STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
JAY HOSEK, BY AND THROUGH HIS LEGAL GUARDIAN JIRINA HOSEK,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
/
Case No. 18-6720MTR
FINAL ORDER
Pursuant to notice, a final hearing was held in this case via video conference with sites in Tallahassee and Miami, Florida, on April 2, 2019, before Robert L. Kilbride, an Administrative Law Judge of the Division of Administrative Hearings ("DOAH").
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
2073 Summit Lake Drive, Suite 300
Tallahassee, Florida 32317 STATEMENT OF THE ISSUES
Whether the Agency for Health Care Administration's ("AHCA" or "the agency") Medicaid lien of $267,072.91 should be
reimbursed in full from the $1 million settlement recovered by Petitioner or whether Petitioner proved that a lesser amount should be paid under section 409.910(17)(b), Florida Statutes.
PRELIMINARY STATEMENT
On December 20, 2018, Petitioner filed a petition with DOAH pursuant to section 409.910(17)(b). The matter was assigned to the undersigned administrative law judge ("ALJ") to conduct a formal administrative hearing and enter a final order.
The final hearing was scheduled for April 2, 2019. Prior to the April 2, 2019, final hearing, the parties filed a Joint Prehearing Stipulation ("JPHS"). The stipulated facts have been incorporated herein.
The final hearing proceeded on April 2, 2019, as scheduled.
Petitioner called two expert witnesses, Brett Rosen, Esquire, and R. Vinson Barrett, Esquire. Petitioner's Exhibits 1 through 11 were admitted into evidence, without objection from AHCA. AHCA did not call any witnesses and submitted into evidence Exhibit 1, without objection from Petitioner.
The one-volume Transcript of the proceedings was filed with DOAH on May 7, 2019. After being granted an extension of time, the parties filed their respective proposed final orders on June 3, 2019. Both parties' proposed final orders were reviewed and considered by the undersigned in the preparation of this Final Order.
Petitioner argues that since Jay Hosek ("Hosek") received less in settling the case than the total value of his personal injury case, the Medicaid lien should be reduced commensurately by the same ratio or percentage that his settlement bears to the total value of his case (this is sometimes referred to as the "proportionality test" or "pro-rata test").
Respondent argues that unless proven otherwise by the test outlined in section 409.910(17)(b), it must be reimbursed for its full Medicaid lien in the amount of $267,072.91, taking into account the statutory formula found in section 409.910(11)(f).
All citations to the Florida Statutes are to the 2018 version, unless otherwise indicated.
FINDINGS OF FACT
Based on the stipulation between the parties (paragraphs 1 through 13 below), the evidence presented, and the record as a whole, the undersigned makes the following Findings of Fact:
On January 13, 2016, Mr. Jay Hosek was operating his 1999 Chevy Trailblazer northbound on U.S. Highway 1, near mile marker 56, in Monroe County. At that same time and place, his vehicle was struck by a southbound tractor trailer. Hosek suffered catastrophic physical injuries, including permanent brain damage. Hosek is now unable to walk, stand, eat, toilet, or care for himself in any manner.
Hosek's medical care related to the injury was paid by Medicaid, Medicare, and United Healthcare ("UHC"). Medicaid provided $267,072.91 in benefits, Medicare provided $93,952.97 in benefits and UHC provided $65,778.54 in benefits. Accordingly, Hosek's entire claim for past medical expenses was in the amount of $426,804.42.
Jirina Hosek was appointed Hosek's legal guardian.
As legal guardian, Jirina Hosek brought a personal injury lawsuit against the driver and owner of the tractor trailer that struck Hosek ("defendants") to recover all of Hosek's damages associated with his injuries.
The defendants maintained only a $1 million insurance policy and had no other collectable assets.
Hosek's personal injury action against the defendants was settled for the available insurance policy limits, resulting in a lump sum unallocated settlement of $1 million. Due to Hosek's incompetence, court approval of the settlement was required and the court approved the settlement by Order of October 5, 2018.
During the pendency of Hosek's personal injury action, AHCA was notified of the action and AHCA asserted a $267,072.91 Medicaid lien against Hosek's cause of action and settlement of that action.
AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Hosek's action against the defendants.
By letter, AHCA was notified of Hosek's settlement.
AHCA has not filed a motion to set aside, void, or otherwise dispute Hosek's settlement.
The Medicaid program through AHCA spent $267,072.91 on behalf of Hosek, all of which represents expenditures paid for Hosek's past medical expenses.
Application of the formula at section 409.910(11)(f) to Hosek's $1 million settlement requires payment to AHCA of the full $267,072.91 Medicaid lien.
Petitioner has deposited AHCA's full Medicaid lien 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, Florida Statutes, pursuant to section 409.910(17).
While driving his vehicle northbound, Hosek drifted into oncoming traffic, crossed over the center line, and struck a southbound vehicle in its lane head on. Petitioner had an indisputable and extremely high degree of comparative negligence in causing this tragic vehicle accident.
Petitioner presented the testimony of Brett Rosen ("Rosen"), Esquire, a Florida attorney with 12 years' experience
in personal injury law. His practice includes catastrophic and wrongful death cases.
Rosen is board-certified in civil trial by the Florida Bar. He is a member of several trial attorney associations. Rosen represented Hosek and his family in the personal injury case.
As a routine part of his practice, Rosen makes assessments regarding the value of damages his injured client(s) suffered. He stays abreast of personal injury jury verdicts by reviewing jury verdict reports and searching verdicts on Westlaw. Rosen regularly reads the Daily Business Review containing local verdicts and subscribes to the "Law 360," which allows him to review verdicts throughout the country.
Rosen was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency.
Rosen testified that Hosek's case was a difficult case for his client from a liability perspective, since all the witnesses blamed Hosek for the crash and the police report was not favorable to him.
In his professional opinion, had Hosek gone to trial, the jury could have attributed a substantial amount of comparative negligence to him based upon the facts of the case. There was also a high possibility that Hosek might not receive
any money at all, since Hosek's comparative negligence in the accident was very high.
Rosen explained the seriousness of Hosek's injuries, stating that Hosek may have fallen asleep while driving and his car veered over and crossed the centerline. It hit an oncoming commercial truck, which caused his vehicle to flip resulting in severe injuries to him.
Rosen testified that Hosek is unable to communicate since he received catastrophic brain injury from the accident and is unable to care for himself.
Rosen provided an opinion concerning the value of Hosek's damages. He testified that the case was worth
$10 million, and that this amount is a very conservative valuation of Hosek's personal injuries. He also generalized that based on his training and experience, Hosek's damages could range anywhere from $10 to $30 million at trial.
He testified that Hosek would need future medical care for the rest of his life. This future medical care has a significant value ranging from $15 to $25 million.1/
Rosen testified that he reviewed other cases and talked to experts in similar cases involving catastrophic injuries. After addressing various ranges of damages, Rosen clarified that the present value of Hosek's damages in this case was more than
$10 million dollars. Although he did not state specific amounts,
he felt that Hosek's noneconomic damages would have a significant value in addition to his economic damages.2/
Rosen believed that a jury would have returned or assigned a value to the damages of over $10 million. He testified that his valuation of the case only included the potential damages. He did not take into account Hosek's "substantial amount" of comparative negligence and liability.3/
Despite doing so in other personal injury cases, Rosen did not conduct a mock trial in an effort to better assess or determine the damages in Hosek's case.
Rosen testified that Hosek sued the truck driver, Alonzo, and Alonzo's employer. He further testified that Hosek was compensated for his damages under the insurance policy carried by the truck driver and his company and settled for the policy limits of $1 million dollars representing 10 percent of the potential total value of his claim.
Rosen did not obtain or use a life care plan for Hosek, nor did he consider one in determining his valuation of damages for Hosek's case.
Rosen did not provide any specific numbers or valuation concerning Hosek's noneconomic damages. Instead, he provided a broad damage range that he said he "would give the jury" or "be giving them a range of $50 Million for past and future."4/
Rosen testified that he relied on several specific factors in making the valuation of Hosek's case. The most important factor for him was to determine what his client was "going through" and experience his client's "living conditions."5/
Secondly, he considers the client's medical treatment and analyzes the client's medical records. Based on these main factors, he can determine or figure out what the client's future medical care will "look like."6/
Petitioner also presented the testimony of R. Vinson Barrett ("Barrett"), Esquire, a Tallahassee trial attorney. Barrett has more than 40 years' experience in civil litigation. His practice is dedicated to plaintiff's personal injury, as well as medical malpractice and medical products liability.
Barrett was previously qualified as an expert in federal court concerning the value of the wrongful death of an elderly person. This testimony was used primarily for tax purposes at that trial.
Barrett has been accepted as an expert at DOAH in Medicaid lien cases in excess of 15 times and has provided testimony regarding the value of damages and the allocation of past medical expenses.
Barrett has handled cases involving catastrophic brain injuries. He stays abreast of local and state jury verdicts.
Barrett has also reviewed several life care plans and economic reports in catastrophic personal injury cases.
He routinely makes assessments concerning the value of damages suffered by parties who have received personal injuries. Barrett determines the value of these damages based primarily on his experience and frequent review of jury verdicts.
Barrett was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency.7/
Barrett testified that Hosek had a catastrophic brain injury with broken facial bones and pneumothoraxes, all sustained during an extremely violent head-on collision with a commercial truck.
This assessment was based on the case exhibits and the "fairly limited medical records" he reviewed. He believed that Hosek would need extensive and expensive medical care for the rest of his life. However, no details were offered by Barrett.8/
Barrett provided an opinion concerning the value of Hosek's damages. This was based on his training and experience. Barrett did not provide a firm number for Hosek's damages. Instead, he offered a nonspecific and broad range of damages.
Barrett testified that Hosek's damages "probably" have a value in the range of $25 to $50 million, and the range of Hosek's future medical care would be $10 to $20 million.
However, he felt that $10 million was a "very, very, very conservative" estimate of damages, primarily because he felt that future medical expenses would be so high.
Barrett stated that Hosek's economic damages would have a significant value exceeding $10 million and that Hosek's noneconomic damages would have an additional value exceeding
$10 million.
Barrett acknowledged that he did not consider or take into account Hosek's "huge comparative negligence" in estimating the total value of the case. Instead, he only considered the amount(s) that would be awarded for damages.
He testified that Petitioner's degree of comparative negligence would reduce each element of damages he was awarded.
As a result of Hosek's very significant comparative negligence, Barrett testified that a trial would have likely resulted in a "complete defense verdict" against Hosek or with only minor negligence attributed to the truck driver or his company.
Barrett felt that a jury in Hosek's case would not have awarded Hosek "more than one million dollars or so."
Barrett explained that in a trial for personal injuries that each element of damages awarded by the jury to the plaintiff on the verdict form is reduced by the percentage of the plaintiff's comparative negligence.
Barrett also explained that when the jury verdict assigns ten percent of the negligence to the defendant and
90 percent of the negligence to the plaintiff, then the defendant is liable for paying only ten percent of each element of the damages awarded to the plaintiff.
Barrett testified that he does not believe that the
$1 million settlement fully compensated Hosek for his injuries and that a potential award of $10 million would be a conservative value of Hosek's claim.
While both experts provided broad and nonspecific ranges for the value of Hosek's claims, they both summed up their testimony by concluding that $10 million was a very conservative estimate of Hosek's total claim.
AHCA did not call any witnesses. The agency presented Exhibit 1, entitled "Provider Processing System Report." This report outlined all the hospital and medical payments that AHCA made on Hosek's behalf, totaling $267,072.91.
On the issue of damages, the experts did not provide any details concerning several of Petitioner's claims, including the amount of past medical expenses, loss of earning capacity, or damages for pain and suffering.
The burden was on Petitioner to provide persuasive evidence to prove that the "proportionality test" it relied on to present its challenge to the agency's lien under
section 409.910(17)(b) was a reliable and competent method to establish what amount of his tort settlement recovery was fairly allocable to past medical expenses. In this case, the undersigned finds that Petitioner failed to carry this burden.9/
There was no credible evidence presented by Petitioner to prove or persuasively explain a logical correlation between the proposed total value of Petitioner's personal injury claim and the amount of the settlement agreement fairly allocable to past medical expenses. Without this proof the proportionality test was not proven to be credible or accurate in this case, and Petitioner did not carry his burden.
There was a reasonable basis in the record to reject or question the evidence presented by Petitioner's experts. Their testimony was sufficiently contradicted and impeached during cross-examination and other questioning. Even if the experts' testimony had not been contradicted, the "proportionality test" proposed by Petitioner was not proven to be a reliable or accurate method to carry Petitioner's burden under section 409.910(17)(b).
To reiterate, there was no persuasive evidence presented by Petitioner to prove that (1) a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by the agency, or
(2) that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
CONCLUSIONS OF LAW
DOAH has jurisdiction of the parties and final order authority in this case pursuant to sections 120.57(1)(a) and 409.910(17)(b), Florida Statutes.
Petitioner is an individual who was the recipient of Medicaid funds to pay for medical expenses related to his care and treatment arising from personal injuries received in a serious vehicle accident.
Petitioner and AHCA agreed that application of the formula at section 409.910(11)(f), to the $1 million settlement amount requires payment to AHCA of the full $267,072.91 Medicaid lien. JPHS (3)(f).
Petitioner and AHCA agreed that the burden of proof for a Medicaid recipient to successfully contest the amount payable to AHCA pursuant to the formula in section 409.910(11)(f) is a preponderance of the evidence. JPHS (3)(f).
Petitioner and AHCA agreed that DOAH has jurisdiction under section 409.910(17)(b) to determine the "portion of a total recovery which should be allocated as past medical expenses," including when the total recovery is an unallocated lump sum settlement. JPHS (3)(f).
Respondent is the state agency responsible to administer Florida's Medicaid program. § 409.902, Fla. Stat. Overview of Federal and State Medicaid Law
Medicaid is a cooperative federal-state welfare program providing medical assistance to people in need. See generally
Roberts v. Albertson's Inc., 119 So. 3d 457 (Fla. 4th DCA 2012).
To participate in the federal Medicaid program, the state agency is obligated to comply with federal Medicaid statutes, and must seek reimbursement for what it has paid out for a recipient when the resources of a liable third party become available. Id.; § 409.910(4), Fla. Stat.
Under Florida law, the agency providing the Medicaid support is then subrogated to and assigned the recipient's rights of recovery from any liable third party. This results in a lien in favor of the agency for the full amount of medical assistance provided by Medicaid. § 409.910(6), Fla. Stat. The recipient may challenge the lien amount at an administrative hearing under the provisions of section 409.910(17)(b).
The Legislature outlined its lien recovery intentions and the purpose underlying the Florida Medicaid recovery statute.
[I]t 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. (emphasis added).
§ 409.910(1), Fla. Stat.10/
Id.
The Florida Legislature also emphasized that:
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.
Thus, it is clear from a reading of these provisions that the State of Florida is entitled to be repaid in full for medical payments it made for the benefit of the recipient, regardless of whether the recipient is made whole. The court in Roberts, emphasized this express provision as well. Roberts, 119
So. 3d at 460.
Applied to the facts of this case and stated another way, AHCA is expressly entitled by the law to recover its full lien amount regardless of whether Petitioner recovers the full amount of his personal injury damages from responsible third parties.
Despite these broad recovery rights afforded to the State, there is a limitation affecting the Florida Medicaid recovery program under chapter 409. Specifically, the State's recovery program cannot run afoul of the anti-lien provisions of federal law.
Notably, the anti-lien provisions of the federal Medicaid Act "pre-empt 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., 568
U.S. 627, 630 (2013)(quoting Ark. Dep't of Health & Human Servs.
v. Ahlborn, 547 U.S. 268, 284 (2006)), and sets "a ceiling on a
State's potential share of a beneficiary's tort recovery[.]" Id. at 633.
Although the federal anti-lien provisions prohibit a state from recovering reimbursement for medical expenses by placing a lien on any of the recipient's property, 42 U.S.C.
§ 1396p(a)(1) (2012), an important exception allows the state to recoup its payments from money the recipient recovers from third parties legally liable to the recipient. Ahlborn, 547 U.S.
at 268, 275.
So long as the Florida Medicaid recovery program outlined in chapter 409 complies with the federal anti-lien provision and the instructions in Wos and Ahlborn, it is
enforceable and complies with federal law.
To that point, section 409.910(17)(b), outlining how to challenge AHCA's lien, has been characterized as being in compliance with the federal anti-lien provisions identified in Wos. See generally Mobley v. State, 181 So. 3d 1233, 1236 (Fla.
1st DCA 2015). See also Harrell v. State, 143 So. 3d 478, 480
(Fla. 1st DCA 2014).
The statutory formula used by an agency to determine the Medicaid lien amount is straightforward. Section 409.910(11)(f) outlines the formula and provides:
(f) Notwithstanding any provision in this section to the contrary, in the event of an action in tort against a third party in which the recipient or his or her legal representative is a party which results in a judgment, award, or settlement from a third party, the amount recovered shall be distributed as follows:
After attorney's fees and taxable costs as defined by the Florida Rules of Civil Procedure, one-half of the remaining recovery shall be paid to the agency up to the total amount of medical assistance provided by Medicaid.
The remaining amount of the recovery shall be paid to the recipient.
For purposes of calculating the agency's recovery of medical assistance benefits paid, the fee for services of an attorney retained by the recipient or his or her legal representative shall be calculated at 25 percent of the judgment, award, or settlement.
However, following the Supreme Court's comments in Wos v. E.M.A., the Florida Legislature provided an opportunity for Medicaid recipients to challenge the agency's lien by adopting section 409.910(17)(b).
A recipient of Medicaid assistance may challenge the Medicaid lien amount set by the agency at an evidentiary hearing under section 409.910(17)(b), which provides:
In order to successfully challenge the amount designated as recovered medical expenses, the recipient must prove, by clear and convincing evidence, that the portion of the total recovery which should be allocated as past and future medical expenses is less than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f). Alternatively, the recipient must prove by clear and convincing evidence that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
Recently, the Florida Supreme Court held that the agency may only recover its Medicaid lien from the portion of the settlement representing recovery for past medical expenses.
Giraldo v. Ag. for Health Care Admin., 248 So. 3d 53 (Fla. 2018).
In short, in a section 409.910(17)(b) hearing to challenge the Medicaid lien asserted by AHCA, the burden is on Petitioner to prove by a preponderance of the evidence what portion of his total recovery should be allocated as past medical expenses, including cases when the total recovery is an unallocated lump sum settlement. JPHS (3)(f).
Evidentiary Standard in a Section 409.910(17)(b) Hearing
With respect to a key issue in this case--the proper method to challenge the agency's lien and the statutory formula
under section 409.910(17)(b)--several cases have addressed this issue.
The Fifth District Court of Appeal has noted that using Petitioner's proposed "pro-rata test" or "proportionality test" is not required. In fact, using the proportionality test was
characterized by the court as being "problematic." The court
stated:
[T]he [U.S. Supreme Court] in Ahlborn, [547
U.S. 268] simply accepted the stipulation, and in no way adopted the [pro-rata] formula as a required or sanctioned method to determine the medical expense portion of an overall settlement amount.
Moreover, the formula used by the Ahlborn parties is problematic in that it assumes the Medicaid lien amount to be the only medical expense included by the plaintiff as part of his or her overall damage claim, which is not a reasonable assumption.
Smith v. Ag. for Health Care Admin., 24 So. 3d 590, 591 (Fla. 5th
DCA 2009).
The problems associated with using the "proportionality test" were noted again by the Fifth District Court of Appeal in Davis v. Roberts, 130 So. 3d 264, 268 (Fla. 5th DCA 2013), where the court, in referring to the Smith opinion, stated:
We rejected the argument that Ahlborn adopted a formula for determining what portion of the settlement was attributable to medical expenses, noting that the formula used by the parties in Ahlborn was problematic. We reasoned, "without knowing how much of the plaintiff's total damage claim is comprised
of medical expenses, there is no way to calculate the medical expense portion of the settlement by simply comparing the damage claim to the ultimate settlement amount." (emphasis added).
Similarly, other district courts in Florida have recognized that using Petitioner's proposed "proportionality formula" is not mandated or required by law. For instance, the Second District Court of Appeal noted:
[The Medicaid recipient] urged the ALJ to employ a pro rata allocation to calculate the amount of the [liable third party] settlement allocable to past medical expenses. . . .
Indeed, because the settlement represents but only some forty percent of the total value of the case, [the recipient] urges that AHCA can only recover about forty percent of the expenses it incurred. We do not condemn this approach . . . [b]ut we also acknowledge that the U.S. Supreme Court has not explicitly endorsed this method. The Supreme Court in no way adopted the formula as a required or sanctioned method to determine the medical expenses portion of an overall settlement amount.
Willoughby v. Ag. for Health Care Admin., 212 So. 3d 516, 522
(Fla. 2d DCA 2017). See also Russell v. Ag. for Health Care
Admin., 23 So. 3d 1266 (Fla. 2d DCA 2010).
Likewise, the Fourth District Court of Appeal, citing Smith, has also cast doubt on the use and validity of Petitioner's "proportionality test." See Roberts v. Albertson's
Inc., 119 So. 3d 457 (Fla. 4th DCA 2012).
Other state and federal courts from around the country have squarely rejected the "proportionality test" used by other plaintiffs and proffered by Petitioner in this case. See Prange
v. Ark. Dep't of Human Servs., 2019 Ark. App. LEXIS 189 (Ark. Ct. App. 2019); McKinney v. Phila. Hous. Auth., 2010 U.S. Dist. LEXIS
86773 (E.D. Pa. 2010); and Scharba v. Everett L. Braden, Ltd.,
2010 U.S. Dist. LEXIS 40200 (M.D. Fla. 2010).
Those decisions correctly point out that the "proportionality test," similar to the test suggested by Petitioner in this case, is not the required or accepted method, nor is it a method that is necessarily correct.
The inescapable conclusion from this compelling body of case law is that (1) the "proportionality test" is not the required method to determine what portion of an unallocated personal injury settlement agreement is allocable to past medical expense and, (2) since it is "problematic," it does not offer a reliable or sound approach to proving what is allocable in an unallocated settlement agreement to past medical expenses. See
also Liset Museguez, as the Court Appointed Guardian of Sergio Museguez v. AHCA, Case No. 16-7379MTR (Fla. DOAH Mar. 14, 2017).11/
The Florida Supreme Court's Opinion in Giraldo
A proper decision in this case cannot be reached without considering the Florida Supreme Court's opinion in
Giraldo v. Agency for Health Care Administration, 248 So. 3d 53
(Fla. 2018).
In Giraldo, the court was asked to resolve a conflict
between the First District Court of Appeal and Second District Court of Appeal regarding whether or not AHCA could lien or recover its medical payments from the future medical expenses
portion of a Florida Medicaid recipient's tort recovery. The court, applying federal law, held that AHCA could only reach the past medical expense portion of a Medicaid recipient's tort recovery to satisfy its Medicaid lien.
The court provided an overview of the federal Medicaid program and its anti-lien provisions. It recognized that the federal anti-lien law broadly prohibits a state from imposing a lien against any of a Medicaid recipient's property.
The court noted, however, that the Medicaid Act contains a narrow exception to the anti-lien prohibition, and allows states to seek reimbursement for Medicaid expenditures by pursuing payments from third parties legally liable for the recipient's medical expenses.
The court examined the plain language of the federal Medicaid Act and held that federal law limited Florida's Medicaid assignment rights (and lien) to reach settlement funds fairly allocable to past medical expenses, not future medical expenses.
The court did not address or discuss what method or standard of proof was required in an administrative hearing brought under section 409.910(17)(b) to challenge the amount of recovery sought by AHCA.
Significantly, the court in Giraldo also did not
discuss, endorse, or even mention the "proportionality test" advanced by Petitioner in this case. Presumably, the issue was not raised or argued by the parties.
The court's discussion and holding were limited to the narrow question of whether future medical expenses could be considered.
Of significance to this case is section III of the Giraldo opinion, entitled "On Remand." There the court restated
the general evidentiary principle that a fact finder may reject "uncontradicted testimony," but there must be a "reasonable basis in the evidence" to do so.
However, the court left unanswered, and did not discuss in that section or in other portions of the opinion, the question of whether or not the "proportionality test" proffered by this Petitioner and others challenging liens held by AHCA, is a reliable or competent method to determine what portion of an unallocated settlement agreement should be fairly allocable to past medical expenses.12/
The court in Giraldo remanded the case with
instructions to reduce the amount awarded to $13,881.79, since this amount was established by the uncontradicted evidence, and apparently there was no reasonable basis in the record to reject using that amount. The court's remand instructions in Giraldo
were based on the record in that case. The comments by the court in section III remanding the case were not necessary to support the limited holding that future medical expenses could not be considered in determining the amount of the unallocated settlement fairly allocable to medical expenses.13/
The record in this case developed in a different way than in Giraldo.
Petitioner's experts were questioned at length about their analysis and methodology. Their extremely broad and inexact hypothetical valuations provided an insufficient basis to sustain Petitioner's burden of proof under section 409.910(17)(b).
Further, the methods and factors considered by Petitioner's experts to estimate the full or projected value of Petitioner's damages left important questions either unanswered or not persuasively answered. Most importantly, they did not specifically address what portion of Hosek's unallocated settlement agreement was fairly allocable to past medical expenses.
Suffice it to say that the record in this case is replete with questions to and answers from Petitioner's experts, which raised questions about the reliability and soundness of the "proportionality test" proposed by Petitioner.
Other Factors Considered in Rejecting the "Proportionality Test"
The "proportionality test" involves comparing the plaintiff's settlement amount to the hypothetical total value of the claim to arrive at a percentage ($1 million settlement is ten percent of $10 million total value). The argument is then advanced that the Medicaid lien should be reduced by the same percentage that the settlement represents to the hypothetical total value of the claim.
In addition to the strong body of state and federal cases rejecting the "proportionality test," another notable factor considered by the undersigned was the absence of any compelling proof to show a logical correlation between what a personal injury plaintiff might have been awarded at trial, and how much of his unallocated settlement agreement should be "fairly allocable" to past medical expenses.
This shortcoming was alluded to by the court in Smith,
where it reasoned "without knowing how much of a plaintiff's total damage claim is comprised of medical expenses, there is no way to calculate the medical expense portion of the settlement by
simply comparing the damage claim to the ultimate settlement amount."14/ (emphasis added).
As a proposed test or method of proof under section 409.910(17)(b), the "proportionality test" was unavailing in this case. There simply was no persuasive correlation proven in this case between (1) what the total damages hypothetically may have
been at trial and (2) how much of the settlement agreement is fairly allocable to past medical expenses.
Without appropriate supporting evidence in this case, the use of the "proportionality test" was fundamentally flawed. It was an artificial and unpersuasive means used to try to prove a fact in this hearing in the conscious absence of direct evidence from Petitioner to prove that Petitioner's past medical expenses were less than the amount calculated by the agency.15/
Regardless of whether Petitioner's case settled for "ten cents on the dollar," that result does not change the fact that AHCA actually paid out "hard dollars" to cover the cost of Petitioner's treatment. There was no dispute that AHCA paid medical bills totaling $267,072.91.16/ See JPHS (10).
Petitioner's argument also ignores the clear intent of the Legislature that the agency should receive full payment of its lien "regardless of whether a recipient is made whole. See
§ 409.910(1), Fla. Stat. See also Roberts v. Albertson's Inc.,
119 So. 3d at 460.
Under Giraldo, an ALJ may not consider future medical
expenses in determining what is fairly allocable to medical payments in a settlement agreement. Yet, the potential trial recovery value suggested by Petitioner's experts, and used to calculate the proposed proportionality ratio or percentage, included a colossal amount of future medical expenses.
Additionally, the rote and mechanical application of the "proportionality test" suggested by Petitioner improperly inhibits the ALJ from fulfilling his/her charge to conduct a thorough and deliberative evaluation of the evidence. Moreover, it impairs the ALJ's ability to decide if Petitioner has proven that a lesser amount is owed than the amount calculated by the agency. Instead, the "proportionality test" reduces the process to the application of a ratio or percentage derived by comparing two numbers (the settlement number compared to the speculative, hypothetical full value of the claim) leaving the ALJ little to do other than apply a "problematic" formula. Smith, 24 So. 3d at 590, 591.
The total or full value of the claim proposed by Petitioner in this case (plus or minus $10 million), and upon which his "proportionality test" stands or falls, is a highly subjective and speculative number since it is indisputably subject to a host of variables and contingencies at trial.
Here, Petitioner's experts agreed that Hosek would have had a very high degree of comparative negligence attributed to him by a jury. Yet Petitioner has not conceded, or even suggested, that the total value of his claim should be adjusted for this likelihood.
Using the "proportionality test" in this case violates both the spirit and letter of the law found in chapter 409. It inexplicably ignores the Legislative mandate that Medicaid should be made whole "regardless of" whether the recipient is made whole. But this is precisely what Petitioner is demanding--"I wasn't made whole, so AHCA shouldn't be made whole either." This argument cannot stand in light of the plain and unambiguous language of section 409.910(1). Holly v. Auld, 450 So. 2d 217,
219 (Fla. 1984).
While the testimony of Petitioner's experts was admitted, their opinions were subject to impeachment. The weight accorded by the undersigned to their opinion was, therefore, undermined by their failure to consider the significant comparative negligence of Petitioner or to consider other relevant factors. See generally Fla. Dep't of Transp. v.
Armadillo Partners, Inc., 849 So. 2d 279, 288 (Fla. 2003);
Gonzalez v. Barrenechea, 170 So. 3d 13 (Fla. 3d DCA 2015).
Having carefully reviewed the extensive case law and considered the evidence presented in this case, the undersigned
concludes that the "proportionality test" offered by Petitioner in this case and under these facts is not a reliable or sound method to prove what amount of an unallocated settlement is fairly allocable to past medical expenses.
As a result, Petitioner did not carry his burden of proving by a preponderance of the evidence that the portion of his total recovery, which should be allocated as past medical expenses, is less than the amount calculated by the agency or that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
The undersigned is persuaded that the legal test endorsed by the Fifth District Court of Appeal in Smith can be best harmonized and aligned with the express language of section 409.910. That approach is summarized as follows:
[Under] Ahlborn a plaintiff should be afforded an opportunity to seek the reduction of a Medicaid lien amount by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses.
See Smith, 24 So. 3d at 592. See also Roberts, 119 So. 3d
at 457. Petitioner was afforded that opportunity, but did not carry his burden of proof.
To conclude, Petitioner did not prove that he is entitled to a reduction of the Medicaid lien of the agency.
ORDER
WHEREFORE, based on the forgoing Findings of Fact and Conclusions of Law, it is hereby DETERMINED and ORDERED that:
Petitioner has failed to prove by a preponderance of the evidence that a lesser portion of his total recovery should be allocated as past medical expenses than the amount calculated by the agency pursuant to the formula set forth in section 409.910(11)(f), Florida Statutes.
Petitioner did not prove that Medicaid provided a lesser amount of medical assistance than the amount asserted by the agency.
Therefore, the agency has an enforceable Medicaid lien pursuant to the provisions of section 409.910 and shall recover the full amount of $267,072.91 from Petitioner.
DONE AND ORDERED this 3rd day of July, 2019, in Tallahassee, Leon County, Florida.
S
ROBERT L. KILBRIDE
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 3rd day of July, 2019.
ENDNOTES
1/ Upon questioning by the undersigned, Petitioner's DOAH counsel acknowledged that future medical expenses recovered by Petitioner are not relevant.
2/ Rosen's very broad and unspecific range of potential damages raised questions in the mind of the undersigned regarding the accuracy of the damages proposed by Rosen and the weight to be accorded to his opinion.
3/ Rosen did not explain why he ignored the comparative negligence factor. This too raised concerns about the accuracy of his damage valuation and weight of his opinion.
4/ Notably, Rosen did not testify that Hosek would likely recover those amounts or that those amounts constituted the objective value of those aspects of damages. Again, these very broad, abstract, and open-ended values undermined the weight and credibility of the witness's testimony.
5/ Since the focus of the hearing and Petitioner's burden was proving what was fairly allocable in the settlement agreement to past medical expenses, Rosen's reliance on these factors, as the most important factors, was questionable. While it is understandable why these factors were important to Rosen, they bear more upon pain and suffering and other noneconomic damages-- not how much of the settlement was for past medical expenses.
6/ His focus on what future medicals would have been had limited value in this section 409.910(17)(b) hearing since the crux of the case involves past medicals.
7/ Neither Rosen or Barrett were accepted as experts in the propriety or use of the "proportionality test" and related methodology. To the extent that the use of the "proportionality" method concerns a legal question applied to a set of facts, it would have been an error to allow them to express an opinion.
Cty. of Volusia v. Kemp, 764 So. 2d 770, 773 (Fla. 5th DCA 2000). It is the undersigned's obligation to consider and assess the facts and apply the appropriate legal test or standard. It was also within the undersigned's discretion to determine the scope
of their testimony and whether it would have assisted the undersigned in understanding the evidence or in determining a fact in issue. Id.
8/ Like Rosen, there was no persuasive evidence offered by Barrett concerning the important question: what portion or amount of Hosek's settlement agreement was fairly allocable to past medical expenses.
9/ Petitioner has argued that the comparative negligence of Petitioner is not relevant in a section 409.910(17)(b) case, and that it is only the total amount of damages that should be considered. He cites to Manfredo v. Employer's Casualty Insurance Company, 560 So. 2d 1162 (Fla. 1990), as support for this proposition. Manfredo involved the analysis of recovery by the employer or insurer of a medical lien in a worker's compensation context, a distinctly different statutory recovery scheme. The worker's compensation statute outlined an entirely different test to determine the lien amount, than outlined in section 409.910. Manfredo, 560 So. 2d at 1165.
In a worker's compensation case, the recovery rights of the employer or insurer are governed by a unique statutory scheme outlined in section 440.39(3)(a), Florida Statutes. That section, by its express terms, requires the use of a ratio or proportionality-type analysis. It provides, in part:
Subject to this deduction, the employer or carrier shall recover from the judgment or settlement, after costs and attorney's fees incurred by the employee or dependent in that suit have been deducted, 100 percent of what it has paid and future benefits to be paid, except, if the employee or dependent can demonstrate to the court that he or she did not recover the full value of damages sustained, the employer or carrier shall recover from the judgment or settlement, after costs and attorney's fees incurred by the employee or dependent in that suit have been deducted, a percentage of what it has paid and future benefits to be paid equal to the percentage that the employee's net recovery is of the full value of the employee's damages.
§ 440.39(3)(a), Fla. Stat.
No such test or comparable language of any sort can be found in section 409.910(17)(b). In fact, section 409.910(17)(b) has a different test altogether.
The worker's compensation statute is also different from section 409.910 in that future benefits are considered in the formula.
Had the Legislature intended chapter 409.910 to utilize a ratio or proportionality test similar to the one contained in section 440.39(3)(a), it would have said so. The absence of such language in section 409.910 regarding Medicaid liens is significant.
10/ Petitioner argues that the agency should not be made whole, because he was not made whole. The phrase "regardless of whether a recipient is made whole" in section 409.910(1) belies this argument, and Petitioner's argument ignores the plain meaning of the statute. Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984).
11/ To the knowledge of the undersigned, there is no U.S. Supreme Court or Florida case expressly requiring the use of the "proportionality test" in a Medicaid lien reimbursement case.
The parties did not point out any persuasive case(s) in their proposed final orders to the contrary.
12/ Section III of the Giraldo opinion cannot be fairly read to endorse or require the use of the "proportionality test," primarily because the court was never called upon to consider the question.
13/ The "On Remand" section in Giraldo contained the evidentiary principle outlined in Wald v. Grainger, 64 So. 3d 1201 (Fla.
2011). However, the remand instructions were not the holding of the court, and were not essential to the decision of the court. State ex rel. Biscayne Kennel Club v. Bd. of Bus. Reg. of Dep't of Bus. Reg., 276 So. 2d 823 (Fla. 1973). Likewise, the "On Remand" section of Giraldo was not dispositive to the outcome of the case, and was dicta. Estate of Williams v. Tandem Health Care of Fla., Inc., 899 So. 2d 369, 374 (Fla. 1st DCA 2005). See also State ex rel. Biscayne Kennel Club, 276 So. 2d at 823.
14/ Here, this concern is even more critical and relevant since Petitioner bore an extremely high degree of comparative negligence in the accident and would likely have received a much lower monetary award by a jury, if any.
15/ It is fair to ask--if the proportionality test is not used by Petitioner, then what method of proof could be used to challenge the agency's lien under section 409.910? Aside from the fact that it is a Petitioner's burden to assemble and present his proof, this could be accomplished in a number of ways. The amount actually paid by AHCA is based on the medical bills incurred, and presumably submitted by Petitioner. The amount paid by AHCA, itself, is compelling proof of how much of the settlement may have been fairly allocable to past medical expenses. Secondly, Petitioner could have offered a collection of the doctor, surgical, hospital, prescription, and equipment bills, which may prove or tend to prove the past medical expenses incurred up to that point and, therefore, fairly allocable in the settlement agreement.
Respondent's Exhibit 1, totaling $267,072.91, was perhaps the best proof of what was fairly allocable to past medical expenses. Thirdly, health care providers or medical billing experts could testify as to how much would have been reasonably incurred by an injured party for past medical expenses with similar injuries, to the same point in time when Petitioner instituted the action. There undoubtedly are additional ways to prove what amount was fairly allocable in the settlement agreement to past medical expenses.
16/ The "hard dollars" paid out by AHCA may prove or tend to prove how much of the settlement agreement was fairly allocable to past medical expenses.
COPIES FURNISHED:
Alexander R. Boler, Esquire
2073 Summit Lake Drive, Suite 300
Tallahassee, Florida 32317 (eServed)
Floyd B. Faglie, Esquire Staunton and Faglie, P.L.
189 East Walnut Street Monticello, Florida 32344 (eServed)
Kim Annette Kellum, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Thomas Hoeler, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Richard J. Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Stefan Grow, General Counsel
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Mary C. Mayhew, Secretary
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
NOTICE OF RIGHT TO JUDICIAL REVIEW
A party who is adversely affected by this Final Order is entitled to judicial review pursuant to section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of administrative appeal with the agency clerk of the Division of Administrative Hearings within
30 days of rendition of the order to be reviewed, and a copy of the notice, accompanied by any filing fees prescribed by law, with the clerk of the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides or as otherwise provided by law.
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 27, 2020 | DOAH Final Order | Using the proportionality methodology and adjusting the total value to reflect the Petitioner's comparative negligence, Hosek recovered 100% of the total value of his case. As a result, ACHA was entitled to recover 100% of its lien-$267,072.91. |
| Jul. 03, 2019 | DOAH Final Order | Petitioner did not carry his burden of proving that a lesser amount was due to ACHA under 409.910(17)(b) for its Medicaid lien. ACHA was entitled to be reimbursed the full amount of its Medicaid lien totaling $267,072.91 from Petitioner's settlement . |
