A Guide from Schwartz Law

If you've been injured in a car accident, slip-and-fall, or any other personal injury incident in Louisiana, medical bills can quickly become overwhelming. Many injured Louisianans rely on Medicaid (called Louisiana Healthy Louisiana in our state) to cover emergency room visits, surgeries, physical therapy, and ongoing care.

When you settle your injury case or win a judgment, Medicaid doesn't just “write off” the bills they paid. They have a legal right to be reimbursed out of your settlement. Understanding how this works can prevent painful surprises when you finally receive your settlement check.

Here's exactly how Medicaid liens and reimbursements are handled in Louisiana accident cases.

1. Medicaid Has an Automatic Lien

Under both federal law (42 U.S.C. § 1396a(a)(25)) and Louisiana law (La. R.S. 46:446), Medicaid has an automatic lien on any settlement, judgment, or award you receive from the at-fault party or their insurance company.

This lien attaches to the portion of your settlement that is meant to compensate you for past and future medical expenses.

2. The Louisiana Department of Health (LDH) Must Be Notified

Louisiana law requires your attorney (or you, if you're handling the case yourself) to notify the Louisiana Department of Health (LDH) within 30 days of filing a lawsuit or making a claim against the responsible party.

Most experienced personal injury attorneys do this automatically. If notification is not sent, LDH can actually sue you or your attorney for the full amount they paid (plus penalties).

3. How Much Does Medicaid Get Back?

Louisiana follows the federal anti-recovery cap rules and the landmark U.S. Supreme Court cases (Ahlborn (2006), Wos v. E.M.A. (2013), and Gallardo (2022)):

• Medicaid can only recover from the portion of the settlement allocated to past medical expenses.
• They cannot reach money allocated to pain and suffering, lost wages, loss of enjoyment of life, or future medical expenses.
• Louisiana uses a proportional reduction formula if the settlement is less than the full value of the entire case (very common).

The Louisiana Formula (La. R.S. 46:446.1)

After attorney fees and litigation costs are deducted, Medicaid's recovery is reduced proportionally:

Medicaid recovery = (Net settlement to client) × (Medicaid paid ÷ Full value of the case)

Then capped at the actual amount Medicaid paid.

Example

• Total settlement: $150,000
• Attorney fees & costs: $55,000
• Net to client before Medicaid: $95,000
• Medicaid paid: $80,000
• Full case value (per both sides' evaluation): $300,000

Medicaid recovery = $95,000 × ($80,000 ÷ $300,000) = $25,333 (instead of the full $80,000).

This proportional reduction is one of the most client-friendly formulas in the country.

4. What About Medicare Set-Asides for Future Medical?

Medicaid does not currently require a formal “Medicaid Set-Aside” account for future medical expenses the way Medicare does. However, if you are on Medicaid and settle a case, you must be very careful not to spend settlement money that is clearly earmarked for future medical care, or you risk losing Medicaid eligibility.

5. Practical Tips from Schwartz Law Attorneys

• Always hire an attorney who routinely handles Medicaid liens. We negotiate these liens every single week and frequently reduce them even further than the statutory formula.
• Never sign a settlement check or release until the final Medicaid lien amount is in writing.
• If you receive a letter from a company like “The Rawlings Group” or “Optum,” they are acting as the recovery contractor for Louisiana Medicaid. Do not speak with them directly; forward everything to your attorney.

We Handle the Medicaid Lien So You Don't Have To

At Schwartz Law, we take care of notifying LDH, negotiating the lien, applying the proportional reduction, and making sure you keep as much of your settlement as legally possible.

If you or a loved one has been injured in Louisiana and Medicaid has paid your bills, call us for a free consultation. We'll explain exactly how much of your settlement you'll actually take home after the Medicaid reimbursement.

Schwartz Law
Baton Rouge | New Orleans | Lafayette | Lake Charles
504-837-2263
www.lawyerschwartz.com

Injured? Don't settle for less because of a Medicaid confusion. Let us fight to maximize what you keep.