SCOTT R. BROWN,

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

vs.

Petitioner,

Case No. 18-1844MTR

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

/

FINAL ORDER

The final hearing in this matter was conducted before

J. Bruce Culpepper, Administrative Law Judge of the Division of Administrative Hearings, pursuant to sections 120.569 and 120.57(1), Florida Statutes (2013),1/ on July 11, 2018, by video teleconference with sites in Tallahassee and Orlando, Florida.

APPEARANCES

For Petitioner: Jason Dean Lazarus, Esquire

Special Needs Law Firm 911 Outer Road

Orlando, Florida 32814

For Respondent: Alexander R. Boler, Esquire

2073 Summit Lake Drive, Suite 300

Tallahassee, Florida 32317 STATEMENT OF THE ISSUE

This matter concerns the amount of money to be reimbursed to the Agency for Health Care Administration for medical

expenses paid on behalf of Scott R. Brown, a Medicaid recipient, following a settlement recovered from a third party.

PRELIMINARY STATEMENT

On April 9, 2018, Petitioner, Scott R. Brown, filed a Petition to Determine Medicaid’s Lien Amount to Satisfy Claim against Personal Injury Recovery by the Agency for Health Care Administration (“Petition”). Through his Petition, Petitioner challenged the Agency for Health Care Administration’s (the “Agency”) lien for medical expenses following Petitioner’s recovery from a third party. The Agency seeks reimbursement from Petitioner for medical expenses Medicaid paid on his behalf. The Agency calculated the amount it believes it is owed using the formula set forth in section 409.910(11)(f), Florida Statutes. Petitioner asserts that reimbursement of a lesser portion of his recovery is warranted pursuant to section 409.910(17)(b).

On April 9, 2018, the Division of Administrative Hearings (“DOAH”) notified the Agency of Petitioner’s Petition for an administrative proceeding to determine the amount payable to the Agency to satisfy the Medicaid lien.

The final hearing was held on July 11, 2018. Prior to the final hearing, Petitioner and the Agency filed a Joint Pre- hearing Stipulation agreeing to several facts upon which the undersigned relied. At the final hearing, Petitioner’s Exhibits

1 through 8 were admitted into evidence. Petitioner testified, as well as presented the testimony of Michael J. Crow and David

A. Paul. The Agency did not offer any evidence or witnesses.

A one-volume Transcript of the final hearing was filed with DOAH on July 27, 2018. At the close of the hearing, the parties were advised of a ten-day timeframe following DOAH’s receipt of the hearing transcript to file post-hearing submittals. Both parties filed Proposed Final Orders, which were duly considered in preparing this Final Order.

FINDINGS OF FACT

1. This proceeding determines the amount the Agency should be paid to satisfy a Medicaid lien following Petitioner’s recovery of a $300,000.00 settlement from a third party. The Agency asserts that it is entitled to recover the full amount of its $112,500.00 lien.

2. The incident that gave rise to this matter occurred on December 22, 2010. On that day, Petitioner, a Florida resident, was visiting relatives in Talladega County, Alabama. Petitioner was shot while sitting in the backseat of a car. The bullet struck Petitioner in his abdomen.

3. Immediately following the incident, Petitioner was taken to UAB Hospital in Birmingham, Alabama. Petitioner received medical care and treatment from December 22, 2010,

   
   

   through January 27, 2011, which included surgical repair of his abdominal injuries.

4. Following his release from UAB Hospital, Petitioner was admitted to Spain Rehabilitation on January 28, 2011. There, Petitioner was diagnosed with a T-10 ASIA-A spinal cord injury, which caused paralysis from the waist down, as well as: a T-12 vertebral fracture; L1 - 2 vertebral fracture; small bowel injury; pancreatic head laceration; and duodenal laceration. Petitioner was also noted to be incontinent and required assistance for all transfers and bed mobility. In short, the gunshot rendered Petitioner a paraplegic. He will continue to require medical treatment for the rest of his life.

5. In June 2011, Petitioner brought a negligence lawsuit in Alabama against the two gunmen. Petitioner was represented by Michael J. Crow, Esquire. Mr. Crow litigated Petitioner’s case over the course of two years. In 2013, Mr. Crow was able to resolve the lawsuit for $300,000, which was the full amount of the gunmen’s homeowner’s insurance. At the final hearing, Mr. Crow testified that the homeowner’s insurance policy was the only available coverage or recoverable asset he identified that could be used to compensate Petitioner for his injuries. Consequently, Mr. Crow believed that it was in Petitioner’s best interests to settle the lawsuit for the policy limits.

   
   

6. A portion of Petitioner’s medical care was paid for by the Medicaid programs in Alabama and Florida in the total amount of $262,536.95.2/ Following Petitioner’s settlement, the Alabama Medicaid Agency asserted a lien of $139,169.94 against Petitioner’s recovery. On November 21, 2013, Mr. Crow was able to settle the Alabama Medicaid lien for $6,000.00. This amount represents approximately 4.31 percent of the total Alabama Medicaid lien. Mr. Crow testified that he thought the settlement payment should have been lower based on the full value he placed on Petitioner’s damages (discussed below) versus the actual amount Petitioner recovered. However, he believed that it was in Petitioner’s best interests to settle the Alabama Medicaid lien to avert protracted litigation.

7. The Agency, through the Florida Medicaid program, paid a total of $123,366.95 for Petitioner’s medical treatment from the gunshot injury. All of the expenditures that Florida Medicaid spent on Petitioner’s behalf are attributed to past medical expenses. No portion of the Agency’s Medicaid lien represents future medical expenses.

8. Under section 409.910, the Agency is to be repaid for its Medicaid expenditures out of any recovery from liable third parties. Accordingly, when the Agency was notified of the settlement of Petitioner’s lawsuit, it asserted a Medicaid lien against the amount Petitioner recovered. The Agency claims

   
   

   that, pursuant to the formula set forth in section 409.910(11)(f), it should collect $112,500.00 to satisfy the medical costs it paid on Petitioner’s behalf. (As discussed below, the formula in section 409.910(11)(f) allows the Agency to collect $112,500.00 to satisfy its Medicaid lien.) The Agency maintains that it should receive the full amount of its lien regardless of the fact that Petitioner settled for less than what Petitioner believes is the full value of his damages.

9. Petitioner, on the other hand, asserts that, pursuant to section 409.910(17)(b), the Agency should be reimbursed a lesser portion of the settlement than the amount it calculated using the section 409.910(11)(f) formula.3/ Petitioner specifically argues that the Agency’s Medicaid lien should be reduced proportionately, taking into account the full value of Petitioner’s damages. Otherwise, the application of the default statutory formula would permit the Agency to collect more than that portion of the settlement that fairly represents Petitioner’s compensation for past medical expenses.

   Petitioner insists that reimbursement of the full lien amount violates the federal Medicaid law’s anti-lien provision

   (42 U.S.C. § 1396p(a)(1)) and Florida common law. Petitioner requests that the Agency’s allocation from Petitioner’s recovery be reduced to $1,389.00.

   
   

10. To establish the value of his damages, Petitioner testified regarding the extent of, and the impact on his life from, the injuries he suffered from the gunshot wound. Petitioner relayed that he has received 18 surgeries on his stomach and intestines.

11. Petitioner further described his future medical expenditures. Petitioner anticipates receiving a hernia operation. Petitioner also requires medication and medical supplies to address his pain and infections. In addition, Petitioner desires a handicap-equipped van that he can use for transportation to his medical visits. Petitioner would also like to install “trapeze” bars in his home to help him exercise.

12. Mr. Crow also testified regarding the full value of Petitioner’s injuries. Mr. Crow has practiced law for 32 years and is a partner with the law firm of Beasley Allen in Montgomery, Alabama. In his practice, Mr. Crow handles serious personal injury and death cases involving car and truck litigation, premise liability cases, and brain injury cases. Mr. Crow has been involved in 15 to 25 lawsuits involving paralyzed clients. As part of his personal injury practice,

    Mr. Crow regularly evaluates damages similar to those Petitioner suffered.

13. Mr. Crow asserted that the $300,000 settlement was far less than the true value of the injuries Petitioner suffered

    
    

    from this incident. Mr. Crow opined that the full value of Petitioner’s damages equals $26,639,170.00. Mr. Crow explained that this figure consists of $6.5 million present value for Petitioner’s future medical expenses, $5 million for pain and suffering, $10 million for mental anguish and loss of quality of life, $139,170 for the Alabama Medicaid lien, and $5 million in punitive damages.

14. In deriving the value of Petitioner’s injuries,

    
    

    Mr. Crow considered that Petitioner is a younger individual suffering from paraplegia. Mr. Crow explained that Petitioner can live in his community with appropriate nursing support.

    However, he will require pain management on a monthly basis. His current medications include Baclofen, Colace, Cymbalta,

    Lopressor, Neurontin, Oxycodone, Senokot, and Glycerine suppositories. Petitioner will also need attendant care to help administer his medications, as well as with bathing, cooking, cleaning, dressing, grooming, and personal hygiene. In addition, Petitioner will require follow-up treatment involving physiatry, physical therapy, urology, and a wheelchair clinic.

    Furthermore, although Petitioner does not have sensory awareness from his waist down, he continues to experience severe pain in his back and legs. Mr. Crow represented that Petitioner is able to propel himself in a wheelchair, but he can only travel short distances due to fatigue and pain. Petitioner does not have

    
    

    access to a power wheelchair. Regarding transportation, Petitioner will need assistance to drive a van with a wheelchair lift.

15. Finally, Petitioner offered the testimony of David A. Paul, Esquire. Mr. Paul has practiced law in Florida for

    22 years as a plaintiff personal injury lawyer and is board- certified in Civil Trial Law by the Florida Bar. Mr. Paul handles catastrophic and serious personal injury cases involving birth injuries, medical malpractice, trucking accidents, and wrongful death. As part of his practice, Mr. Paul regularly evaluates catastrophic injuries. Mr. Paul testified that he has handled many cases with similar injuries to Petitioner.

    Mr. Paul was accepted as an expert regarding the value of personal injury damages and resolving liens in personal injury cases.

16. At the final hearing, Mr. Paul supported Mr. Crow’s valuation of Petitioner’s injuries. Mr. Paul opined that a “fair full value” of Petitioner’s damages equals in excess of

    $26 million. In formulating his injury valuation, Mr. Paul considered Petitioner’s past medical expenses, anticipated future medical expenses, the cost of attendant care with daily living activities, past and future lost wages, pain and suffering, as well as mental anguish and loss of quality of life.

    
    

17. Regarding the Medicaid liens, Mr. Paul relayed that the norm when resolving liens in Florida is to compare the total value of the injured party’s injuries to the amount of the actual recovery. The lien is then reduced proportionally by this ratio. Mr. Paul commented that he typically resolves Medicaid liens in workers compensation cases using this “equitable formula.”

18. Based on the testimony from Mr. Crow and Mr. Paul that the $300,000 settlement did not fully compensate Petitioner for his damages, Petitioner argues that a lesser portion of the settlement should be allocated to reimburse Florida Medicaid, instead of the full amount of the lien. Petitioner proposes that a ratio should be applied based on the ultimate value of Petitioner’s damages ($26,639,170.00) compared to the amount that Petitioner actually recovered ($300,000). Using these numbers, Petitioner’s settlement represents approximately a

    1.126 percent recovery of the full value of Petitioner’s damages. In like manner, the Florida Medicaid lien should be reduced to 1.126 percent or approximately $1,389.00 ($123,366.95 times .01126). Therefore, Petitioner asserts that $1,389.00 is the portion of his third-party settlement that represents the equitable, fair, and reasonable amount the Florida Medicaid program should recoup for its payments for Petitioner’s medical care.

    
    

19. The Agency was not a party to the Alabama wrongful injury lawsuit or Petitioner’s settlement. Petitioner was aware of both the Alabama and Florida Medicaid liens and past medical expense damages at the time he settled the lawsuit. No portion of the $300,000 settlement represents reimbursement for future medical expenses.

20. The undersigned finds that Petitioner met his burden of proving, by a preponderance of the evidence, that the full value of his damages from this incident equals $21,639,170.00.4/ Further, based on the evidence in the record, Petitioner proved that a lesser portion of Petitioner’s settlement should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Finally, the undersigned finds that the evidence establishes that the Agency should be reimbursed in the amount of $5,317.95 from Petitioner’s recovery of $300,000 from a third party to satisfy the Florida Medicaid lien.

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the subject matter and parties in this proceeding pursuant to sections 120.569, 120.57(1), and 409.910(17)(b). DOAH has final order authority.

    § 409.910(17)(b), Fla. Stat.

    
    

22. The Agency is the Medicaid agency for the State of Florida, as provided under federal law, and administers Florida’s Medicaid program. See § 409.901(2), Fla. Stat.

23. The federal 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). While a state’s participation is entirely optional, once a state elects to participate in the federal Medicaid program, it must comply with federal requirements governing the program. Id.; and 42 U.S.C. § 1396,

    et seq.

    
    

24. As a condition for receipt of federal Medicaid funds, states are required to seek reimbursement for medical expenses from Medicaid recipients who later recover from legally liable third parties. See Arkansas Dep’t of Health & Hum. Servs. v. Ahlborn, 547 U.S. 268, 276 (2006); and 42 U.S.C. § 1396a. To

    comply with this federal requirement, the Florida Legislature enacted section 409.910, Florida’s “Medicaid Third-Party Liability Act,” which authorizes and requires the Agency 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. See Smith v. Ag. for Health Care Admin., 24 So. 3d 590 (Fla. 5th DCA 2009). The

    Legislature expressly set forth in section 409.910(1):

    
    

    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.

    
    

25. Accordingly, by accepting Medicaid benefits, Medicaid recipients automatically subrogate their rights to any third- party benefits for the full amount of medical assistance provided by Medicaid and automatically assign to the Agency the right, title, and interest to those benefits, other than those excluded by federal law. See § 409.910(6)(a), (b), Fla. Stat.;

    see also 42 U.S.C. § 1396k(a)(1) (requiring states participating

    
    

    in the federal Medicaid program to provide, as a condition of Medicaid eligibility, assignment to the state of the right to payment for medical care from any third party). Section 409.910 creates an automatic lien on any such judgment or settlement with a third party for the full amount of medical expenses Medicaid paid on behalf of the Medicaid recipient. See

    § 409.910(6)(c), Fla. Stat.

    
    

26. However, the obligation to reimburse the Agency (and Medicaid) following recovery from a third party is not unbounded. Pursuant to 42 U.S.C. sections 1396a(a)(25)(A), (B), and (H), 1396k(a) and 1396p(a), the Agency may only assert a Medicaid lien against that portion of Petitioner’s award from a third party that represents the costs of the medical assistance made available for the individual. See Ahlborn, 547 U.S. at

    278; Wos v. E.M.A., 133 S. Ct. 1391, 1396 (2013); Harrell v.

    
    

    State, 143 So. 3d 478, 480 (Fla. 1st DCA 2014); and Davis v.

    
    

    Roberts, 130 So. 3d 164, 266 (Fla. 5th DCA 2013). The federal

    
    

    Medicaid statute’s anti-lien provision, 42 U.S.C. § 1396p(a)(1), prohibits a state from attaching a lien for medical assistance on a Medicaid recipient’s property other than that portion of a Medicaid recipient’s recovery designated as payment for medical care. See also section 409.910(4), (6)(b)1., and (11)(f)4., which provides that the Agency may not recover more than it paid for the Medicaid recipient’s medical treatment.

27. As Ahlborn explains, the anti-lien provision of the federal Medicaid Act circumscribes these obligations by authorizing payment to a state only from those portions of a Medicaid recipient’s third-party settlement recovery allocated for payment of medical care. See also E.M.A. ex rel. Plyler v. Cansler, 674 F.3d 290, 312 (4th Cir. 2012), where the court

    concluded “[a]s 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.”

28. Section 409.910(11) establishes a formula to determine the amount the Agency may recover for medical assistance benefits paid from a judgment, award, or settlement from a third party.5/ Section 409.910(11)(f) states, in pertinent part:

    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.

       
       

    4. 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.

       
       

29. In short, section 409.910(11)(f) establishes that the Agency’s recovery for a Medicaid lien is limited to the lesser of: (1) its full lien; or (2) one-half of the total award, 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. See

    Ag. for Health Care Admin. v. Riley, 119 So. 3d 514, 515 n.3 (Fla. 2d DCA 2013).

30. In cases where a Medicaid recipient only recovers a limited amount, section 409.910 protects the Medicaid recipient’s interest in the non-medical expense portion of the judgment, award, or settlement. In this matter, under the section 409.910(11)(f) formula, Petitioner’s recovery ($300,000) is not sufficient to fully satisfy the medical assistance provided by Florida Medicaid ($123,366.95). Therefore, the Agency was required to reduce its Medicaid lien to $112,500.00.6/

31. However, section 409.910(17)(b) provides a method by which a Medicaid recipient may contest the amount designated as recovered medical expenses payable under section 409.910(11)(f). Following the U.S. Supreme Court decision in Wos, the Florida

    
    

    Legislature created an administrative process to determine the portion of the judgment, award, or settlement in a tort action that is properly allocable to medical expenses; and, thus, the portion of the recovery that may be used to reimburse the Medicaid lien. Section 409.910(17)(b) states:

    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.[7/] (emphasis added).

    
    

32. Section 409.910(17)(b) establishes that the section 409.910(11)(f) formula constitutes a default allocation of the amount of a settlement that is attributable to medical costs, and sets forth an administrative procedure for an adversarial challenge of that allocation. See Harrell, 143 So. 3d at 480

    (“we now hold that a plaintiff must be given the opportunity to seek reduction of the amount of a Medicaid lien established by the statutory formula outlined in section 409.910(11)(f), by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses”).

33. In order to successfully challenge the amount payable to the Agency, the burden is on the Medicaid recipient to prove, by a preponderance of the evidence, that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount the Agency calculated.

    § 409.910(17)(b), Fla. Stat. In other words, if Petitioner can demonstrate that the portion of the settlement attributed to past medical expense is less than the amount the Agency calculated using the section 409.910(11)(f) formula, the amount Petitioner must reimburse the Agency may be reduced below

    $112,500.

    
    

34. Turning to apportioning Petitioner’s $300,000 settlement, the undersigned finds that Petitioner persuasively demonstrated that a lesser portion of his third-party recovery

    
    

    should be allocated to satisfy the Agency’s Medicaid lien, instead of applying the default amount calculated under section 409.910(11)(f).

35. Regarding the amount of Petitioner’s settlement that should be allotted to reimburse the Agency, the Florida Legislature, despite establishing a procedure for a Medicaid recipient to challenge the amount of a Medicaid lien, provided little guidance as to the standard DOAH should use to determine what portion of the third-party recovery should represent (past) medical expenses.

36. Petitioner contends that the Medicaid lien should be reduced using a ratio that factors in the full value of Petitioner’s damages. Petitioner specifically asserts that only

    $1,389.00 of the total settlement should be attributed to past medical expenses ($123,366.95 times 1.126 percent). Petitioner maintains that his alternative calculation apportions a more equitable and reasonable share of the settlement to Petitioner in light of his significant injuries.8/

37. However, the undersigned is mindful that, “[t]he Medicaid program provides federal and state funding to pay healthcare costs for individuals who cannot afford it.” Vestal

    v. First Recovery Grp., LLC, 292 F. Supp. 3d 1304, 1310 (M.D. Fla. 2018); see also Roberts v. Albertson’s Inc., 119 So. 3d

    457, 458 (Fla. 4th DCA 2012); and 42 U.S.C.

    
    

    § 1396a(a)(25)(A)-(B). To keep the Medicaid program viable, Congress recognized that it is necessary to obtain reimbursement when a third party makes payment to the Medicaid beneficiary for medical care already paid for by Medicaid. Roberts, 119 So. 3d at 459. Roberts further observed that the Medicaid program’s

    requirement that states take all reasonable measures to seek reimbursement from legally liable third parties ensures that tax dollars are protected, while preventing Medicaid recipients from receiving “a windfall by recovering medical costs they did not pay.” Roberts, 119 So. 3d at 459 (citing Tristani v. Richman,

    652 F.3d 360, 373 (3d Cir. 2011)).

    
    

38. The Florida Medicaid Third-Party Liability Act emphasizes this mandate by instructing: “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.” § 409.910(a), Fla. Stat. Section 409.910 further directs that “[e]quities of a recipient . . . shall not defeat, reduce, or prorate recovery by the agency as to its subrogation rights.” § 409.910(6)(a), Fla. Stat.9/

39. In balancing the competing interests of Petitioner and the Agency in this matter, the undersigned notes that a state Medicaid agency (Alabama) has already considered the amount of Petitioner’s settlement and agreed to reduce its own Medicaid lien. Based on controlling Federal case law, the Alabama

Medicaid Agency operates under the same dictates and directives as the Agency, including the requirement to seek full reimbursement from monies recovered from third parties. The Alabama Medicaid Agency acceded to reduce its lien to 4.31 percent of its total amount ($6,000 divided by $139,169.94). In determining the fair and reasonable portion of Petitioner’s recovery to allocate as past medical expenses paid for by the Florida Medicaid program, the undersigned concludes that the Agency’s lien should also be reduced to 4.31 percent of its total value, or $5,317.12 ($123,366.95 times .0431). This result serves to maintain consistency in the application of two state Medicaid programs. Accordingly, the Agency is entitled to be reimbursed $5,317.12 from Petitioner’s $300,000 settlement.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED that Petitioner, Scott R. Brown, shall pay to Respondent, Agency for Health Care Administration, the sum of

$5,317.95 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 20th day of September, 2018, in Tallahassee, Leon County, Florida.

S

J. BRUCE CULPEPPER 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 20th day of September, 2018.

ENDNOTES

1/ All references to the Florida Statutes are to the 2013 version, unless otherwise noted. Petitioner settled his negligence lawsuit in 2013. The Agency obtained its right to reimbursement from third-party benefits on that date.

Accordingly, the 2013 version of the governing statute (section 409.910, Florida Statutes) controls DOAH’s jurisdiction. See Suarez v. Port Charlotte HMA, LLC, 171 So. 3d 740 (Fla. 2d DCA 2015).

2/ Petitioner’s total medical bills equaled approximately

$745,445.00.

3/ Initially, in May 2015, Petitioner filed a Petition to Allocate Settlement and Determine Past Medical Expense Related to Medicaid [L]ien in the Sixth Judicial Circuit Court in Pinellas County, Florida. In June 2015, the Agency responded with a Motion for Order on Jurisdiction based on Suarez, 171 So. 3d 740, seeking to remove the case from circuit court. In September 2015, the circuit court issued an order agreeing with the Agency that the circuit court lacked subject matter jurisdiction over the matter. Petitioner appealed to the Second District Court of Appeal. On February 28, 2018, the court per

curiam affirmed the circuit court’s ruling. Thereafter, Petitioner filed his Petition with DOAH.

4/ In reaching this figure, the undersigned subtracted out the

$5 million, which Mr. Crow included for punitive damages. In Alabama, punitive damages may be awarded in a tort action:

[W]here it is proven by clear and convincing evidence that the defendant consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff.

Ala. Code § 6-11-20.

Based on the record in this matter, Petitioner did not sufficiently demonstrate that he would have recovered punitive damages in the underlying civil action.

5/ “Third-party benefit” is broadly defined to include any settlement between a Medicaid recipient and a third party for any Medicaid-covered injury, including costs of medical services related thereto, for personal injury or for death of the recipient. § 409.901(28), Fla. Stat.

6/ The Agency calculated its Medicaid lien as follows: first,

25 percent ($75,000) is subtracted from the full settlement amount ($300,000), which leaves $225,000. One-half of that remaining recovery is $112,500. Therefore, section 409.910(11)(f) limits the Agency’s share of Petitioner’s recovery to $112,500.

7/ Recent federal case law directs that “clear and convincing evidence” is not the appropriate standard of proof by which to determine whether a Medicaid recipient rebuts the default formula in section 409.910(11)(f). See Gallardo v. Dudek, 263

F. Supp. 3d 1247, 1256 (N.D. Fla. 2017); and Gallardo v. Senior,

No. 4:16cv116-MW/CAS, 2017 U.S. Dist. LEXIS 112448, at *24

(N.D. Fla. July 18, 2017). Therefore, the undersigned applies the preponderance of evidence standard to Petitioner’s challenge under section 409.910(17)(b). See § 120.57(1)(j), Fla. Stat.

Further, the Florida Supreme Court recently instructed that a Medicaid lien may only be imposed on settlement funds attributed to past (not future) medical expenses. See Giraldo v. Ag. for Health Care Admin., 248 So. 3d 53 (Fla. 2018). (It

is undisputed that no portion of Petitioner’s $300,000 settlement represents future medical expenses.).

8/ The Agency emphatically opposes Petitioner’s “pro rata” formula to calculate the past medical expense portion of Petitioner’s $300,000 settlement. However, although the Agency does not have the burden of proof, it did not elicit testimony or present evidence contradicting Petitioner’s experts’ testimony that using a ratio comparing the “full” value of Petitioner’s damages with the total amount Petitioner recovered produces a reasonable share of a settlement available as reimbursement for past medical expenses. This methodology of lien reduction has been recognized and approved by Florida courts. See Giraldo, 248 So. 3d at 53.

9/ See also section 409.910(13), which states:

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.

COPIES FURNISHED:

Alexander R. Boler, Esquire Suite 300

2073 Summit Lake Drive Tallahassee, Florida 32317 (eServed)

John Cofield, Client Services Sr. Manager Conduent Payment Integrity Solutions Suite 300

2073 Summit Lake Drive Tallahassee, Florida 32317 (eServed)

Dan Gabric

Agency for Health Care Administration Mail Stop 19

2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

Kim Annette Kellum, Esquire

Agency for Health Care Administration Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

Jason Dean Lazarus, Esquire Special Needs Law Firm

911 Outer Road

Orlando, Florida 32814 (eServed)

Richard J. Shoop, Agency Clerk

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

Tallahassee, Florida 32308 (eServed)

Stefan Grow, General Counsel

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 3

Tallahassee, Florida 32308 (eServed)

Shena Grantham, Esquire

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: 18-001844MTR

Orders for Case No: 18-001844MTR