STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
GENESIS BELINASO,
vs.
Petitioner,
Case No. 15-6136MTR
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
/
FINAL ORDER
Pursuant to notice, a final hearing was held in this case on January 26, 2016, by video teleconference at sites in Tallahassee and Miami, Florida, before E. Gary Early, a designated Administrative Law Judge of the Division of
Administrative Hearings.
APPEARANCES
For Petitioner: Floyd B. Faglie, Esquire
Staunton and Faglie, P.L.
189 East Walnut Street Monticello, Florida 32344
For Respondent: Alexander R. Boler, Esquire
Xerox Recovery Services Group 2073 Summit Lake Drive, Suite 300
Tallahassee, Florida 32317 STATEMENT OF THE ISSUE
The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent
or AHCA), for medical expenses paid on behalf of Petitioner, Genesis Belinaso (Petitioner), from a medical malpractice settlement received by Petitioner from a third party.
PRELIMINARY STATEMENT
On October 30, 2015, Petitioner filed a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien, by which she challenged AHCA’s lien for recovery of medical expenses paid by Medicaid in the amount of $301,085.18. The basis for the challenge was the assertion that the application of section 409.910(17)(b), Florida Statutes (2013), warranted reimbursement of a lesser portion of the total third-party settlement proceeds than the amount calculated by AHCA pursuant to the formula established in section 409.910(11)(f).
The final hearing was scheduled for January 26, 2016, and was held as scheduled.
The parties filed a Joint Pre-hearing Stipulation in which they identified stipulated facts for which no further proof would be necessary. The stipulated facts have been accepted and considered in the preparation of this Recommended Order.
At the final hearing, Petitioner presented the testimony of: Stephen Rossman, an attorney practicing with Rossman, Baumberger, Reboso, Spier & Connelly, P.A., who represented Petitioner and her parents and natural guardians in the medical
malpractice action from which the third-party settlement proceeds were obtained, and who was qualified without objection as an expert in valuation of damages; and Vinson Barrett, an attorney practicing with Eubanks, Barrett, Fasig & Brooks, who was qualified without objection as an expert in valuation of damages. Petitioner’s Exhibits 1 through 12 were received into evidence. AHCA offered no independent witnesses or exhibits.
A one-volume Transcript of the proceedings was filed on February 19, 2016. Both parties timely filed Proposed Final Orders, which have been duly considered in the preparation of this Final Order.
All citations are to the 2014 Florida Statutes except as
otherwise indicated.
FINDINGS OF FACT
Petitioner was born on August 29, 2011. At 11 months of age, Petitioner was diagnosed with Gaucher Disease, Type I.
On September 21, 2012, when she was approximately 13 months of age, Petitioner was admitted to the hospital for the insertion of a central venous port (mediport) for treatment of her Gaucher Disease with Cerezyme infusions. The mediport insertion on the right side was unsuccessful, and it was inserted on the left side.
Petitioner did not wake up from anesthesia and experienced seizure activity. Radiographic evaluation with CT
and MRI of the brain revealed subarachnoid hemorrhage, cerebral edema, and herniation.
Petitioner required an emergency craniotomy, duraplasty and partial right temporal lobectomy, with the operative note diagnosing a right internal carotid artery stroke and possible dissecting aneurysm of the internal carotid artery bifurcation. A post-operative CT revealed significant infarction of the right cerebral hemisphere. A subsequent intracranial hemorrhage resulted in recurrent/worsening of cerebral edema.
Petitioner was transferred to Jackson Memorial Hospital where she underwent numerous neurological surgeries and procedures associated with catastrophic brain damage from the strokes suffered on September 21, 2012.
As a result of the catastrophic brain damage, Petitioner suffers from left side hemiplegia and severe cognitive deficits. She is permanently disabled and unable to care for herself. She will need some form of care for the rest of her life.
AHCA, through the Medicaid program, spent $301,085.18 on behalf of Petitioner, all of which represents expenditures paid for Petitioner’s past medical expenses. The $301,085.18 paid by Medicaid constituted Petitioner’s entire claim for past medical expenses.
No portion of the $301,085.18 paid by AHCA through the Medicaid program on behalf of Petitioner represented expenditures for future medical expenses, and AHCA did not make payments in advance for medical care.
Petitioner’s parents and natural guardians, Cintia Aquino and Jonas Belinaso, brought a medical malpractice claim against Petitioner’s medical providers, including the physician and the hospital, to recover Petitioner’s damages, as well as their damages associated with their child’s injury.
The physician responsible for the unsuccessful mediport insertion (“Settling Tortfeasor”), maintained only an insurance policy with a policy limit of $250,000.00.
Petitioner’s medical malpractice claim against the Settling Tortfeasor was settled during the pre-suit period for the insurance policy limit of $250,000.00.
The Release of All Claims with the Settling Tortfeasor (“Release”) stated, inter alia:
Although it is acknowledged that this settlement does not fully compensate Genesis Belinaso and her parents for all of the damages that they have allegedly suffered, this settlement shall operate as a full and complete RELEASE as to RELEASEES without regard to this settlement only compensating Genesis Belinaso and her parents for a fraction of the total monetary value of their alleged damages. The parties agree that the alleged damages sustained by Genesis Belinaso and her parents, have a potential full value in excess of
$25,000,000, of which $301,085.18 represents Genesis Belinaso’s claim for past medical expenses. Given the facts, circumstances, and nature of Genesis Belinaso’s injuries and this settlement, the parties have agreed to allocate $3,010.85 of this settlement to the 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 of the damage claims sustained by Genesis Belinaso and her parents.
Further, the parties acknowledge that Genesis Belinaso may need future medical care related to her injuries, and some portion of this settlement may represent compensation for future medical expenses Genesis Belinaso will incur in the future. However, the parties acknowledge that Genesis Belinaso, or others on her behalf, have not made payments in advance for Genesis Belinaso’s future medical care and Genesis Belinaso has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses.
The Release did not further differentiate or allocate the $250,000.00 total recovery. Thus, this proceeding was brought by Petitioner pursuant to section 409.910(17)(b) to establish “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 [409.910](11)(f).”
The acceptance of the Settling Tortfeasor’s policy limits was expressly conditioned on all claims against the hospital being preserved.
Because Petitioner was a minor, Court approval of the settlement was required. Accordingly, on July 29, 2015, Circuit Court Judge Maria M. Korvick entered an Order Approving Settlement.
There is no evidence that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. There was no evidence of any manipulation or collusion by the parties to minimize the share of the settlement proceeds attributable to past medical expenses for Petitioner’s medical care.
During the pendency of Petitioner’s medical malpractice claim, AHCA was notified of the claim. AHCA, through its collections contractor Xerox Recovery Services, asserted a Medicaid lien in the amount of $301,085.18 against any proceeds received from a third party as a result of Petitioner’s cause of action and settlement of that action.
By letter of September 24, 2015, Petitioner’s medical malpractice attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Release and itemization of Petitioner’s $85,095.49 in litigation costs. The letter explained that the damages suffered had a value in excess
of $25,000,000, and that the $250,000.00 settlement represented only a one-percent recovery of Petitioner’s $301,085.18 claim for past medical expenses. The letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the
$301,085.18 Medicaid lien.
AHCA responded to the September 24, 2015, letter on November 2, 2015. AHCA indicated that it had calculated the section 409.910(11)(f) formula amount owed from the $250,000.00 settlement and, under the formula, $74,735.15 was owed to AHCA in satisfaction of its Medicaid lien. AHCA requested a “check made payable to ‘Agency for Health Care Administration’ in the amount of $74,735.15.”
AHCA correctly computed the lien amount pursuant to the statutory formula in section 409.910(11)(f). Deducting the
25 percent attorney’s fee of $62,500.00 from the $250,000.00 recovery left a sum of $187,500.00. AHCA then deducted
$38,029.71 in approved taxable costs, which left a sum of
$149,470.29, half of which is $74,735.15. That figure establishes the maximum amount that could be reimbursed from the third-party recovery in satisfaction of the Medicaid lien.
Thus, application of the formula allows for sufficient funds from the settlement proceeds to satisfy the Medicaid lien amount of $74,735.15.
AHCA has not filed an action to set aside, void, or otherwise dispute Petitioner’s settlement, nor has it commenced a civil action to enforce its rights under section 409.910.
Petitioner deposited the section 409.910(11)(f) formula amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, pursuant to section 409.910(17).
At the final hearing, Petitioner presented the expert testimony of Mr. Rossman. Mr. Rossman, who is board-certified in civil trial practice, demonstrated considerable experience handing personal injury and medical malpractice cases in the Miami area. Mr. Rossman testified that the standard of care in his field of practice requires a careful evaluation of a case from the time of intake through the trial. That evaluation, which includes an assessment of the value of the damages, includes a comparison of other jury verdicts in comparable cases as “the barometer of what is happening.” In assessing the value and worth of a case, it is common practice for counsel to retain a life care planner and an economist, and information provided by such persons is reasonably relied upon by persons in
Mr. Rossman’s field of expertise.
Mr. Rossman had extensive knowledge of the nature and extent of the injuries suffered by Petitioner, and was familiar
with the information provided in Petitioner’s Habilitation Assessment and Present Value Analysis.
Mr. Rossman testified that Petitioner’s total economic damages were $8,367,417.18, which included $301,085.18 in past medical expenses; $1,330,634.00 in lost earning capacity over Petitioner’s lifetime; and $6,735,698.00 for future life care needs. The future life care costs included those for future medical, surgical, diagnostic, and therapeutic needs, specialized equipment and supplies, attendant care, and related needs. The $6,735,698.00 amount estimated for future life care needs was the most conservative figure among the scenarios presented in the Present Value Analysis.
Mr. Rossman also estimated the non-economic damages associated with Petitioner’s claim to be in the range of $12 million for Petitioner, and $3 million each for Petitioner’s parents, for a total of $18 million. His assessment of non- economic damages was based not only on his own knowledge and experience, but included an analysis of comparable jury verdicts, which is information reasonably relied upon by persons in Mr. Rossman’s field of expertise.
As a result of his expert analysis, Mr. Rossman testified that, as a case of absolute liability with full damages awarded, Petitioner’s claim had a minimum value of
$25 million dollars. Mr. Rossman’s testimony was credible, and is accepted.
At the final hearing, Petitioner also presented the expert testimony of Mr. Barrett. Mr. Barrett has focused his practice for the past 30 years on personal injury cases, with the past 10 years devoted to medical malpractice and pharmaceutical products liability cases. Evaluation of personal injury cases and medical malpractice cases is a daily component of his practice.
In preparation for his testimony, Mr. Barrett reviewed the reports of Petitioner’s life care planner and economist, Petitioner’s medical records, and other materials that are included in the record of this proceeding. Mr. Barrett routinely reviews jury verdict reports, and applied his knowledge and experience to Petitioner’s claim. Based on his review, Mr. Barrett concurred that the overall value of Petitioner’s claim was, conservatively, in the $25 million range, with the same general breakdown for economic and non- economic damages. Mr. Barrett’s testimony was credible, and is accepted.
The evidence was clear and convincing that the total value of the damages related to Petitioner’s injury was, conservatively, $25 million, and that the settlement amount was one percent of the total value. The evidence was equally clear
and convincing that the allocation for past medical expenses reflected in the court-approved Release was of the same ratio to the total past medical expenses as was the settlement amount to the reasonable value of the claim. There was no evidence that the allocation was subject to any form of manipulation to increase or decrease the accounting of past medical expenses.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties in this case pursuant to sections 120.569, 120.57(1), and 409.910(17), Florida Statutes (2013).
AHCA is the agency authorized to administer Florida’s Medicaid program. § 409.902, Fla. Stat.
The 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). Though participation is optional, once a State elects to participate in the Medicaid program, it must comply with federal requirements governing the same. Id.
As a condition for receipt of federal Medicaid funds, states are required to seek reimbursement for medical expenses incurred on behalf of Medicaid recipients who later recover from legally liable third parties. See Ark. Dep't of Health & Human
Servs. v. Ahlborn, 547 U.S. 268, 276 (2006).
Consistent with this federal requirement, the Florida Legislature has enacted section 409.910, which authorizes and requires the State 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). The statute creates an automatic lien on any such judgment or settlement for the medical assistance provided by Medicaid. § 409.910(6)(c), Fla. Stat.
The amount to be recovered for Medicaid medical expenses from a judgment, award, or settlement from a third party is determined by the formula in section 409.910(11)(f), which sets that amount at one-half of the total recovery, 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. Ag. for
Health Care Admin. v. Riley, 119 So. 3d 514, 515 n.3 (Fla. 2d
DCA 2013).
Application of the formula to Petitioner’s $250,000.00 settlement resulted in a reimbursement amount of $74,735.15.
Section 409.910(1) establishes the primacy of repayment to Medicaid for medical assistance paid by Medicaid, and provides that:
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.
As a condition of providing Medicaid funds, the state of Florida is placed in a priority position for recovery of all funds expended, as expressed in section 409.910(6)(a), which provides that:
The agency is automatically subrogated to any rights that an applicant, recipient, or legal representative has to any third-party benefit for the full amount of medical assistance provided by Medicaid. Recovery pursuant to the subrogation rights created hereby shall not be reduced, prorated, or applied to only a portion of a judgment, award, or settlement, but is to provide full recovery by the agency from any and all third-party benefits. Equities of a recipient, his or her legal representative, a recipient’s creditors, or health care
providers shall not defeat, reduce, or prorate recovery by the agency as to its subrogation rights granted under this paragraph.
AHCA is not automatically bound by any allocation of damages set forth in a settlement between a Medicaid recipient and a third party that may be contrary to the formulaic amount.
§ 409.910(13), Fla. Stat. (“No action of the recipient shall prejudice the rights of the agency under this section. No . . . ‘settlement agreement,’ entered into or consented to by the recipient or his or her legal representative shall impair the agency’s rights.”); see also, § 409.910(6)(c)7., Fla. Stat.
(“No release or satisfaction of any . . . settlement agreement shall be valid or effectual as against a lien created under this paragraph, unless the agency joins in the release or satisfaction or executes a release of the lien.”).
In cases as this, where AHCA has not participated in or approved the settlement, the administrative procedure created by section 409.910(17)(b) is the means for determining whether a lesser portion of a total recovery should be allocated as reimbursement for medical expenses in lieu of the amount calculated by application of the formula in section 409.910(11)(f).
Section 409.910(17)(b) provides, in pertinent part,
that
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). . . . 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.
Clear and convincing evidence “requires more proof
than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re Graziano,
696 So. 2d 744, 753 (Fla. 1997). The clear and convincing evidence level of proof:
[E]ntails both a qualitative and quantitative standard. The evidence must be credible; the memories of the witnesses must be clear and without confusion; and the sum total of the evidence must be of sufficient weight to convince the trier of fact without hesitancy.
Clear 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 testimony 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 a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
In re Davey, 645 So. 2d 398, 404 (Fla. 1994) (quoting, with
approval, Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983)); see also In re Henson, 913 So. 2d 579, 590 (Fla. 2005).
“Although [the clear and convincing] standard of proof may be met where the evidence is in conflict, it seems to preclude evidence that is ambiguous.” Westinghouse Elec. Corp. v. Shuler Bros., 590 So. 2d 986, 989 (Fla. 1st DCA 1991).
Proof as to Reimbursement for Past Medical Expenses
A settlement agreement does not dictate, but may inform, the administrative determination of the appropriate portion of the recovery subject to reimbursement to AHCA. Mobley v. Ag. for Health Care Admin., Case No. 13-4785MTR, ¶ 33
(Fla. DOAH Mar. 2, 2016).
The Medicaid lien was accounted for in the court- approved Release, and made subject to “an allocation between medical and nonmedical damages--in the form of either a jury verdict, court decree, or stipulation binding on all parties,” a
process approved in Wos v. E.M.A., 528 U.S. , 2013 U.S. LEXIS
2372 *18 (2013).
The Release recognized that the amount expended on Petitioner’s behalf by Medicaid of $301,085.18 bore the same ratio to the $3,010.85 allocation for past medical expenses as did the total value of Petitioner’s claim of $25 million to the
$250,000.00 settlement amount.
Petitioner has proven, by clear and convincing evidence, that $3,010.85 of the $250,000.00 third-party recovery represents that proportionate share of the settlement proceeds fairly attributable to expenditures that were paid by AHCA for Petitioner’s past medical expenses.
Reimbursement from Future Medical Expense Settlement Proceeds
The undersigned recognizes the split in DOAH Final Orders regarding the extent to which a Medicaid lien may be recovered from portions of a settlement reserved for future medical expenses, in addition to those allocated to recovery for past medical expenses. That split was ably described by Administrative Law Judge F. Scott Boyd in Mobley v. Ag. for
Health Care Admin., Case No. 13-4785MTR, ¶ 36 and fn. 4 (Fla. DOAH Mar. 2, 2016).
The debate over the limits on recovery from settlement proceeds allocated to future medical expenses under the Medicaid anti-lien statute is not limited to administrative law judges at
the Florida DOAH, but is one that is being engaged nationwide. See, e.g., Lewis v. W. Va. Dep't of Health & Human Res. (In re E.B.), 729 S.E.2d 270, 305-306 (W. Va. 2012)(Davis, J.,
concurring).1/
The issue that has been squarely posed in this case is whether the state Medicaid lien for reimbursement of medical expenses authorizes not only reimbursement from that portion of a third-party recovery fairly attributable to past medical expenses, but also authorizes reimbursement from funds allocated for other classes of damages, including future medical expenses. For the reasons set forth herein, the undersigned concludes it cannot.
Federal Anti-lien Statute
Notwithstanding the public policy favoring recovery to the state for Medicaid assistance, the federal Medicaid anti- lien statute, 42 U.S.C. § 1396p(a)(1), limits the scope of said recovery, and 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. Ark.
Dep't of Human Servs. v. Ahlborn, 547 U.S. 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.”2/
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, states participating in Medicaid must provide:
[T]o 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 the Medicaid anti-lien statute, 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 . . . .
Ark. Dep't of Human Servs. v. 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:
[T]he 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.
Id. 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 to state:
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.
Id. at 284-285.
The Court concluded that “Federal Medicaid law does not authorize ADHS to assert a lien on Ahlborn's settlement in an amount exceeding $35,581.47, and the federal anti-lien provision affirmatively prohibits it from doing so.” Id. 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.
62. In Wos v. E.M.A., 528 U.S. , 2013 U.S. LEXIS 2372
(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.’” Wos v. E.M.A.,
2013 U.S. LEXIS 2372 at *6. 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. Wos v. E.M.A., 2013 U.S. LEXIS 2372 at *27.
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., 2013 U.S. LEXIS 2372 at *20.
“Skilled home 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.
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.
66. 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.” Id. 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.
Id. 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” (Id. 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.” Id. 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 Florida 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 AHCA was entitled to recover the full amount of its Medicaid lien, calculated pursuant to the formula established in section 409.910(11)(f), from a Medicaid recipient’s third-party recovery. In reversing the trial court,
the Court engaged in an analysis of the effect of the Medicaid anti-lien statute, as construed by Ahlborn and Wos, on the presumption created by the section 409.910(11)(f) statutory formula, and 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, 480 (Fla. 1st DCA 2014)(“ As
the Fifth District recently noted, ‘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.’”); Suarez v. Port Charlotte HMA, LLC, 171 So. 3d 740, 742 (Fla. 2d DCA
2015)(“Prior to the amendment [of section 409.910], recipients were able to challenge the amount of a settlement designated as a recovery for past medical expenses by motion in the circuit court.”).
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 opinion. Therefore, the Fifth District
Court of Appeal’s analysis that the Medicaid anti-lien statute, as interpreted by Ahlborn and Wos, limits AHCA’s recovery to that portion of Petitioners' settlement representing compensation for past medical expenses remains viable and effective, regardless of the 2013 amendment to section 409.910.
The argument has been made that recovery of past versus future medical expenses was not the direct issue before the courts in Davis, Harrell, and Suarez. Nonetheless, those cases provide the clearest expression of the limits of recovery under Florida law, taking into account the application of the federal Medicaid anti-lien statute as mandated by Ahlborn and Wos.
In addition to the more abbreviated assessment of the issue by the courts in Davis, Harrell, and Suarez, the issue of
Medicaid reimbursement being limited to that portion of a third- party recovery allocated to past medical expenses has been squarely addressed in cases from no fewer than seven of
Florida’s 20 judicial circuits. As an example, in his Order Allocating Settlement and Determining Medicaid Lien, Judge Kevin Blazs determined that:
Ahlborn and Wos are controlling. Those cases dictate that Section 409.910, Florida Statutes is preempted by the federal Medicaid statute's anti-lien provision to the extent the statute authorizes a lien against any portion of the settlements that did not represent recovery for past medical expenses paid by Medicaid. See also, Davis v. Roberts 130 So. 3d 264, 270 (Fla. 5th DCA 2013); Harrell v. State, 143 So. 3d 478, 480 (Fla. 1st DCA 2014). When, as with the instant settlements, a settlement is undifferentiated, Ahlborn, Wos, Davis, and Harrell dictate that a plaintiff be afforded an opportunity to demonstrate with evidence that the amount of a Medicaid lien resulting from application of the formula in section 409.910(11)(f) exceeds the amount recovered for past medical expenses; and, that reimbursement be limited to only the amount recovered for past medical expenses.
Adams v. Orange Park Med. Ctr., 2015 Fla. Cir. LEXIS 147, *4-5 (Fla. 4th Cir. Ct., June 21, 2015). Judge Blazs also included, as a footnote to the text quoted above, that:
The Court rejects the Agency's argument that the cases authorize a lien against the settlements and reimbursement for all medical expenses recovered, including recovery for future medical expenses. The clear implication of the cited authorities was to limit Medicaid's lien and reimbursement to the amount recovered for past medical expenses.
Id. at *10; see also Harrell v. Bay Hospital, Inc., Case
No. 02-3998CA (Fla. 14th Cir. Ct., Jan. 27, 2015)(Final Order on
Medicaid Lien)(“Accordingly, AHCA is entitled to recover from [Plaintiff’s] settlement only the $115,437.27 which represents compensation for past medical expenses.”); Davis v. Roberts,
Case Nos. 09-4294-CA-B and 09-4389-CA-G (Fla. 5th Cir. Ct.,
Oct. 20, 2014)(Final Order on Medicaid Lien)(“The settlement allocation agreed to by the parties of 10% of the past medical expenses is reasonable, appropriate and equitable. Accordingly, AHCA is entitled to recover from [Plaintiff’s] settlement only the $23,292.88 which represents compensation received for past medical expenses.”); Roberts v. Albertson’s Inc., Case No. 2005
CA 6389 AO (Fla. 15th Cir. Ct., Mar. 14, 2014)(Order on Plaintiff’s Motion to Determine Equitable Lien Amount) (“[T]he case settled for approximately 10% of the total damages at the time of settlement. Accordingly, the sum of $34,345.28 represents the appropriate allocation for past medical expenses pursuant to [Ahlborn and Wos].”); Williams v. Carson, Case
No. 0714107 (Fla. 17th Cir. Ct., July 18, 2014)(Final Order Allocating Settlement and Determining Medicaid Lien) (“This Court finds that [Ahlborn] is controlling. [AHCA] is entitled to assert its Section 409.910, Florida Statutes, Medicaid lien against only the portion of the Plaintiff’s settlement representing compensation for past medical expenses.”); Virgo v. Arnold, Case No. 06-CA-009121-G (Fla. 13th Cir. Ct., Mar. 14,
2014)(Final Amended Order on Medicaid Lien)(“Because the Court
found . . . that the allocation to past medical expenses of
$22,152.95 was reasonable, . . . the court finds that Plaintiffs have rebutted the formula at § 409.910(11)(f), Fla. Stat.”); Roye v. Beltre, Case No. 12-CA-5553-09-W (Fla. 18th Cir. Ct., Jan. 17, 2014)(Order Determining Medicaid Lien)(“Plaintiffs have demonstrated that the $301.996.81 Medicaid lien exceeds the amount recovered for past medical expenses. Accordingly, AHCA may assert its Medicaid lien against, and seek recovery from Plaintiffs, only in the total sum of $100,000.00.”).
What is clear from an analysis of the cases construing the effect of the Medicaid anti-lien statute is that the exception3/ 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 reserved for costs necessary to sustain an injured party in the future, are no more related to costs actually spent by Medicaid than are reservations for future skilled home care or future loss of earning capacity. 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, AHCA 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 paid under a State plan. Thus, payment of the Medicaid lien from proceeds designated as future life care or 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.”
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.”
Even assuming the Florida statute can supersede a limitation established by the Medicaid anti-lien statute, the 2013 amendment does not, by its terms, require reimbursement
from that portion of a third-party recovery designated as future medical expenses.
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 $301,085.18, all of which represented expenditures paid for Petitioner’s past medical expenses.
There was no evidence that any portion of the Medicaid expenditures were for future medical expenses.
In order to allow reimbursement to AHCA from those portions of a settlement reserved for future, but as yet unincurred, medical expenses, section 409.910(17)(b) should provide for “reimbursement from past and future medical expenses.” However, the statute allows “reimbursement for past
and future medical expenses.” There is a fundamental linguistic difference between Respondent being reimbursed for future medical expenses paid by Medicaid, and Respondent being reimbursed for its past medical expenses from that portion of a settlement reserved for as yet unpaid future medical expenses.
It is the opinion of the undersigned that reimbursement for past medical expenses to be recovered from funds designated to as yet unincurred future medical expenses is
not a result required by section 409.910(17)(b). Thus, AHCA can seek reimbursement of Medicaid funds spent for future medical expenses, if any. However, section 409.910 does not suggest that AHCA can be reimbursed from funds set aside for expenses unrelated to those actually paid by Medicaid.
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, in the same ratio that the settlement amount has to the overall value of the claim, 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 AHCA for Petitioner’s medical expenses, that amount being $3,010.85.
CONCLUSION
Upon consideration of the above Findings of Fact and Conclusions of Law, it is hereby
ORDERED that:
The Agency for Health Care Administration is entitled to
$3,010.85 in satisfaction of its Medicaid lien.
DONE AND ORDERED this 25th day of March, 2016, in Tallahassee, Leon County, Florida.
S
E. GARY EARLY 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 25th day of March, 2016.
ENDNOTES
1/ As with Administrative Law Judge Boyd’s analysis of Florida cases, Justice Davis’s concurring opinion is an admirable analysis of the issue nationwide, and is recited here in its entirety:
The majority opinion in this case is a thorough, well-reasoned, and comprehensive compendium of this Court's jurisprudence regarding DHHR's statutory right, afforded by W. Va. Code § 9-5-11 (2009) (Supp. 2011),
to recover monies it has paid for a Medicaid recipient's medical expenses. I write separately to reiterate my agreement with the majority's recognition that DHHR's recovery pursuant to W. Va. Code § 9-5-11 is limited to that portion of a Medicaid recipient's damages award that is allocated to, or specified as payment for, his/her past medical expenses only. Unquestionably, the seminal case on this point, Arkansas Department of Health and Human Services v.
Ahlborn, 547 U.S. 268, 126 S. Ct. 1752, 164
L. Ed. 2d 459 (2006), remains silent as to
whether a recovery of previously paid Medicaid benefits attaches only to the recipient's damages award for past medical expenses or whether reimbursement also may be sought from the recipient's future medical damages award, referring only to "medical expenses," generally, without distinction between past and future medical expenses. See Ahlborn, 547 U.S. at 291, 126 S. Ct. at 1766, 164 L. Ed. 2d 459
(citation omitted). Whether the Supreme Court intentionally or astutely failed to resolve this quandary remains to be seen, although the most logical explanation is that the Court simply did not need to reach this issue insofar as the parties therein had agreed that the Medicaid payor's recovery would be limited to that portion of the Medicaid recipient's settlement proceeds that "constituted reimbursement for medical payments made." See 547 U.S. at 274, 126 S.
Ct. at 1758, 164 L. Ed. 2d 459 (citation omitted).
Nevertheless, this absence of a definitive ruling inevitably has led to a difference of opinion regarding the source of a Medicaid payor's recovery: whether the recovery source is limited to past medical damages only or whether both past and future medical damages are available to satisfy the payor's previously paid expenses. The dissenters favor attaching that portion of the recipient's damages award representing his/her future medical expenses that is intended to provide the recipient financial security and ensure that he/she will have sufficient resources to continue receiving necessary medical care. By contrast, the majority of the Court, as we consistently have done in our prior opinions, resolves this issue by consulting the other courts whohave carefully considered and answered this question. The majority view in the country, with which the majority of this Court agrees, permits a Medicaid payor to recover benefits it previously has paid on
behalf of a Medicaid recipient from that portion of the recipient's damages award representing his/her past medical expenses only. See, e.g., E.M.A. v. Cansler, 674 F.3d 290 (4th Cir. 2012); McKinney v.
Philadelphia Hous. Auth., No. 07-4432, 2010
U.S. Dist. LEXIS 86773, 2010 WL 3364400
(E.D. Pa. Aug. 24, 2010); Price v. Wolford, No. CIV-07-1076-M, 2008 U.S. Dist. LEXIS 85808, 2008 WL 4722977 (W.D. Okla. Oct. 23,
2008); Branson v. Sharp Healthcare, Inc.,
193 Cal. App. 4th 1467, 123 Cal. Rptr. 3d
462 (2011); Garcon v. Agency for Health Care Admin., No. 3D11-925, 2012 Fla. App. LEXIS 9480, 2012 WL 2120870 (Fla. Dist. Ct. App. June 13, 2012); Lugo v. Beth Israel Med. Ctr., 13 Misc. 3d 681, 819 N.Y.S.2d 892 (N.Y. Sup. Ct. 2006); Doe v. Vermont Office of Health Access, 191 Vt. 517, 54 A.3d 474, 2012 Vt. LEXIS 41, 2012 WL 752727 (2012). The view espoused by the dissenting members of this Court is the country's minority view, which permits the attachment of both past and future medical damages awarded to the Medicaid recipient. See, e.g., I.P. v. Henneberry, 795 F. Supp. 2d 1189 (D. Colo. 2011); Special Needs Trust for K.C.S. v. Folkemer, No. 08:10-CV-1077-AW, 2011 U.S. Dist. LEXIS 32442, 2011 WL 1231319 (D. Md. Mar. 28, 2011); In the Matter of Matey v. Matey, 147 Idaho 604, 213 P.3d 389 (2009).
I agree with the soundness of the legal reasoning supporting the decisions of a majority of the courts in the country, which this Court's majority has adopted in its decision of this case: the recovery of previously paid Medicaid expenses is limited to the recipient's damages award for his/her past medical expenses. Accordingly, I respectfully concur with the majority's opinion in this case.
Lewis v. W. Va. Dep't of Health & Human Res. (In re E.B.), 729 S.E.2d at 305-306.
Justice Davis’s concurring opinion, authored in 2012, would now undoubtedly include Aguilera v. Loma Linda University Medical Center, 185 Cal. Rptr. 3d 699 (Cal. Dist. Ct. App.
2015); State Dep't of Health Care Policy & Fin. v. S.P., 356 P.3d 1033 (Colo. Ct. App. 2015); and In re Estate of Solivan, 2015 N.J. Super. Unpub. LEXIS 2406, * 17 ((N.J. Super. Ct. App. Div. 2015), in his analysis of the “majority view.”
2/ 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.
3/ 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).
COPIES FURNISHED:
Floyd B. Faglie, Esquire Staunton and Faglie, P.L.
189 East Walnut Street Monticello, Florida 32344 (eServed)
Alexander R. Boler, Esquire Xerox Recovery Services Group
2073 Summit Lake Drive, Suite 300
Tallahassee, Florida 32317 (eServed)
Richard J. Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Elizabeth Dudek, Secretary
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1
Tallahassee, Florida 32308 (eServed)
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 |
|---|---|---|
| Mar. 25, 2016 | DOAH Final Order | Petitioner proved by clear and convincing evidence that the portion of its third-party recovery attributable to past medical expenses allowed by the Medicaid anti-lien statute was available for reimbursement of Respondent's Medicaid lien. |
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