Sanctions for a frivolous motion for relief from judgment; MCR 2.612(C)(1)(f); MCR 1.109(E); Settlement allocation; The State’s subrogation & assignment rights as to a third party’s liability for a Medicaid recipient’s medical care; MCL 400.106(8); The federal anti-lien statute (42 USC § 1396p(a)(1)); Neal v Detroit Receiving Hosp; Arkansas Dep’t of Health & Human Servs v Ahlborn; Byrnes v Martinez; “Incur”; Pro rata allocation; Attorney fees & costs; Department of Health & Human Services (DHHS)

The court concluded that the trial court did not err in imposing sanctions against intervening plaintiff-DHHS for a frivolous motion for relief from judgment. Further, it did not err in effectively limiting the DHHS’s recovery for medical services paid for through Medicaid to the part of the medical malpractice action settlement agreement allocated to plaintiff-patient’s past medical expenses. The court also found that nothing prevented the trial court from using a pro rata approach in determining the part of the settlement allocated to those expenses, and that the amount apportioned to the DHHS was not reduced due to plaintiffs’ attorney fees or costs. Thus, it affirmed the trial court’s order approving the distribution of proceeds from the settlement. The court noted that the DHHS’s argument under MCR 2.612(C)(1)(f), relying on a case decided after entry of the trial court’s final order, “was legally deficient on its face.” While the trial court may have erred in relying on the fact the case was closed, its “rejection of the DHHS’s position that it could obtain relief from the final order based on a subsequently issued decision” by the court was correct. As to settlement allocation, the issue was whether “the federal provisions limit a state to recovering from funds allocated for past medical expenses or for any medical expenses, which would include future medical expenses.” The court held that pursuant to Ahlborn, and as recognized by Neal, due to § 1396p(a)(1), “states are only entitled to recover settlement proceeds that have been allocated to past medical expenses.” Next, it disagreed with the DHHS that its settlement share was reduced by a pro rata amount. Rather, “the trial court determined the portion of the settlement allocated to past medical expenses by using a pro rata approach, i.e., because plaintiffs settled the case for 21.25% of the value of the case, it followed that 21.25% of the incurred medical expenses were captured in the settlement amount.” The court found no error in this approach. Finally, it determined that, contrary to the DHHS’s claim, the trial court did not reduce the amount it “could recover based on plaintiffs’ attorney fees and costs.” The trial court awarded the “DHHS 21.25% of its $268,357.33 lien, or $57,025.93. Importantly, that 21.25% was calculated by using the total settlement amount before any attorney fees or costs were ever considered.”