Supreme Court will hear case on North Carolina malpractice settlement

McClatchy NewspapersSeptember 25, 2012 

— A North Carolina family catastrophe has landed at the Supreme Court, with potentially far-reaching consequences for how states handle medical malpractice settlements.

In a case that’s both technical and poignant, the court agreed Tuesday to consider a North Carolina law that state officials use to claim a portion of the settlement funds provided to medical malpractice plaintiffs and their loved ones. The state share can add up to a lot, millions of dollars in some instances.

The case the high court accepted involves North Carolina officials asserting a lien on $933,333.33, one-third of the $2.8 million that Sandra and William Earl Armstrong secured in a lump-sum medical malpractice settlement reached in 2006 on behalf of their daughter.

Several states, including Florida and Georgia, mirror North Carolina’s practice in how they seek medical reimbursements.

“This is certainly a very important case for the Armstrong family,” Raleigh, N.C.-based attorney Christopher Browning said in a telephone interview Tuesday, “and I do think this is likely to be a case that will also have a significant impact on the legal community.”

Everyone agrees that states can claim some reimbursement from medical malpractice settlements, typically to help cover what they’d previously paid out to the plaintiffs through state Medicaid programs. The hot legal question is whether the North Carolina law is too broad, in permitting the state to claim one-third of the total settlement.

“It’s too much, in some circumstances,” Browning said. “It’s a one-size-fits-all policy.”

Browning will represent the Armstrongs when the case now called Delia v. E.M.A. gets its hourlong oral argument, probably sometime early next year. The North Carolina case was one of six added to the court’s argument calendar Tuesday, as justices prepare for the start Monday of their next term, which will last through June.

The Armstrongs’ daughter, known in court records only as E.M.A., was born Feb. 25, 2000, at what’s now called the Catawba Valley Medical Center, in Hickory, N.C. She was delivered by cesarean section, which didn’t go well.

As a result of the injuries she suffered at birth, according to appeals court documents, E.M.A. is legally deaf and blind. She cannot sit, walk, crawl or talk. She suffers from mental retardation and a seizure disorder, and requires 12 to 18 hours of skilled nursing care every day.

The North Carolina Department of Health and Human Services, through the state Medicaid program, paid more than $1.9 million in health care expenses on E.M.A.’s behalf.

The Armstrongs sued their obstetrician, the medical center and other defendants in 2003. The obstetrician had a history of drug abuse, though he denied using illegal drugs at the time of E.M.A’s delivery, subsequent court proceedings revealed.

After the settlement was reached and the state staked a claim on its one-third share, the Armstrongs challenged the North Carolina reimbursement law as conflicting with federal law. The Armstrongs note that the total medical-malpractice settlement on which the state makes a one-third claim can cover other elements, such as pain and suffering, that are above and beyond medical costs.

The 4th U.S. Circuit Court of Appeals agreed with the Armstrongs that the North Carolina law conflicted with federal law prohibiting state governments from imposing liens on “property” outside the medical costs. The North Carolina Supreme Court, though, upheld the state law in a similar case.

“Only this court’s decision can resolve the conflict,” North Carolina Solicitor General John Maddrey advised the U.S. Supreme Court in a legal brief.

Email: mdoyle@mcclatchydc.com; Twitter: @MichaelDoyle10

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