nebraska Medical Assistance Program (NMAP). Neb. Rev. Stat.
§ 68-908; see also Smalley v. Neb. Dep't of
Health & Human Servs., 811 N.W.2d 246, 252 (Neb.
2012). NMAP provides joint state and federal funding of
medical care for low-income Nebraskans. Neb. Rev. Stat.
§§ 68-904, 905. Federal law requires states
participating in Medicaid, such as Nebraska, to comply with
standards and requirements imposed by federal statutes and
regulations. Thorson v. Neb. Dep't of Health &
Human Servs., 740 N.W.2d 27, 30 (Neb. 2007). One of the
federal statutory requirements relates to third-party
liability for medical expenses that might otherwise be paid
by Medicaid. Under the federal statute, the state agency
administering the state's Medicaid program-DHHS in
Nebraska-must take all reasonable measures to ascertain the
legal liability of third parties. 42 U.S.C. §
1396a(a)(25)(A). Once the liability is ascertained, states
must seek reimbursement to the extent of the legal liability.
42 U.S.C. § 1396k(a)(25)(B).
facilitate recovery from liable third parties, states are
required to pass laws, which provide a means to recover
medical expenses. See, e.g., 42 U.S.C. §
1396k(a)(25)(I). In situations where a third party is liable
to make payments for medical expenses on behalf of a
beneficiary, states are required to have laws in place
throuhg which the state is deemed to have acquired the
beneficiaries' rights to those payments. 42 U.S.C. §
1396k(a)(25)(H). NMAP's provisions are set out in Neb.
Rev. Stat. § 68-916. Under § 68-916, recipients of
NMAP benefits assign to DHHS their rights to pursue or
receive payments for medical expenses from liable third party
the terms of Neb. Rev. Stat. § 68-916, when Doran
Schmidt applied for Medicaid benefits on behalf of S.S., she
assigned her and S.S.'s rights to payments for medical
expenses from a third party tortfeasor to DHHS. Before the
jury determined Bellevue Medical Center's legal
liability, DHHS paid $146, 180.89 for S.S.'s medical
expenses. See Carnes Aff. ¶ 3, ECF No. 363-2,
Page ID 8122; Itemization of Medical Treatment, ECF No.
363-3. Plaintiffs do not dispute that they were recipients of
NMAP benefits, nor do they dispute that DHHS has paid $146,
180.89 in medical expenses for S.S. The judgment against
Bellevue Medical Center for S.S.'s injuries established
third party liability. Accordingly, under the express
language of 42 U.S.C. § 1396k(b) and the provisions of
the NMAP statutes, DHHS is entitled to reimbursement for the
medical expenses it paid on behalf of S.S.
Plaintiffs' Arguments Against the Lien
argue that principles of fairness and equity demand that
DHHS's claim be reduced or completely eliminated.
Plaintiffs also argue that the lien is premature. For the
reasons stated below, neither of these arguments presents a
basis for reducing or avoiding DHHS's lien.
Equity and Fairness of the Lien
first argue that DHHS was fully reimbursed when the
jury's verdict was reduced from $17, 000, 000 to the
statutory limit due to the NHMLA's cap on damages.
Plaintiffs reason that DHHS saved significant money by
avoiding a large payout under Nebraska's Excess Liability
Fund. Nebraska's Excess Liability Fund, created in
conjunction with the NHMLA, provides a state-run insurance
benefit to qualified health care providers. Under the
statute, the Excess Liability Fund pays medical malpractice
damages in excess of $500, 000 on behalf of qualifying health
care providers. Neb. Rev. Stat. § 44-2832(2). Plaintiffs
argue that the Excess Liability ...