vs.
Case No. 15-6594MTR
Respondent.
A duly-noticed final hearing was held in this case on June 28, 2016, via video teleconference in Tallahassee and Miami, Florida, before W. David Watkins, 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 Suite 300
The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (AHCA), for
medical expenses paid on behalf of Petitioner, Yesica Cardenas, from a personal injury settlement received by Petitioner from a third party.
On November 11, 2015, Petitioner filed a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien, pursuant to section 409.910(17)(b), Florida Statutes. Thereafter, the matter was assigned to the undersigned administrative law judge to conduct a formal administrative hearing and enter a final order.
After once being continued, the matter was ultimately set for hearing to commence on June 28, 2016. Prior to hearing the parties filed a Joint Prehearing Stipulation (“JPHS”), which included numerous stipulated and admitted facts. To the extent relevant, those facts have been incorporated herein.
The hearing proceeded as scheduled, with the Petitioner calling two witnesses, Michael Weisberg, Esquire; and Thomas E. Backmeyer, Esquire. Petitioner’s Exhibits 1 through 11 were admitted in evidence. Respondent did not enter in evidence any document or call any witnesses. Petitioner’s evidence and testimony was unrebutted.
A one-volume Transcript of the proceedings was filed on August 26, 2016. Petitioner and Respondent timely filed Proposed Final Orders. Both parties’ Proposed Final Orders were
considered by the undersigned in the preparation of this Final Order.
All references to the Florida Statutes are to the 2016 version, unless otherwise noted.
Based on the stipulations of the parties, evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made:
On December 31, 2010, Yesica Cardenas (“Ms. Cardenas”) was a passenger on a motor scooter that was involved in an accident on State Road 112 in Miami, Florida. As a result of this accident, Ms. Cardenas suffered serious physical injury, including amputation of her left leg below the knee. (JPHS
p. 8)
Ms. Cardenas’ past medical expenses related to her injuries were paid in part by Medicaid, and Medicaid provided
$89,518.80 in benefits. This $89,518.80 in benefits paid by Medicaid, combined with $12,449.80 in medical bills not paid by Medicaid, constituted Ms. Cardenas’ entire claim for past medical expenses. Accordingly, Ms. Cardenas’ claim for past medical expenses was in the amount of $101,968.60. (JPHS p. 8)
Ms. Cardenas, or others on her behalf, did not make payments in the past or in advance for Ms. Cardenas’ future medical care, and no claim for damages was made for
reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care.
Ms. Cardenas brought a personal injury lawsuit in Miami-Dade County to recover all of her damages against those responsible for her injuries (“Defendants”). (JPHS p. 8)
On September 9, 2015, Ms. Cardenas compromised and settled her lawsuit with the Defendants for the amount of
$240,000. (JPHS p. 8)
In making this settlement, the settling parties agreed that: 1) the settlement did not fully compensate Ms. Cardenas for all her damages; 2) Ms. Cardenas’ damages had a value in excess of $2,400,000, of which $101,968.60 represented her claim for past medical expenses; and 3) allocation of $10,196.86 of the settlement to Ms. Cardenas’ claim for past medical expenses was reasonable and proportionate. In this regard, the General Release and Settlement Agreement (“Release”) memorializing the settlement stated:
Although it is acknowledged that this settlement does not fully compensate RELEASOR for the damages she has allegedly suffered, this settlement shall operate as a full and complete Release as to all claims against [Defendants] without regard to this settlement only compensating the RELEASOR for a fraction of the total monetary value of her alleged damages. The damages have a value in excess of $2,400,000, of which
$101,968.60 represents RELEASOR’S claim for
past medical expenses. Given the facts, circumstances, and nature of the RELEASOR’S alleged injuries and this settlement, the parties settled this matter for 10% of the value of the damages ($240,000.00) and as such, have allocated $10,196.86 of this settlement the RELEASOR’S claim for past medical expenses and the remainder of the settlement has been allocated toward the satisfaction of her other claims. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all of the RELEASOR’S alleged damages.
Further, the parties acknowledge that the RELEASOR may need future medical care related to her alleged injuries, and some portion of this settlement may represent compensation for these future medical expenses that the RELEASOR may incur in the future. However, the parties acknowledge that the RELEASOR, or others on her behalf, have not made payments in the past or in advance for the RELEASOR’S future medical care and the RELEASOR has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for payments made to secure future medical care.
(JPHS p. 8-9)
As a condition of Ms. Cardenas’ eligibility for Medicaid, Ms. Cardenas assigned to AHCA her right to recover from liable third parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) and § 409.910(6)(b), Fla. Stat.
During the pendency of Ms. Cardenas’ personal injury action, AHCA was notified of the action and AHCA, through its
collections contractor, Xerox Recovery Services, asserted a
$89,518.80 Medicaid lien against Ms. Cardenas’ cause of action and settlement of that action. (JPHS p. 9)
By letter of September 11, 2015, AHCA was notified by Ms. Cardenas’ personal injury attorney of the settlement and provided a copy of the executed Release and itemization of
$2,711.70 in litigation costs. This letter explained that Ms. Cardenas’ damages had a value in excess of $2,400,000, and
the $240,000 settlement represented only a 10-percent recovery of Ms. Cardenas’ damages. Accordingly, she had recovered only
10 percent of her $101,968.60 claim for past medical expenses, or $10,196.86. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of its Medicaid lien. (JPHS p. 9)
AHCA did not respond to Ms. Cardenas’ attorney’s letter of September 11, 2015. (JPHS p. 9)
AHCA did not file an action to set aside, void, or otherwise dispute Ms. Cardenas’ settlement with the Defendants. (JPHS p. 9)
AHCA has not commenced a civil action to enforce its rights under section 409.910. (JPHS p. 9)
The Medicaid program spent $89,518.80 on behalf of Ms. Cardenas, all of which represents expenditures paid for Ms. Cardenas’ past medical expenses. (JPHS p. 9)
No portion of the $89,518.80 paid by the Medicaid program on behalf of Ms. Cardenas represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. (JPHS p. 10)
Ms. Cardenas is no longer a Medicaid recipient. (JPHS p. 10)
AHCA has determined that $2,711.70 of Ms. Cardenas’ litigation costs are taxable costs for purposes of the section 409.910(11)(f) formula calculation. (JPHS p. 10)
Subtracting the $2,711.70 in taxable costs and allowable attorney’s fees, the section 409.910(11)(f) formula applied to Ms. Cardenas’ $240,000 settlement requires payment of
$88,644.15 to AHCA in satisfaction of its $89,518.80 Medicaid lien. Since the $89,518.80 Medicaid lien amount is more than the $88,644.15 amount required to be paid to AHCA under the section 409.910(11)(f) formula, AHCA is seeking reimbursement of
$88,644.15 from Ms. Cardenas’ $240,000 settlement in satisfaction of its Medicaid lien. (JPHS p. 10)
Petitioner has deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). (JPHS p. 10)
Testimony of Michael Weisberg
Mr. Weisberg has been an attorney since 1967 and is a partner with Weisberg and Weisberg, P.A. Mr. Weisberg explained that he is a civil trial attorney who has spent 30 years handling insurance defense, and in the last 20 years has focused his practice on plaintiff personal injury. Mr. Weisberg testified that over his career, he has handled approximately
550 jury trials to verdict and he often handles cases involving catastrophic injuries. Mr. Weisberg testified that as a routine and daily part of his practice, he makes assessments concerning the value of damages suffered by injured parties.
Petitioner proffered Mr. Weisberg as an expert in the valuation of damages suffered by injured parties, and AHCA did not object to the proffer. Mr. Weisberg was accepted as an expert in the valuation of damages suffered by injured parties.
Mr. Weisberg represented Ms. Cardenas relative to her personal injury action. He explained that as part of his representation, he reviewed Ms. Cardenas’ medical records, met with her doctors, reviewed the accident report, took the deposition of persons involved in the accident, took the deposition of witnesses to the accident, and met with
Ms. Cardenas many times. Mr. Weisberg gave a detailed explanation of the circumstances giving rise to Ms. Cardenas’ injury. He explained that Ms. Cardenas was a hostess at a
restaurant in a Miami Beach hotel. After her shift ended, she was asked to stay and continue working. After the restaurant closed, she was unable to take the Metro Mover home because it ceased running at midnight. Instead, she was given a ride home by a co-worker who had a motor scooter. The co-worker’s motor scooter was too slow for the highway he chose to travel upon, and it was struck from behind by a motorcycle. Ms. Cardenas was thrown off the motor scooter. She was taken to Jackson Memorial Hospital where her leg was amputated a few inches below the knee. Due to her lack of financial resources, Ms. Cardenas was provided limited rehabilitation and she was provided only a rigid prosthetic leg that did not have a flexible ankle/foot.
Mr. Weisberg explained that this injury has had a negative impact on Ms. Cardenas’ life. Because of the limitations presented by having an amputated leg, she has had difficulty maintaining her relationship with her friends and has become isolated. She is unable to enjoy her previous pastime of shopping due to the injury and is unable to play with her son in the same manner as before. Mr. Weisberg testified that
Ms. Cardenas’ injury has caused Ms. Cardenas to suffer from depression and “she is not a happy girl.”
Mr. Weisberg testified that Ms. Cardenas’ claim for past medical expenses related to her injury was $101,968.60,
which consisted of $89,518.80 in Medicaid benefits and
$12,449.80 in medical bills not paid by Medicaid.
Mr. Weisberg testified that Ms. Cardenas, or others on her behalf, did not make payments in the past or in advance for future medical care, and no claim was brought to recover reimbursement for past payments for future medical care.
Mr. Weisberg testified that through his representation of Ms. Cardenas, review of Ms. Cardenas’ file, and based on his training and experience, he had developed the opinion that the value of Ms. Cardenas damages was “a minimum of five million dollars.” In support of his valuation, he compared Ms. Cardenas’ case to a case he had tried to jury verdict involving a man with a preexisting leg amputation who was struck by a bus and suffered a degloving injury to his other leg. This client regained use of the injured leg and the jury still awarded him
$1.3 million. Mr. Weisberg explained that if that client’s less severe injury where he regained use of his injured leg, warranted a $1.3 million verdict, then “a person with no leg, a reasonable verdict, in my opinion . . . would be in excess of five million dollars.” Mr. Weisberg also testified that he “round tabled” Ms. Cardenas’ case with five other experienced attorneys, and they believed Mr. Weisberg’s valuation of
Ms. Cardenas’ damages at $5 million was low. Further,
Mr. Weisberg testified that he had reviewed the jury verdicts in
Petitioner’s Exhibit 11 and he believed those cases were comparable to Ms. Cardenas’ case and supported his valuation of Ms. Cardenas’ damages as being in excess of $5 million.
Mr. Weisberg explained that the driver/owner of the motor scooter Ms. Cardenas was riding, as well as the driver/owner of the motorcycle that struck the motor scooter, did not have liability insurance or assets, so no recovery was possible against them. Instead, a lawsuit was brought against the restaurant under the theory that by requesting Ms. Cardenas to work after her shift was finished, they caused her to be unable to use public transit and rely upon transport home by way of the motor scooter. Mr. Weisberg explained that the theory of liability was difficult and there were numerous disputed facts associated with the case. Based on these issues, Ms. Cardenas settled her case for $240,000.
Mr. Weisberg testified that the settlement did not fully compensate Ms. Cardenas for the full value of her damages. Mr. Weisberg testified that based on the conservative valuation of all Ms. Cardenas’ damages of $2,400,000, the settlement represented a recovery of 10 percent of the value of
Ms. Cardenas’ damages. Mr. Weisberg testified that because Ms. Cardenas only recovered 10 percent of the value of her
damages in the settlement, she only recovered 10 percent of her
$101,968.60 claim for past medical expenses, or $10,196.86.
Mr. Weisberg testified that the settling Defendant was represented by experienced trial attorneys and that the settling parties agreed in the Release that Ms. Cardenas’s damages had a value in excess of $2.4 million, as well as the allocation of
$10,196.86 of the settlement to past medical expenses.
Mr. Weisberg further testified that the allocation of $10,196.86 of the settlement to past medical expenses was reasonable and rational, as well as conservative, because it was based on a very low-end valuation of her damages of $2.4 million. If a higher valuation of her damages was used, the amount allocated to past medical expenses would have been much less.
Mr. Weisberg testified that because no claim was made to recover reimbursement for past payments for future medical care, no portion of the settlement represented reimbursement for past payments for future medical care. He also testified that the parties agreed in the Release that no claim was made for reimbursement of past payments for future medical care, and no portion of the settlement represented reimbursement for future medical expenses.
Testimony of Thomas Backmeyer
Thomas Backmeyer has been an attorney since 1970, and since 1996, he has worked as a mediator. Prior to becoming a mediator in 1996, he was board-certified in civil trial law by the Florida Bar and the National Board of Trial Advocates.
Mr. Backmeyer testified that he has handled 100 to 125 jury trials, 90 percent of which were personal injury cases. He further testified that in his practice he regularly made assessments concerning the value of damages suffered by injured parties.
Petitioner proffered Mr. Backmeyer as an expert in the valuation of damages suffered by injured parties. AHCA did not object to the proffer, and Mr. Backmeyer was accepted as an expert in the valuation of damages suffered by injured parties.
Mr. Backmeyer testified that he was familiar with Ms. Cardenas’ injuries and had reviewed the hospital records
from Jackson Memorial, pictures of Ms. Cardenas, the Complaint, and Petitioner’s exhibits. Mr. Backmeyer testified that in his opinion, Ms. Cardenas’ damages had a value in excess of
$5 million to $10 million. He explained that his valuation was “based on my experience in handling jury trials. It’s based on my experience of dealing with cases over the last twenty years as a mediator, some of which involve amputations of, I can think of one that involved the amputation of a leg of a young lady.” Mr. Backmeyer also testified that he had reviewed the jury verdicts in Petitioner’s Exhibit 11 and he found those verdicts comparable with Ms. Cardenas’ case and supportive of his valuation of her damages. He discussed two of the verdicts in relation to Ms. Cardenas’ case.
Mr. Backmeyer testified that he was aware of the Cardenas settlement, and that the parties had allocated
$10,196.86 to past medical expenses based on a valuation of all damages of $2,400,000. He further testified that he believes allocation of $10,196.86 to past medical expenses was “a generous number” because he believed the value of the damages was much higher than the $2,400,000 valuation used by the parties in calculating the allocation to past medical expenses.
AHCA did not propose a differing valuation of
Ms. Cardenas’ damages or contest the methodology used by the parties to calculate the $10,196.86 allocation to past medical expenses. The testimony and evidence presented concerning the value of Petitioner’s damages, and the allocation to past medical expenses, was unrebutted.
The evidence presented is not in conflict or ambiguous. The parties to the settlement agreed that:
1) Ms. Cardenas was not being fully compensated for all her damages in the settlement; 2) Ms. Cardenas’ damages had a value in excess of $2,400,000, of which $101,968.60 represented her claim for past medical expenses; 3) the parties allocated
$10,196.86 of the settlement to past medical expenses based on the same ratio the settlement bore to the total monetary value of all damages; and 4) because there was no claim made for reimbursement, restitution, repayment, indemnification, or to be
made whole for payments made in the past for future medical care, no portion of the settlement represented reimbursement for future medical expenses.
AHCA was not a party or participant in the settlement.
However, the unrebutted evidence and testimony is of sufficient quality and quantity to establish that the value of
Ms. Cardenas’ damages was in excess of $2,400,000; the allocation of $10,196.86 to past medical expenses under the method of calculation used was reasonable, fair, and accurate; and no portion of the settlement represented reimbursement for future medical expenses.
Petitioner has proven by clear and convincing evidence that $10,196.86 of the settlement represents reimbursement for past and future medical expenses.
Petitioner has proven by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the $88,644.15 amount calculated by the 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.
Respondent is the agency authorized to administer Florida’s Medicaid program. See § 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. See § 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 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,” and quoting Roberts v. Albertson’s, Inc., 119 So. 3d 457, 465-466 (Fla. 4th DCA 2012)).
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:
[E]ntails 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 $10,196.86 constitutes a fair, 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 $10,196.86 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 ORDERED that:
$10,196.86 in satisfaction of its Medicaid lien.
DONE AND ORDERED this 29th day of September, 2016, in Tallahassee, Leon County, Florida.
W. DAVID WATKINS Administrative Law Judge
Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 2016.
Alexander R. Boler, Esquire Suite 300
Floyd B. Faglie, Esquire Staunton and Faglie, P.L.
Richard J. Shoop, Agency Clerk
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
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.
