STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALBERTO MARTINEZ,

vs.

Petitioner,

Case No. 16-0851MTR

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

/

FINAL ORDER

This case came before Administrative Law Judge John G. Van Laningham for final hearing by video teleconference on April 26, 2016, at sites in Tallahassee and Miami, Florida.

APPEARANCES

For Petitioner: Christopher G. Klemick, Esquire

Klemick & Gampel, P.A. 1953 Southwest 27th Avenue Miami, Florida 33145

For Respondent: Alexander R. Boler, Esquire

Xerox Recovery Services, Inc. 2073 Summit Lake Drive, Suite 300

Tallahassee, Florida 32317 STATEMENT OF THE ISSUES

The issues for determination are, first, whether a lesser portion of Petitioner's total recovery from a third-party tortfeasor should be designated as recovered medical expenses than the share presumed by statute; if so, then the amount of

Petitioner's recovery to which Respondent's Medicaid lien may attach must be determined.

PRELIMINARY STATEMENT

By letter dated June 9, 2015, Respondent Agency for Health Care Administration's authorized agent for collecting third- party benefits notified Petitioner Alberto Martinez of its intent to enforce a Medicaid lien in the amount of $177,056.88 against any recovery that he might realize in an action for damages against a third party arising from an accident which had occurred on September 13, 2014. When Mr. Martinez disclosed his intent to settle the ongoing tort case for $102,000, Respondent, relying on a statutory formula, claimed that the proceeds should be divided 37/63 between medical expense damages and nonmedical damages, exposing $37,500 to the Medicaid lien.

Mr. Martinez objected to this presumptive allocation of the settlement proceeds, and, on February 15, 2016, he timely filed a petition with the Division of Administrative Hearings to contest the amount designated as recovered medical expense damages payable to Respondent.

At the final hearing, which took place as scheduled on April 26, 2016, with both parties present, Mr. Martinez testified on his own behalf, and he called one of his attorneys, Herman Klemick, III, as an additional witness. Petitioner's

Exhibits 1 through 4 were received in evidence without objection. Respondent rested without offering any evidence.

The final hearing transcript was filed on May 18, 2016. The parties timely filed proposed final orders on or before May 31, 2016, the established deadline. These papers were carefully considered in the preparation of this Final Order.

Unless otherwise indicated, citations to the official statute law of the state of Florida refer to Florida Statutes

2016.

FINDINGS OF FACT1/

1. On September 13, 2014, Petitioner Alberto Martinez ("Martinez") was knocking down a concrete wall, apparently while performing work for the homeowner on whose property he labored, when the wall collapsed, crushing Martinez and causing severe, life-threatening injuries that Respondent agrees were "catastrophic." Resp't's PFO at 12.

2. Martinez, who had recently turned 48, was taken to the trauma department at Kendall Regional Medical Center, where he was diagnosed with, and treated for, a litany of bodily injuries consistent with being squashed by concrete blocks, including multiple fractures, contusions, and lacerations from head to legs, and numerous insults to his internal organs including damages to the lungs, liver, pancreas, and kidneys. Martinez

   
   

   remained in the hospital for nearly three months (until December 4, 2014), during much of which time he was in a coma.

3. At all relevant times, Martinez's health insurance was provided by Medicaid. Medicaid is a program "which provides for payments for medical items or services, or both, on behalf of any person who is determined by the Department of Children and Families . . . to be eligible on the date of service for Medicaid assistance." § 409.901(16), Fla. Stat. Medicaid is jointly funded by the federal government and the states that have elected to participate in the program, which include Florida. Respondent Agency for Health Care Administration ("AHCA") is the agency responsible for administering Medicaid in the state of Florida.

4. The full amount of the medical bills for the goods and services Martinez received as a result of his injuries is

   $1,822,499.70. Medicaid reimbursed the providers at much lower rates, however, paying out a total of $177,056.88 on their claims. Martinez is not responsible for the difference, and his past medical expenses are considered paid in full.

5. After his discharge from the hospital, Martinez spent a month in an assisted living facility. Notwithstanding all of the treatment he has received, Martinez's injuries have left him permanently impaired. Martinez cannot walk without a cane, and he is physically unable to return to work, presently and most

   
   

   likely for the remainder of his working life. He suffers from chronic discomfort in his arm and leg, and his leg is especially painful.

6. At the time of his injury, Martinez earned approximately $600 per week, or around $31,200 annually. Using a round figure of $30,000 per annum, Martinez calculates that his past lost wages, as of the final hearing in his case, amount to $48,000. He claims that his damages from loss of future earning capacity should be valued at $360,000——12 years of lost income, in other words, reflecting the period remaining until the earliest age (62) Martinez could start collecting Social Security retirement benefits.2/ The undersigned accepts Martinez's rather conservative valuation of this economic loss and finds, without hesitation, that his total damages from lost earnings are at least $400,000, rounded off.3/

7. Martinez brought an action for damages against the homeowner whose wall had fallen on him. Unfortunately for Martinez, the defendant is practically judgment proof; his liability insurance coverage limits of $102,000 were tendered, and Martinez has accepted, or intends to accept, this offer.

   The proposed settlement is undifferentiated——that is, no attempt has been made therein to apportion the proceeds between the various elements of compensatory damages potentially available to Martinez.

   
   

8. Upon learning of the proposed settlement, AHCA asserted its rights under the Medicaid Third-Party Liability act, section 409.910, Florida Statutes, which grants AHCA an automatic lien upon "collateral" such as settlements and settlement agreements for the full amount of medical assistance provided by Medicaid to a recipient for which a third party might be liable. There is, however, an important limitation on AHCA's right of repayment from liable third parties: Because federal law prohibits a state from attaching a Medicaid lien to any part of a recipient's tort recovery not designated as payments for medical care, the lien can encumber only the portion of a settlement or recovery that represents compensation for medical expenses.4/ As a means of complying with this anti-lien law, section 409.910(11)(f) prescribes a formula for determining how the proceeds of a settlement or other recovery from a third- party tortfeasor should be divided between medical expense damages and all other (i.e., nonmedical) compensatory damages, and it directs that the portion attributable to payments for medical care be paid to AHCA up to the total amount spent by Medicaid.

9. The parties agree that, under this statutory formula,

   
   

   $37,500 out of the $102,000 offered to Martinez in settlement of his tort action is designatable as recovered medical expense

   
   

   damages payable to AHCA. This is the amount AHCA claims as its rightful distribution under paragraph (11)(f).

10. Exercising his right under section 409.910(17)(b), Martinez initiated this proceeding to contest the statutory designation of $37,500 as payments for medical care. As will be discussed in greater detail below, to succeed Martinez must prove that a "lesser portion" of his settlement should be allocated to medical expense damages.

11. The amount payable to AHCA (the "Statutory Distribution") pursuant to the formula set forth in paragraph (11)(f) is either (a) an amount equal to .75 times the gross settlement, minus taxable costs, divided by 2 (hereafter, the "Presumed Recovered Medical Expense Damages" or "PRMED"); or

    (b) the total dollar amount of medical assistance that Medicaid actually has provided (hereafter, the "Actual Expenditure"), whichever is lower. The ratio of PRMED to the gross settlement proceeds ("GSP") reflects the portion of the GSP that the statutory formula allocates by default as reimbursement to the injured party for both past and future medical expenses (hereafter collectively referred to as "Medical Damages") based upon an underlying presumption about the proportional relationship between Medical Damages and full damages in a given case.

    
    

12. The statute, it will be seen, presumes that a specific percentage of the recipient's undifferentiated GSP (PRMED/GSP)—— which happens to be 37% in this case——constitutes compensation for Medical Damages. It seems likely that, in the run of cases, the statutory percentage (hereafter the "Portion" or "P%") will be somewhere in the neighborhood of one-third, although in particular cases P%——which cannot exceed 37.5%——could be much smaller, even zero.5/ Where PRMED is zero or amounts to a relatively small percentage of GSP due to a high costs-to-GSP ratio, however, litigation over the amount of the Medicaid lien is less likely to occur as a practical matter. In any event, P is a limited dependent variable whose value (numerical quantity) is immaterial to the analysis that follows, except when discussing the particular facts of this case, of course.

13. So, for example, if GSP were $250,000 in a case having taxable costs of $17,500, PRMED would work out to $85,000 under the statutory formula, and P% would be 34%. If the Actual Expenditure were, say, $150,000, then the Statutory Distribution would be $85,000——that is, AHCA would claim every dollar of the settlement which the statute presumes is reasonably attributable to Medical Damages. If the Actual Expenditure were $75,000, then the Statutory Distribution would be $75,000. The statutory presumption that 34% of GSP is allocable to Medical Damages

    
    

    would still hold in that event, but AHCA would not need (or be entitled) to take all of the recipient's PRMED.

14. Having identified the statutory presumption, a closer examination thereof will be useful. We can deduce——from the fact that AHCA may seek recovery of its Actual Expenditure from, and to the exhaustion of, all of the recipient's Medical Damages——that paragraph (11)(f) presumes that the share of an average settlement attributable to Medical Damages never exceeds P%. If the portion of an average settlement attributable to Medical Damages were greater than P%, then the statutory formula would leave money on the table——a situation, it seems reasonable to assume, which the statute was designed to avoid. We can further deduce that the statute presumes the average settlement does not include less than a P% share for Medical Damages, for if the average settlement allocated less than the Portion to Medical Damages, then the statutory formula would authorize AHCA to recover, by default, from nonmedical damages, which everyone recognizes is unlawful.

15. To summarize, then, for every settled tort case, PRMED under paragraph (11)(f) will be equal to a quantifiable share (P%) of GSP, the assumption clearly being that all settlements are average settlements unless and until proven otherwise. Whenever, as here, the Actual Expenditure is greater than PRMED,

    
    

    moreover, AHCA is entitled to recover 100% of PRMED unless the recipient successfully contests the amount classified as PRMED.

16. Naturally, in the case of a settlement involving the compromise of a disputed claim, PRMED will rarely be equal to 100% of the recipient's maximum provable Medical Damages ("MaxMD"), i.e., the amount of Medical Damages that the recipient reasonably could have expected to be awarded had the case gone to trial. Under the statutory presumption regarding the allocation of damages in an undifferentiated settlement, MaxMD should be equal to P% of the recipient's total provable damages ("TPD"), i.e., the full amount of damages——including, in addition to MaxMD, such components as lost wages and noneconomic damages (e.g., pain and suffering)——which the recipient might have proved at trial had he not settled. That is, PRMED/GSP (P%) should equal MaxMD/TPD (P%) because in fairness a settlement must be deemed to proportionally reimburse the recipient for each component of his compensatory damages.6/ By the same token, PRMED/MaxMD should equal GSP/TPD since the same haircut must be applied to Medical Damages and nonmedical damages alike.

17. Section 409.910(17)(b) provides that "[i]n 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) . . . ." (Emphasis added). This language must be read very carefully to ascertain what fact or facts the recipient must prove by clear and convincing evidence.

18. AHCA, understandably, interprets the statute as requiring that the recipient must prove, by clear and convincing evidence, "not only what amount should be allocated, but also

    how that amount should be determined." Resp't's PFO at 7. But notice that the statute does not say that the recipient must prove that a lesser sum should be payable to AHCA; it says the recipient must prove that a lesser portion of the total recovery should be deemed compensation for his MaxMD. There is a subtle but material difference between these two ideas.

19. The phrase "a lesser portion of the total recovery should be allocated as reimbursement for [MaxMD]" cannot reasonably be understood to mean, simply, a smaller sum of money, as AHCA suggests. If the legislature had intended to communicate that uncomplicated idea, it easily could (and surely would) have just said, succinctly, that in order to successfully challenge the amount payable to the agency, the recipient must prove, by clear and convincing evidence, that the agency should receive less than the amount calculated by the statutory

    
    

    formula. Clearly, in opting for the wordier description it actually enacted, the legislature had something else in mind.

20. The reference in section 409.910(17)(b) to the "portion of the total recovery . . . allocated as reimbursement for [MaxMD]" is plainly meant to denote the Portion, i.e. the share (P%) of the settlement that the statute presumes is designatable as Medical Damages.7/ What the statute unambiguously tells us, therefore, is that the rebuttable presumption regarding the attribution of P% of the recipient's recovery to Medical Damages is one which affects the burden of proof. See §§ 90.302(2) and 90.304, Fla. Stat. To elaborate, paragraphs (11)(f) and (17)(b) operate in tandem to create the rebuttable presumption that P% of the recipient's GSP is attributable to Medical Damages (the presumed fact), and paragraph (17)(b) makes plain that the recipient has the burden of proving, by clear and convincing evidence, the nonexistence of the presumed fact. The presumption at issue, according to paragraph (17)(b), thus is not a "bursting bubble" presumption that vanishes upon the introduction of credible evidence contrary to the presumed fact, see section 90.302(1), Florida Statutes, but rather it imposes upon the recipient the burden to prove that less than P% of the settlement is attributable to Medical Damages.

    
    

21. Proving the nonexistence of the presumed fact (P% ≠ MaxMD/TPD) does not necessarily require proving affirmatively the specific fact (e.g., MaxMD/TPD = 15%) that the party against whom the presumption operates wants to establish. To rebut the presumption in a case such as this, however, the statute requires the recipient to prove by clear and convincing evidence that the portion of his settlement attributable to Medical Damages is not P% (negating the presumed fact) and is less than P% (positively establishing a favorable alternative fact), which means, at bottom, that the recipient must affirmatively prove: 0% ≤ MaxMD/TPD < P%——that is, that the Portion should be a percentage in the range below P%. The recipient could carry this burden by proving his MaxMD and TPD by clear and convincing evidence. Neither the statute, nor logic, however, requires recipients to satisfy their burden solely in this fashion.8/

22. If the recipient carries his burden to rebut the presumption, then he must establish the amount of money to which the Medicaid lien should attach (the collateral money or "COL$"). Consistent with the governing principle of proportionality, the formula for calculating this sum is:

    COL$ = (MaxMD/TPD) x GSP. Section 409.910(17)(b) does not require the recipient to prove COL$ by clear and convincing evidence; he may do so, therefore, by the greater weight. See

    § 120.57(1)(j), Fla. Stat. If the recipient proves COL$ by a

    
    

    preponderance of the evidence, then AHCA's recovery on the lien ("LN$") will be either COL$ or the Actual Expenditure, whichever is less.

23. As mentioned above, the parties agree that PRMED is

    
    

    $37,500 in this case. The Portion at issue, which paragraph 11(f) presumes is attributable to Medical Damages, is 37% of Martinez's GSP.9/ The Actual Expenditure ($177,05710/) exceeds PRMED. Accordingly, the undisputed Statutory Distribution is

    $37,500.

    
    

24. Because the statute presumes that 37% of the Martinez's settlement is attributable to Medical Damages, it likewise presumes, for reasons explained previously, that MaxMD/TPD = .37 (or, stated differently, that TPD = MaxMD/.37). If we knew the amount of Martinez's MaxMD, we could compute his statutorily presumed total provable damages ("PTPD"), 63% of which should be sufficient to compensate Martinez for all of his nonmedical damages, if the statutory presumption is correct. Proof that Martinez's nonmedical damages are actually greater than 63% of PTPD would therefore rebut the statutory presumption that GSP should be split 37/63 between medical and nonmedical damages, respectively, and would show that less than 37% of GSP should be apportioned to MaxMD.

25. There is no genuine dispute that the Actual Expenditure of $177,057 constitutes the full extent of

    
    

    Martinez's recoverable past medical expense damages. To be sure, the parties have stipulated that Martinez's medical bills totaled $1,822,499.70. His providers, however, agreed to accept substantially reduced fees from Medicaid as payment in full. As a matter of law, Martinez will never be obligated to pay the difference between the roughly $1.8 million charged for past medical expenses and the lesser sums, totaling $177,057, which the providers actually received. See, e.g., § 409.907(3)(j),

    Fla. Stat. At a trial, Martinez would have been prohibited from introducing evidence of the full amount charged by his medical providers, and his compensatory damages for past medical expenses would have been limited to the amount paid by Medicaid. See, e.g., Coop. Leasing, Inc. v. Johnson, 872 So. 2d 956, 960 (Fla. 2d DCA 2004); Thyssenkrupp Elevator Corp. v. Lasky, 868

    So. 2d 547 (Fla. 4th DCA. 2003), clarified on motion for reh'g, 868 So. 2d 547 (2004).

26. This means that $177,057 plus Martinez's provable future medical expense damages equals his MaxMD. Put another way, Martinez's provable future medical expense damages are equal to MaxMD minus $177,057. We can, therefore, calculate Martinez's PTPD using the following equation: .37PTPD = 177,057

    + (MaxMD-177,057), or

    
    

    PTPD = 478,532 +

    
    

    (MaxMD -177,057)

    .37

    
    

    This mathematical operation provides a basis for testing the reasonableness of the presumption that 37% of GSP is attributable to Martinez's Medical Damages.

27. This equation also, incidentally, shows the potential significance of future medical expenses, a component of damages to which the Medicaid lien might attach. Suppose, hypothetically, that in this case it was undisputed that Martinez's future medical expenses were $1,700,000. In that

    situation, PTPD would equal 478,532 + 1,700,000

    .37

    or 5,073,127.

    
    

    Martinez's presumed nonmedical damages, accordingly, would be

    
    

    $3,196,070. Under the facts of this case, the undersigned might be unable to say that Martinez has proved by clear and convincing evidence that his actual nonmedical damages necessarily exceed $3.1 million——or consequently that, if Martinez had $1.7 million in future medical expenses (which he actually does not), the presumptive allocation of 37% of GSP to Medical Damages would be unfairly disproportionate and should be reduced to a lesser portion.

28. Future medical expense damages, in a nutshell, exert upward pressure on the portion of GSP that should be designated as reimbursement for Medical Damages, which the recipient must offset with evidence of nonmedical damages. AHCA, ironically, has a stronger incentive than the recipient to offer proof of the recipient's recoverable future medical expenses; indeed, the

    
    

    recipient is actually discouraged from proving future medical expenses, because doing so only increases his MaxMD, which while not necessarily fatal, obviously cannot reduce the MaxMD:TPD ratio.

29. Not every plaintiff, of course, has grounds for recovering future medical expenses, and not everyone who thinks he does is able to prove, to a reasonable degree of certainty, the amount necessary for his future care.11/ A plaintiff is not required, moreover, to seek the recovery of every element of damages for which compensation might possibly be had, nor should he pursue those for which he lacks adequate grounds. One of Martinez's attorneys testified on cross-examination that he believed there were no specific expenses that a doctor has said Martinez will later incur, which persuasively establishes the negative proposition that Martinez does not have grounds for seeking future medical expenses.12/ AHCA did not present any persuasive evidence, such as expert testimony that Martinez is likely to require future medical treatment as a result of his injuries, to refute or rebut this assertion.

30. The undersigned finds without hesitancy, therefore, that Martinez has no recoverable future medical expenses. His only compensatory damages for medical expenses relate to goods and services provided in the past, the measure of which is limited to the amount paid by Medicaid——$177,057. In short,

    
    

    MaxMD = $177,057. Thus, applying the mathematical formula set forth above, Martinez's PTPD equals $478,532.

31. Because PTPD equals $478,532, it follows that paragraph (11)(f) presumes Martinez's nonmedical damages (PTPD – MaxMD, or .63 x PTPD) to be $301,475. Yet, the persuasive (and unchallenged) evidence shows that Martinez's past and future lost earnings, alone, are approximately $400,000 in the aggregate. This amount is approximately 84% of PTPD, which demonstrates convincingly that the statute presumes a proportion of nonmedical damages relative to TPD (i.e., 63%) that does not in fact exist; the statute, it is clear, gives more weight to Medical Damages than the facts can support. Even if Martinez's only nonmedical damages were lost wages ($400,000), then the portion of the settlement reasonably attributable to Medical Damages would be less than 37%.

32. But Martinez clearly and convincingly has proven that he does, in fact, have additional nonmedical damages——for pain and suffering. Placing a value on pain and suffering is not a scientific or mathematically precise enterprise. See, e.g.,

    Ortega v. Belony, 185 So. 3d 538, 539 (Fla. 3d DCA 2015)("Damages for pain and suffering are difficult to calculate, have no set standard of measurement, and for this reason are uniquely reserved to a jury for their decision."). Yet Martinez has persuasively, even convincingly, established

    
    

    that his pain and suffering must reasonably be valued in seven figures. If we assume for the moment that Martinez's pain and suffering is worth $1 million (for it is certainly not worth less), add to that the lost wages of approximately $400,000 which he has persuasively demonstrated, and tack on the recoverable past medical expenses of $177,057, it becomes clear that Martinez's TPD is at least 1.5 million, with Medical Damages comprising no more than approximately 12% of TPD.

33. It is determined, as a matter of ultimate fact, that Martinez has proved, 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 an amount ($37,500) equal to 37% of GSP. In short, Martinez has clearly and convincingly rebutted the presumption that 37% of his settlement is attributable to Medical Damages.

34. It remains to be determined what the dollar amount is that should be designated as recovered medical expense damages,

    i.e. COL$, using the formula COL$ = (MaxMD/TPD) x GSP. We already know the values for MaxMD and GSP, which means that TPD is the only unknown variable at this point. The value of TPD is largely dependent on the size of Martinez's award for pain and suffering, for that is, by far, the single biggest component of his TPD.

    
    

35. In a civil action in tort, the standard jury instruction on general damages comprising injury, pain, disability, disfigurement, and loss of capacity for enjoyment of life provides as follows:

    Any bodily injury sustained by (name) and any resulting pain and suffering [disability or physical impairment] [disfigurement] [mental anguish] [inconvenience] [or] [loss of capacity for the enjoyment of life] experienced in the past [or to be experienced in the future]. There is no exact standard for measuring such damage.

    The amount should be fair and just in the light of the evidence.

    
    

    Fla. Std. Jury Instr. (Civ.) 501.2(a) (emphasis added). Had Martinez's tort case gone to trial, the jury probably would have been charged along these lines.

36. It should go without saying that the absence of an "exact standard" for determining the financial measure of pain and suffering does not somehow delegitimize this element of general damages. Yet it must be said, because AHCA disparages noneconomic losses as "inexact and uncertain," "subject to the whim of a jury." Resp't's PFO at 11. The undersigned rejects this characterization. Pain and suffering is no less compensable a loss in tort than "hard and known" medical expenses.

37. That said, there is no way to "prove" a precise figure for pain and suffering——which is why requiring clear and

    
    

    convincing evidence of the amount of damages the recipient could have recovered at trial for this noneconomic loss makes no sense. As the Florida Supreme Court explained:

    Jurors know the nature of pain, embarrassment and inconvenience, and they also know the nature of money. Their problem of equating the two to afford reasonable and just compensation calls for a high order of human judgment, and the law has provided no better yardstick for their guidance than their enlightened conscience. Their problem is not one of mathematical calculation but involves an exercise of their sound judgment of what is fair and right. The problem is often further complicated by the fact that the pain and suffering are yet to be suffered and thus even further removed from exact calculation and certain measurement. But such further uncertainty does not change the problem from one of judgment to one of calculation. It still rests within the enlightened conscience of the jury.

    
    

    Braddock v. Seaboard A. L. R. Co., 80 So. 2d 662, 668 (Fla. 1955).

38. It falls to the enlightened conscience of the undersigned, as the fact-finder, to determine as a matter of fact the monetary value of Martinez's physical pain and emotional anguish. He will not pretend to do so on the basis of clear and convincing evidence, however, because such evidence, it is believed, does not exist for Martinez or any recipient. How could anyone prove by clear and convincing evidence the exact measure of something for which the best yardstick is a

    
    

    stranger's enlightened conscience? If that is what the statute requires, then it might as well direct the recipient to produce a unicorn. If an appellate court eventually reviews this decision and holds otherwise, it is hoped and expected that the case would be remanded to the undersigned with instructions as to how this necessary finding of fact should be made in accordance with a strict evidential standard.

39. It is undisputed that Martinez sustained catastrophic injuries when a wall came crashing down on his body and crushed him under a pile of concrete rubble. Martinez was badly hurt and nearly killed in this accident, and there can be no doubt that he suffered severe physical pain immediately and long afterwards. He was experiencing chronic discomfort as of the final hearing, and the undersigned finds that Martinez will likely always be in pain as a result of the accident. He cannot walk without a cane, or work to earn a living. The undersigned finds that these significant deficits cause Martinez to suffer substantial emotional anguish and loss of enjoyment of life.

40. The undersigned finds that the reasonable and appropriate monetary value of Martinez's pain and suffering, past, present, and future, is $2.5 million. This amount is roughly five times his special damages, which strikes the undersigned as a figure comfortably within the range of reasonable awards, perhaps on the conservative side. Most

    
    

    important, $2.5 million is fair and just in light of the evidence, when weighed in the balance of the undersigned's enlightened conscience.

41. It is found, therefore, that Martinez's TPD is

    
    

    $3,077,057. Dividing MaxMD by TPD (MaxMD/TPD) yields .06 (rounded to the nearest hundredth). MaxMD, accordingly, is 6% of TPD. The settlement proceeds of $102,000, it is found, should be split 6/94 between Medical Damages and nonmedical damages.

42. Using the formula previously identified, COL$ equals

    
    

    .06 [MaxMD/TPD] times $102,000 [GSP], or $6,120. In other words, the dollar amount of Martinez's GSP attributable to payments for medical care is $6,120. Because COL$ is less than the Actual Expenditure of $177,057, LN$ is capped at (and thus equals) COL$, or $6,120, which is the amount payable to AHCA pursuant to its Medicaid lien.

    CONCLUSIONS OF LAW

    
    

43. The Division of Administrative Hearings has personal and subject matter jurisdiction in this proceeding, as well as final order authority, pursuant to section 409.910(17)(b), Florida Statutes.

44. Section 409.910(1) provides that "[i]f benefits of a liable third party are discovered or become available after medical assistance has been provided by Medicaid, . . . Medicaid

    
    

    [must] be repaid in full and prior to any other person, program, or entity." As previously stated herein, however, the U.S. Supreme Court has interpreted the anti-lien provision in federal Medicaid law as imposing a bar which, pursuant to the Supremacy Clause, precludes "a state from asserting a lien on the portions of a settlement not allocated to medical expenses." See, e.g., Mobley v. State, 181 So. 3d 1233, 1235 (Fla. 1st DCA 2015).

45. Although the states do not have unfettered access to tortfeasors' payments when enforcing Medicaid liens, the Court has remarked that the states are not necessarily forbidden from establishing rebuttable presumptions respecting the earmarking of settlement proceeds for medical expense damages, leaving that door open to them. It has, however, "found that a Medicaid beneficiary must be given the opportunity to show that the amount apportioned for medical expenses by the parties is less than the amount of the lien asserted by the state." Id.

46. As we have seen, Florida has opted to take a formulaic approach to the division of settlement proceeds. Section 409.910(11)(f) provides in relevant part as follows:

    (f) Notwithstanding any provision in this section to the contrary, in the event of an action in tort against a third party in which the recipient or his or her legal representative is a party which results in a judgment, award, or settlement from a third party, the amount recovered shall be distributed as follows:

    
    

    1. After attorney's fees and taxable costs as defined by the Florida Rules of Civil Procedure, one-half of the remaining recovery shall be paid to the agency up to the total amount of medical assistance provided by Medicaid.

       
       

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

       
       

    3. For purposes of calculating the agency's recovery of medical assistance benefits paid, the fee for services of an attorney retained by the recipient or his or her legal representative shall be calculated at 25 percent of the judgment, award, or settlement.

    
    

47. Section 409.910(17)(b) establishes the exclusive remedy for contesting the Statutory Distribution, which affords the recipient an opportunity in an administrative hearing to rebut the presumptive allocation of settlement proceeds to Medical Damages by proving:

    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.

    
    

48. As found above, Martinez carried his burden, as a matter of fact, by proving, clearly and convincingly,13/ that a lesser portion than 37% of his total recovery should be designated as compensation for Medical Damages.

    
    

49. As found above, Martinez proved that, under a fair allocation of his total recovery, $6,120 is attributable to payments for medical care, as a matter of fact.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of Law, it is DETERMINED that the amount payable to AHCA in satisfaction of its Medicaid lien for medical assistance provided to Martinez is $6,120, which reflects the amount that Martinez recovered for medical expense damages in the settlement of his third-party tort litigation.

DONE AND ORDERED this 30th day of June, 2016, in Tallahassee, Leon County, Florida.

S

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 2016

ENDNOTES

1/ The facts of this case are better understood when presented in the context of the governing legal framework. As a result, there are some findings herein that might be classified as legal in nature and others that clearly are. To the extent the undersigned is breaching the dichotomy between fact and law, it is only to organize the material in a way which, hopefully, improves readability and facilitates comprehension.

2/ One of Martinez's attorneys indicated at hearing that Martinez's lost future income was calculated out to "age 65," but he appears to have misspoken in this regard, as the numbers fail to add up under that assumption.

3/ The undersigned is aware that, in a civil action in tort, the trier of fact would be told that Martinez's damages for the loss of ability to earn money in the future should be reduced to present value. See Fla. Std. Jury Instr. (Civ.) 502.7.

Determining present value in reference to loss of future earning capacity is complicated, due to the different approaches used by economists to make such a calculation. No expert testimony was adduced by either party concerning the appropriate discount and growth factors to be applied (which would account, respectively, for the investment value of money and for the injured party's expected increases in compensation over the years from, e.g., pay raises). Given the relatively modest income and time frame in view here, however, the undersigned believes it is reasonable to assume a net neutral discount, because the range of reasonable outcomes under scenarios applying either a net positive discount or a net negative discount is limited, and any value within that range would lead to substantially the same result in this case.

4/ This legal principle is not disputed.

5/ This is because .75 x .50 = .375. The independent variable that changes the Portion from case to case is the amount of taxable costs. The deduction of any taxable costs from the settlement recovery (net of attorney's fees) reduces P% to less than 37.5%. Thus, the greater the taxable costs relative to GSP, the smaller the statutory percentage. For example, if GSP were $10,000 in a case having $3,500 in taxable costs, then PRMED would be $2,000, making the statutory percentage 20%. If costs in the same hypothetical case were $7,500, then the statutory percentage would be zero. P% must fall in the range

between 0% and 37.5% because taxable costs cannot be less than zero, and .75 x .50 always equals .375.

6/ Fairness requires the assumption of a pro rata distribution, but so too does logic. Unless constrained by considerations of proportionality, the injured party would always urge an allocation that maximized his net recovery by exposing as little of the settlement as possible to the claims of subrogees, tax collectors, and creditors of all kinds, just as his creditors would do the same, conversely, to maximize their recoveries to the detriment of the injured party. Without a neutral principle for resolving disputes over the division and distribution of a fixed and insufficient sum, adjudication would come down to picking winners and losers. Proportionality is the only rational and uniformly applicable check on the opposing interests of the competing claimants.

7/ Reinforcing this plain reading of the statute is that the formula in section 409.910(11)(f) does not take into account the types or amounts of damages which the recipient suffered, nor does it otherwise attempt to allocate sums of money by any method that relates to the facts of the recipient's case.

Instead, the statutory formula operates to impose a percentage of GSP deemed attributable to Medical Damages based on factors having no particular bearing on the plaintiff's compensable losses or injuries, including expenses for medical care. The 25% reduction for attorney's fees, for example, would not likely reflect the tort litigants' allocation of sums paid in settlement, at least in a typical case, because the defendant is not usually liable to the plaintiff for attorney's fees in a personal injury action. See, e.g., Trytek v. Gale Indus., 3 So. 3d 1194, 1198 (Fla. 2009)("It is well-settled that attorneys' fees can derive only from either a statutory basis or an agreement between the parties."). The reduction for taxable costs (which is the only case-specific variable), in contrast, does relate to a potential liability of the defendant, see section 57.041, Florida Statutes, but it seems unlikely that a defendant, in a settlement, would pay 100% of the plaintiff's taxable costs, and in any event the amount of taxable costs possesses no predictable relationship to the amount of a plaintiff's Medical Damages. The final, 50% reduction just splits the balance down the middle——it clearly has no connection to the recipient's actual circumstances. The point is, the statutory formula gives an appearance of mathematical rigor when, in effect, it merely generates a percentage, i.e., the Portion, that is largely predetermined (37.5%), and wholly based

on variables that have practically nothing to do with the actual amounts of a recipient's damages. Therefore, to give a strong presumption of correctness to the dollar amount (as opposed to the Portion) that the statutory formula produces, as if the figure were custom-made to suit the recipient's circumstances, would dignify the number with a precision it obviously lacks.

The Portion lacks precision too, but the recipient's burden of proving that less than P% of GSP should be designated as Medical Damages is not as onerous as would be the requirement that he prove by clear and convincing evidence every element of his damages.

8/ As an aside, it is worth mentioning that requiring every recipient to prove MaxMD and TPD by clear and convincing evidence in this type of administrative proceeding would be plainly unfair. In a civil action, after all, the plaintiff is not required to prove his damages by clear and convincing evidence, but by a preponderance of the evidence, which is a less demanding standard. Yet, the findings of a jury regarding the respective amounts required to compensate the plaintiff for his general and specific damages, including those relating to past and future medical care, are conclusive for purposes of the Medicaid lien. Wos v. E.M.A., U.S. , 133 S. Ct. 1391, 1399, 185 L. Ed. 2d 471, 483 (2013)("When there has been a judicial finding or approval of an allocation between medical and nonmedical damages——in the form of either a jury verdict, court decree, or stipulation binding on all parties——that is the end of the matter."). This means that if the recipient goes to trial, instead of settling, he does not need to prove the amounts of his damages by clear and convincing evidence, and AHCA's recovery is limited to the amount of Medical Damages that the jury has awarded under the less stringent preponderance standard.

Further, to impose upon recipients the burden of proving by clear and convincing evidence those elements of damages that are inherently uncertain (e.g., future medical expenses) or insusceptible to ordinary methods of proof (e.g., pain and suffering) would be effectively to doom many if not most recipients to failure by setting the bar impossibly high. If the statute were interpreted as imposing such a burden of proof, the law would create a disincentive to settlement that might reasonably persuade some plaintiffs to reject otherwise reasonable offers of compromise so as to avoid facing the prospect of proving their damages by clear and convincing evidence in an administrative proceeding.

9/ Martinez's PRMED divided by 102,000 actually equals .3676, which the undersigned has rounded to the nearest hundredth (.37) to compute the percentage.

10/ This figure has been rounded to the nearest dollar.

11/ See, e.g., Fasani v. Kowalski, 43 So. 3d 805, 812 (Fla. 3d DCA 2010)("It is a plaintiff's burden to establish that future medical expenses will more probably than not be incurred." The evidence must be sufficient to permit the jury to determine, with reasonable certainty, the amount of future medical expenses the plaintiff is likely to incur. A mere possibility that treatment might subsequently be obtained cannot support an award of future medical expenses.). "Some direct evidence of anticipated future medical expense is essential to a recovery because the amount of past medical expenses incurred does not—— at least by itself——provide a reasonable basis for a jury to compute future medical expenses." Volusia Cnty. v. Joynt, 179 So. 3d 448, 452 (Fla. 5th DCA 2015).

12/ The undersigned admits that he has difficulty imagining what clear and convincing proof of no recoverable future medical expenses would look like, given that proving affirmatively in a civil trial that the jury should award a measurable amount as future medical expense damages merely by a preponderance of the evidence is no easy task for the plaintiff, and that requiring clear and convincing positive proof of such damages would likely preclude recovery therefor in most tort cases. It is much easier, indeed, for a plaintiff in a tort action to fail to prove recoverable future medical expense damages than to succeed. All this makes it extremely difficult to grasp the concept of a recipient in this sort of administrative proceeding failing to fail to prove recoverable future medical expense damages, except by offering evidence that he has them. Even then, the recipient could easily fail to succeed, if he tried to prove a recoverable amount of such damages, if required to do so by clear and convincing proof——but this would inure to his advantage in the end, since future medical damages only increase MaxMD, which is never helpful to the recipient contesting a Medicaid lien. In any event, Martinez succeeded in failing to show the existence of recoverable future medical expense damages by introducing unrebutted evidence that he has none.

13/ Regarding the standard of proof, in Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983), the court developed a "workable definition of clear and convincing evidence" and found

that of necessity such a definition would need to contain "both qualitative and quantitative standards." The court held that:

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.

Id. The Florida Supreme Court later adopted the Slomowitz court's description of clear and convincing evidence. See In re Davey, 645 So. 2d 398, 404 (Fla. 1994).

COPIES FURNISHED:

Christopher G. Klemick, Esquire Klemick & Gampel, P.A.

1953 Southwest 27th Avenue Miami, Florida 33145 (eServed)

Alexander R. Boler, Esquire Xerox Recovery Services, Inc. 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 F. 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 appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the First District Court of Appeal in Leon County, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 16-000851MTR

Orders for Case No: 16-000851MTR