BERGER, J.
The appellants, Tiffany Davis and Owen Glenn Davis, as parents and natural guardians of Hunter Davis, a minor, appeal the trial court's order, which determined, pursuant to the formula outlined in section 409.910, Florida Statutes (2012), that the Agency for Healthcare Administration ("AHCA"), is entitled to recover the full amount of AHCA's Medicaid lien out of the proceeds Hunter received from a personal injury settlement. Appellants argue that section 409.910 is unenforceable to the extent it allows AHCA to recover more than what Hunter's settlement allocated for past medical expenses. We agree and hold the trial court erred when it determined as a matter of law that it was without discretion to limit repayment of the lien and was, instead, required to apply the formula set forth in section 409.910(11)(f).
States participating in Medicaid are required by the federal government to seek reimbursement for medical expenses incurred on behalf of beneficiaries who later recover from third-party tortfeasors. See Arkansas Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 276, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). To comply with federal directives the Florida legislature enacted section 409.910, Florida Statutes, which authorizes the State to recover from a personal injury settlement money that the State paid for the plaintiff's medical care prior to recovery. See Smith v. Agency for Health Care Admin., 24 So.3d 590, 590 (Fla. 5th DCA 2009). The specific amount the State may recover from a settlement is determined by utilizing the formula provided in section 409.910(11)(f), which caps recovery at half of the total amount of the settlement, after deducting attorney's fees and costs.
In the present case, nine-year-old Hunter was rendered a parapalegic and lost two siblings when the mini-van her mother was driving collided head-on into a pick-up truck. Hunter was treated at Shands Hospital for her injuries. AHCA provided $232,928.87 in benefits to Hunter and claimed a lien for that amount. The Florida Department of Health's Spinal Cord Injury Program (DOH) also provided benefits to Hunter and asserted a lien for $6,340. Appellants sued the driver and owners of the pick-up truck for Hunter's economic and non-economic damages. Because all of Hunter's medical care related to the accident was paid by Medicaid and DOH, the sum of both their liens ($239,268.87) constituted Hunter's entire claim for past medical expenses.
Appellants and the third party tortfeasor entered into settlement negotiations, ultimately agreeing that $1,000,000 would go to Hunter in satisfaction of her individual claims for damages. They agreed, based on insurance caps and comparative negligence, that the $1,000,000 settlement represented 10% of the total value of all of Hunter's damages, including her past medical expenses. Consequently, out of the $1,000,000 Hunter was to receive, the settlement agreement allocated $23,926.88 toward Hunter's past medical expenses (10% of the total past medical expenses of $239,268.87), and allocated the remaining $976,073.12 to compensate Hunter for all of her substantial remaining damages.
Appellants petitioned the trial court to approve the settlement and reduce AHCA's lien accordingly. Appellants argued that since Hunter was only receiving 10% of the value of all of her damages, her liens for past medical expenses should be correspondingly reduced. Although AHCA ultimately agreed to the settlement amount, it objected to the allocation within that settlement to past medical expenses and asserted that section 409.910 required its lien be paid in full.
The trial court conducted a lengthy evidentiary hearing during which Appellants' counsel put on evidence to establish that the $1,000,000 settlement was in Hunter's best interest and that the allocation to compensate Hunter's past medical expenses was fair and reasonable. AHCA did not put on any evidence regarding the fairness or reasonableness of the settlement amount or the allocation within the settlement for Hunter's past medical expenses. AHCA also did not challenge the value placed on the damages by Hunter's expert and trial counsel. Instead, AHCA argued that the settlement and allocation were invalid because AHCA did not consent. Thus, section 409.910 controlled and required repayment of AHCA's full lien amount. AHCA maintained that no legal authority authorized Florida courts to allow Medicaid recipients to prove that some smaller portion of their settlement was comprised of medical expenses. The trial court agreed and awarded AHCA its full lien amount, under the assumption that the language of section 409.910(11)(f) was mandatory and precluded it from considering evidence to support limiting payment of the lien. This was error.
This court was presented with a similar set of facts in Smith, in which the guardian for the plaintiff settled a personal injury claim for $2,225,000 after Medicaid paid $122,783.87 in medical expenses. 24 So.3d 590. Utilizing the formula in section 409.910(11)(f), the trial court awarded
Although AHCA correctly argued that we ultimately held section 409.910(11)(f) had to be used to determine the amount paid to AHCA in Smith, we did not do so because we determined the language in the statute was mandatory;
The fourth district also authorized use of an evidentiary hearing to determine the amount of a settlement attributable to medical expenses. See Roberts v. Albertson's Inc., 119 So.3d 457 (Fla. 4th DCA 2012), reh'g and reh'g en banc denied, modified on reh'g, No. 4D10-2313 (Fla. 4th DCA June 26, 2013).
On appeal, the fourth district reversed, recognizing that the statutory formula could run afoul of federal anti-lien and anti-recovery statutes if the majority of an award was not allocable to medical expenses. Id. at 465-66. The court concluded that section 409.910 was a default allocation, which created a presumptively valid allocation of settlement proceeds subject to a Medicaid lien when AHCA does not participate in the settlement agreement. Id. at 465. The court also concluded, however, that a Medicaid recipient had the right to rebut the presumptively valid allocation by seeking a judicial determination of the portion of a personal injury settlement subject to a Medicaid lien. Specifically, the court stated, "[W]e agree with the Fifth District in Smith ... that a plaintiff should be afforded an opportunity to seek the reduction of a Medicaid lien amount established by the statutory default allocation by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses." Id. at 466.
Smith and Roberts are both in line with the United States Supreme Court's recent decision in Wos v. E.M.A. ex rel. Johnson, ___ U.S. ___, 133 S.Ct. 1391, 185 L.Ed.2d 471 (2013).
AHCA argues that Wos is readily distinguishable from the instant case and that this court is not bound in any way by that decision. AHCA insists that Wos does not
Ahlborn and Wos make clear that section 409.910(11)(f) is preempted by the federal Medicaid statute's anti-lien provision to the extent it creates an irrebuttable presumption and permits recovery beyond that portion of the Medicaid recipient's third-party recovery representing compensation for past medical expenses.
Regardless, AHCA insists that the recipient in this case was provided an evidentiary hearing and was unable to persuade the trial court to rule in her favor. The trial court's detailed order belies such interpretation. Despite its express finding that "[t]he facts and circumstances of the injury and the limited settlement justify relief from the full payment of the lien," the trial court believed it was "hamstrung by section 409.910" and without discretion to reduce the lien. This was error because our decision in Smith gave the trial court the authority to reduce the lien if there was sufficient evidence introduced to support the reduction. However, to the extent we were unclear, Wos,Roberts, and Riley expressly authorize a plaintiff to seek, by way of an evidentiary hearing, the reduction of the Medicaid lien amount established by the statutory allocation. Accordingly, we reverse the order on appeal and remand for a supplemental hearing to allow the trial court and the parties to be guided by these decisions.
REVERSED and REMANDED.
RFINGER and WALLIS, JJ., concur.
§ 409.910(13), Fla. Stat. (emphasis added).