Medicaid and PeachCare Paid for My Child’s Care. Do They Get Paid Back From the Settlement?

In Georgia, a very large number of children have their medical care paid by Medicaid or by PeachCare for Kids. When one of those children is hurt by someone else’s carelessness, those programs often pay the hospital, the surgeon, and the therapist long before any insurance company pays a dime.

Then the case settles, and a letter arrives. The state wants its money back.

Parents are often caught off guard by this. Some are told the state will take everything. That is not true. This post explains why Medicaid gets repaid, how much it can actually take, and how families can keep more of what belongs to their child.

Why Medicaid gets paid back

Medicaid is meant to be the payer of last resort. When someone else caused the injury, federal law requires the state to try to recover what it spent.

Two things give Georgia that right. First, when a family applies for Medicaid, it assigns to the state the right to recover medical payments from anyone responsible for the injury. Second, Georgia law gives the Department of Community Health a right of subrogation and a lien against the recovery, O.C.G.A. §§ 49-4-148 and 49-4-149.

So the question is almost never whether Medicaid gets repaid. The question is how much.

How much Medicaid can take: only the medical part

In 2004, the Supreme Court of Georgia held in Richards v. Georgia Department of Community Health that Medicaid’s claim attached to a family’s entire recovery. Two years later, the Supreme Court of the United States said otherwise.

In Arkansas Department of Health & Human Services v. Ahlborn (2006), the Court held that federal law limits the state to the part of a settlement that represents medical expenses. Medicaid cannot reach the money for your child’s pain and suffering, scarring, disability, or lost earning capacity.

In Gallardo v. Marstiller (2022), the Court added that the state may also reach the part of a settlement that represents future medical care, not only past care. That matters for children with lasting injuries, whose settlements often include money for years of treatment to come.

A simple example. Suppose a child’s case settles for $300,000, and Medicaid paid $40,000 for the child’s care. If the medical portion of that settlement is fairly valued at $40,000 or more, Medicaid can generally be repaid in full. But if the case settled for far less than it was worth, the medical portion shrinks too, and so does what Medicaid can take. Medicaid also cannot use a one-size-fits-all formula that ignores the facts of the case. The Supreme Court rejected that in Wos v. E.M.A. (2013).

The lien letter is a starting number, not the final one

The first number Medicaid sends is rarely the number that should be paid. Check it carefully.

• It is what Medicaid paid, not what the hospital billed. Medicaid pays providers at low rates. The repayment claim is usually far smaller than the bills, and that is the right starting point.
• Ask for an itemized payment history. Medicaid’s printout often includes care that had nothing to do with the injury: well-child checkups, ear infections, prescriptions for unrelated conditions. Every unrelated line should come off.
• Check the dates. Treatment from before the injury, or for a different illness, does not belong on the list.
• Make the medical portion argument. If the settlement is less than the full value of the case, the medical share is smaller too, and the repayment should be reduced to match.

Finally, ask. A written request for a reduction, with a clear explanation of the case’s weaknesses, the limits of the other side’s insurance, and the child’s future needs, is often worth the effort.

PeachCare and the Medicaid care management plans

PeachCare for Kids is Georgia’s health program for children in families who earn too much for Medicaid but cannot afford private coverage. It is also run by the Department of Community Health.

Most Georgia children on Medicaid or PeachCare are enrolled through a care management organization, a private health plan that manages the child’s care for the state. Expect the repayment claim to come from that plan, or from a recovery company working for it, rather than from the state directly.

The same rules about what was paid, what was related, and what part of the settlement is medical apply in these negotiations too. Make sure you know every plan that paid for your child’s care, so that no repayment claim surfaces after the money has been divided.

Private health insurance is different

If your child is covered by private health insurance instead, Georgia law gives your family a stronger protection.

Under Georgia’s made-whole statute, O.C.G.A. § 33-24-56.1, a private health insurer can be repaid from an injury settlement only if the injured person has been fully compensated for all losses, and the insurer must pay its share of the attorney’s fees. In many child injury cases, where the settlement is limited by the other side’s insurance coverage, a family is not made whole, and the insurer gets nothing.

There is an important exception. Many employer plans are “self-funded” plans governed by the federal ERISA law, and those plans usually are not bound by Georgia’s made-whole statute. The made-whole statute also does not govern Medicaid. Knowing exactly what kind of coverage paid for your child’s care is the first step.

How liens fit into the settlement

Liens are not an afterthought. They shape the whole settlement.

When a child’s claim settles for more than $25,000, a judge has to approve it. A lien that is legally enforceable against the settlement is subtracted when figuring the “net settlement,” which decides whether a conservatorship is required. I explained how that works in Part II of my post on minimizing court involvement.

That means the lien numbers need to be final before the settlement goes to the judge. A repayment claim that surfaces later can come out of money that was supposed to be your child’s.

Remember, too, that the claim for a minor’s medical bills is usually the parents’ claim, not the child’s. How the settlement is divided between the parents and the child, and how much of it is called “medical,” all affect what the liens can reach. I explained the two claims in Your Child’s Claim and Your Claim.

What I tell parents

1. Tell your lawyer about every program and plan that paid for your child’s care, including Medicaid, PeachCare, and the care management plan.
2. Do not ignore letters from Medicaid or a recovery company. Send them to your lawyer.
3. Ask for an itemized payment history and check every line.
4. Get the final lien amounts in writing before the settlement is presented to a judge.
5. Do not let anyone tell you the state takes everything. It does not. It is limited to the medical part of the settlement.

Medicaid and PeachCare were there when your child needed care. They are entitled to be repaid fairly. They are not entitled to the money that compensates your child for pain, for scars, or for a future that has been changed.

Attorney Pete Pearson has practiced personal injury law in Georgia since 1996. He has a special interest in helping families of injured children. He is a father of ten and lives with his wife and children in Newborn, Georgia.

If you need to talk, my direct line is Six-Seven-Eight 358-2564, or email pete@petepearsonlaw.com.