STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
LUCA WEEDO, A MINOR, BY AND THROUGH HIS PARENTS AND GUARDIANS, DEBRA ANN WEEDO AND KENNETH DARRELL WEEDO,
vs.
Petitioner,
Case No. 16-1932MTR
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
/
FINAL ORDER
A formal hearing was conducted in this case on June 22, 2016, via video teleconference from sites in Miami and Tallahassee, Florida, before Lawrence P. Stevenson, a duly- designated Administrative Law Judge with the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Floyd B. Faglie, Esquire
Staunton and Faglie, P.L.
189 East Walnut Street Monticello, Florida 32344
For Respondent: Alexander R. Boler, Esquire
2073 Summit Lake Drive, Suite 300
Tallahassee, Florida 32317
STATEMENT OF THE ISSUE
The issue in this proceeding is how much of Petitioner’s settlement proceeds should be paid to Respondent, Agency for Health Care Administration (“AHCA”), to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes.1/
PRELIMINARY STATEMENT
On April 7, 2016, Petitioner, Luca Weedo, by and through his parents and guardians, Debra Ann Weedo and Kenneth Darrell Weedo ("Petitioner"), filed with the Division of Administrative Hearings (“DOAH”) a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien (the “Petition”). The Petition challenged AHCA’s lien for recovery of medical expenses paid by Medicaid in the amount of $314,747.23. Petitioner asserted that section 409.910(17)(b) provided for the reimbursement of a lesser amount of the total third-party settlement proceeds than the amount calculated by AHCA pursuant to the formula established in section 409.910(11)(f).
The case was scheduled for hearing on June 22, 2016, on which date it was convened and completed.
At the hearing, Petitioner offered the testimony of his adoptive mother, Debra Ann Weedo; Todd Rosen, the attorney who represented him in connection with his personal injury claim; and attorney R. Vinson Barrett. Both Mr. Rosen and Mr. Barrett
were accepted without objection as experts in the valuation of damages suffered by injured parties. Petitioner’s Exhibits 1 through 11 were admitted into evidence. AHCA presented the testimony of James Bruner, who was accepted as an expert for purposes of comparing the verdicts of several decided cases to the facts of this case. AHCA’s Exhibit A was admitted into evidence.
The one-volume Transcript of the hearing was filed at DOAH on July 25, 2016. On August 4, 2016, the due date for the filing of proposed final orders, the parties filed a joint motion to extend the time for filing to August 8, 2016. Given the time exigency, the undersigned granted the motion ore tenus.
Both parties filed their Proposed Final Orders on August 8, 2016.
FINDINGS OF FACT
On July 31, 2012, Luca Weedo’s natural mother, who was
30 weeks pregnant with Luca, was walking on the sidewalk on the east shoulder of Airport Pulling Road in Naples, Florida. At the same time, a Jeep Wrangler was traveling on Airport Pulling Road. As the Jeep Wrangler approached Luca’s natural mother, the left front tire and wheel separated from the Jeep Wrangler. The separated wheel bounced along the roadway at a high rate of speed, crossing the median and northbound lane of Airport Pulling Road. The wheel approached Luca’s natural mother at such a high
rate of speed that she was unable to avoid it. She was struck by the wheel and knocked to the ground, which caused her to lose consciousness and suffer a ruptured placenta.
Luca’s natural mother was transported to Lee Memorial Hospital. Upon admission, she underwent emergency surgery due to abdominal trauma. Luca was delivered via emergency C-section. Luca was born with extreme fetal immaturity and catastrophic brain damage. Luca remained in the hospital for three months, undergoing numerous medical procedures associated with his serious medical needs and brain damage. Luca now suffers from catastrophic brain damage and a seizure disorder that causes him to have multiple seizures every day. He is unable to ambulate, speak, eat, toilet, or care for himself in any manner.
Prior to Luca’s birth, his natural mother had decided to place Luca up for adoption. Accordingly, when Luca was discharged from the hospital, the Florida Department of Children and Families asked Debra and Kenneth Weedo to take Luca into their home as a foster child. Kenneth Weedo is a retired truck driver and his wife Debra is a foster parent for medically needy children. Debra and Kenneth Weedo took Luca into their home and adopted him on May 2, 2013.
Luca’s past medical expenses related to his injuries were paid by Medicaid, which provided $319,188.20 in benefits.
This $319,188.20 paid by Medicaid constituted Luca’s entire claim for past medical expenses.
Luca, through his parents and guardians, Debra and Kenneth Weedo, brought a personal injury action to recover all his damages. The lawsuit was initially brought against the owner/driver of the Jeep Wrangler. However, through discovery, it was determined that the party responsible for the wheel separating from the Jeep Wrangler was the tire and rim shop that installed the wheel on the Jeep Wrangler approximately a year prior to the accident (“Tire Shop”).
The Tire Shop maintained insurance with a policy limit of $1 million. The Tire Shop’s insurance company tendered the
$1 million insurance policy limit, which was accepted by
Debra and Kenneth Weedo in settlement of Luca’s claim for damages against the Tire Shop. The General Release and Hold Harmless Agreement (“Release”), executed on December 21, 2015, memorialized the settlement with the Tire Shop as follows, in relevant part:
Although it is acknowledged that this settlement does not fully compensate LUCA ALECZANDER WEEDO for all of the damages that he has allegedly suffered, this settlement shall operate as a full and complete Release as to Second Parties without regard to this settlement only, compensating LUCA ALECZANDER WEEDO for a fraction of the total monetary value of his alleged damages. LUCA ALECZANDER WEEDO has alleged his damages have a value in excess of $25,000,000, of
which $319,188.20 represents LUCA ALECZANDER WEEDO’s claim for past medical expenses.
Given the facts, circumstances, and nature of LUCA ALECZANDER WEEDO’s injuries and allegations, $12,767.53 of this settlement has been allocated to LUCA ALECZANDER WEEDO for LUCA ALECZANDER WEEDO’s claim for past medical expenses and the remainder of the settlement towards the satisfaction of claims other than past medical expenses.
LUCA ALECZANDER WEEDO alleges that this allocation is reasonable and proportionate based on the same ratio this settlement bears to the total monetary value of all LUCA ALECZANDER WEEDO’s damages.
Further, LUCA ALECZANDER WEEDO acknowledges that he may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses that LUCA ALECZANDER WEEDO will incur in the future. However, LUCA ALECZANDER WEEDO alleges that his family and/or others on his behalf have not made payments in the past or in advance for LUCA ALECZANDER WEEDO’s future medical care and LUCA ALECZANDER WEEDO 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, it is LUCA ALECZANDER WEEDO’s contention that no portion of this settlement represents reimbursement for future medical expenses.
Because Luca was a minor, Court approval of the settlement was required. Accordingly, on February 17, 2016, Collier County Circuit Court Judge James Shenko approved the settlement by entering an Agreed Order on Petitioner’s Unopposed Petition to Approve Minor’s Settlement.
As a condition of his eligibility to receive Medicaid benefits, Luca assigned to AHCA his 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.
AHCA was notified of Luca’s personal injury action during its pendency. Through its collections contractor, Xerox Recovery Services, AHCA has asserted a Medicaid lien in the amount of $314,747.23 against Luca’s cause of action and settlement of the personal injury action. This is the amount that the Medicaid program spent on behalf of Luca for his past medical expenses.2/ Application of the formula set forth in section 409.910(11)(f) requires that AHCA be reimbursed for the full $314,747.23 Medicaid lien.
Neither Luca nor others on his behalf made payments in the past or in advance for his future medical care. 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.
Debra Ann Weedo attended the final hearing along with Luca. Ms. Weedo is a foster parent for medically needy children. She testified that she currently has four children in her home: three-year-old Luca; a six-year-old in more or less the same condition as Luca; a five-year-old who is “basically normal”; and an autistic eight-year-old.
Ms. Weedo first met Luca in the hospital during his post-birth hospitalization. She was asked to take him as a foster child and visited him several times in the hospital before taking him home at age three months. Ms. Weedo stated that when she brought Luca home, the whole family fell in love with him and “he became our family.” As soon as it was possible, Ms. Weedo and her husband adopted Luca.
Ms. Weedo testified that Luca’s siblings interact with him and that Luca knows the voices of his caregivers and “will kind of try to talk to us.” At the hearing, the undersigned observed that Luca is somewhat aware of his surroundings and responsive to voices. Ms. Weedo testified that her family does everything together. Luca travels, goes on vacations, and goes out to eat as part of the family.
Ms. Weedo testified that Luca requires 24-hour supervision and that his condition will become progressively worse as he ages. Luca has been on oxygen since December 2014. He must use a BiPAP (Bilevel Positive Airway Pressure) machine when he sleeps because the oxygen saturation level in his blood tends to be perilously low. He receives his nutrition through a gastrostomy tube.
Civil trial attorney Todd Rosen testified on behalf of Petitioner as a fact witness and an expert on the valuation of damages. Mr. Rosen has been an attorney for 15 years and is the
principal of the Todd Rosen Law Group in Coral Gables.
Mr. Rosen stated that his practice is exclusively devoted to representing plaintiffs in personal injury cases. Mr. Rosen is a member of the American Association for Justice, the Florida Justice Association, the American Trial Lawyers Association, and the Dade County Bar Association.
Mr. Rosen has handled many jury trials and has represented plaintiffs who have suffered catastrophic brain injuries. A daily part of his practice is to assess the value of damages to injured persons. He stays abreast of jury verdicts in his area and routinely “round-tables” legal issues and damage valuations with other attorneys.
Mr. Rosen testified that he was hired by Luca Weedo’s parents to investigate the potential claims they might have on behalf of their son. Mr. Rosen reviewed thousands of pages of Luca’s medical records, the accident report, and insurance policies for the defendants. The records indicated that Luca suffered catastrophic brain damage as a result of placental abruption and that this injury had a permanent and devastating impact on the child’s life.
Mr. Rosen explained that he could not file a lawsuit until the adoption process was complete, about eight months after the accident. He initially brought the suit against the driver of the Jeep, who had only PIP and property damage
insurance and no collectable assets. Mr. Rosen interviewed the Jeep owner and learned the name of the Tire Shop. He made a demand for payment of the Tire Shop’s $1 million insurance policy. The full policy amount was tendered very soon after Mr. Rosen’s demand.
Mr. Rosen testified that no life care plan or economist’s report was prepared in this case because the case settled so quickly. He believed that it would have been imprudent to spend money out of the $1 million settlement on a life care plan when the Weedos were not facing the prospect of a jury trial.
Mr. Rosen testified that Luca’s past medical care related to the accident was paid by Medicaid. He testified that Medicaid provided $319,188.20 in benefits, representing Luca’s entire claim for past medical expenses. Mr. Rosen testified that Luca, or others on his 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. Rosen opined that Luca’s damages had a value “well in excess of” $25 million. Mr. Rosen explained that based on his experience in other cases, he believed the value of Luca’s future life care needs “would be well in excess of at least
10 to 15 million dollars” and that Luca’s non-economic damages
would have a high value. Mr. Rosen noted that a jury would also take into account how “wonderful” Debra and Kenneth Weedo are to have devoted their lives to caring for Luca and other children in similar circumstances. Mr. Rosen believed that the
$25 million valuation on Luca’s damages was “very conservative.”
Mr. Rosen stated that the Tire Shop’s insurance counsel believed they had a strong argument that the owner of the Jeep must have done something to the tires after the Tire Shop put them on the car. However, despite the contested liability, the insurance company readily agreed during informal settlement discussions to pay the policy limits because the lawyers believed they were facing a verdict of up to
$50 million.
Mr. Rosen testified that the biggest cost factor in assessing Luca’s damages is the 24-hour attendant care that he will require for the rest of his life. Depending on how many caregivers are employed, the skill level required, and the location, attendant care may range from $25 to $40 per hour. Mr. Rosen estimated that a life care plan for Luca would be in the neighborhood of $10 million, including attendant care, nursing, and medical expenses.
Mr. Rosen testified that the $1 million settlement did not come close to fully compensating Luca for the full value of his damages. Based on the conservative valuation of all Luca’s
damages at $25 million, the $1 million settlement represented a recovery of four percent of the value of Luca’s damages.
Mr. Rosen testified that because Luca only recovered four percent of the value of his damages in the settlement, he only recovered four percent of his $319,188.20 claim for past medical expenses, or $12,767.53.3/
Mr. Rosen noted that the settling parties agreed in the Release that Luca’s damages had a value in excess of
$25 million, as well as to the allocation of $12,767.53 to past medical expenses. Mr. Rosen testified that the allocation of
$12,767.53 of the settlement to past medical expenses was reasonable, rational, and more than fair because it was based on a conservative estimate of Luca’s damages. He stated, “Me, personally, I believe it should be less, but yes, that is fair just being conservative.”
Mr. Rosen 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 noted 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.
Because Luca was a minor, court approval of his settlement was required. The court appointed another experienced attorney to act as Luca’s Guardian ad Litem to review the terms of the settlement and make a report to the court as to its appropriateness. The Guardian ad Litem recommended approval of the settlement, and the court adopted that recommendation.
Also testifying on behalf of Petitioner as an expert in the valuation of damages was R. Vinson Barrett, a partner in the Tallahassee firm of Barrett, Fasig and Brooks, which
Mr. Barrett described as a mid-sized firm that exclusively undertakes personal injury and products liability cases.
Mr. Barrett stated that he has been a trial lawyer for 40 years and for the last 15 years has confined his practice to medical malpractice, medical products liability, and pharmaceutical products liability cases.
Mr. Barrett testified that he has done many jury trials. He discussed the importance of accurately estimating the value of the damages suffered by his clients because of the heavy investment that a trial firm must make in a complex case. Mr. Barrett stated that a firm can easily spend a quarter of a million dollars on experts and discovery, as well as life care plans, economic analyses, and vocational rehabilitation analyses, among other items required to establish damages. He
stated that it is essential not to spend so much money in putting on the case that the client has nothing left after the verdict.
Mr. Barrett stated that he has reviewed dozens of life care plans and economist reports, many for children with the same kind of injuries suffered by Luca Weedo. Mr. Barrett testified that he was familiar with Luca’s injuries and had reviewed the accident report, hospital birth records, records from a second hospitalization, medical records from Luca’s neurologist, the Guardian ad Litem report, the court order approving the settlement, Mr. Rosen’s demand letter to the insurance carrier, and each of Petitioner’s exhibits. He had also spoken to Debra Weedo by phone concerning Luca’s medical condition.
Mr. Barrett gave a detailed explanation of Luca’s injuries and extent of his disability. He concluded that Luca’s injury “is as bad an injury as you can possibly receive and stay alive . . . . It could not be more catastrophic.” The medical records indicate that Luca will not get better and his prognosis is poor.
Mr. Barrett opined that Luca’s life care plan alone would probably exceed $25 million. He conceded “that seems like a huge, huge, huge amount of money,” but explained that it
really is not such a large sum when one considers that Luca is supposed to have 24-hour attendant care throughout his lifetime.
Life care plans are not limited to the cost of services provided by Medicaid, which is a safety net that “takes care of things that are absolutely essential to keep on breathing.” However, Medicaid does not cover many things that medically needy children require for quality of life, such as wheelchair-equipped vans. The life care plan includes all of the child’s needs. Mr. Barrett testified that a life care planner accounts for every cost, “pill by pill, wheelchair replacement by wheelchair replacement,” then reduces it to present value.
Mr. Barrett testified that based on his experience working with life care planners in trial preparation, and his extensive experience in evaluating damages in cases similar to that of Luca Weedo, he had no doubt that $25 million is a conservative estimate of Luca’s pure losses. Mr. Barrett testified that the settlement did not come close to compensating Luca for the full value of his damages. Using $25 million as the conservative measure of all his damages, Luca had recovered only four percent of the value of his damages.
Mr. Barrett testified that “by equity and basically, now by federal law, you look at the same ratio for the lien that you look at [for] the claimant.” Accordingly, Mr. Barrett
testified that the settlement provided Luca with only
four percent of Medicaid’s $319,188.20 claim for past medical expenses, or $12,767.53. Mr. Barrett testified that the settling parties’ allocation of $12,767.53 of the settlement to past medical expenses was reasonable, rational, and conservative.
Both Mr. Rosen and Mr. Barrett testified at some length about comparable jury verdicts and prior DOAH Medicaid lien cases involving children with catastrophic brain injuries. This discussion had some value in establishing that $25 million was by no means an unreasonable estimate of Luca Weedo’s damages, but was secondary and supplemental to the directly expressed expert opinions of Mr. Rosen and Mr. Barrett.
AHCA presented the testimony of attorney James Bruner, who was accepted as an expert for the limited purpose of comparing the jury verdicts in the cases cited by Petitioner to the facts of the instant case. Mr. Bruner correctly noted that it can be misleading to cite the numbers from a jury verdict without reference to later reductions made on appeal or via settlement pending appeal.
Mr. Bruner also effectively demonstrated that there is never a precise correlation between the facts of one case and those of another, and therefore that there cannot be a precise comparison of damages from one case to another.4/ However, the
undersigned did not look to the comparative verdicts for such a strict comparison, but simply for the purpose of establishing a range of reasonableness in broadly similar cases.
AHCA called no witness to directly contest the valuation of damages made by Mr. Rosen or to offer an alternative methodology to calculate the allocation to past medical expenses. No evidence was presented that the settlement agreement was not reasonable given all the circumstances of the case. It does not appear that the parties colluded to minimize the share of the settlement proceeds attributable to Medicaid’s payment of costs for Petitioner’s medical care. In fact, the evidence established that the settlement was conservative in its valuation of Petitioner’s claim and that the settling parties could have reasonably apportioned less to Medicaid than they actually did.
AHCA was not a party to the settlement of Petitioner’s claim. AHCA correctly computed the lien amount pursuant to the statutory formula in section 409.910(11)(f). Deducting the
25 percent attorney’s fee, or $250,000, as well as $8,112.70 in taxable costs, from the $1 million recovery, leaves $741,887.30, half of which is $370,943.65. That figure exceeds the actual amount expended by Medicaid on Petitioner’s medical care. Application of the formula would provide sufficient funds to satisfy the Medicaid lien of $314,747.23.
Petitioner proved by clear and convincing evidence that the $25 million total value of the claim was a reasonable, even somewhat conservative, amount. Petitioner proved by clear and convincing evidence, based on the strength and sympathy of his case and on the fact that it was limited only by the inability to collect the full amount of the likely judgment, that the amount agreed upon in settlement of Petitioner’s claims constituted a fair settlement, including the portion attributed to the
Medicaid lien for medical expenses.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding. §§ 120.569, 120.57(1), and 409.910(17), Fla. Stat.
AHCA is the agency authorized to administer Florida’s Medicaid program. § 409.902, Fla. Stat.
The Medicaid program has been succinctly described as follows:
The Medicaid program was established in 1965 by Title XIX of the Social Security Act ("the Act"), codified at 42 U.S.C. § 1396- 1396v. The primary purpose of the program is to provide federal financial assistance to States that elect to reimburse certain costs of medical treatment for needy individuals. See Harris v. McRae, 448 U.S. 297, 301, 65 L. Ed. 2d 784, 100 S. Ct. 2671
(1980). States voluntarily agree to participate in the program, but must comply with federal requirements once they do so. Id. It is often said that Congress wanted
Medicaid to be a "payer of last resort, that is, other available resources must be used before Medicaid pays for the care of an individual enrolled in the Medicaid program." S. Rep. No. 99-146, at 312 (1985), reprinted in 1986 U.S.C.C.A.N. 42,
279.
Ahlborn v. Arkansas Dep’t of Human Servs., 397 F.3d 620, 623
(8th Cir. 2005), aff’d Arkansas Dep’t of Health and Human Servs. v. Ahlborn, 547 U.S. 268 (2006).
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 liable third parties. Title 42 U.S.C. § 1396a(a)(25)(H) provides:
A State plan for medical assistance must—
* * *
(25) provide—
* * *
(H) that to the extent that payment has been made under the State plan for medical assistance in any case where a third party has a legal liability to make payment for such assistance, the State has in effect laws under which, to the extent that payment has been made under the State plan for medical assistance for health care items or services furnished to an individual, the State is considered to have acquired the rights of such individual to payment by any other party for such health care items or services.
Title 42 U.S.C. § 1396k(a)(1)(A) provides:
For the purpose of assisting in the collection of medical support
payments . . . a State plan for medical assistance shall—
provide that, as a condition of eligibility for medical assistance under the State plan to an individual who has the legal capacity to execute an assignment for himself, the individual is required—
to assign the State any rights . . . to payment for medical care from any third party.
To implement these federal requirements, the Florida Legislature has enacted section 409.910, the “Medicaid Third- Party Liability Act.” In its statement of intent, the statute provides as follows:
(1) It is the intent of the Legislature that Medicaid be the payor of last resort for medically necessary goods and services furnished to Medicaid recipients. All other sources of payment for medical care are primary to medical assistance provided by Medicaid. If benefits of a liable third party are discovered or become available after medical assistance has been provided by Medicaid, it is the intent of the Legislature that Medicaid be repaid in full and prior to any other person, program, or entity. Medicaid is to be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid. Principles of common law and equity as to assignment, lien, and subrogation are abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources. It is intended that if the resources of a liable third party become
available at any time, the public treasury should not bear the burden of medical assistance to the extent of such resources.
It was undisputed that Medicaid provided $314,747.23 in medical expenses for Petitioner or that AHCA had a valid Medicaid lien against Petitioner’s settlement and the right to seek reimbursement for its expenses. The mechanism by which AHCA enforces its right is set forth in section 409.910 as
follows:
(11) The agency may, as a matter of right, in order to enforce its rights under this section, institute, intervene in, or join any legal or administrative proceeding in its own name in one or more of the following capacities: individually, as subrogee of the recipient, as assignee of the recipient, or as lienholder of the collateral.
If either the recipient, or his or her legal representative, or the agency brings an action against a third party, the recipient, or the recipient's legal representative, or the agency, or their attorneys, shall, within 30 days after filing the action, provide to the other written notice, by personal delivery or registered mail, of the action, the name of the court in which the case is brought, the case number of such action, and a copy of the pleadings. If an action is brought by either the agency, or the recipient or the recipient's legal representative, the other may, at any time before trial on the merits, become a party to, or shall consolidate his or her action with the other if brought independently. Unless waived by the other, the recipient, or his or her legal representative, or the agency shall provide notice to the other of the intent to dismiss at least 21 days prior to voluntary
dismissal of an action against a third party. Notice to the agency shall be sent to an address set forth by rule. Notice to the recipient or his or her legal representative, if represented by an attorney, shall be sent to the attorney, and, if not represented, then to the last known address of the recipient or his or her legal representative.
An action by the agency to recover damages in tort under this subsection, which action is derivative of the rights of the recipient or his or her legal representative, shall not constitute a waiver of sovereign immunity pursuant
to s. 768.14.
In the event of judgment, award, or settlement in a claim or action against a third party, the court shall order the segregation of an amount sufficient to repay the agency's expenditures for medical assistance, plus any other amounts permitted under this section, and shall order such amounts paid directly to the agency.
No judgment, award, or settlement in any action by a recipient or his or her legal representative to recover damages for injuries or other third-party benefits, when the agency has an interest, shall be satisfied without first giving the agency notice and a reasonable opportunity to file and satisfy its lien, and satisfy its assignment and subrogation rights or proceed with any action as permitted in this section.
Except as otherwise provided in this section, notwithstanding any other provision of law, the entire amount of any settlement of the recipient's action or claim involving third-party benefits, with or without suit, is subject to the agency's claims for reimbursement of the amount of medical
assistance provided and any lien pursuant thereto.
Notwithstanding any provision in this section to the contrary, in the event of an action in tort against a third party in which the recipient or his or her legal representative is a party which results in a judgment, award, or settlement from a third party, the amount recovered shall be distributed as follows:
After attorney's fees and taxable costs as defined by the Florida Rules of Civil Procedure, one-half of the remaining recovery shall be paid to the agency up to the total amount of medical assistance provided by Medicaid.
The remaining amount of the recovery shall be paid to the recipient.
For purposes of calculating the agency's recovery of medical assistance benefits paid, the fee for services of an attorney retained by the recipient or his or her legal representative shall be calculated at
25 percent of the judgment, award, or settlement.
Notwithstanding any provision of this section to the contrary, the agency shall be entitled to all medical coverage benefits up to the total amount of medical assistance provided by Medicaid. For purposes of this paragraph, "medical coverage" means any benefits under health insurance, a health maintenance organization, a preferred provider arrangement, or a prepaid health clinic, and the portion of benefits designated for medical payments under coverage for workers' compensation, personal injury protection, and casualty.
As shown in Finding of Fact 40, supra, AHCA correctly
computed the lien amount pursuant to the statutory formula in
subsection (11)(f). One-half of the amount remaining after deduction of the attorney’s fee and costs would be $370,943.65, which exceeds the actual amount expended by Medicaid on Petitioner’s medical care. Application of the formula would provide sufficient funds to satisfy the Medicaid lien of
$314,747.23.
Section 409.910(13) provides that AHCA is not automatically bound by the allocation of damages set forth in Petitioner’s settlement agreement:
(13) No action of the recipient shall prejudice the rights of the agency under this section. No settlement, agreement, consent decree, trust agreement, annuity contract, pledge, security arrangement, or any other device, hereafter collectively referred to in this subsection as a "settlement agreement," entered into or consented to by the recipient or his or her legal representative shall impair the agency's rights. However, in a structured settlement, no settlement agreement by the parties shall be effective or binding against the agency for benefits accrued without the express written consent of the agency or an appropriate order of a court having personal jurisdiction over the agency.
Section 409.910(17)(b) provides a mechanism whereby a recipient may challenge AHCA’s presumptively correct calculation of medical expenses payable to the agency:
(b) 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.
In Evans Packing Co. v. Department of Agriculture &
Consumer Services., 550 So. 2d 112, 116 n.5 (Fla. 1st DCA 1989), the Court defined clear and convincing evidence as follows:
[C]lear 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 evidence 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 the firm belief of conviction, without hesitancy, as to the truth of the allegations sought to be
established. Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).
Judge Sharp, in her dissenting opinion in Walker v.
Department of Business & Professional Regulation, 705 So. 2d
652, 655 (Fla. 5th DCA 1998) (Sharp, J., dissenting), reviewed recent pronouncements on clear and convincing evidence:
Clear and convincing evidence requires more proof than preponderance of evidence, but less than beyond a reasonable doubt. In re Inquiry Concerning a Judge re Graziano, 696 So. 2d 744 (Fla. 1997). It is an intermediate level of proof that entails both qualitative and quantative [sic] elements. In re Adoption of Baby E.A.W., 658 So. 2d 961, 967 (Fla. 1995), cert.
denied, 516 U.S. 1051, 116 S. Ct. 719, 133
L.Ed.2d 672 (1996). The sum total of evidence must be sufficient to convince the trier of fact without any hesitancy. Id.
It must produce in the mind of the fact finder a firm belief or conviction as to the truth of the allegations sought to be established. Inquiry Concerning Davey, 645 So. 2d 398, 404 (Fla. 1994).
The evidence is clear and convincing that the allocation for Petitioner’s past medical expenses in the amount of $12,767.53 as set forth in the Release constitutes a fair and reasonable share of the total recovery for those past medical expenses actually paid by Medicaid. The allocation is slightly more than four percent, due to the fact that the settlement agreement was based on AHCA’s original lien claim of $319,188.20 rather than the final lien claim of $314,747.23.
The evidence is clear and convincing that the parties to the settlement engaged in no manipulation of the apportionment to minimize or prejudice AHCA’s right to reimbursement for medical expenditures. The apportionment was based on a conservative estimate of the value of Petitioner’s claim.
There was no evidence that Medicaid funds were either committed to or paid for future medical expenses.
The full amount of the Medicaid lien was accounted for, and made subject to “an allocation between medical and nonmedical damages--in the form of either a jury verdict, court decree, or stipulation binding on all parties,” a process approved in Wos v.
E.M.A., 528 U.S. ; 133 S. Ct. 1391, 1399; 185 L. Ed. 2d 471,
483; 2013 U.S. LEXIS 2372, at *18-19 (2013).
Petitioner has proven, by clear and convincing evidence, that $314,747.23 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.
In addition to being able to satisfy its lien from the portion of the settlement proceeds representing payment for past medical expenses, AHCA also contends that settlement funds received by Petitioner for payment of future medical expenses are subject to AHCA's lien. It bases this contention on the language from section 409.910(17)(b) that a challenger, such as
Petitioner, 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).” (Emphasis added).
Title 42 U.S.C. § 1396p(a)(1), the “anti-lien provision” of the Medicaid statute, prohibits the state from attaching a lien on the property of a Medicaid beneficiary to recover benefits paid by the state. “The anti-lien provision pre-empts a State’s effort to take any portion of a Medicaid beneficiary’s tort judgment or settlement not ‘designated as payments for medical care.” Wos at 133 S. Ct. 1395; 185 L. Ed.
2d 478; 2013 U.S. LEXIS 2372, *6.
In Ahlborn v. Arkansas Department of Human Services,
397 F.3d 620 (8th Cir. 2004), the United States Court of Appeals for the Eighth Circuit reviewed a district court's grant of summary judgment in favor of the Arkansas Department of Human Services (“ADHS”) in a dispute concerning the extent to which a recovery from a tortfeasor could be taken by the State as reimbursement for the cost of medical care provided to
Ms. Ahlborn by the Medicaid program. Id. at 621.
ADHS had provided Medicaid benefits in the amount of
$215,645.30 to Ms. Ahlborn. The parties agreed that
Ms. Ahlborn’s injuries gave rise to a damages claim estimated at
$3,040,708.12, which claim was settled for a lump sum of
$550,000. Pursuant to Arkansas’ third-party liability statute, ADHS asserted a lien against Ms. Ahlborn’s settlement for the full amount of the benefits ADHS had provided. Id. at 622.
Ms. Ahlborn brought suit seeking a declaratory judgment “arguing that ADHS can only recover that portion of her settlement representing payment for past medical expenses.” Id. Thus, the issue presented by the case was “whether federal Medicaid statutes, which provide for the assignment of rights to third-party payments, but prohibit placing a lien on a Medicaid recipient’s property, limit the State’s recovery to only those portions of the payments made for medical expenses.” Id. The parties stipulated that if the state prevailed, it would recover
$215,645.30, the total amount of the Medicaid payments made for the care of Ms. Ahlborn. If Ms. Ahlborn prevailed, the state would recover $35,581.47, which represented 16.5 percent of the total amount as “a fair representation of the percentage of the settlement constituting payment by the tortfeasor for past
medical care.” Id. (emphasis added).
The Eighth Circuit concluded, after review of the relevant statutes, that Ms. Ahlborn “has the better of the argument.” Id. at 621-622. ADHS’s main assertion was that because other federal statutes require the state to impose a
statutory lien for Medicaid reimbursement, the Arkansas third-
party liability statute could not be in conflict with the federal anti-lien statute. Id. at 624.
The Eighth Circuit examined the text of 42 U.S.C.
§ 1396a(a)(25)(H) and 42 U.S.C. § 1396k(a)(1)(A), the relevant portions of which are set forth at Conclusions of Law 45 and 46, supra. The court concluded that “a straightforward
interpretation of the text of these statutes demonstrates that the federal statutory scheme requires only that the State recover payments from third parties to the extent of their legal liability to compensate the beneficiary for medical care and
services incurred by the beneficiary.” Id. at 625. Both of the
cited statutes are “limited to rights to third-party payments made to compensate for medical care.” Id.
The Eighth Circuit reversed the district court’s summary judgment in favor of ADHS and remanded the case “with directions to enter judgment for the State in the amount of
$35,581.47.” Id. at 628. It should be noted that this amount was expressly noted by the court as constituting payment for past
medical care.
The case was appealed to the United States Supreme Court, which unanimously affirmed the decision of the Eighth Circuit. Arkansas Dep’t of Health and Human Servs. v. Ahlborn,
547 U.S. 268 (2006). The Supreme Court concluded, as had the Eighth Circuit, that “the federal statute places express limits
on the State’s powers to pursue recovery of funds it paid on the recipient’s behalf” and that “Federal Medicaid law does not authorize ADHS to assert a lien on Ahlborn's settlement in an amount exceeding $35,581.47, and the federal anti-lien provision affirmatively prohibits it from doing so.” 547 U.S. at 283, 292. The Medicaid law’s third-party liability provisions are an exception to the anti-lien provision and therefore are strictly limited to payments for medical care. Id. at 284-85.
In E.M.A. v. Cansler, 674 F.3d 290 (4th Cir. 2012), the issue before the Fourth Circuit was whether North Carolina’s third-party liability statute comported with federal Medicaid law and Ahlborn “merely because the subrogation statute . . . ‘caps’ the state’s recovery at the lesser of the actual medical expenses paid or one-third of the total settlement.” Id. at 307. The Fourth Circuit concluded that the North Carolina statute violated federal law because its presumption that the state is entitled to the actual medical expenses or one-third of the total settlement was unrebuttable. The court held that to comport with federal law as interpreted in Ahlborn, the statutory presumption “must be subject to adversarial testing.” Id. at 311.
The Fourth Circuit succinctly and correctly described Ahlborn as follows:
In Ahlborn, the Supreme Court reconciled seemingly conflicting legal standards when it considered whether an Arkansas third-
party liability statute permitting the state to claim a right to the entirety of the costs it paid on a Medicaid recipient's behalf, regardless of whether that amount exceeded the portion of the recipient's judgment or settlement representing past medical expenses, violated federal Medicaid law. 547 U.S. at 278. In an opinion by Justice Stevens for a unanimous Court, Ahlborn held that Arkansas' assertion of a lien on a Medicaid recipient's tort settlement in an amount exceeding the stipulated medical-expenses portion was not authorized by federal Medicaid law; to the contrary, the state's attempt to do so was affirmatively prohibited by the general anti-lien provision in 42 U.S.C. § 1396p.
Id. at 292.
E.M.A. v. Cansler, 674 F.3d at 299.
The lower court had seized upon the fact that E.M.A.’s settlement was an unallocated lump sum to hold that Ahlborn was
inapplicable and that the North Carolina statute’s mandatory allocation of one-third of the settlement was reasonable. The Fourth Circuit rejected “such a crabbed interpretation” of Ahlborn. 674 F.3d at 307. The Fourth Circuit noted that the Ahlborn court’s analysis “in no way rested” “on whether there
has been a prior determination or stipulation as to the medical expenses portion of a Medicaid recipient’s settlement.” The court found that “Ahlborn is properly understood to prohibit
recovery by the state of more than the amount of settlement proceeds representing payment for medical care already received.” Id.
The Fourth Circuit concluded as follows:
As the unanimous Ahlborn Court's decision makes clear, federal Medicaid law limits a state's recovery to settlement proceeds that are shown to be properly allocable to past medical expenses. In the event of an unallocated lump-sum settlement exceeding the amount of the state's Medicaid expenditures, as in this case, the sum certain allocable to medical expenses must be determined by way of a fair and impartial adversarial procedure that affords the Medicaid beneficiary an opportunity to rebut the statutory presumption in favor of the state that allocation of one-third of a lump sum settlement is consistent with the anti- lien provision in federal law.
E.M.A. v. Cansler, 674 F.3d at 312 (emphasis added).
On review, the United States Supreme Court affirmed the Fourth Circuit’s decision. Wos v. E.M.A., 528 U.S. ;
133 S. Ct. 1391; 185 L. Ed. 2d 471; 2013 U.S. LEXIS 2372 (2013).
At the outset of its opinion, the Supreme Court reaffirmed its Ahlborn holding that “[t]he anti-lien provision pre-empts a
State’s effort to take any portion of a Medicaid beneficiary’s tort judgment or settlement not ‘designated as payments for medical care.” Wos, 2013 U.S. LEXIS 2372, at *6, quoting
Ahlborn, 547 U.S. at 284.
Nothing in Wos contradicts the Fourth Circuit’s
statement that Ahlborn makes clear that federal Medicaid law limits a state’s recovery to settlement proceeds that are allocable to past medical expenses. The Fourth Circuit’s
statement was based on Ahlborn’s unanimous affirmance of the
Eighth Circuit’s express determination that the state was entitled only to “the percentage of the settlement constituting payment by the tortfeasor for past medical care.” Ahlborn v.
Arkansas Dep’t of Human Servs., 397 F.3d 620, 622.
The conclusion is inescapable that reimbursement of Medicaid expenditures from a settlement is limited to that portion of a settlement allocable to past medical expenses. Reimbursement from a portion of a settlement reserved for future care, including medical expenses, is prohibited by the Medicaid anti-lien statute.
This conclusion is supported by Florida case law. In Davis v. Roberts, 130 So. 3d 264 (Fla. 5th DCA 2013), the Court reversed a lower court ruling that AHCA was entitled to recover the full amount of its Medicaid lien, calculated pursuant to the formula established in section 409.910(11)(f), from a Medicaid recipient’s third-party recovery. The Court held that:
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. Accordingly, we agree with the fourth district in [Roberts v. Albertson’s, Inc., 119 So. 3d 457] that section 409.910(11)(f) is a "default allocation." 119 So. 3d at 465. As such, we reiterate our prior directive and hold
that a Medicaid recipient "should be afforded the opportunity to seek the reduction of a Medicaid lien amount by demonstrating, with evidence, that the lien amount [established by section 409.910(11)(f)] exceeds the amount recovered for medical expenses." [Smith v. Ag. for Health Care Admin, 24 So. 3d 590, 592 (Fla. 5th DCA 2009)]; see also Agency for Health Care Admin. v. Riley, 119 So. 3d 514, 516 (Fla. 2d DCA 2013) (expressly adopting the fourth district's holding in Roberts 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).
Davis v. Roberts, 130 So. 3d at 270 (footnotes omitted).
Accord, Harrell v. Ag. for Health Care Admin, 143 So. 3d 478 (Fla. 1st DCA 2014).
The decisions in Davis and Harrell were issued prior
to the 2013 amendments establishing the procedure in section 409.910(17)(b) that allows a Medicaid recipient to contest the amount designated as recovered medical expense damages payable to AHCA by proving 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).” (emphasis added). However, there has been no change to the federal Medicaid anti- lien statute on which Davis and Harrell were based and therefore
no reason to believe that the Court’s analysis would be any
different in light of the change to section 409.910. The Medicaid anti-lien statute, as interpreted by Ahlborn and Wos, limits AHCA’s recovery to that portion of Petitioner’s settlement representing compensation for past medical expenses.
ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby ORDERED that:
The Agency for Health Care Administration is entitled to
$12,767.53 in satisfaction of its Medicaid lien.
DONE AND ORDERED this 27th day of September, 2016, in Tallahassee, Leon County, Florida.
S
LAWRENCE P. STEVENSON
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 27th day of September, 2016.
ENDNOTES
1/ Citations will be to Florida Statutes (2015) unless otherwise indicated.
2/ At the time of settlement, the claimed Medicaid lien was
$319,188.20. However, by letter dated February 12, 2016, AHCA
indicated that its lien was $314,747.23. The court did not receive this letter prior to its approval of the settlement on February 17, 2016, and therefore the higher amount was included in the Release approved by the court. In this proceeding, AHCA is seeking only $314,747.23, which amount Petitioner has reserved from the settlement proceeds in order to preserve the Medicaid lien.
3/ If the actual amount of the Medicaid lien is $314,747.23, then the four-percent recovery would amount to $12,589.89.
Petitioner has not argued that the apportionment should be reduced from $12,767.53.
4/ A complicating factor in the instant case might have been the drug use of Luca’s natural mother, though Mr. Rosen testified that his review of the record and discussions with attending physicians made it clear there was no link between the mother’s drug use and Luca’s injuries, all of which were attributable to rupture of the placenta and subsequent anoxic brain injury.
COPIES FURNISHED:
Alexander R. Boler, Esquire Suite 300
2073 Summit Lake Drive Tallahassee, Florida 32317 (eServed)
Floyd B. Faglie, Esquire Staunton and Faglie, P.L.
189 East Walnut Street Monticello, Florida 32344 (eServed)
Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Elizabeth Dudek, Secretary
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1
Tallahassee, Florida 32308 (eServed)
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
NOTICE OF RIGHT TO JUDICIAL REVIEW
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.
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 27, 2016 | DOAH Final Order | Petitioner proved by clear and convincing evidence that the Medicaid anti-lien statute limited AHCA's recovery to $12,767.53, the portion of Petitioner's settlement representing compensation for past medical expenses. |
