vs.
Case No. 20-1526MTR
Respondent.
Pursuant to notice, a hearing was conducted in this case pursuant to sections 120.569 and 120.57(1), Florida Statutes (2019),1 before Administrative Law Judge ("ALJ") Cathy M. Sellers, on June 24, 2020, in Tallahassee, Florida.
For Petitioner: Floyd B. Faglie, Esquire
Staunton & Faglie, P.L. 189 East Walnut Street Monticello, Florida 32344
For Respondent: Alexander R. Boler, Esquire
The issue to be determined is the amount to be paid by Petitioner to Respondent, Agency for Health Care Administration, from the proceeds of a
1 All references to Florida Statutes are to the 2019 version unless otherwise stated.
third party settlement, in satisfaction of Respondent's Medicaid lien, pursuant to section 409.910(17)(b), Florida Statutes.
On March 24, 2020, Petitioner filed her Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien ("Petition") with the Division of Administrative Hearings ("DOAH"). The final hearing initially was set for June 4, 2020; however, as a result of the Covid-19 pandemic, the final hearing was rescheduled for June 24, 2020.
The final hearing was held on June 24, 2020. Petitioner presented the testimony of two expert witnesses, Michael Overbeck and R. Vinson Barrett, and Petitioner's Exhibits 1 through 7 were admitted into evidence without objection. Respondent did not present any witness testimony or tender any exhibits for admission into evidence.
The one-volume Transcript of the final hearing was filed at DOAH on August 6, 2020. The parties were given through August 17, 2020, to file their proposed final orders. Petitioner timely filed her Proposed Final Order on August 17, 2020, and Respondent filed its Proposed Final Order on
August 20, 2020. Both Proposed Final Orders have been given due consideration in preparing this Final Order.
Petitioner, Mary Bishop, is a person for whom Medicaid paid medical care expenses for injuries that she suffered in an accident.
Respondent, Agency for Health Care Administration, is the state agency that administers the Medicaid program in Florida. § 409.902, Fla. Stat.
Stipulated Facts
On June 25, 2014, Petitioner suffered catastrophic injuries when she fell from a moving vehicle while being transported between two medical facilities. In the accident, Petitioner suffered permanent catastrophic injuries, including severe brain damage, a broken shoulder, a broken arm, and a punctured lung. As a result of her injuries, Petitioner's leg was amputated below the knee.
Medicaid paid for Petitioner's medical care related to the injury. Through Respondent, Medicaid provided $293,149.98 in benefits for Petitioner's medical care. This amount constitutes Petitioner's entire claim for past medical expenses.
Petitioner's daughter, Nicole Milstead, was appointed Petitioner's guardian. Milstead, as Petitioner's guardian, pursued a personal injury claim against the parties allegedly liable ("Tortfeasors") for Petitioner's injuries to recover all of Petitioner's damages.
Petitioner's personal injury claim was settled through a series of confidential settlements in a lump-sum of $2,000,000 ($2 million).2
During the pendency of Petitioner's personal injury claim, Respondent was notified of the claim and asserted a Medicaid lien in the amount of
$293,149.98 against Petitioner's cause of action and settlement of that action.
Respondent did not institute a civil action to enforce its rights under section 409.910, nor did it intervene or join in Petitioner's claim against the Tortfeasors.
By letter, Respondent was notified of Petitioner's $2 million settlement with the Tortfeasors.
2 At the final hearing, testimony revealed that in addition to the $2 million settlement, there was a $100,000 settlement allocated to Petitioner's husband associated with his claims relative to Petitioner's injuries. The parties have agreed to address this $100,000 settlement separately, so this proceeding only concerns the $2 million settlement received by Petitioner. See Joint Stip., Aug. 17, 2020.
Respondent has not filed a motion to set aside, void, or otherwise dispute Petitioner's settlement with the Tortfeasors.
The Medicaid program, through Respondent, paid $293,149.98 on behalf of Petitioner, which represents the amount paid for her past medical expenses.
If the formula in section 409.910(11)(f) is applied to Petitioner's
$2 million settlement, then the full amount of the $293,149.98 Medicaid lien should be paid to Respondent.
Petitioner deposited the $293,149.98 Medicaid lien amount into an interest-bearing account for the benefit of Respondent, pending the outcome of an administrative determination of Respondent's right regarding the Medicaid lien. Pursuant to section 409.910(17), such deposit constitutes "final agency action" under chapter 120.
Facts Found Pursuant to Evidence Adduced at Final Hearing
As stated above, on June 25, 2014, Petitioner, who had a long history of mental illness, leapt from a moving vehicle on I-95 while being transported between a mental health provider's office and the assisted living facility where she resided.
As a result, Petitioner suffered severe injuries, including traumatic brain injury. She was in a coma; intubated; ventilated; suffered multiple fractures resulting in a right foot below-knee amputation; multiple upper right extremity injuries, including humeral and shoulder injuries; cervical and thoracic vertebrae fractures; fractured ribs; fractured fingers; and multiple-organ failure. She had open reduction and internal fixation surgery on her elbow and an exploratory laparotomy. In all, she was hospitalized for approximately eight months.
As a result of the injuries she sustained, Petitioner is unable to bathe herself, dress herself, or cut her food without assistance. She has a prosthetic foot and uses a walker; has limited use of her arm, and is significantly scarred and disfigured. She suffers extreme pain in her upper right
extremity, and as a result of her traumatic brain injury, experiences difficulty in problem-solving, which leads to her frustration.
Petitioner requires attendant care 24 hours per day, seven days a week.
Overbeck testified as a fact and expert witness on behalf of Petitioner. He is a Florida Bar Board-Certified attorney in civil trial practice, and has nearly 30 years of experience in a broad range of personal injury-related matters, including assessing the damages value of cases involving catastrophic injury, and the allocation of settlements in various contexts, including the Medicaid lien context.
Overbeck represented Petitioner in her personal injury case against liable third parties, including the assisted living facility in which Petitioner resided; the mental health outpatient facility where she was receiving counseling at the time of her accident; the entity that was transporting Petitioner when she jumped from the moving vehicle; the driver of the vehicle from which Petitioner jumped; and the transport coordinator who arranged the vehicle transportation for Petitioner.
Ultimately, Petitioner's claims against the liable third parties settled for a total of $2 million.
Because Petitioner's case settled before trial, a life care plan and economist report was not prepared. However, based on Overbeck's experience regarding life care plans in similar cases, he opined that Petitioner's future medical needs would have a value of between $1 million and $3 million.
Additionally, he testified, credibly and persuasively, that Petitioner's non-economic damages (i.e., pain and suffering) would constitute the greatest part of any jury verdict, and that, based on cases involving catastrophic injuries and other circumstances similar to Petitioner's, her non-economic damages would be valued on the order of $15 million to $18.5 million.
Overbeck opined that Petitioner's damages had a value in excess of
$8 million, which he described as a "conservative" valuation. Thus, the
$2 million settlement did not fully compensate Petitioner for the full value of her damages.
According to Overbeck, Petitioner's $2 million third-party recovery represents only 25% of the value of her damages, using the conservative
$8 million valuation of those damages.
Overbeck testified that because Petitioner recovered only 25% of her total damages, conservatively valued at $8 million, it is fair and reasonable that 25% of the $2 million third-party recovery be allocated for Petitioner's past medical expenses. This would amount to $73,287.50 to be paid to Respondent in satisfaction of its Medicaid lien.
Barrett also testified as an expert witness on behalf of Petitioner. Barrett is a trial lawyer who has over 40 years of experience in personal injury law. His experience includes handling catastrophic injury cases, including those involving traumatic brain injury. As part of his practice, he stays abreast of jury verdict awards and routinely makes assessments regarding the value of damages suffered by injured parties.
Barrett testified that based on his experience in cases involving parties who suffered catastrophic injuries similar to Petitioner's, he estimated the value of Petitioner's damages to be in the $8 million to
$12 million range, with $8 million "being the basement."
Based on his review of life care plans and economist reports for persons who suffered traumatic brain injury and needed "24/7" care, Barrett testified that Petitioner's claim for future medical expenses would be high.
Additionally, he concurred with Overbeck that Petitioner's claim for non-economic damages would be very high and would comprise the greater part of any damages award. Based on cases he reviewed, Barrett valued Petitioner's non-economic damages alone at over $8 million.
Barrett opined that the $2 million settlement amount did not fully compensate Petitioner for all of the damages she suffered, and represented 25% of the conservative $8 million valuation of her damages.
He testified that because the $2 million third-party settlement amount that Petitioner recovered represented 25% of the total value of her damages, it was "very reasonable" for 25% of her third party recovery to be allocated to past medical expenses.
Respondent did not call any witnesses or present any countervailing evidence regarding the value of Petitioner's damages. Thus, Petitioner's evidence in this proceeding is unrebutted.
CONCLUSIONS OF LAW
DOAH has jurisdiction over the parties to, and subject matter of, this proceeding, pursuant to sections 120.569, 120.57(1), and 409.910(17)(b).
Petitioner bears the burden of proof, by a preponderance of the evidence,3 to show that the amount to be paid to Respondent in satisfaction of its Medicaid lien is less than the $293,149.98 that would be due if the formula in section 409.910(11)(f) were applied in this proceeding.
Medicaid is a joint federal-state cooperative program that helps participating states provide medical services to residents who cannot afford treatment. Ark. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006). The federal Medicaid Act ("Act") governs regulation of the Medicaid program, and it mandates that states that participate in the program comply with federal Medicaid statutes and regulations. Id. at 275. As a condition for receipt of federal Medicaid funds, states are required to seek reimbursement for medical expenses incurred on behalf of beneficiaries who later recover from a third party. Id. at 276.
The Act contains a general anti-lien provision that protects Medicaid recipients by prohibiting state Medicaid agencies from imposing liens against a recipient's property. 42 U.S.C. § 1396p(a)(1).
3 The parties stipulated to application of the preponderance of the evidence standard in this proceeding.
However, the Act also contains a narrow exception to this anti-lien provision which requires states to seek reimbursement for their Medicaid expenditures by pursuing payment from third parties who are legally liable for Medicaid recipients' medical expenses. Ahlborn, 547 U.S. at 284-85. States are preempted from taking any portion of a Medicaid beneficiary's third-party tort judgment or settlement not designated for medical care. Id.; Wos v. E.M.A., 568 U.S. 627, 630 (2013).
The Act limits the portion of a recipient's tort recovery on which a state can impose a lien to past medical expenses only. Giraldo v. Ag. for Health Care Admin., 248 So. 3d 53, 56 (Fla. 2018)("Giraldo II")(emphasis added).
To comply with the Act's requirement that states seek reimbursement for Medicaid expenditures from judgments or settlements paid by third parties to Medicaid recipients, Florida enacted section 409.910, the Medicaid Third-Party Liability Act.
Section 409.910(6)(c) creates an automatic lien, on behalf of Respondent, on a judgment or settlement paid by a third party to a Medicaid recipient for the amount of medical care furnished by Medicaid to the recipient. The lien
attaches automatically when a recipient first receives treatment for which Respondent may be obligated to provide medical assistance under the Medicaid program.
Section 409.910(11)(f) establishes a formula for determining the amount owed Respondent in satisfaction of its Medicaid lien. This statute states, in pertinent part:
(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.
* * *
(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:
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.
This formula creates a presumptive "default allocation" of third party proceeds subject to a Medicaid lien when AHCA does not participate in the settlement. Roberts. v. Albertson's Inc., 119 So. 3d 457, 465-66 (Fla. 4th DCA 2012); Ag. for Health Care Admin. v. Riley, 119 So. 3d 514, 516 (Fla. 2d DCA 2013).
Consistent with the holding in Wos that the Act's anti-lien provision preempts state statutes that create a conclusive presumption regarding the amount of medical expenses for which the state is entitled to reimbursement, the Florida Legislature enacted section 409.910(17)(b), which creates an administrative process under chapter 120 to contest the amount designated as recovered medical expense damages payable to Respondent pursuant to the formula in section 409.910(11)(f). See Delgado v. Ag. for Health Care Admin., 237 So. 3d 432, 435 (Fla. 1st DCA 2018); Mobley v. Ag. for Health Care Admin., 181 So. 3d 1233, 1235 (Fla. 2015). Section 409.910(17)(b) states:
(b) If federal law limits the agency to reimbursement from the recovered medical expense damages, a recipient, or his or her legal representative, 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 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[4] that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
In compliance with section 409.910(17)(b), Medicaid recipients who assert that the amount paid to satisfy Respondent's Medicaid lien are entitled to present evidence in an administrative forum showing that the lien amount exceeds the amount recovered for past medical expenses in a third party settlement or judgment. When such evidence is introduced, the ALJ must consider it in determining whether Respondent's lien should be reduced. See Harrell v. Ag. for Health Care Admin., 143 So. 3d 478, 480 (Fla. 1st DCA 2014).
Recently, the First District Court of Appeal, in Eady v. Agency for Health Care Administration, 279 So. 3d 1249 (Fla. 1st DCA 2019), determined, under circumstances similar to those in this case—where the Medicaid recipient presented expert testimony regarding the appropriate share of settlement funds to be allocated to past medical expenses and the agency did not present any evidence to refute the experts' opinions—that utilizing the pro rata allocation method for determining the amount of the third-party recovery to be allocated to past medical expenses not only was appropriate, but was required under the circumstances. Id. at 1259. Citing Giraldo II, the court in Eady determined, as a matter of law, that the ALJ was not authorized to reject uncontradicted testimony where there is no reasonable basis in the evidence for doing so. Id.
Since Eady, Florida courts consistently have held that where a Medicaid recipient presents unrebutted competent substantial evidence to show that the pro rata allocation methodology supports a reduction of the Medicaid lien as calculated under the formula in section 409.910(11)(f), it is reversible error for an ALJ to reject the use of such methodology in
4 As stated above, the parties have stipulated that the preponderance of the evidence standard applies to this case.
determining the amount of the Medicaid lien pursuant to section 409.910(17)(b), unless there is a reasonable basis in the evidentiary record for doing so. See, e.g., Bryan v. Ag. for Health Care Admin., 291 So. 3d 1033, 1036 (Fla. 1st DCA 2020); Mojica v. Ag. for Health Care Admin., 285 So. 3d 393, 398 (Fla. 1st DCA 2019); Larrigui-Negron v. Ag. for Health Care Admin., 280 So. 3d 550 (Fla. 1st DCA 2019).
Here, the preponderance of the competent substantial evidence establishes that the pro rata allocation methodology is a fair and reasonable method for allocating Petitioner's third-party settlement proceeds in this case.
As noted above, Respondent did not present any countervailing evidence at the final hearing. Thus, there is no evidentiary basis in the record for rejecting Petitioner's evidence, which, as found above, credibly and persuasively shows that the pro rata allocation methodology is a fair and reasonable means for determining Petitioner's past medical damages for purposes of determining the amount payable to satisfy Respondent's Medicaid lien.
Under Eady and the other case law cited herein, it would be reversible error for the undersigned to reject application of the pro rata allocation methodology to Petitioner's third-party settlement recovery in determining the amount of her past medical expenses for purposes of satisfaction of Respondent's Medicaid Lien.
Based on the foregoing, it is concluded that Respondent is entitled to a payment of $73,287.50 in satisfaction of its Medicaid lien.
Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Agency for Health Care Administration is entitled to payment of $73,287.50 from Petitioner's third-party settlement proceeds in satisfaction of its Medicaid lien.
DONE AND ORDERED this 23rd day of September, 2020, in Tallahassee, Leon County, Florida.
CATHY M. SELLERS
Division of Administrative Hearings this 23rd day of September, 2020.
Alexander R. Boler, Esquire
Floyd B. Faglie, Esquire Staunton & Faglie, P.L. 189 East Walnut Street Monticello, Florida 32344 (eServed)
Shena L. Grantham, Esquire Building 3, Room 3407B
Richard J. Shoop, Agency Clerk
Bill Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Mary C. Mayhew, Secretary
Thomas M. Hoeler, Esquire
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.
