Re-prioritizing Who is Made Whole in Tort Actions: the Injured Party or the State?

Gallardo leaves Missouri’s statutory and regulatory scheme in Medicaid reimbursement vulnerable and subject to change. While Missouri currently explicitly limits the recovery of Medicaid to past medical expenses, lawmakers with similar ideologies to the majority may read the Court’s ruling as a signal to propose new legislation in allowing the State to recover more losses than its due.

By: Maria Ceriotti

Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751 (2022)


     The Medicaid Act was enacted to provide medical payment support to individuals whose income falls below a certain threshold and who would not be able to afford health insurance through other means.1 Because of its potential breadth and expense, Medicaid is a payor of last resort. Therefore, if a third party is liable for someone else’s injury and pays that individual in part for their medical expenses, Medicaid can seek reimbursement for what it has paid in medical expenses due to that injury.2 In Gallardo, the Court undercut the principal premise of assistance on which Medicaid was based to bolster funds that can be given to the State from a personal injury settlement.3 This holding will have direct effects on both state law and on the recovery of plaintiffs more broadly.


     In 2008, Gianinna Gallardo, then thirteen years old, was struck by a truck after being dropped off by her school bus.4 She sustained catastrophic physical injuries and, since the accident, has remained in a vegetative state as a result of severe brain damage.5 Medicaid paid over $860,000.00 for a portion of her past medical expenses and an additional $21,499.30 was paid by a private insurer.6 On behalf of their daughter, Ms. Gallardo’s parents sued the truck driver and the school board seeking damages for past and future medical expenses, lost earnings, and other damages.7 The action eventually settled, with court approval, for $800,000.8 The agreement expressly designated $35,367.52 as past medical expenses paid by Medicaid.9 The settlement also recognized that “some portion of the settlement may represent compensation for future medical expenses” but did not provide an estimate of those costs.10

     After settlement, Florida’s Medicaid agency asserted a lien against the settlement proceeds to recover both past and future medical expenses paid or to be paid by Medicare.11 Under the statutory scheme of Florida, Medicaid was entitled to recover roughly $300,000 of the $800,000 settlement proceeds (37.5% of the proceeds).12 Gallardo placed $300,000 in escrow and challenged the allocation in an administrative proceeding, as required under Florida law.13 In addition, Gallardo then brought suit in federal court seeking a declaration that Florida was violating the Medicaid Act by requiring compensation for both past and future medical expenses.14 The United States District Court for Northern District of Florida granted summary judgment in favor of Gallardo.15 The Eleventh Circuit reversed by concluding that nothing in the text of the Medicaid Act prohibited a state from seeking reimbursement of future medical costs from a settlement with a third party.16 The Supreme Court granted certiorari and determined that the Medicaid Act permits a state to seek reimbursement of settlement proceeds allocated for future medical expenses.17


     This Part will walk through Medicaid and its caselaw, and then it will explore various state statutes relating to past and future medical cost recovery under Medicaid.

A. The Medicaid Act & Relevant Case Law

     In order for a state to receive funding from the federal government for Medicaid, the state must comply with the federal requirements of the program.18 When the Act was enacted in 1965, it included an “anti-lien provision” which stated that a lien could not be asserted “against the property of the individual prior to his death on account of medical assistance” that was provided under the plan, whether “paid or to be paid.”19 A narrow exception to this general rule relates to medical payments made to the individual on behalf of a third party via settlements.20 In Ahlborn, the Court held in favor of the exception and found that Medicaid can seek reimbursement from third parties who are liable for a beneficiary’s medical cost.21 In doing so, the Court noted that it was an exception because under the general anti-lien provision, settlements qualified as “property” are generally protected from Medicaid repayment.22 Additionally, the Alhborn Court rejected the claim that a state could seek reimbursement more broadly from the remainder of settlement funds, as it would be in violation of the anti-lien provision, thereby limiting the exception.23

     Three years after the enactment of the Act, Congress included the third-party liability provision.24 In this provision, Congress allowed States, where “legal liability is found to exist after medical assistance has been made available on behalf of the individual,” to “seek reimbursement for such assistance to the extent of such legal liability.”25 Congress then enacted two additional provisions to assist states when seeking reimbursement: the assignment provision and the acquisition provision.26 The assignment provision requires each state Medicaid plan to condition eligibility on the assignment of “any rights” of the beneficiary “to payment of medical care from any third party.”27 The acquisition provision required states to enact laws that automatically acquire a beneficiary’s rights to the third party payments “for health care items or services furnished” to the beneficiary.28 These provisions work together to support the reimbursement of Medicaid from third party liability settlements where appropriate. 

B. Important State Statutes

States have enacted their own sets of statutes and laws to govern the collection of reimbursements required under the Medicaid Act.

1. Florida & Other States with Explicit “Future” Cost Recovery

     In order to satisfy the reimbursement requirements of the Medicaid Act, Florida enacted its Medicaid Third-Party Liability Act.29 This statute entitled Florida to up to half of a beneficiary’s total recovery, but no more than the amount of assistance provided by Medicaid could be taken.30 The statute noted that this presumptively represents the portion of recovery for “past and future medical expenses.”31 Beneficiaries can rebut this presumption with clear and convincing evidence that the true amount of recovery for past and future medical costs is less than the amount calculated by the statute’s formula.32 Florida’s statute explicitly included reimbursement of both past and future medical expenses that are recovered by a third party.33 Additionally, other statutes, while not explicitly stating a recovery for future costs, may be interpreted to include future medical costs.34

2. Missouri: “Past” Cost Recovery Only

     In Missouri, the statutes and regulations governing recovery of medical payments made by the state’s Medicaid program do not allow reimbursement of future medical costs when the beneficiary is injured by a third party.35 In fact, Missouri regulations of the state Medicaid program explicitly allow for the assignment of a lien only on past medical expenses that the State has paid.36 However, this limitation is only in regulation, and is not codified in the same explicit manner in the statutory scheme.37 The statute uses language which implicitly limits the recovery to past medical expenses through phrases such as “right to recover payments made to a provider…”38 The regulation governing the calculation of the lien Medicaid has against a third party settlement, however, explicitly limits the recovery to past medical expenses that are recovered or are expected to be recovered.39 It is precisely the language of both individual state statutes and the Medicaid Act’s language which decided the majority opinion in Gallardo.


     The Majority found that the “anti-lien provision” of the Medicaid Act did not prohibit a State from seeking reimbursement of future medical care expenses.40  Justice Sotomayor, in a dissent joined by Justice Breyer, concluded that a State’s ability to receive future medical expenses out of a third-party settlement was contrary to both prior case law and a fair reading of the Medicaid Act.41

A. Justice Thomas’s Majority Opinion

     The Court relied on the plain text of 1396k(a)(1)(A), the assignment provision, in deciding this case.42 In this provision, the Court found no limiting language that required reimbursement of only past medical care and reads “any rights” as broadly inclusive of both rights to payment for past medical expenses and future.43 The Court found that if Congress intended for there to be limits on the kind of medical care payments that could be recovered, it would have provided such language in the assignment provision, as it did in other areas of the Act more broadly.44

The Court rejected the policy arguments made by Gallardo.45 First, the Court rejected the argument that it would be “absurd and fundamentally unjust” for the State to receive repayment of damages for which it has not yet provided compensation.46 The Court found no basis in ruling based on “fairness” and instead relied on a strict reading of the text.47 The Court also rejected Gallardo’s second argument that a strict reading of Section 1396k(a)(1)(A) would provide a “lifetime assignment” to the State as it gives rights even if that individual, in the future, is no longer on Medicaid for those future medical expenses.48 The Court responded to this policy argument by reading the term “individual” in the statutory text as rights assigned only when they are a beneficiary of Medicaid at the time of the assignment, regardless of the beneficiary’s status when those benefits might be realized in the future.49

B. Justice Sotomayor’s Dissent

     The dissent relied on the Court’s holding in Ahlborn where it found that the State could not seek reimbursement from the entirety of the settlement outside of what is allocated for medical costs.50 In doing so, the Ahlborn Court noted that such an outcome, if allowed, would be “unfair to the recipient” of the settlement, and “absurd and fundamentally unjust.”51 Relying on this precedent, the dissent agreed with Gallardo’s policy arguments.52

     Additionally, the dissent found the majority’s statutory interpretation to be incorrect in light of the Medicaid Act’s statutory text as a whole.53 Rather than reading Section 1396k(a)(1)(A) in isolation, the dissent began its analysis with the general rule of the “anti-lien” provision and then looked to the exceptions, such as the assignment provision.54 In doing so, it found that rather than creating a broad right to an assignment of all medical costs both past and future, the assignment provision, with its companion provisions in the text such as the acquisition provision, provided a framework for carrying out a limited exception of past medical costs only.55 Through this analysis, the dissent found that the proper reading of the statutory text is the opposite conclusion of the majority opinion.56


     Gallardo’s holding is not only inconsistent with prior case law and sound statutory interpretation, but it is also devoid of logic and runs contrary to the principles of remedies that are due to a person injured by another party. The conclusion of the Court will have effects on the future of state statutes as related to their Medicaid reimbursement scheme and will have likely effects on the settlement process between two parties moving forward.

     The majority opinion in Gallardo focuses narrowly on one provision in the Medicaid Act without reading it in full context of the Act. Because of this, the Court was forced to jump through hoops in its rejection of the sound policy arguments that resulted as a logical conclusion of their interpretation.57 Contrary to their own prior case law on a similar substantive issue, Justice Thomas’s opinion discards Gallardo’s fairness argument by near circular reasoning in rejecting an argument of fairness for one of textual interpretation.58 However, even if one believes the Court should not be guided in its decisions by principles of fairness, this ruling cannot sidestep the illogical conclusion it creates. Through this decision, the Court now allows reimbursement of costs that do not, and may never, exist. The implied holding suggests a faulty idea that a person receiving Medicaid benefits at the time of their injury caused by a third party will still be receiving those benefits at any given time in the future when the medical costs might be realized.59

     Additionally, in the Court’s rejection of Gallardo’s “lifetime assignment” argument, the majority relied on “background legal principles” in their conclusion, mainly those of contract law.60 However, the Court’s method of choosing which background principles to apply leaves out those that are most important when looking at the context of ruling as a whole: principles of remedies. The law of remedies, the backbone of the judicial system and a guiding principle for settlement offers and agreements, demands that an injured party be made whole.61 This is inclusive of a person’s medical bills, pain and suffering, lost wages, and any other loss attributable to the injury caused by the actions of the third party.62 The Court’s holding in Gallardo shifts this foundational legal principle by prioritizing who needs to be made whole. Rather than reading the Act in light of making the injured party whole, the Court focuses on making the State whole first. The intent of the law of remedies has never been to make the state whole but is instead to ensure the injured party is made whole—a background legal principle the majority ignores in Gallardo.

     Finally, Gallardo leaves Missouri’s statutory and regulatory scheme in Medicaid reimbursement vulnerable and subject to change. While Missouri currently explicitly limits the recovery of Medicaid to past medical expenses,63 lawmakers with similar ideologies to the majority may read the Court’s ruling as a signal to propose new legislation in allowing the State to recover more losses than its due. The outcome of such a change will only encourage settlement agreements to either deflate future medical costs at the expense of the injured party or increase the monetary value elsewhere to accommodate for the lost funds in seeking to make the injured party truly whole. In states with statutory caps on non-economic damages this leaves plaintiffs with only one option: receive less than what they are due.64 In light of the principles of remedies and for fairness and justice due to injured parties, Missouri lawmakers should not seek the adoption of a law similar to Florida that seeks only to increase money given to the State at the expense of injured individuals. Rather, Missouri should codify the scheme set out in its regulations to limit recovery to past medical expenses.


     The holding of Gallardo has potential major impacts on the outcome of a plaintiff’s recovery in a tort action. The holding of the Court undermines the basic principles of remedies and misinterprets federal law to reach the desired outcome. Missouri lawmakers should not seek to adopt a similar approach to the Florida statute in order to preserve the rights of injured parties and their ability to recover for the losses they endured.


[1] Policy Basics: Introduction to Medicaid, Center on Budget and Policy Priorities (Apr. 14, 2020),

[2] 42 U.S.C. § 1396a(a)(25)(B) (2022).

[3] See Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751 (2022).

[4] Brief for Petitioner at 16, Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751 (2022) (No. 20-1263).

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751, 1757 (2022).

[10] Id.

[11] Brief for Petitioner at 17, Gallardo, 142 S. Ct. 1751 (No. 20-1263).

[12] Gallardo, 142 S. Ct. at 1757; Fla. Stat. ann. § 409.910(11)(f)(1), (17)(b) (West 2017).

[13] Id.

[14] Gallardo, 142 S. Ct. at 1757.

[15] Gallardo, 142 S. Ct. at 1757; Gallardo v. Dudek, 263 F.Supp.3d 1247, 1260 (2017).

[16] Gallardo, 142 S. Ct. at 1757; Gallardo v. Dudek, 963 F.3d 1167, 1176 (2020).

[17] Gallardo, 142 S. Ct. at 1755, 1759. The specific provision of the Medicaid Act to which the Court based its opinion was Section 1396k(a)(1)(A).

[18] 42 U.S.C. § 1396d(b) (2022).

[19] 42 U.S.C. § 1396p(a)(1) (2018).

[20] 42 U.S.C. § 1396k(a)(1)(A) (2018); See Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268, 283-84 (2006).

[21] Ahlborn, 547 U.S. at 282. In the capacity of this article, references to “’Medicaid’ seeking reimbursement” relates to the entity and agency of the State which runs the Medicaid program.

[22] Id. at 285-286.

[23] Id. at 288. The Court noted it would be “unfair to the recipient” for the State to “share in damages for which it has provided no compensation.”

[24] 42 U.S.C. § 1936a(a)(25)(B) (2022).

[25] § 1936a(a)(25)(B) (emphasis added).

[26] 42 U.S.C. § 1396k(a)(1)(A) (2022); § 1396a(a)(25)(H) (2022).

[27] § 1396k(a)(1)(A).

[28] § 1396a(a)(25)(H).

[29] Fla. Stat. ann. § 409.910(14) (West 2017).

[30] Fla. Stat. ann. § 409.910(14), (11)(f)(1) (West 2017).

[31] Fla. Stat. ann. § 409.910(17)(b) (West 2017).

[32] Id.

[33] Id.

[34] Some states submitted an amicus brief in favor of the Florida statue and is therefore assumed their own state law interprets or would be interpreted to include both past and future medical expenses. Brief of Amici Curiae States of Utah, Ohio, and 12 Other States in Support of Respondent, Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751 (2022) (No. 20-1263). However, it should also be noted that some of the states who signed this brief do have current statutes that explicitly limit recovery to past medical expenses; therefore, the inclusion of these states in the brief may only signal a potential change in their state law after Gallardo. See e.g. Ark. Code Ann. § 20-77-315 (West 2013); Ga. Code Ann. § 49-4-149 (West 1999).

[35] Mo. Rev. Stat. § 208.215 (West 2014); Mo. Code Regs. Ann. tit. 13, § 70-4.120 (2022).

[36] Mo. Code Regs. Ann. tit. 13, § 70-4.120 (2022).

[37] Mo. Rev. Stat. § 208.215 (West 2014); Mo. Code Regs. Ann. tit. 13, § 70-4.120 (2022).

[38] Mo. Rev. Stat. § 208.215 (West 2014).

[39] Mo. Code Regs. Ann. tit.13 § 70-4.120 (2022) (“The division shall be entitled to any payments or benefits recovered, or to be recovered, by or on behalf of a participant from a liable third party or insurer to the extent the payment is compensation for past medical treatment.”) (emphasis added).

[40] Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751, 1759 (2022).

[41] Id. at 1762 (Sotomayor, J., dissenting).

[42] Id. at 1758.

[43] Id.

[44] Id. The Court cites specifically to the acquisition provision in 1936a(a)(25)(H) as an example where the statute uses express limiting language to past medical expenses.

[45] Id. at 1759.

[46] Id. at 1761 (citing Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268, 288 n. 19 (2006)).

[47] Id.

[48] Id.

[49] Id.

[50] Id. at 1763.

[51] Id. (Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268, 288 n.19 (2006)).

[52] Gallardo, 142 S. Ct at 1763 (Sotomayor, dissenting).

[53] Id. at 1765.

[54] Id. at 1767.

[55] Id. at 1767. In doing so, the dissent relied on language from Ahlborn which said that the acquisition provision “reiterated” and “echoed” the assignment provision requirements and should be read in conjunction and relation to one another. Id. at 1765 (citing Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 276, 281 (2006)).

[56] Id. at 1767.

[57] Id.

[58] Id. Justice Thomas seems to argue that the Court could not base its decision on principles of fairness because Alhborn was decided based on the text of the Act. However, in Alhborn, the textual interpretation by the Court was based on whether it was “unfair” to the recipient of benefits to allow Medicaid to recover more than medical costs from the settlement amount. Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268, 288 (2006)).

[59] Additionally, the calculation of future medical expenses is an estimate, though based on thorough research and data. While the individual should be compensated for the costs of their future medical, to allow the State to retain those funds may mean they obtain a windfall should that actual future amount be less than calculated at the time of settlement. Brief of American Academy of Physician Life Care Planners as Amicus Curiae in Support of Neither Party at 2-3, Gallardo by and through Vallasso v. Marstiller, 142 S. Ct. 1751 (2022) (No. 20-1263).

[60] Gallardo, 142 S. Ct. at 1761.

[61] See Trimble v. Pracna, 167 S.W.3d 706, 711 (2005).

[62] See 74 Am. Jur. 2d Torts § 62 (updated Nov. 2022).

[63] Mo. Code Regs. Ann. tit. 13, § 70-4.120 (2022).

[64] In Missouri, there does not exist a statutory cap on economic or non-economic damages for most personal injury claims. One exception, medical malpractice, does provide a cap.  See Watts v. Lester E. Cox Medical Centers, 376 S.W.3d 633, 636 (2012); Ordinola v. University Physician Associates, 625 S.W.3d 445, 450-51 (2021).