Medicaid Lien Third Party Settlement
Medicaid lien third party settlement is not a national pay-order. 42 U.S.C. § 1396k lists assignment of rights to payment for medical care from any third party and State retention to reimburse medical assistance; § 1396a lists ascertain third-party liability and seek reimbursement; CT 17b-265 and NC 108A-57 list state subrogation rules — competing G.S. 44-50 hospital liens remain separate.
Last updated: September 9, 2026
Medicaid Lien Third Party Settlement
42 U.S.C. § 1396k / § 1396a / § 1396p and 42 C.F.R. § 433.138/.139/.145 are federal law. CT § 17b-265 and NC G.S. 108A-57 are state subrogation statutes. G.S. 44-49 / 44-50 rows are competing hospital-lien law on the same pot.
| Claim | Listed | Source |
|---|---|---|
| CT subrogation reaches insurer or other legally liable third party | “against an insurer or other legally liable third party” | CT § 17b-265 |
| Medicaid eligibility requires assignment of third-party payment rights | “to assign the State any rights” | 42 U.S.C. § 1396k |
| Assignment covers payment for medical care from any third party | “payment for medical care from any third party” | 42 U.S.C. § 1396k |
| Recipient must cooperate identifying liable third parties | “to cooperate with the State in identifying, and providing information to assist the State in pursuing, any third party who may be liable” | 42 U.S.C. § 1396k |
| State retains collected amounts needed to reimburse medical assistance | “shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual” | 42 U.S.C. § 1396k |
| Remainder after State reimbursement paid to individual | “the remainder of such amount collected shall be paid to such individual” | 42 U.S.C. § 1396k |
| State plan must ascertain third-party legal liability | “ascertain the legal liability of third parties” | 42 U.S.C. § 1396a |
| State must seek reimbursement to the extent of legal liability | “seek reimbursement for such assistance to the extent of such legal liability” | 42 U.S.C. § 1396a |
| State acquires recipient rights to payment by any other party for items/services | “the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services” | 42 U.S.C. § 1396a |
| Federal anti-lien: no lien on property prior to death for medical assistance paid | “No lien may be imposed against the property of any individual prior to his death on account of medical assistance paid” | 42 U.S.C. § 1396p |
| No adjustment/recovery of correctly paid assistance except as statute allows | “No adjustment or recovery of any medical assistance correctly paid” | 42 U.S.C. § 1396p |
| Agency must take reasonable measures to determine third-party liability | “The agency must take reasonable measures to determine the legal liability of the third parties who are liable to pay for services” | 42 C.F.R. § 433.138 |
| Agency must seek recovery from third party to limit of legal liability | “seek recovery of reimbursement from the third party to the limit of legal liability” | 42 C.F.R. § 433.139 |
| Recovery sought when expected recovery exceeds cost of recovery | “greater than the cost of recovery” | 42 C.F.R. § 433.139 |
| Assign rights to payment for medical care from any third party as eligibility condition | “payment for medical care from any third party” | 42 C.F.R. § 433.145 |
| Assign to the Medicaid agency his or her rights | “Assign to the Medicaid agency his or her rights” | 42 C.F.R. § 433.145 |
| CT DSS subrogated to recovery rights | “the Department of Social Services shall be subrogated to any right of recovery or indemnification” | CT § 17b-265 |
| CT former cause-of-action claim statute 17b-94 repealed effective July 1 2022 | “Section 17b-94 is repealed, effective July 1, 2022” | CT § 17b-94 (repealed) |
| NC Medicaid subrogation rights | “Subrogation rights” | G.S. 108A-57 |
| NC claim against third party includes Medicaid claim | “Any claim brought by a medical assistance beneficiary against a third party” | G.S. 108A-57 |
| NC claim deemed to include the Medicaid claim | “shall be deemed to include the Medicaid claim” | G.S. 108A-57 |
| NC statute lists Medicaid-claim vs one-third gross-recovery presumption text | “If the amount of the Medicaid claim does not exceed one-third of the medical assistance beneficiary's gross recovery, it is presumed that the gross recovery includes compensation for the full amount of the Medicaid claim” | G.S. 108A-57 |
| NC hospital/provider lien created on PI recoveries | “there is hereby created a lien upon any sums recovered as damages for personal injury in any civil action in this State” | G.S. 44-49 |
| NC provider lien 50% cap exclusive of attorneys fees | “The lien provided for shall in no case, exclusive of attorneys' fees, exceed fifty percent (50%) of the amount of damages recovered” | G.S. 44-50 |
| Ahlborn Held: conflicting state TPL provisions unenforceable | “Arkansas’ third-party liability provisions are unenforceable insofar as they compel a different conclusion” | Ahlborn (Justia) |
| Wos syllabus: anti-lien pre-empts taking non-medical settlement portion | “The federal Medicaid statute’s anti-lien provision, 42 U. S. C. §1396p(a)(1) , pre-empts a State’s effort to take any portion of a Medicaid beneficiary’s tort judgment or settlement not “designated as payments for medical care,”” | Wos (Cornell) |
Sources fetched September 9, 2026: 42 U.S.C. § 1396k, 42 U.S.C. § 1396a, 42 U.S.C. § 1396p, 42 C.F.R. § 433.138, 42 C.F.R. § 433.139, 42 C.F.R. § 433.145, CT § 17b-265, CT § 17b-94 (repealed), G.S. 108A-57, G.S. 44-49, G.S. 44-50, Ahlborn (Justia), Wos (Cornell).
Frequently asked questions
What is a Medicaid Lien Third Party Settlement?
Medicaid lien third party settlement is not a national pay-order. 42 U.S.C. § 1396k lists assignment of rights to payment for medical care from any third party and State retention of amounts needed to reimburse medical assistance. § 1396a states that the State must ascertain third-party liability and seek reimbursement. CT § 17b-265 and NC § 108A-57 list state subrogation rules. Competing G.S. 44-50 hospital liens remain separate.
What does 42 U.S.C. § 1396k say about assignment and retention?
42 U.S.C. § 1396k states that eligibility requires assigning the State any rights to payment for medical care from any third party, and that amounts collected shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual, with the remainder paid to the individual. It also lists a cooperation duty identifying liable third parties.
What does 42 U.S.C. § 1396a say about third-party liability?
42 U.S.C. § 1396a states that the State plan must ascertain the legal liability of third parties and seek reimbursement for such assistance to the extent of such legal liability. It also states that the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services.
What do CT § 17b-265 and NC G.S. 108A-57 list?
Connecticut § 17b-265 states that the Department of Social Services shall be subrogated to any right of recovery or indemnification against an insurer or other legally liable third party. North Carolina G.S. 108A-57 lists Subrogation rights and that any claim brought by a medical assistance beneficiary against a third party shall be deemed to include the Medicaid claim. Those are state statutes.
Do competing G.S. 44-50 hospital liens disappear under Medicaid recovery?
No. North Carolina G.S. 44-49 states that there is hereby created a lien upon any sums recovered as damages for personal injury. G.S. 44-50 states that the lien shall in no case, exclusive of attorneys' fees, exceed fifty percent (50%) of the amount of damages recovered. Those are competing published rules beside Medicaid subrogation rules.