An attorney is accusing the state's health care program of illegally taking more money than it is entitled to from enrollees who get lawsuit settlements.
Larry Coben said the Arizona Health Care Cost Containment System is entitled to try to recoup its costs when someone getting care from the state manages to get money from the person who caused the injury in the first place.
But Coben, in a lawsuit filed in Maricopa County Superior Court, says the state's right is limited to going after that third party. He said AHCCCS is engaged in fraud when it pressures the injured parties for cash.
The bigger legal issue, though, is how much AHCCCS can recoup even when it does things right. Coben said the practices he has found show the state has been seeking -- and in some cases getting -- more than what it is entitled to collect.
What is involved here is more than small change: AHCCCS reports that it collected $21 million in these kinds of cases in one budget year alone.
AHCCCS spokeswoman Jennifer Carusetta said she cannot respond to the specifics of this lawsuit.
"However, the AHCCCS administration believes that it is acting in compliance with both federal and state law regarding third party liability,'' she said.
In 2006 the U.S. Supreme Court said Medicaid programs like AHCCCS are entitled to recover a portion of what they have paid.
The key word here is "portion,'' which the high court defined as the percentage of what the Medicaid recipient was able to recover in comparison to the "value of the case,'' the ultimate amount to which someone might be entitled. That calculation is key because those who sue do not always recover the full amount of their damages, which can include past and future medical expenses.
For example, Coben said, a case may be valued at $100,000 but the victim, for a variety of reasons, chooses to settle for $50,000. Based on that, he said, AHCCCS is entitled to just 50 percent of what it paid for the person's medical care.
But even that does not end the discussion.
Coben said the recipient then gets a "discount'' on what AHCCCS is entitled to recover based on the legal fees and other costs expended -- costs that helped the government get back some of its money.
In a case where AHCCCS spent $50,000 in medical bills, the first calculation reduces its recovery by half, to $25,000. But the ultimate recovery for AHCCCS will be less because of the other fees and costs.
Where it gets even more complicated, Coben said, is figuring out the whole formula.
He said someone has to determine the value of the case. And that is not always as simple as it seems.
"What's happening is, AHCCCS is trying to negotiate with each claimant,'' Coben said.
"Sometimes they're reasonable, sometimes they're a little hard-nosed,'' he continued. "It depends on what the circumstances are.''
And that's where it can get subjective.
One of his clients is a quadriplegic, one is a paraplegic.
"Clearly, they didn't get as much money as they were entitled to, for the injuries,'' he said, though Coben did not disclose how much they did receive.
"But what ended up happening was AHCCCS demanded full payment,'' he said, $216,675 in the first case and $127,189 in the second. "Under the law, they weren't entitled to that.''
No date has been set for a hearing.