STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TYA-MARIE SAVAIN,

vs.

Petitioner,

Case No. 17-5946MTR

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

/

FINAL ORDER

Pursuant to notice, a final hearing was held in this case on January 11, 2018, by video teleconference at sites located in Tallahassee and Miami, Florida, before Robert L. Kilbride, Administrative Law Judge of the Division of Administrative Hearings ("DOAH").

APPEARANCES

For Petitioner: Ian Pinkert, Esquire

Halpern, Santos, & Pinkert, P.A.

150 Alhambra Circle, Suite 1100 Coral Gables, Florida 33134

For Respondent: Alexander R. Boler, Esquire

2073 Summit Lake Drive, Suite 300

Tallahassee, Florida 32317 STATEMENT OF THE ISSUE

The issue to be determined is what amount of the $10,652.23 Medicaid lien held by Respondent, Agency for Health Care Administration ("Respondent" or "Agency"), is recoverable by

Respondent from the $65,000.00 settlement reached by Petitioner, Tya-Marie Savain ("Petitioner" or "Savain"), in her related personal injury action.

PRELIMINARY STATEMENT

On October 31, 2017, 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.

The matter was referred to DOAH and was assigned to the undersigned. The case was set for a final hearing on January 11, 2018.

Before the final hearing, Petitioner and Respondent filed a Joint Pre-hearing Stipulation.1/ In the stipulation, the parties agreed upon certain facts, which will be relied upon by the undersigned, in addition to other facts proven by a preponderance of the evidence.

The final hearing was held on January 11, 2018, as regularly scheduled. Petitioner did not call any witnesses. Petitioner offered into evidence Exhibits 1 through 24.

Respondent did not object to Exhibits 1 through 23, but objected to Exhibit 24.2/ Respondent did not call any witnesses and did not offer any exhibits into evidence.

A hearing transcript was not ordered by either party. The parties agreed to file proposed final orders by January 26,

2018. Proposed final orders were timely received from each party and were given due consideration in the preparation of this Final Order.

Petitioner has argued that since she received considerably less in settling the case than the actual value of her personal injury case, the Medicaid lien should be reduced accordingly and by the same ratio or percentage that the settlement bears to the actual value of her case. (This is sometimes referred to as the "proportionality test" or "pro-rata test.")

Respondent has argued that, unless proven otherwise, it must be reimbursed for its Medicaid lien in the amount of

$10,652.23, taking into account the statutory formula found in section 409.910(11)(f). This section limits the Agency’s recovery to the lesser of: (1) its full lien; or (2) one half of the remaining settlement, after attorney fees (calculated at

25 percent) and taxable costs are deducted from the gross settlement amount.3/

All citations to the Florida Statutes are to the 2016 version, unless otherwise indicated.

FINDINGS OF FACT

Based on the stipulation between the parties, the evidence presented and the record as a whole, the undersigned makes the following findings of fact:

1. On the afternoon of May 27, 2015, Petitioner, who was

   
   

   19 years of age, was a pedestrian walking northbound across Forrest Hill Boulevard in West Palm Beach, Florida. As she was crossing the road in daylight, she was hit by a vehicle operated by Kenneth Knowles. (JPHS p. 5, ¶ 1).

2. As a result of the collision, Petitioner suffered a fractured femur requiring open reduction internal fixation to repair her leg and a second surgery to remove the medical hardware. Petitioner suffered additional injuries (during the accident), including a left eye laceration, and road rash with scarring on her hands, elbows, chin, ears, forehead, mouth, and other body parts. (JPHS p. 5, ¶ 2).

3. Respondent expended $10,652.23 in medical assistance through its Medicaid program for the benefit of Petitioner related to her fractured femur and the two resulting surgeries caused in the accident. (JPHS p. 5, ¶ 4).

4. Petitioner’s extensive injuries necessitated surgery and resulted in significant medical treatment and related medical expenses (see, e.g., Pet. Exs. 2-12, 23).

5. Petitioner brought a personal injury action for negligence against the liable third party and driver, Kenneth Knowles, in Palm Beach County, Florida.

6. Kenneth Knowles had bodily injury coverage with Allstate Insurance Company in the amount of $15,000.00. Knowles

   
   

   paid an additional $50,000.00 out of his pocket resulting in a gross settlement of $65,000.00 for the personal injury claim brought by Savain.4/ (JPHS p. 5, ¶ 3).

7. Following resolution of Petitioner’s personal injury action, her counsel advised the Agency of the settlement through correspondence dated April 10, 2017. Counsel explained to the Agency that Savain would not be recovering the full value of her damages and requested that Respondent accept a reduced amount in full satisfaction of its Medicaid lien. (JPHS p. 5, ¶ 6).

8. Respondent replied to Petitioner’s counsel in writing on June 22, 2017, and stated that Medicaid would not accept any reduction from the full lien amount of $10,652.23. (JPHS p. 6,

   ¶ 8).

   
   

9. There was no evidence that the Agency participated in, approved of, or was consulted concerning Petitioner’s settlement with Kenneth Knowles.

10. In addition to the Medicaid lien, Petitioner had total medical bills of $182,660.42, and has outstanding bills and liens (excluding Respondent’s Medicaid lien) totaling

    $38,899.51. Accordingly, Petitioner’s total outstanding past medical expenses, including the Agency’s Medicaid lien is

    $49,551.74. (JPHS p. 6, ¶ 7).

    
    

11. Both parties stipulated that the application of the formula at section 409.910(11)(f) to Petitioner’s $65,000.00

    
    

    settlement requires payment to the Agency in the amount of

    
    

    $10,652.23 in satisfaction of its Medicaid lien. (JPHS p. 5,

    
    

    ¶ 5).

    
    

12. There was no evidence presented to prove or suggest that the Agency provided a lesser amount of medical assistance than the $10,652.23 it asserted it had expended.

13. Further, there was no evidence presented to prove what portion of the $65,000.00 settlement was allocated by Petitioner and Kenneth Knowles to her past medical expenses.5/

14. The affidavit of Attorney Eric Morales, proffered by Petitioner, opined that the "value" of Petitioner’s claim was between $550,000.00 and $750,000.00. (Pet. Ex. 24). These figures supposedly represent the total sum of Petitioner’s range of damages.

15. Morales was of the opinion that the settlement reached by Petitioner represented five percent, on the high end, and 3.6 percent, on the low end, of the actual value of her claim.6/

16. The undersigned finds and concludes that the affidavit is an out-of-court statement used to prove the truth of the matters asserted in it. It does not supplement or explain other admissible evidence, and Petitioner has advanced no case authority or exception to the hearsay rule which would permit its use or consideration by the undersigned.

    
    

17. Morales’s affidavit is classic hearsay. See Fortune

    
    

    v. Fortune, 61 So. 3d 441 (Fla. 2d DCA 2011); and B.C.S., S.R.L. v. Wise, 910 So. 2d 871, 874 (Fla. 5th DCA 2005). As

    such, it cannot be considered or used by the undersigned to establish or support any findings of fact in this case and is stricken from consideration or use by the undersigned.

18. Petitioner, therefore, did not present any admissible evidence to support a finding of the actual value of her personal injury claim or to support the "pro-rata" or "proportionality" formula she advanced through her counsel’s arguments.7/

19. To reiterate, there was no evidence presented by Petitioner to prove that (1) a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by the Agency, or (2) that Medicaid provided a lesser amount of medical assistance than the

    $10,652.23 asserted by the Agency.

    
    

    CONCLUSIONS OF LAW

    
    

20. DOAH has jurisdiction of the parties and final

    
    

    order authority in this case pursuant to sections 120.57(1)(a) and 409.910(17)(b), Florida Statutes.

21. Petitioner is an individual who was the recipient of Medicaid funds to assist her with medical expenses related to her

    
    

    care and treatment arising from injuries received in a vehicle/pedestrian accident.

22. Respondent is the state agency responsible to administer Florida’s Medicaid program. § 409.902, Fla. Stat. To participate in the Federal Medicaid program, the Agency is also obligated to seek full reimbursement for what it has paid out to a recipient in Medicaid expenditures, when the resources of a liable third party become available. § 409.910(4), Fla. Stat.

23. The Agency is automatically subrogated to and assigned the recipient’s rights to recover from the liable third party. This results in a lien in favor of the Agency for the full amount of medical assistance provided by Medicaid. § 409.910(6), Fla. Stat.

24. The Florida Legislature expressed this intent and the purpose behind the statute:

    [I]t 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. (Emphasis added).

    
    

    § 409.910(1), Fla. Stat.

    
    

25. The Florida Legislature added that:

    
    

    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. (Emphasis added).

    
    

    Id.

    
    

26. The Agency may not seek reimbursement, however, for more than the amount of medical assistance paid by Medicaid.

    § 409.910(4), Fla. Stat.

    
    

27. In this case, there can be no dispute that Petitioner had a full and fair opportunity to prove that the portion of her settlement that represents past medical expenses was less than the amount due under the formula outlined in section 409.910(11)(f).

28. The Florida Legislature provided this opportunity to Medicaid recipients following the Supreme Court’s decision in Wos v. E.M.A., 133 S. Ct. 1391 (2013).8/ See § 409.910(17)(b),

    Fla. Stat.

    
    

    The challenge which a recipient can make to the Medicaid lien amount is outlined in section 409.910(17)(b) as follows:

    In order to successfully challenge the amount designated as recovered medical expenses, the recipient must prove, by clear and convincing evidence, that the portion of the total recovery which should be allocated as past and future medical expenses is less than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f). Alternatively, the recipient must prove by clear and convincing evidence that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.

    
    

    The statutory formula used by the Agency to set the Medicaid lien amount is simple and straightforward. Section 409.910(11)(f) outlines the formula and states:

    (f) 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:

    
    

    1. 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.

       
       

    2. The remaining amount of the recovery shall be paid to the recipient.

       
       

    3. 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.

    
    

29. Florida district courts of appeal have characterized the Medicaid lien recovery formula under section 409.910(11)(f) as a statutory "default" allocation of the medical expense portion of the recovery. Ag. for Health Care Admin. v. Riley,

    119 So. 3d 514 (Fla. 2d DCA 2013); Davis v. Roberts, 130 So. 3d

    
    

    264 (Fla. 5th DCA 2013). As will be explained in more detail,

    
    

    this statutory "default" allocation can be overcome by proof during an evidentiary hearing before DOAH.

30. The undersigned is mindful of the ruling by the Federal Northern District of Florida, which enjoined Respondent from enforcing portions of section 409.910, including parts of

    section 409.910(17)(b) directly at issue in this proceeding. Gallardo v. Dudek, Case No. 4:16cv116-MW/CAS, 2017 WL 3081816 (N.D. Fla. July 18, 2017).

31. Specifically, the federal court’s second amended judgment declares that the Agency may not seek "reimbursement of past Medicaid payments from portions of a recipient’s recovery that represents future medical expenses," nor require "a Medicaid recipient to affirmatively disprove § 409.910(17)(b)’s formula based allocation with clear and convincing evidence." (Emphasis added).

32. Accordingly, in evaluating this case and Petitioner’s burden of proof, the undersigned has utilized a preponderance of the evidence standard. Further, in assessing what amount the Agency may recover, the undersigned is limited to considering only past medical expense.

33. With respect to the heart of this matter--the proper evidentiary method to challenge the statutory formula under section 409.910(17)(b)--the Fifth District Court of Appeal has noted that using Petitioner’s proposed "pro-rata" or

    
    

    "proportionality" formula is not required, and commented that using such a formula would be "problematic":

    
    

    [T]he [U.S. Supreme Court] in Ahlborn[, 547

    U.S. 268] simply accepted the stipulation, and in no way adopted the [pro-rata] formula as a required or sanctioned method to determine the medical expense portion of an overall settlement amount.

    
    

    Moreover, the formula used by the Ahlborn parties is problematic in that it assumes the Medicaid lien amount to be the only medical expense included by the plaintiff as part of his or her overall damage claim, which is not a reasonable assumption.

    
    

    Smith v. Ag. for Health Care Admin., 24 So. 3d 590, 591 (Fla. 5th

    
    

    DCA 2009).

    
    

34. Other district courts have also recognized that using Petitioner’s "proportionality" formula is not mandated or required by law. For instance, the Second District Court of Appeal noted:

    [The Medicaid recipient] urged the ALJ to employ a pro rata allocation to calculate the amount of the [liable third party] settlement allocable to past medical expenses. . . .

    Indeed, because the settlement represents but only some forty percent of the total value of the case, [the recipient] urges that AHCA can only recover about forty percent of the expenses it incurred. We do not condemn this approach . . . [b]ut we also acknowledge that the U.S. Supreme Court has not explicitly endorsed this method.

    
    

    Willoughby v. Ag. for Health Care Admin., 212 So. 3d 516, 522

    
    

    (Fla. 2d DCA 2017).

    
    

35. Those decisions correctly point out that the proportionality formula suggested by Petitioner in this case is not the required or accepted method, nor is it a method that is necessarily correct.9/

36. The undersigned is persuaded that the legal test sanctioned by the Fifth District Court of Appeal in Smith is the

    better approach, and is most closely aligned with the express language of the statute. That approach is summarized as follows:

    [Under] Ahlborn a plaintiff should be afforded an opportunity to seek the reduction of a Medicaid lien amount by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses.

    
    

    See also Roberts v. Albertson's Inc., 119 So. 3d 457 (Fla. 4th DCA 2012).

37. Thus, under that test, Petitioner was obligated to prove that the Agency’s lien amount of $10,652.23 exceeds the amount recovered by Petitioner for her medical expenses.

38. Other considerations guide the undersigned. For instance, the undersigned is charged "to decide between competing views of the correct reimbursement amount, per the statute's exclusive method for challenging the amount of third-party benefits payable to the agency." § 409.910(17)(b), Fla. Stat. See State Ag. for Health Care Admin. v. Hunt, 165 So. 3d 868 (Fla. 1st DCA 2015).

    
    

39. It is also noteworthy that the statutory formula under section 409.910(11)(f) has been determined to comply with federal law, and the interpretation of that law by the Supreme Court in Arkansas Department of Health and Human Services. v. Ahlborn, 547 U.S. 268, 292, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006). See

    Garcon v. Ag. for Health Care Admin., 96 So. 3d 472 (Fla. 3rd DCA

    
    

    2012); and Roberts v. Albertson's Inc., 119 So. 3d 457 (Fla. 4th DCA 2012).

40. To conclude, Petitioner did not prove that she is entitled to a reduction of the Medicaid lien of the Agency. The exhibits presented by Petitioner, which the undersigned has reviewed and considered, do not prove what amount of the settlement recovery should be allocated as past medical expenses, nor do the exhibits prove that the Agency spent less than it has asserted as being due.10/

DISPOSITION

WHEREFORE, based on the forgoing Findings of Fact and Conclusions of Law, it is hereby DETERMINED and ORDERED that:

1. Petitioner has failed to prove by a preponderance of the evidence that a lesser portion of her total recovery should be allocated as past medical expenses than the amount calculated by the Agency pursuant to the formula set forth in section 409.910(11)(f), Florida Statutes;

   
   

2. Petitioner did not alternatively prove that Medicaid provided a lesser amount of medical assistance than the amount of

   $10,652.23 asserted by the Agency.

   
   

3. Therefore, the Agency has an enforceable Medicaid lien pursuant to the provisions of section 409.910, Florida Statutes, and shall recover the full amount of $10,652.23 from Petitioner.

DONE AND ORDERED this 26th day of February, 2018, in Tallahassee, Leon County, Florida.

S

ROBERT L. KILBRIDE

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 26th day of February, 2018.

ENDNOTES

1/ Citations to the Joint Pre-hearing Stipulation will be referred to as "JPHS."

2/ Exhibit 24 is an Affidavit executed by Eric Morales, Esquire. The undersigned took Exhibit 24 under advisement and informed the parties that he would make a determination as to the consideration and use of Exhibit 24 during his deliberations.

3/ In cases where a recipient’s recovery is limited, this section helps to ensure that a recipient’s interest in the

settlement is protected and that the Medicaid lien is adjusted to comport with the statutory formula, if appropriate.

4/ Petitioner was represented by counsel in her personal injury action, and there was no evidence to suggest that the ultimate settlement of $65,000.00 was anything other than a knowing and voluntary, arm’s length settlement. Presumably, the settlement amount agreed to by Petitioner took into account liability and damage factors typically considered in the settlement of a personal injury action. In short, Petitioner freely and voluntarily settled the case upon advice from counsel for the amount of $65,000.00, which she determined was appropriate under the facts and circumstances.

5/ Petitioner offered Exhibits 17 and 18, a general release in favor of certain parties. However, no settlement agreement or other comparable documents outlining the terms or allocation of the settlement was provided.

6/ Morales was not called to testify; only his Affidavit was proffered.

7/ Regardless, had admissible expert evidence been admitted to prove or support a "proportionality test," the undersigned would not have utilized it as a means to determine or reduce the Agency’s $10,652.23 Medicaid lien, as explained in more detail in the Final Order.

8/ Consistent with the rule announced in Wos, the State of Florida has an administrative process to enable Medicaid recipients to challenge the portion of the settlement representing recovery of medical expenses determined by the formula found in section 409.910(11)(f).

9/ In fact, the express provisions of section 409.910 do not contain, include, or even suggest that the proportionality or pro-rata formula be used.

10/ The Affidavit of Morales was stricken as hearsay and was not used in the undersigned’s deliberation and this Final Order.

COPIES FURNISHED:

Kim Annette Kellum, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

Alexander R. Boler, Esquire

2073 Summit Lake Drive, Suite 300

Tallahassee, Florida 32317 (eServed)

Ian Pinkert, Esquire

Halpern, Santos & Pinkert, P.A.

150 Alhambra Circle, Suite 1100 Coral Gables, Florida 33134 (eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

Justin Senior, Secretary

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 (eServed)

Stefan Grow, General Counsel

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 (eServed)

Thomas M. Hoeler, Esquire

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.

Docket for Case No: 17-005946MTR

Orders for Case No: 17-005946MTR