vs.
Case No. 16-1270MTR
Respondent.
An administrative hearing was held in this case on June 9, 2016, in Tallahassee, Florida, and with video teleconference from Lauderdale Lakes, Florida, before James H. Peterson III, Administrative Law Judge with the Division of Administrative
Hearings (DOAH).
For Petitioner: Floyd B. Faglie, Esquire
Staunton & Faglie, P.L.
For Respondent: Alexander R. Boler, Esquire
The issue to be determined is the amount payable under section 409.910, Florida Statutes,1/ in satisfaction of
Respondent's Medicaid lien on settlement proceeds received by Petitioner, Victor Hugo Herrera, Sr., from a third party.
On March 7, 2016, Petitioner filed a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien, pursuant to section 409.910(17)(b). The final hearing was duly noticed, scheduled, and held on June 9, 2016.
At the final hearing, Petitioner presented the testimony of two witnesses, Edward Zebersky, Esquire; and R. Vinson Barrett, Esquire, each of whom was accepted as an expert in valuation of damages in personal injury cases. Petitioner's Exhibits P-1 through P-12 were admitted into evidence. Respondent submitted one exhibit which was received into evidence as Exhibit A. By stipulation of the parties, Respondent's Exhibit A was deemed confidential and sealed.
The proceedings were recorded and a transcript was ordered. The record was held open and Respondent presented the deposition testimony of James H.K. Bruner, Esquire, in a deposition held on June 27, 2016, the transcript of which was filed on August 3, 2016, along with the one-volume Transcript of the final hearing.
The parties’ were given until August 22, 2016 within which to file their proposed final orders. The parties timely filed
their respective Proposed Final Orders, both of which have been considered in rendering this Final Order.
On July 29, 2014, unbeknownst to Mr. Herrera, an individual (hereinafter Assailant) entered the common area where Mr. Herrera rented an office. The Assailant stalked Mr. Herrera and forced his way into Mr. Herrera’s office. The Assailant attacked Mr. Herrera in his office and shot Mr. Herrera in the leg. As a result of being shot in the leg, Mr. Herrera had his leg medically amputated above the knee, suffered a collapsed lung, and was comatose for nearly two months.
As a result of his severe injuries, Mr. Herrera is now permanently disabled, disfigured, and wheelchair-bound, unable to walk.
Mr. Herrera’s medical expenses related to his injuries were paid by Medicaid, which provided $271,344.06 in benefits.
Mr. Herrera brought a personal injury lawsuit to recover all of his damages associated with his injuries against the owner of the office and security company responsible for providing security (Defendants). The $271,344.06 paid by Medicaid constituted Mr. Herrera’s entire claim for past medical expenses.
On December 11, 2015, Mr. Herrera compromised and settled his personal injury action against the Defendants for
$925,000. The General Release of Claims memorializing the settlement with the Defendants stated, inter alia:
The First Party, the Second Party and their respective counsel acknowledge that this settlement does not fully compensate the First Party for the damages he has allegedly suffered, but as provided herein this settlement shall operate as a full and complete release as to all claims against Second Party, without regard to this settlement only compensating the First Party for a fraction of the total monetary value of his alleged damages. These parties agree that the damages suffered by the First Party have a value in excess of $5,000,000.00, of which $271,344.06 represents First Party’s claim for past medical expenses. Given the facts, circumstances, and nature of the First Party’s alleged injuries and this settlement, $50,198.65 of this settlement has been allocated to the First Party’s claim for past medical expenses and the remainder of the settlement has been allocated toward 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 First Party’s alleged damages. Further, the parties acknowledge that the First Party may need future medical care related to his alleged injuries, and some portion of this settlement may represent compensation for those future medical expenses the First Party may incur in the future. However, the parties acknowledge that the First Party, or others on his behalf, have not made payments in the past or in advance for the First Party’s future medical care and the First Party has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in
advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for payments made to secure future medical care.
During the pendency of Mr. Herrera’s personal injury lawsuit, the Agency for Health Care Administration (AHCA) was notified of the lawsuit and AHCA, through its collections contractor Xerox Recovery Services, asserted a $271,344.06 Medicaid lien against Mr. Herrera’s cause of action and settlement of that action.
By letter of January 22, 2016, AHCA was notified by Mr. Herrera’s personal injury attorney of the settlement and provided a copy of the executed release and itemization of Mr. Herrera’s $10,114.38 in litigation costs. This letter explained that Mr. Herrera’s damages had a value in excess of
$5,000,000, and the $925,000 settlement represented only an
18.5 percent recovery of Mr. Herrera’s damages. Accordingly, he had recovered only 18.5 percent of his $271,344.06 claim for past medical expenses, or $50,198.65. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $271,344.06 Medicaid lien.
AHCA did not respond to Mr. Herrera’s attorney’s letter of January 22, 2016.
AHCA has not filed an action to set aside, void, or otherwise dispute Mr. Herrera’s settlement.
AHCA has not commenced a civil action to enforce its rights under section 409.910.
The Medicaid program spent $271,344.06 on behalf of Mr. Herrera, all of which represents expenditures paid for Mr. Herrera’s past medical expenses.
No portion of the $271,344.06 paid by the Medicaid program on behalf of Mr. Herrera represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care.
Mr. Herrera and AHCA agree that application of the formula at section 409.910(11)(f) to Mr. Herrera’s $925,000 settlement would require payment to AHCA of the full $271,344.06 Medicaid lien.
Petitioner has deposited the full Medicaid lien amount into an interest-bearing account pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17).
At the final hearing, Mr. Zebersky, who represented Mr. Herrera in his underlying personal injury action, testified and was accepted, without objection, as an expert in the valuation of damages suffered by injured parties. Mr. Zebersky has been an attorney for 27 years and has demonstrated
considerable experience in handling plaintiffs’ personal injury and insurance class action claims in South Florida.
In rendering his opinion as to the value of
Mr. Herrera’s claim, Mr. Zebersky explained that, as a routine and daily part of his practice, he makes assessments concerning the value of damages suffered by injured parties and he explained his process for making these determinations.
Mr. Zebersky was familiar with and gave a detailed explanation of the circumstances giving rise to Mr. Herrera’s claim. In making his valuation determination, Mr. Zebersky reviewed the police report, the State Attorney’s file on the shooting, all of Mr. Herrera’s medical records, and met numerous times with Mr. Herrera and his family. Mr. Zebersky testified that through his representation of Mr. Herrera, review of
Mr. Herrera’s file, and based on his training and experience, he had developed the opinion that the value of Mr. Herrera’s damages was $5,000,000. Mr. Zebersky suggested that the
$5,000,000 amount was conservative, by testifying that “five million dollars, you know, is probably what the pain and suffering value is especially in Broward County.”
In addition to his first-hand experience with Mr. Herrera’s claim, Mr. Zebersky further supported his
valuation opinion by explaining that he had “round-tabled” the
case with other experienced attorneys and they agreed that the value of Mr. Herrera’s damages was $5,000,000.
Further, Mr. Zebersky testified that he had reviewed jury verdicts in developing his opinion and the jury verdicts in Petitioner’s Exhibit 12 were comparable to Mr. Herrera’s case and support the valuation of Mr. Herrera’s damages at
$5,000,000.
Mr. Zebersky’s testimony was credible and is accepted.
Petitioner also presented the testimony of
Mr. Barrett, who was accepted as an expert in the valuation of damages. Mr. Barrett has been accepted as an expert in valuation of damages in a number of other Medicaid lien cases before DOAH. Mr. Barrett has been a trial attorney for
40 years, with a primary focus on plaintiff personal injury cases, including medical malpractice, medical products liability, and pharmaceutical products liability. Mr. Barrett stays abreast of jury verdicts and often makes assessments concerning the value of damages suffered by injured parties.
After familiarizing himself with Mr. Herrera’s injuries through review of pertinent medical records and Petitioner’s Exhibits, including the police report, pictures of Mr. Herrera, Mr. Herrera’s complaint and Mr. Herrera’s General Release of Claims, Mr. Barrett offered his opinion, based upon his professional training and experience, that “five million was
a conservative estimate” for the value of Mr. Herrera’s damages and that Mr. Herrera’s damages were “undoubtedly at least five million dollars.”
Mr. Barrett also reviewed the jury verdicts in Petitioner’s Exhibit 12 and opined that those verdicts were comparable and supported his valuation of Mr. Herrera’s damages.
Mr. Barrett’s testimony was credible and is accepted.
AHCA’s designated expert, Mr. Bruner, was not available for testimony at the final hearing. Instead of asking for a continuance, the parties agreed to take Mr. Bruner’s deposition after the final hearing and then file the transcript with DOAH. Further, during the final hearing, AHCA agreed that Mr. Bruner would not be testifying as to the value of
Mr. Herrera’s damages. In accordance with that agreement, Mr. Brunner’s deposition was subsequently taken and his deposition transcript was filed on August 3, 2016.
At Mr. Bruner’s deposition, AHCA proffered Mr. Bruner as an expert in evaluation of cases and settlements. Petitioner objected on the grounds that Mr. Bruner lacked experience or expertise in personal injury cases and should not be allowed to testify as an expert. Further, Petitioner objected to the relevance of Mr. Bruner’s testimony based on AHCA’s earlier agreement that he would not be testifying concerning the value of the damages suffered.
Counsel for AHCA responded to Petitioner’s objection to the relevance of Mr. Bruner’s testimony by agreeing that AHCA would not be seeking any “expert testimony as to evaluation of damages,” but would only be using Mr. Bruner’s testimony to “evaluate” the jury verdicts in Petitioner’s Exhibit 12.
While Mr. Bruner does not have the same level of experience in personal injury claims as the experts offered by Petitioner, Mr. Bruner has sufficient experience to offer an opinion on the jury verdicts set forth in Petitioner’s
Exhibit 12, and to that extent, his expertise in the evaluation of cases is accepted. However, because of his lack of recent experience in settling personal injury claims, Mr. Brunner is not accepted as an expert in personal injury settlements.2/
In his deposition testimony, Mr. Bruner criticized the relevance of the 12 verdicts in Petitioner’s Exhibit 12 on the grounds that, while the verdicts involved amputations of legs, there were factual differences in the mechanism of injury.
Mr. Bruner further asserted that, to the extent the verdicts in Petitioner’s Exhibit 12 included awards for future medical expenses, they should not be considered because, according to Mr. Bruner’s understanding, Mr. Herrera did not recover any future medical expenses in the settlement.
Finally, while the juries in the 12 jury verdicts had determined the value of the damages, Mr. Bruner criticized the
verdicts because he asserted that it was possible that the cases may have settled post-verdict for less, or that the injured parties may have received less, due to reductions for comparative negligence. On this last point, it appears that Mr. Bruner confused the issue of the value of the damages with the settlement value of the case. The value of the damages is the estimation of the monetary value a jury would assign to the damages. On the other hand, the settlement value of the case is the amount it settled for with the considerations of liability, causation, the Defendant’s ability to pay, risk of trial, and other limiting factors, which are a calculus in every settlement.
Despite Mr. Bruner’s criticisms of the jury verdicts in Petitioner’s Exhibit 12, the undersigned finds those verdicts supportive of the valuation opinions offered by Petitioner’s experts. Further, Petitioner’s experts’ opinions were not primarily reliant on those 12 verdicts, but were rather based upon their knowledge of Mr. Herrera’s injury and their extensive experience in handling cases involving catastrophic injury, including jury trial experience.
Mr. Bruner’s testimony did not provide an alternative value of the damages suffered by Petitioner. The value of
$5,000,000 for Mr. Herrera’s claim opined by Petitioner’s experts is unrebutted.
Considering the valuation of Mr. Herrera’s claim in the amount of $5,000,000, his $925,000 settlement represents only an 18.5 percent recovery of Mr. Herrera’s damages. Applying that same 18.5 percent to the $271,344.06 paid by
Medicaid for past medical expenses results in the sum $50,198.65 from the settlement proceeds available to satisfy AHCA’s Medicaid lien.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and parties in this case pursuant to sections 120.569, 120.57(1), and 409.910(17), Florida Statutes.
Respondent is the agency authorized to administer Florida’s Medicaid program. See § 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 (Fla. 5th DCA
2009). The statute creates an automatic lien on any such judgment or settlement for the medical assistance provided by Medicaid. See § 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). Ag. for Health Care Admin. v. Riley, 119 So. 3d 514, 515 n.3 (Fla. 2d DCA 2013).
Section 409.910(11)(f) provides:
Notwithstanding any provision in this section to the contrary, in the event of an action in tort against a third party in which the recipient or his or her legal representative is a party which results in a judgment, award, or settlement from a third party, the amount recovered shall be distributed as follows:
After attorney’s fees and taxable costs as defined by the Florida Rules of Civil Procedure, one-half of the remaining recovery shall be paid to the agency up to
the total amount of medical assistance provided by Medicaid.
The remaining amount of the recovery shall be paid to the recipient.
For purposes of calculating the agency’s recovery of medical assistance benefits paid, the fee for services of an attorney retained by the recipient or his or her legal representative shall be calculated at
25 percent of the judgment, award, or settlement.
Notwithstanding any provision of this section to the contrary, the agency shall be entitled to all medical coverage benefits up to the total amount of medical assistance provided by Medicaid. For purposes of this paragraph, “medical coverage” means any benefits under health insurance, a health maintenance organization, a preferred provider arrangement, or a prepaid health clinic, and the portion of benefits designated for medical payments under coverage for workers’ compensation, personal injury protection, and casualty.
Application of the formula in 409.910(11)(f) to Mr. Herrera’s $925,000 settlement requires payment to AHCA of the full $271,344.06 Medicaid lien.
Respondent correctly asserts that it 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, citing section 409.910(13). 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.”). Rather, in cases such as this, where Respondent 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:
A recipient may contest the amount designated as recovered medical expense damages payable to the agency pursuant to the formula specified in paragraph (11)(f) by filing a petition under chapter 120 within 21 days after the date of payment of funds to the agency or after the date of placing the full amount of the third-party benefits in the trust account for the benefit of the agency pursuant to
paragraph (a). The petition shall be filed with the Division of Administrative Hearings. For purposes of chapter 120, the payment of funds to the agency or the placement of the full amount of the third- party benefits in the trust account for the benefit of the agency constitutes final agency action and notice thereof. Final order authority for the proceedings specified in this subsection rests with the Division of Administrative Hearings. This procedure is the exclusive method for challenging the amount of third-party benefits payable to the agency. In order to successfully challenge the amount payable to the agency, the recipient must prove, by clear and convincing evidence, that a lesser
portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f) or that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
Section 409.910(17)(b) thus makes clear that the formula set forth in subsection (11) constitutes a default allocation of the amount of a settlement that is attributable to medical costs, and sets forth an administrative procedure for adversarial testing of that allocation. See Harrell v. State,
143 So. 3d 478, 480 (Fla. 1st DCA 2014)(adopting the holding in Riley that petitioner “should be afforded an opportunity to seek the reduction of a Medicaid lien amount established by the statutory default allocation by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses”)(quoting Roberts v. Albertson’s, Inc., 119 So. 3d 457,
465-466 (Fla. 4th DCA 2012), reh’g and reh’g en banc denied sub nom. Giorgione v. Albertson’s, Inc., 2013 Fla. App. LEXIS 10067
(Fla. 4th DCA June 26, 2013)).
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).
Petitioner has proven, by clear and convincing evidence, that $50,198.65 of the total third-party recovery represents that share of the settlement proceeds fairly attributable to expenditures that were actually paid by Respondent for Petitioner’s past medical expenses.
In addition to being able to satisfy its lien from the portion of the settlement proceeds representing payment for past medical expenses, AHCA also argues that settlement funds received by Petitioner for payment of future medical expenses are subject to AHCA's lien. It bases this contention on the language from section 409.910(17)(b) that a challenger, such as Petitioner, 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).
There are two views on this argument: One allowing the Medicaid lien to spread to the portions of settlement agreements attributable to both past and future medical expenses; and the other limiting recovery from portions of settlements attributed to past medical expenses. See 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)(analyzing the two views). DOAH has generated final orders on both sides of
the issue. See, e.g., Mobley v. Ag. for Health Care Admin.,
Case No. 13-4785MTR, FO at 36-52 (Fla. DOAH Mar. 2, 2016)
(Medicaid lien for past medical expenses spreads to “undifferentiated recovery allocable to future medical expenses.”); compare Belinaso v. Ag. for Health Care Admin.,
Case No. 15-6136MTR, FO at 82 (Fla. DOAH Mar. 25, 2016)(“section
409 does not suggest that AHCA can be reimbursed from funds set aside for expenses [such as funds to pay for future medical expenses] unrelated to those actually paid by Medicaid.”); accord, Weedo v. Ag. for Health Care Admin., Case No. 16-
1932MTR, FO at 76 (Fla. DOAH Sept. 27, 2016)(“Medicaid anti-lien statute . . . limits AHCA’s recovery to that portion of [p]etitioner’s settlement representing compensation for past medical expenses.”).
The undersigned favors that latter view that limits AHCA’s Medicaid lien for past medical expenses to those portions of a settlement attributed to past medical expenses. Moreover, under the facts of this case, the settlement specifically recites that there is no allocation for future medical expenses.
In sum, 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 18.5 percent ratio that Mr. Herrera’s $925,000 settlement amount has to the overall
$5,000,000 value of his claim. Applying the 18.5 percent ratio to the full Medicaid lien sum of $271,344.06 calculated pursuant to the formula in section 409.910(11)(f), results in $50,198.65, which constitutes a fair, reasonable, and accurate share of the total recovery for past medical expenses actually paid by
Medicaid.
$50,198.65 in satisfaction of its Medicaid lien.
DONE AND ORDERED this 11th day of October, 2016, in Tallahassee, Leon County, Florida.
JAMES H. PETERSON, III
Filed with the Clerk of the Division of Administrative Hearings this 11th day of October, 2016.
1/ All citations to the Florida Statutes or federal law are to current versions.
2/ Mr. Bruner has been an attorney since 1983 and a member of the Florida Bar since 2004. Since coming to Florida in 2003, he has worked for the Department of Children and Families, the Department of Health, and AHCA, and he was employed for five years by Xerox Recovery Services in relation to collection of Medicaid liens with such employment ending in April 2013. In 2013, Mr. Bruner became a solo practitioner, and he lists on the Florida Bar website 75 areas of law in which he practices. He testified that his practice is a general practice and he practices “door law,” taking whatever comes in the door.
Mr. Bruner testified that 60 percent of his practice is plaintiff personal injury. He testified that over the last two years, he has only filed two personal injury lawsuits. He has never handled a case involving amputation. Mr. Bruner testified that he has never handled a personal injury jury trial.
Mr. Bruner testified that over the last four years, he has not settled a personal injury case.
Alexander R. Boler, Esquire Xerox Recovery Services
Floyd B. Faglie, Esquire Staunton & Faglie, P.L.
Richard J. Shoop, Agency Clerk
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Justin Senior, Interim Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1
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 one copy of a Notice of Administrative Appeal with the agency clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The Notice of Administrative Appeal must be filed within 30 days of rendition of the order to be reviewed.
