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The Takeaway

Parents filing suit on behalf of their children frequently bring claims for incurred medical and hospital expenses as a result of the child’s claimed injury. But what happens if the child was covered under Medicaid at the time of treatment? Illinois’ Family Expense Act, Medicaid regulations, an Illinois Supreme Court ruling, and the state’s right of recoupment all hold that parents cannot recover medical expenses for their child’s treatment if Medicaid originally covered those expenses.

The Illinois Family Expense Act and Medicaid

The Illinois Family Expense Act, 750 ILCS 65/15, makes spouses liable for expenses of the family. Specifically, the Act imposes a legal obligation on parents to pay for medical expenses incurred for the care and treatment of their minor children.

Courts have consistently held that parents can recover medical expenses from a third-party tortfeasor who caused their child’s injury if the parents are liable for those expenses. Pirrello v. Maryville Acad., Inc., 2014 IL App (1st) 133964, ¶ 12. This cause of action belongs to the parents and is grounded in their responsibility to pay for the medical treatment.

However, when Medicaid covers the cost of a child’s medical treatment, the parents do not become liable for the expenses. Illinois Medicaid regulations prevent medical providers from billing or seeking reimbursement from Medicaid recipients or their family members; the providers are instead required to accept Medicaid payments as “payment in full” (89 Ill. Adm. Code 140.12(i)(1)). Because parents are not required to pay for these medical services, they do not incur a recoverable expense under the Illinois Family Expense Act.

An Illinois Supreme Court Ruling

In Lewis v. Lead Indus. Ass’n. 2020 IL 124107, the Illinois Supreme Court addressed the issue of whether parents could recover medical expenses previously covered by Medicaid. In Lewis, a group of children’s parents brought a class action lawsuit against manufacturers of lead paint. The parents sought to recover the costs associated with the mandatory lead toxicity blood screening their children underwent. Id. at ¶ 4.

The Court held that medical providers that accept Medicaid payments are not “creditors” of the parents because the Medicaid program eliminates any legal obligation for the parents to pay the provider. Id. at ¶¶ 38-40. (The purpose of Medicaid is to ensure that recipients, including minor children, receive medical care without incurring personal liability. By accepting Medicaid payments, providers agree not to bill the patient or their family.) Therefore, since the parents never had any out-of-pocket expenses and were never liable for payment, they lacked the legal standing to recover these expenses from a third-party tortfeasor. Consequently, the parents could not claim an obligation for these expenses under the Illinois Family Expense Act.

Subrogation and the State’s Right of Recoupment

The Illinois Public Aid Code (305 ILCS 5/11-22) allows the Department of Healthcare and Family Services (DHFS) to recover Medicaid payments from a third-party tortfeasor. However, this right belongs to the State, not the parents. Section 11-22 grants DHFS a lien on any recovery obtained from a third-party tortfeasor who is liable for the child’s medical expenses. The State’s right of recoupment is a claim against the tortfeasor and not against the Medicaid recipient or their family. As such, parents cannot recover medical expenses covered by Medicaid because those expenses are subject to the State’s subrogation rights, not the parents’ personal liability. Lewis, 2020 IL 124107 at ¶ 40.