MICAIAH MCCRAY, a minor, by and through his parents and guardians, DARRIN MCCRAY AND MIA MCCRAY,
vs.
Case No. 15-4378MTR
Respondent.
Pursuant to notice, a final hearing was held in this case on October 16, 2015, in Tallahassee, Florida, before Suzanne Van Wyk, a designated Administrative Law Judge of the Division of
Administrative Hearings.
For Petitioner: Floyd B. Faglie, Esquire
Staunton and Faglie, P.L.
For Respondent: Alexander R. Boler, Esquire
The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner, Micaiah McCray, from a medical-malpractice settlement received by Petitioner
from a third party.
On August 3, 2015, Petitioner filed with the Division of Administrative Hearings (Division) a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien (Petition), by which he challenged Respondent’s lien for recovery of medical expenses paid by Medicaid in the amount of $217,545.58. The basis for the challenge was the assertion that the application of section 409.910(17)(b), Florida Statutes (2015), warranted reimbursement of a lesser portion of the total third-party settlement proceeds than the amount calculated by Respondent pursuant to the formula established in section 409.910(11)(f).
August 3, 2015. The final hearing was scheduled for October 16, 2015, and was held as scheduled.
At the final hearing, Petitioner presented the testimony of Scott M. Newmark, Mark Finkelstein, and R. Vinson Barrett, each of whom was accepted as an expert in valuation of damages (in
personal injury cases). Petitioner’s Exhibits 1 through 16 were received in evidence. The undersigned officially recognized Petitioner’s Exhibits 17 and 18, comprising selected trial court orders and jury verdicts. Respondent offered no independent witnesses or exhibits.
A one-volume Transcript of the proceedings was filed on November 12, 2015. Both parties timely filed Proposed Final Orders, which have been considered by the undersigned in the preparation of this Final Order.
Petitioner was born on November 11, 2008. In the months following birth, Petitioner underwent several surgeries and procedures including a percutaneous endoscopic gastrostomy tube placement on January 26, 2009, a repair of incomplete atrioventricular canal defect on April 15, 2009, and Nissen Fundoplication and revision of gastrostomy tube on July 8, 2009.
On July 23, 2009, Petitioner was admitted to St. Mary’s Medical Center with suspected bronchitis and exacerbation of reactive airway distress. During this hospitalization, on or about August 15, 2009, Petitioner suffered a stroke involving the right hand and part of the right leg. A CT scan of Petitioner’s brain revealed a left middle cerebral artery distribution infarction suggesting a large ischemic infarct.
Petitioner’s condition stabilized and Petitioner was released from the hospital on August 27, 2009, with the following discharge summary:
Exacerbation of reactive airway disease
Bronchitis
Mitral stenosis
Mild pulmonary hypertension
Hypersecretory upper airway
Pansinusitis
Clostridium difficile colitis
Hypoxemia with oxygen dependency
Gastroesophageal reflux disease, status post fundoplication
Left cerebral infarction of unknown etiology
Endocardial cushion defect status post atrioventricular canal repair
Bilateral optic nerve colobomas
Rule out CHARGE association/Goletz syndrome
On September 21, 2009, Petitioner was admitted to Palms West Hospital with a diagnosis of respiratory distress. Petitioner’s condition improved and he was discharged home on September 25, 2009.
Subsequent to that hospitalization, an MRI performed on October 19, 2009, revealed new acute strokes.
In the years following Petitioner’s strokes, he underwent numerous surgeries, procedures, and therapies for a multitude of medical conditions.
Petitioner’s past medical expenses related to his injuries were paid by both private health insurance and Medicaid. Medicaid paid for Petitioner’s medical expenses in the amount of $217,545.58. United Healthcare and Aetna provided
$37,090.17 and $3,231.72 in benefits, respectively. Total healthcare expense incurred for Petitioner’s injuries was
$257,867.47.
Petitioner is developmentally delayed and cannot walk or crawl. Petitioner requires a wheelchair or stroller for mobility and requires positioning and trunk support to maintain a seated position. His ability to independently explore his environment is severely restricted.
Petitioner is completely dependent on others for activities of daily living. He cannot bathe, dress, or eat on his own. He requires a feeding tube, and receives professional in-home services to monitor his respiration and heartrate, manage his GJ tube, administer medication, and monitor bowel and bladder function.
Petitioner does not vocalize words and has limited communication. He has no function of his right hand and has tightness in the right leg below the knee.
Petitioner’s condition is permanent.
Petitioner’s parents brought a medical malpractice action on his behalf in the Circuit Court of the 15th Judicial Circuit Court in and for Palm Beach County against Tenet
St. Mary’s Inc., d/b/a St. Mary’s Medical Center; Palms West Hospital Limited Partnership, d/b/a Palms West Hospital; David Evan Mound Drucker, M.D.; South Florida Pediatric
Surgeons, P.A.; Physicians Professional Liability Risk Retention Group; Alberto Antonio Marante, M.D.; Florida Pediatric Critical Care, P.A.; Diego Maurcio Diaz, M.D.; Gerard Minor, P.A.-C; Children’s Center Gastroenterology & Nutrition, P.A.; Chartis Claims, Inc.; Lexington Insurance Company; Eunice Cordoba, M.D; and Edwin Liu, M.D., P.A., d/b/a Pediatric Neurologist of Palm Beach (Defendants).
Petitioner’s action alleged, among other theories, that the Defendants failed to recognize in Petitioner a sickle cell trait and properly treat Petitioner’s dehydration, a factor contributing to Petitioner’s strokes.
Petitioner’s parents retained Scott Marlowe Newmark, an attorney specializing in personal and catastrophic injury claims for over 30 years, to represent Petitioner in the medical malpractice action against Defendants.
In preparation for litigation, Stephanie P. Chalfin, M.S., prepared a life care plan for Petitioner. The plan sets out the need for future medical care, equipment, hospitalizations, surgeries, medications, and attendant care, through Petitioner’s expected life span. In this case, Petitioner’s life expectancy is an additional 66.9 years.
During the pendency of the medical malpractice action,
J. Rody Borg, Ph.D., an economist, prepared a report assigning a present value between $24,373,828 and $29,065,995 for the future
costs of Petitioner’s life care plan, lost benefits, and lost earning capacity.
Mr. Newmark’s expert valuation of the total damages suffered by Petitioner is at least $30 million. Mr. Newmark considered the life care plan and Dr. Borg’s report in arriving at the value of total economic damages.
Mr. Newmark then examined jury verdicts in similar cases involving catastrophic injury to value non-economic damages. Of the nine jury verdicts examined, Mr. Newmark highlighted three as particularly relevant because they involved young children with brain injuries similar to Petitioner’s injury and who required life-long care.
The nine cases had an average award of $12 million for non-economic damages (past and future pain and suffering).
Mr. Newmark arrived at his valuation of Petitioner’s damages at $30 million by considering the low-end of Dr. Borg’s economic damages estimate, $24 million, along with the average jury award for non-economic damages in similar cases.
Mr. Newmark’s testimony was credible, reliable and persuasive.
Mr. Newmark’s valuation of total damages was supported by the testimony of two additional personal injury attorneys, Mark Finklestein and R. Vinson Barrett, both of whom have practiced personal injury law for more than 30 years and were
accepted as experts in valuation of damages (in personal injury cases).
Mr. Finkelstein served as Petitioner’s guardian ad litem in the underlying medical malpractice action and agreed with the valuation of total damages at $30 million.
In formulating his opinion on the value of Petitioner’s damages, Mr. Barrett reviewed the discharge summaries from Petitioner’s hospitalizations, the life care plan, Dr. Borg’s report, and a day-in-the-life video of Petitioner. Mr. Barrett also reviewed the jury trial verdicts and awards relied upon by Mr. Newmark. Mr. Barrett likewise agreed with the $30 million valuation of Petitioner’s total damages.
Respondent was notified of Petitioner’s medical malpractice action during its pendency. Respondent asserted a Medicaid lien in the amount of $217,545.58 against the proceeds of any award or settlement arising out of that action.
In 2012 and again in 2015, Petitioner received a series of settlements from the Defendants. The settlements totaled $2,450,000.
The settlements do not fully compensate Petitioner for the total value of his damages. The settlements are undifferentiated, meaning they are not apportioned to specific
types of damages, such as economic or non-economic, past or future.
In all of the releases signed by the parties thereto, the parties agreed that, “if an allocation of this settlement is necessary in the future, this allocation should be made by applying the same ratio this settlement bears to the total monetary value of all [Petitioner’s] damages to the specific damage claim.”
Respondent was not a party to the 2012 and 2015 settlements and did not execute any of the applicable releases.
Respondent’s position is that it should be reimbursed for its Medicaid expenditures on behalf of Petitioner pursuant to the formula set forth in section 409.910(11)(f). Under the statutory formula, the lien amount is computed by deducting a 25 percent attorney’s fee and taxable costs (in this case,
$613,131) from the $2,450,000 recovery, which yields a sum of
$1,836,869 then dividing that amount by two, which yields
$918,434.50. Under the statute, Respondent is limited to recovery of the amount derived from the statutory formula or the amount of its lien, whichever is less. In the case at hand, Respondent may recover under the statute the full amount of its
lien.
Petitioner’s position is that reimbursement for past
medical expenses should be limited to the same ratio as
Petitioner’s recovery amount to the total value of damages. Petitioner urges Respondent should be reimbursed $21,067.77 in satisfaction of its Medicaid lien.
The settlement amount of $2,450,000 is 8.17 percent of the total value ($30 million) of Petitioner’s damages. By the same token, 8.17 percent of $257,867.47 (Petitioner’s past medical expenses paid by both Medicaid and private insurance) is
$21,067.77.
Both Mr. Finklestein and Mr. Barrett testified that
$21,067.77 is a reasonable and rational reimbursement for past medical expenses. Their testimony is accepted as persuasive.
Petitioner proved by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by Respondent pursuant to the formula set forth in section 409.910(11)(f).
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties in this case pursuant to sections 120.569, 120.57(1), and 409.910(17), Florida Statutes (2015).
Respondent is the agency authorized to administer Florida’s Medicaid program. § 409.902, Fla. Stat.
The Medicaid program “provide[s] federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.” Harris v. McRae, 448 U.S.
297, 301 (1980). Though participation is optional, once a State elects to participate in the Medicaid program, it must comply with federal requirements governing the same. Id.
As a condition for receipt of federal Medicaid funds, states are required to seek reimbursement for medical expenses incurred on behalf of Medicaid recipients who later recover from legally liable third parties. See Arkansas Dep't of Health &
Human Servs. v. Ahlborn, 547 U.S. 268, 276 (2006).
Consistent with this federal requirement, the Florida Legislature has enacted section 409.910, which authorizes and requires the State to be reimbursed for Medicaid funds paid for a recipient's medical care when that recipient later receives a personal injury judgment or settlement from a third party. Smith v. Ag. for Health Care Admin., 24 So. 3d 590 (Fla. 5th DCA
2009). The statute creates an automatic lien on any such judgment or settlement for the medical assistance provided by Medicaid. § 409.910(6)(c), Fla. Stat.
The amount to be recovered for Medicaid medical expenses from a judgment, award, or settlement from a third party is determined by the formula in section 409.910(11)(f), which sets that amount at one-half of the total recovery, after
deducting attorney’s fees of 25 percent of the recovery and all taxable costs, up to, but not to exceed, the total amount actually paid by Medicaid on the recipient’s behalf. Ag. For
Health Care Admin. v. Riley, 119 So. 3d 514, 515, n.3 (Fla. 2d DCA 2013).
Respondent correctly asserts that it is not automatically bound by any allocation of damages set forth in a settlement between a Medicaid recipient and a third party that may be contrary to the formulaic amount, citing section 409.910(13). See also, § 409.910(6)(c)7., Fla. Stat. (“No
release or satisfaction of any . . . settlement agreement shall be valid or effectual as against a lien created under this paragraph, unless the agency joins in the release or satisfaction or executes a release of the lien.”). Rather, in cases such as this, where Respondent has not been provided prior notice and has not participated in or approved the settlement, the administrative procedure created by section 409.910(17)(b) is the means for determining whether a lesser portion of a total recovery should be allocated as reimbursement for medical expenses in lieu of the amount calculated by application of the formula in section 409.910(11)(f).
Section 409.910(17)(b) provides that
A recipient may contest the amount designated as recovered medical expense damages payable to the agency pursuant to
the formula specified in paragraph (11)(f) by filing a petition under chapter 120 within 21 days after the date of payment of funds to the agency or after the date of placing the full amount of the third-party benefits in the trust account for the benefit of the agency pursuant to paragraph (a). The petition shall be filed with the Division of Administrative Hearings. For purposes of chapter 120, the payment of funds to the agency or the placement of the full amount of the third-party benefits in the trust account for the benefit of the agency constitutes final agency action and notice thereof. Final order authority for the proceedings specified in this subsection rests with the Division of Administrative Hearings. This procedure is the exclusive method for challenging the amount of third- party benefits payable to the agency. In order to successfully challenge the amount payable to the agency, the recipient must prove, by clear and convincing evidence, that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f) or that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
Section 409.910(17)(b) thus makes clear that the formula set forth in subsection (11) constitutes a default allocation of the amount of a settlement that is attributable to medical costs, and sets forth an administrative procedure for adversarial testing of that allocation. See Harrell v. State,
143 So. 3d 478, 480 (Fla. 1st DCA 2014)(adopting the holding in Riley that petitioner “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”)(quoting Roberts v. Albertson’s, Inc., 119 So. 3d 457,
465-466 (Fla. 4th DCA 2012), reh’g and reh’g en banc denied sub nom. Giorgione v. Albertson’s, Inc., 2013 Fla. App. LEXIS 10067
(Fla. 4th DCA June 26, 2013)).
Clear and convincing evidence “requires more proof than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re Graziano,
696 So. 2d 744, 753 (Fla. 1997). The clear and convincing evidence level of proof
entails both a qualitative and quantitative standard. The evidence must be credible; the memories of the witnesses must be clear and without confusion; and the sum total of the evidence must be of sufficient weight to convince the trier of fact without hesitancy.
Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
In re Davey, 645 So. 2d 398, 404 (Fla. 1994)(quoting, with
approval, Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA
1983)); see also In re Henson, 913 So. 2d 579, 590 (Fla. 2005).
“Although [the clear and convincing] standard of proof may be met where the evidence is in conflict, it seems to preclude evidence that is ambiguous.” Westinghouse Elec. Corp. v. Shuler Bros., 590 So. 2d 986, 989 (Fla. 1st DCA 1991).
The evidence in this case is clear and convincing that the allocation for Petitioner’s past medical expenses in the amount of $21,067.77 constitutes a fair and reasonable, and accurate share of the total recovery for those past medical expenses actually paid by Medicaid.
Petitioner has proven, by clear and convincing evidence, that $21,067.77 of the total third-party recovery represents that share of the settlement proceeds fairly attributable to expenditures that were actually paid by Respondent for Petitioner’s medical expenses.
Upon consideration of the above Findings of Fact and Conclusions of Law, it is hereby
$21,067.77 in satisfaction of its Medicaid lien.
DONE AND ORDERED this 16th day of December, 2015, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 16th day of December, 2015.
Alexander R. Boler, Esquire Xerox Recovery Services Group Suite 300
Floyd B. Faglie, Esquire Staunton and Faglie, P.L.
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Richard J. Shoop, Agency Clerk
A party who is adversely affected by this Final Order is entitled to judicial review pursuant to section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of administrative appeal with the agency clerk of the Division of Administrative Hearings within
30 days of rendition of the order to be reviewed, and a copy of the notice, accompanied by any filing fees prescribed by law, with the clerk of the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides or as otherwise provided by law.
