State Can Recover Twice from the Same Pool of Settlement Funds

An Illinois appeals court rules that the state can recover from a Medicaid recipient’s estate for expenses paid before she was injured even though the state had accepted a negotiated figure from the settlement and the settlement funds were the only asset in the estate. In Re Estate of Ries (Ill. Ct. App., 2nd Dist., No. 2-19-1027, Jan. 19, 2021).

Lois Ries received Medicaid starting in 2005. In 2011, she was injured during an epidural injection. Ms. Ries sued the hospital for the injury, and the state filed a lien on any potential recovery. She died while the lawsuit was pending, and the lawsuit was her only asset. The state filed a claim against her estate to recover benefits paid on her behalf. When her estate moved to settle the lawsuit, the state agreed to reduce its lien from $124,679.63 to $20,000. The state then moved to modify its claim against the estate to reflect the amount it received in the settlement.

The estate argued that the state could not recover twice from the same settlement pool of money. The state argued that its acceptance of the settlement did not extinguish its claims for the expenses it paid for Ms. Ries’ preinjury care. The court ruled that the state could not recover from the settlement funds because it had already accepted a negotiated figure from the settlement. The state appealed.

The Illinois Court of Appeal, Second District, reverses, holding that the state can file a claim against the estate. The court rules that there is nothing in state law that forecloses the state “from pursuing a claim against the Estate for expenses paid on [Ms. Ries’] behalf before her injury.” The court notes that the state could not “have encompassed into the personal-injury settlement its claims for expenses not related to the injury.”

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