The court ruled 6-3 Wednesday in favor of the family of the girl, identified only as E.M.A. She is severely disabled as a result of what her parents say was a botched delivery.
North Carolina has spent nearly $2 million for her medical care and when the family settled a malpractice lawsuit for $2.8 million, the state claimed a third of the settlement.
Writing for the court, Justice Anthony Kennedy said the state can't claim a share of the settlement as reimbursement for medical care without determining how much of the settlement is attributable to the care.
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