This order to show cause seeks resolution of a conflict between the New Jersey Tort Claims Act and the Medicaid Assistance Program with respect to deduction and reimbursement rights for medical payments made by Medicaid.
Plaintiff fell on allegedly defective steps in her apartment building owned and maintained by defendant Newark Housing Authority. Medical expenses totalling $18,390.75 were paid by Medicaid. Plaintiff now sues defendant Newark Housing Authority pursuant to the New Jersey Tort Claims Act. A section
of the act (N.J.S.A. 59:9-2 e.) provides defendant, Newark Housing Authority, with a credit for such collateral source payments. At the same time the Division of Medical Assistance and Health Services is entitled to reimbursement from any judgment obtained by plaintiff for the medical expenses it paid. (N.J.S.A. 30:4D-7.1 b.).
If both sections are enforced, plaintiff will in effect bear the burden of paying her medical expenses twice; first, because she must deduct them from any award assessed against Newark Housing Authority, and second, from any award obtained reimbursement must be made to Medicaid. All parties agree this would be inequitable. The only question is, therefore, which governmental entity should bear the loss. The answer is defendant, Newark Housing Authority.
Section 59:9-2 e. of the Tort Claims Act states:
e. If a claimant receives or is entitled to receive benefits for the injuries allegedly incurred from a policy or policies of insurance or any other source other than a joint tortfeasor, such benefits shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award shall be deducted from any award against a public entity or public employee recovered by such claimant; provided, however, that nothing in this provision shall be construed to limit the rights of a beneficiary under a life insurance policy. No insurer or other person shall be entitled to bring an action under a subrogation provision in an insurance contract against a public entity or public employee.
The funds disbursed by the Medical Assistance statute are derived in part from federal grants made pursuant to 42 U.S.C.A. § 1396 (1974). In order to qualify for such grants, § 1396a (1974 Supp.1982) establishes the requirement of reimbursement from liable third parties. N.J.S.A. 30:4D-7.1 b. is in conformity with the statute and states:
b. When a recipient, his guardian, executor, administrator or other appropriate representative brings an action for damages against a third party, written notice shall be given to the Director of the Division of Medical Assistance and Health Services. In addition, every recipient or his legal representative shall promptly notify the division of any recovery from a third party and shall immediately reimburse the division in full from the proceeds of any settlement, judgment, or other recovery in any action or claim initiated against any such third party subject to a pro rata deduction for counsel fees, costs, or other expenses incurred by the recipient or the recipient's attorney; provided, however,
that the director may make application to a court of competent jurisdiction for an award of counsel fees and costs incurred in the pursuit of a claim under this subsection.
Any settlement, judgment, dismissal, exchange of releases, or action affecting the disposition of a recipient's independent action against a third party shall not serve to bar a claim or cause of action brought by the Attorney General on behalf ...