STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
SHERRIE MARIE BRYANT, AN INCAPACITATED PERSON, BY AND THROUGH HER GUARDIAN, FREDA BRYANT,
vs.
Petitioner,
Case No. 15-4651MTR
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
/
FINAL ORDER
Pursuant to notice, a formal administrative hearing was conducted before Administrative Law Judge Mary Li Creasy, by video teleconference with locations in Tallahassee and Lauderdale Lakes, Florida, on November 23, 2015.
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
Xerox Recovery Services Group Suite 300
2073 Summit Lake Drive Tallahassee, Florida 32317
STATEMENT OF THE ISSUE
What is the amount to be reimbursed to Respondent, Agency for Health Care Administration (AHCA), for medical expenses paid on behalf of Petitioner Bryant (Petitioner) pursuant to section 409.910, Florida Statutes, from a personal injury settlement received by Petitioner from a third party?
PRELIMINARY STATEMENT
On August 18, 2015, Petitioner filed a Petition to Determine Amount Payable to the Agency for Health Care Administration in Satisfaction of Medicaid Lien. The final hearing in this matter was held on November 23, 2015, as scheduled.
Petitioner presented the testimony of two fact and expert witnesses, Joseph J. Slama, Esquire, and Allen McConnaughhay, Esquire. Petitioner's Exhibits 1 and 3 through 16 were admitted into evidence. Respondent offered no witnesses or documentary evidence. The parties filed a Joint Pre-hearing Stipulation, and the facts stipulated therein are accepted and made a part of the Findings of Fact below. The Transcript of the final hearing was filed December 17, 2015, and the parties timely filed proposed orders that have been carefully considered by the undersigned in the preparation of this Final Order.
At the request of both parties, pertinent legal authorities were officially recognized. Unless otherwise noted, all statutory references are to Florida Statutes (2015).
FINDINGS OF FACT
Factual Allegations that Served As a Basis for the Underlying Personal Injury Litigation
On March 11, 2009, Petitioner, then 21 years old, suffered catastrophic physical injury and brain damage when her bicycle was struck by a car near the Oakland Park I-95 overpass in Broward County.
Petitioner was taken to the North Broward Hospital, where she was intubated with mechanical ventilation. Imaging revealed a right subdural hematoma, and Petitioner showed signs of increased intracranial pressure. On March 12, 2009, Petitioner underwent bilateral frontoparietal craniotomies through separate incisions with evacuation of a left parietooccipital epidural hematoma and right frontal temporoparietal subdural hematoma; bilateral duraplasty to accommodate brain swelling; and repair of a left occipital laceration. On that same date, a CT scan revealed that Petitioner had numerous pelvic and hip fractures. Petitioner underwent an upper gastrointestinal endoscopy with a PEG tube placement. Eventually, her medical condition stabilized and she was discharged to rehabilitation.
Petitioner is now unable to move the left side of her body. She receives her nutrition through a g-tube and is bowel and bladder incontinent. She suffers from cognitive deficits.
Petitioner is cognizant of her condition and her surroundings, but has extreme difficulty with communication. Petitioner is severely disabled and unable to ambulate or care for herself in any manner. Prior to the accident, Petitioner was a healthy
21-year-old. It is anticipated that Petitioner's life span will be approximately another 60 years, her condition is permanent, and she will always need full-time medical care.
The Personal Injury Litigation
Due to Petitioner's incapacity, Freda Bryant (Bryant) was appointed the guardian of the person and property of Petitioner.
As Petitioner's guardian, Bryant brought a personal injury action to recover all of Petitioner's damages against the company responsible for maintaining the lights on the highway where Petitioner's accident occurred ("Defendant").
Freda Bryant retained the Krupnick, Campbell, Malone, et al., law firm of Fort Lauderdale, a firm concentrating in the areas of catastrophic personal injury, wrongful death, and products liability.
The Medicaid Lien
Petitioner is a Medicaid recipient and her medical care was paid for by Medicaid. AHCA, through the Medicaid program, paid $404,399.68 on behalf of Petitioner for medical benefits related to the injuries sustained by Petitioner. This
$404,399.68 paid by Medicaid represented Petitioner's entire claim for past medical expenses up until the time of settlement.
During the pendency of Petitioner's personal injury action, AHCA was notified of the action and AHCA, through its collections contractor Xerox Recovery Services, asserted a
$404,399.68 Medicaid lien against Petitioner's cause of action and settlement of that action.
Valuation of the Personal Injury Claim
Joseph Slama (Slama), the attorney representing Petitioner in her personal injury action, prepared an evaluation of her claim in preparation for trial and/or settlement negotiations. Slama has extensive experience representing parties in catastrophic personal injury, wrongful death, and product liability cases since 1982. Slama has practiced in this field for 33 years, is a board-certified civil trial attorney, first certified in 1987, who has litigated hundreds of these types of cases. Slama is a member of the American Board of Trial Advocates (ABOTA), the Florida chapter of ABOTA (FLABOTA), Attorneys Information Exchange Group, Florida Justice Association, Broward Justice Association, and the Florida Bar.
Slama was offered and accepted, without objection, as an expert in the valuation of damages in catastrophic injury cases.
In making the determination regarding the valuation of Petitioner's personal injury claim, Slama reviewed Petitioner's medical records, accident report, prepared fact and expert witnesses for trial, and personally interacted with Petitioner on multiple occasions. Slama is very familiar with the injuries suffered by Petitioner and her need for constant care. Slama was present during the filming of Petitioner's "Day in the Life" video which was intended to be shown to the jury if Petitioner's case went to trial. Slama also reviewed Petitioner's economic damages report prepared by an economist1/ and is familiar with the mental pain and suffering Petitioner experiences as a result of her ability to understand the change in her life from a normal functioning individual to someone requiring total care for the rest of her life.
To properly determine the value of Petitioner's claim, Slama researched Florida jury verdicts in personal injury cases with catastrophic brain injuries for young people requiring total care. Slama reviewed five comparable cases with verdicts for the plaintiff. The average jury award per plaintiff in these five cases was $51,474,346.00, and the average pain and suffering component of that award was $28,735,850.00.
The case most closely comparable to that of Petitioner was the 2014 case of Mosley v. Lloyd, Case No. CACE09-025532,
2014 WL 7910512, a Broward County Circuit Court trial in which
the jury awarded $75,543,527.00, of which $39,500,000.00 represented damages for past and future pain and suffering.
Another similar case was that of Lymans v. Bynum
Transportation, Case No. 2007CA-007728, 2009 WL 9051959, decided by a Pasco County jury. According to Slama, Pasco County juries are generally considered very conservative. In the Lymans case, a 21-year-old sustained a catastrophic brain injury resulting in her requiring 24/7 total care, much like the Petitioner. The jury awarded $65,000,000.00, of which $41,000,000.00 represented damages for pain and suffering.
Based upon the five verdicts, including the Mosley and Lymans jury verdicts, review of the medical records, extensive
personal interaction with Petitioner, and his personal experience and knowledge in valuing catastrophic personal injury cases from decades of practice in this field, Slama conservatively valued the damages for mental pain and suffering to be $15 million or greater.
Slama acknowledged litigation risk issues with this personal injury action, which included a reduction or elimination of liability based on the defense of contributory negligence and a statutory restriction on liability for a utility company unless there was prior written notice to the utility company of deficient lighting.
Slama consulted Allen McConnaughhay, Esquire, an attorney with the Tallahassee law firm of Fonvielle, Lewis, Foote & Messer, for an independent assessment of Petitioner's claim. McConnaughhay has practiced in the field of catastrophic personal injury cases for 15 years. He was offered and accepted, without objection, as an expert in the field of valuation of catastrophic injury cases.
McConnaughhay explained that his firm, like that of Slama, relies on the expertise of its partners, a review of the injured party's medical records, research of jury verdicts in comparable cases, and it conducts a roundtable discussion to determine the value of a catastrophic personal injury claim. McConnaughhay and his partners engaged in such review of Petitioner's claim and found that a figure in excess of
$50 million was a proper value for her pain-and-suffering damages. McConnaughhay opined that the $15 million figure ascertained by Slama was extremely conservative.
The Settlement Allocation
On May 18, 2015, Bryant settled Petitioner's personal injury lawsuit for $1,164,000. Given the facts of this case, the figure agreed upon was supported by the competent professional judgment of the trial attorneys in the interests of their clients.
There is no evidence that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement, taking into account all of the strengths and weaknesses of their positions. There was no evidence of any manipulation or collusion by the parties to minimize the share of the settlement proceeds attributable to the payment of costs expended for Petitioner's medical care by AHCA.
The General Release with the settling Defendants stated, inter alia:
Although it is acknowledged that this settlement does not fully compensate Petitioner Bryant for all of the damages she has allegedly suffered, this settlement shall operate as a full and complete Release as to Released Parties without regard to this settlement only compensating Petitioner Bryant for a fraction of the total monetary value of her alleged damages. The parties agree that Petitioner Bryant's alleged damages have a value in excess of
$15,000,000, of which $404,399.68 represents Petitioner Bryant's claim for past medical expenses. Given the facts, circumstances, and nature of Petitioner Bryant's injuries and this settlement, the parties have agreed to allocate $31,381.42 of this settlement to Petitioner Bryant's claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Petitioner Bryant's damages.
Further, the parties acknowledge that Petitioner Bryant may need future medical care related to her injuries, and some
portion of this settlement may represent compensation for future medical expenses Petitioner Bryant will incur in the future. However, the parties acknowledge that Petitioner Bryant, or others on her behalf, have not made payments in the past or in advance for Petitioner Bryant's future medical care and Petitioner Bryant has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care.
Accordingly, no portion of this settlement represents reimbursement for future medical expenses.
Because Petitioner was incapacitated, court approval of the settlement was required. Accordingly, on June 4, 2015, the Honorable Circuit Court Judge Cynthia Imperato approved the settlement by entering an Order Approving Settlement.
By letter of May 26, 2015, Petitioner's personal injury attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Release, Order Approving Settlement, and itemization of Petitioner's $75,852.90 in litigation costs. This letter explained that Petitioner's damages had a value in excess of $15,000,000, and the settlement represented only a 7.76 percent recovery of Petitioner's $404,399.68 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $404,399.68 Medicaid lien.
AHCA responded to Petitioner's attorney's letter by letter of June 25, 2015, and demanded a "check made payable to
'Agency for Health Care Administration' in the amount of
$404,399.68."
AHCA has not filed an action to set aside, void, or otherwise dispute Petitioner's settlement. AHCA has not commenced a civil action to enforce its rights under Section 409.910, Florida Statutes.
No portion of the $404,399.68 paid by AHCA through the Medicaid program on behalf of Petitioner represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care.
AHCA has determined that of Petitioner's $75,852.90 in litigation costs, $63,375.06 are taxable costs for purposes of the section 409.910(11)(f) formula calculation.
Based on $63,375.06 in taxable costs, the section 409.910(11)(f) formula applied to Petitioner's $1,164,000 settlement, results in $404,812.47 payable to AHCA in satisfaction of its $404,399.68 Medicaid lien. Because
$404,399.68 is less than the $404,812.47 amount derived from the formula in section 409.910(11)(f), AHCA is seeking reimbursement of $404,399.68 from Petitioner's settlement in satisfaction of its Medicaid lien.
Petitioner has deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, which constitutes
"final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17).
Petitioner proved by clear and convincing evidence that the $15 million total value of the claim was a reasonable and realistic value. Furthermore, Petitioner proved by clear and convincing evidence, based on the relative strengths and weaknesses of each party's case, and on a competent and professional assessment of the likelihood that Petitioner would have prevailed on the claims at trial and the amount she reasonably could have expected to receive on her claim if successful, that the amount agreed upon in settlement of Petitioner's claims constitutes a fair, just, and reasoned settlement, including $31,381.42, the amount attributable to the Medicaid lien for medical expenses as its 7.76 percent proportionate share of the total settlement.
CONCLUSIONS OF LAW
The Division of Administrative Hearings (DOAH) has jurisdiction over the subject matter and the parties in this case, and final order authority pursuant to sections 120.569, 120.57(1), and 409.910(17).
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
third-party tortfeasors. See Ark. Dep't of Health & Hum. Servs.
v. Ahlborn, 547 U.S. 268, 276 (2006). To secure reimbursement
from liable third parties, the state must require a Medicaid recipient to assign to the state his right to recover medical expenses from those third parties. In relevant part, 42 U.S.C.
§ 1396a(a)(25) requires:
(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.
To comply with this federal mandate, the Florida Legislature enacted section 409.910, Florida's Medicaid
Third-Party Liability Act. This statute authorizes and requires the State, through AHCA, to be reimbursed for Medicaid funds paid for a recipient's medical care when that recipient later receives a personal injury judgment or settlement from a third party.
Smith v. Ag. for Health Care Admin., 24 So. 3d 590, 590 (Fla. 5th DCA 2009).
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 $404,399.68 in medical expenses for Petitioner or that AHCA asserted a 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 discussed in Finding of Fact 28, supra, AHCA correctly computed the Lien amount pursuant to the statutory formula in paragraph (11)(f). One-half of the amount remaining, after deduction of the attorneys' fees and costs, would be
$404,812.47, 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
$404,399.68.
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:
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 Company v. Department of Agriculture
and 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).
The evidence is clear and convincing that the allocation for Petitioner's past medical expenses in the amount of $31,381.42, as set forth in the settlement agreement, constitutes a fair, reasonable, and accurate share of the total recovery for those past medical expenses actually paid by Medicaid. The evidence is equally 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. If anything, the parties to the settlement were overly generous in the apportionment for medical expenditure made.
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., 133 S. Ct. 1391, 1399 (2013).
Petitioner has proven, by clear and convincing evidence, that $31,381.42 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.
Reimbursement from Future Medical Expense Settlement Proceeds2/
The remaining issue for determination in this proceeding is whether the state Medicaid lien for reimbursement of medical expenses authorizes not only recovery of funds identified in a differentiated third-party settlement as applying to medical expenses actually paid, i.e., past medical expenses, but also authorizes recovery against allocated funds for other classes of damages, including future, but as yet unincurred, medical expenses. For the reasons set forth herein, the undersigned concludes it cannot.
Federal Anti-lien Statute
42 U.S.C. § 1396p(a)(1), generally referred to as the federal Medicaid anti-lien statute, provides that "[n]o lien may be imposed against the property of any individual prior to his death on account of medical assistance paid."
In Arkansas Department of Health and Human Services v.
Ahlborn, 547 U.S. 268 (2006), the Supreme Court addressed the extent of recovery from a third-party settlement under a Medicaid lien, in light of the Medicaid anti-lien statute. In that case, the Medicaid recipient, Ms. Ahlborn, filed suit for injuries sustained in an automobile accident, in which she sought damages for past medical costs; future medical expenses; permanent physical injury; past and future pain, suffering, and mental anguish; past loss of earnings and working time; and permanent impairment of the ability to earn in the future. Id. at 467.
The total value of Ms. Ahlborn's damages was estimated at
$3,040,708.12. The past medical costs paid by Medicaid and subject to the Medicaid lien totaled $215,645.30.
Ms. Ahlborn settled her lawsuit for $550,000.00, of which $35,581.47 was attributable to "medical expenses."3/
The Supreme Court posed the question as one in which "[w]e must decide whether ADHS can lay claim to more than the portion of Ahlborn's settlement that represents medical expenses."
To facilitate reimbursement from liable third parties, the federal statute requires:
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.
42 U.S.C. § 1396a(a)(25)(H).
The Supreme Court identified the following provisions of 42 U.S.C. § 1396p as being pertinent to its decision:
Imposition of lien against property of an individual on account of medical assistance rendered to him under a State plan
No lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan, except--
pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual, . . . .
* * *
Adjustment or recovery of medical assistance correctly paid under a State plan
No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made.
Ahlborn, 547 U.S. at 283-284.
The Court recognized 42 U.S.C. § 1396a(a)(25)(H) to be an exception to the broader anti-lien provisions of 42 U.S.C
§ 1396p, and held that:
the federal statute places express limits on the State's powers to pursue recovery of funds it paid on the recipient's behalf.
These limitations [in 42 U.S.C. § 1396p]
. . . prohibit[] States (except in circumstances not relevant here) from placing liens against, or seeking recovery of benefits paid from, a Medicaid recipient.
Ark. Dep't of Human Servs. v. Ahlborn, 547 U.S. at 283.
Based on its analysis of the interplay between the Medicaid reimbursement provisions and the Medicaid anti-lien provisions, the Supreme Court held that the states could recover for their Medicaid expenditures to the extent a recovery from a third-party accounted for such expenditures, but conditioned its decision by stating:
But that does not mean that the State can force an assignment of, or place a lien on, any other portion of Ahlborn's property. As explained above, the exception carved out by
§§ 1396a(a)(25) and 1396k(a) is limited to payments for medical care. Beyond that, the anti-lien provision applies.
Ark. Dep't of Human Servs. v. Ahlborn, 547 U.S. at 284-285.
The Court concluded: "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." Ark. Dep't of Human
Servs. v. Ahlborn, 547 U.S. at 292.
The analysis of the Supreme Court opinion in Ahlborn,
including the facts regarding the nature of the $35,581.47 in
"medical expenses" established in the lower court opinion, leads to the conclusion that the $35,581.47 recovery against the Medicaid lien represented the allocation of the third-party settlement for past medical care. In reviewing the case as a whole, the only conclusion that can be drawn is that the Court intended the narrow exception to the anti-lien statute to allow for reimbursement from that portion of a recovery intended to account for "medical expenses" actually paid by the state, i.e., past medical expenses, as opposed to that portion of a recovery designated and reserved for future medical or life care costs that may be required to sustain a Medicaid recipient in the future, and which have not yet been paid by Medicaid.
Subsequent to its decision in Ahlborn, the Supreme Court was again called upon to resolve issues relating to the allocation of funds from a third-party recovery.
56. In Wos v. E.M.A., 133 S. Ct. 1391, 1398 (2013), the
Court reaffirmed its decision, as expressed in Ahlborn, that the
Medicaid anti-lien statute "prohibits States from attaching a lien on the property of a Medicaid beneficiary to recover benefits paid by the State on the beneficiary's behalf [and] 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.'" In Wos, the Court disapproved of an
irrebuttable formula by which the Medicaid share subject to
reimbursement would be calculated. Rather, the court required some form of evidence-based process to determine the actual amount of medical expenses subject to recovery. Id. at 1402.
The Court's discussion of the reasons that an
evidence-based calculation is necessary to determine that portion of a third-party recovery that is attributable to "medical expenses" includes the following:
The facts of the present case demonstrate why Ahlborn anticipated that a judicial or administrative proceeding would be necessary in that situation. Of the damages stemming from the injuries E.M.A. suffered at birth, it is apparent that a quite substantial share must be allocated to the skilled home care she will require for the rest of her life.
See App. 112. It also may be necessary to consider how much E.M.A. and her parents could have expected to receive as compensation for their other tort claims had the suit proceeded to trial. An irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act's clear mandate that a State may not demand any portion of a beneficiary's tort recovery except the share that is attributable to medical expenses.
Wos v. E.M.A., 133 S. Ct. at 1399.
"Continuous care" for the rest of one's life is sufficiently analogous to "future medical expenses" to convince the undersigned that the "medical expenses" that may be recovered in derogation of the Medicaid anti-lien statute are to be limited to expenses that have been incurred and paid by Medicaid, and not to include expenses that have yet to be incurred, and have not
been paid by Medicaid. Thus, that portion of the third-party recovery from which the Medicaid lien may be satisfied is that designated and set aside for past medical expenses actually paid by Medicaid.
Consideration of the underlying Fourth Circuit Court of Appeals case affirmed by Wos demonstrates with even greater clarity and persuasiveness that the Medicaid anti-lien statute prohibits recovery of paid Medicaid funds from funds designated for future medical expenses.
In E.M.A. v. Cansler, 674 F.3d 290 (4th Cir. 2012), the
Fourth Circuit noted that, in the underlying third-party tort case, "the plaintiffs had alleged that '[E.M.A.] suffered severe and permanent injuries and that both parents . . . have incurred liability for past, present and future medical and life care expenses for treatment of [E.M.A.],'" and that "the sums set out in the Settlement Schedule were fair and just compensation for their respective claims." E.M.A. v. Cansler, 674 F.3d at 294.
The Fourth Circuit construed Ahlborn, as does the undersigned, that:
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.
E.M.A. v. Cansler, 674 F.3d at 292. The Fourth Circuit noted
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" (E.M.A. v. Cansler,
674 F.3d at 307) and concluded that "[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." E.M.A. v. Cansler,
674 F.3d at 312.
Based on the foregoing, the undersigned is convinced that reimbursement of Medicaid expenditures from that portion of a settlement reserved for future care, including medical expenses, is prohibited by the Medicaid anti-lien statute.
The conclusion drawn herein finds support in the case of Davis v. Roberts, 130 So. 3d 264 (Fla. 5th DCA 2013). In that
case, the Court disapproved of a lower court order which determined that the Agency for Health Care Administration 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. In reversing the trial court, the Court engaged in an analysis of the combined effect of Ahlborn and Wos as requiring a procedure by which the presumption created by application of the section 409.910(11)(f) statutory formula could be rebutted in an
evidence-based proceeding.
In its opinion, 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.
Davis v. Roberts, 130 So. 3d at 270; see also Harrell v. Ag. for
Health Care Admin., 143 So. 3d 478, (Fla. 1st DCA 2014). Although the issue of recovery of past versus future medical expenses was not the direct issue before the Court, the Court's understanding of the nature of reimbursable expenses, as derived from its review of Ahlborn and Wos, is worthy of consideration.
The 2012 version of section 409.910 at issue in Davis,
did not contain the procedure now established in section 409.910(17)(b) allowing a Medicaid recipient to prove 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 Medicaid anti-lien statute that formed the basis for the Davis court's opinion. Therefore, the Fifth District Court of Appeal's analysis that the Medicaid anti-lien statute, as interpreted by Ahlborn and Wos, limits Respondent's recovery to that portion of Petitioner's settlement representing compensation for past medical expenses remains viable and effective, regardless of the 2013 amendment to section 409.910.
What is clear from an analysis of the cases construing the effect of the Medicaid anti-lien statute is that the exception4/ for reimbursement of medical expenses is designed to allow for Medicaid to recover those costs that it actually spent on behalf of a Medicaid recipient. Thus, satisfaction of a Medicaid lien from that portion of a third-party recovery designed and designated to compensate for past medical expenses expended on behalf of the Medicaid recipient is allowable under the narrow exception to the anti-lien statute.
Future medical expenses identified and specified in a differentiated settlement agreement, and reserved for as yet unincurred and unexpended costs necessary to sustain the injured party in the future, are no more related to costs actually spent by Medicaid than are reservations for future loss of earning capacity or future skilled home care. By seeking recovery
against property--in the form of third-party settlement
proceeds--that is unrelated to the costs expended on Petitioner's behalf by Medicaid, Respondent seeks to enforce a lien against the property of Petitioner that exceeds the amount of benefits allocated in an agreed upon and approved recovery of medical assistance correctly paid under a State plan. Thus, payment of the Medicaid lien from proceeds designated as future medical expenses violates the Medicaid anti-lien statute.
Section 409.910(17)(b)
In 2013, the Florida Legislature amended section 409.910(17) to address the Supreme Court's opinion in Wos that a State may implement administrative procedures to ascertain that portion of a third-party recovery that may be recoverable as allowable "medical expenses." Even assuming the Florida statute can supersede a limitation established by the Medicaid anti-lien statute, the 2013 amendment does not, by its terms, allow reimbursement from that portion of a third-party recovery designated as future medical expenses.
Section 409.910(17)(b) provides, in pertinent part, that in order to challenge a Medicaid lien calculated pursuant to the statutory formula, "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."
The term "reimburse" is commonly understood to mean "to pay someone an amount of money equal to an amount that person has spent." MERRIAM WEBSTER ONLINE DICTIONARY, at
http://www.merriam-webster.com/dictionary/reimburse.
In this case, Medicaid spent $404,399.68, all of which represented expenditures paid for Petitioner's past medical expenses.
The parties stipulated that no portion of the Medicaid expenditures was for future medical expenses.
AHCA argues that section 409.910(17)(b) should be read to mean that the Agency can be reimbursed from the medical expense portion of settlement, to include both past and future medical expenses.
AHCA's proposed construction would require the undersigned impute words to section 409.910(17) that simply are not there. There is a fundamental linguistic difference between Respondent being reimbursed for future medical expenses paid by
Medicaid, and AHCA being reimbursed for its past medical expenses from that portion of a settlement reserved for as yet unpaid
future medical expenses.
AHCA correctly cites the case of Paul v. State, 129 So.
3d 1058, 1064 (Fla. 2013), for the proposition that "[o]ur purpose in construing a statute is to give effect to the Legislature's intent. When a statute is clear, courts will not
look behind the statute's plain language for legislative intent or resort to rules of statutory construction to ascertain intent."
The statute is clear. AHCA can seek reimbursement of Medicaid funds spent for future medical expenses. Here, there
were no Medicaid funds spent for future medical expenses. There is nothing in section 409.910 to suggest that AHCA can be reimbursed from funds set aside for expenses unrelated to those
actually paid by Medicaid, and such a construction would be contrary to the plain language of the statute.
It is the opinion of the undersigned that an interpretation of section 409.910(17)(b) that allows for reimbursement for past medical expenses to be recovered from funds designated for as yet unincurred future medical
expenses--an interpretation that requires the modification of, or addition of words to, the statute--is clearly erroneous.5/
Petitioner has proven, by clear and convincing evidence, that the settlement allocated a fair and reasonable percentage of the total recovery to reimbursement of medical expenses paid by Medicaid, and that a lesser portion of the total recovery than the amount calculated pursuant to the formula in paragraph (11)(f) should thus be reimbursed to Respondent for Petitioner's medical expenses, that amount being $31,381.42.
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
$31,381.42 in satisfaction of its Medicaid lien.
DONE AND ORDERED this 12th day of February, 2016, in Tallahassee, Leon County, Florida.
S
MARY LI CREASY
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 12th day of February, 2016.
ENDNOTES
1/ The economic damages report, Exhibit 14, was admitted without objection. The preparer of the report did not testify at hearing. However, it was admitted because it was offered, not for the truth of the matter asserted, but rather as evidence of the items considered by counsel when valuing Petitioner's damages.
2/ The analysis in this section regarding future medical costs is adopted in large part from the well-reasoned Final Order of the Honorable E. Gary Early issued in Holland v. Agency for Health Care Administration, Case No. 14-2520 (Fla. DOAH Sept. 29, 2014).
3/ A review of Ahlborn, in light of the facts recited in the lower court proceeding affirmed by the Supreme Court, demonstrates that the $215,645.30 in "medical expenses" at issue in Ahlborn was limited to amounts spent for past medical expenses, and that the $35,581.47 ultimately paid to the State in satisfaction of its Medicaid lien represented "a fair representation of the percentage of the settlement constituting payment by the tortfeasor for past medical care." Ahlborn v.
Ark. Dep't of Human Servs., 397 F.3d 620, 622 (8th Cir. 2005). Thus, the "medical expenses" for which recovery from the settlement was authorized under the anti-lien statute were limited to those for past medical expenses.
Though the full value of Ms. Ahlborn's suit included an estimate of future medical expenses, there was no suggestion by the Supreme Court that recovery of past medical expenses from the future medical expenses component of the settlement proceeds would be allowed under the anti-lien statute. Based on an analysis of the underlying case and facts being decided, the undersigned concludes that when the Supreme Court stated that "the relevant 'liability' extends no further than [$35,581.47]," (Ahlborn, 547 U.S. at 280-281) the liability for "medical expenses" at issue was that for past medical expenses.
4/ In analyzing the effect of the Medicaid anti-lien statute in light of the exception created in 42 U.S.C. § 1396a(a)(25)(H) by which a State is considered to have acquired the rights of a Medicaid recipient to payment by a liable third party "for such health care items or services," the undersigned recognizes the general and oft-held proposition that "[i]n construing provisions
. . . in which a general statement of policy is qualified by an exception, we usually read the exception narrowly in order to preserve the primary operation of the provision." Comm'r v.
Clark, 489 U.S. 726, 739 (1989).
5/ The undersigned recognizes that several Administrative Law Judges have suggested that Medicaid expenditures may be recovered from a portion of a settlement reserved for future, but as yet unincurred medical expenses. See Holland v. Ag. for Health Care Admin., Case No. 13-4951 (Fla. DOAH May 2, 2014); Silnicki v. Ag. for Health Care Admin., Case No. 13-3852MTR (Fla. DOAH July 15, 2014); Goddard v. Ag. for Health Care Admin., Case No. 14-2597MTR (Fla. DOAH Mar. 23, 2015); Suarez v. Ag. For Health Care Admin., Case No. 14-2597MTR (Fla. DOAH Nov. 13, 2015); Villa v. Ag. for Health Care Admin., Case No. 15-4423MTR (Fla. DOAH Dec. 30, 2015). With those decisions, the undersigned must, respectfully, disagree.
If, as the Honorable Robert E. Meale suggests in Suarez, supra, the Florida statute authorizes recovery of yet-to-be- incurred future medical expenses from a portion of a differentiated settlement, and AHCA has the burden to show it will expend additional medical assistance after the date of settlement in a specific amount, AHCA in this case, wholly failed to meet that burden. The only evidence offered at hearing regarding future medical costs likely to be incurred was the testimony on cross-examination of McConnaughhay, who merely referenced the economist's report (Exhibit 14). If offered for the truth of the matter asserted, the report is uncorroborated hearsay and cannot, by itself, support a finding of fact.
Accordingly, even assuming arguendo, that future medical care should have been accounted for in determining the appropriate amount of the Medicaid lien, the result would remain the same.
COPIES FURNISHED:
Alexander R. Boler, Esquire Xerox Recovery Services Group 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)
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)
Richard J. Shoop, Agency Clerk
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 |
|---|---|---|
| Feb. 12, 2016 | DOAH Final Order | Petitioner proved by clear and convincing evidence that Respondent should be reimbursed for its Medicaid lien in a lesser amount than that calculated pursuant to section 409.910(11)(f).
 |
