Attorney General Greg Stumbo Seeks Preliminary Injunction in U.S. Supreme Court to Prevent Collection of “Clawback” Payments From Kentucky Medicaid Program

FRANKFORT, KY (March 17, 2006) – Attorney General Greg Stumbo announced today that Kentucky filed a motion in the United States Supreme Court seeking a preliminary injunction to prevent the Secretary of the United States Department for Health and Human Services from collecting so-called “Clawback” payments from the Kentucky Medicaid program. A lawsuit filed by Stumbo on March 3, 2006 challenging the constitutionality of the new federal Medicare Part D prescription drug plan is pending before the Supreme Court.

Four other states, Texas, Maine, Missouri and New Jersey, joined Kentucky in the lawsuit, and ten additional states have filed an amicus friend of the court brief in support of the lawsuit. The court challenge will not adversely affect any potential savings on prescription drugs, but aims to protect Kentucky’s tax dollars from the federal “Clawback.”

Kentucky’s anticipated Clawback bill for calendar year 2006 is over $81 million and in the next five years the Clawback could saddle Kentucky taxpayers with payments to the federal government totaling more than $360 million for a net loss to the Medicaid program approaching $20 million.

“The Clawback is an unconstitutional effort on the part of Congress to force Kentucky taxpayers to fund a federal program,” Stumbo stated. “The interest alone on Kentucky’s first Clawback payment would cost the Medicaid program over $10,000 a day,” Stumbo continued. “For this reason I have sought a preliminary injunction from the Supreme Court to halt the Clawback payments until the Court has ruled on the merits of our lawsuit.”

The United States Department of Health and Human Services has ten (10) days to respond to the motion for a preliminary injunction and sixty (60) days to respond to the states’ motion for leave to file an original action.