North Carolina's Medicaid Personal Injury Lien Law Struck Down by Supreme Court
North Carolina legislators wanted to take one third of all the money Medicaid claimants receive in tort lawsuits against doctors and hospitals. The Supreme Court rejected North Carolina’s statute because It required that every tort case pay one third of its value to the state government.
The Supreme Court was not comfortable with allowing North Carolina to take one third of every tort recovery in cases where one third was not justifiable. Federal law only grants states the right to take what they have paid via the State Medicaid program; any additional taking would not be recovery, instead as here, a taking of money that is allocated in the settlement for other purposes.