STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SONJA L. NICOLAS, AS PLENARY GUARDIAN FOR HER SON, CLAUDE ZAVIER NICOLAS, AN INCAPACITATED PERSON,

vs.

Petitioner,

Case No. 19-1889MTR

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

/

FINAL ORDER

Administrative Law Judge John D. C. Newton, II, of the Division of Administrative Hearings (Division), conducted the final hearing in this case on May 28, 2019, by video teleconference at locations in Tampa and Tallahassee, Florida.

APPEARANCES

For Petitioner: David D. Dickey, Esquire

The Yerrid Law Firm Suite 3900

101 East Kennedy Boulevard Tampa, Florida 33602

For Respondent: Alexander R. Boler, Esquire Suite 330

2073 Summit Lake Drive Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

What amount of Petitioner’s malpractice settlement must be paid to Respondent, Agency for Health Care Administration (Agency), to satisfy the Agency’s $13,904.06 Medicaid Lien?1/

PRELIMINARY STATEMENT

On April 12, 2019, Petitioner’s mother as guardian for and on behalf of her son filed a Petition to Determine Amount Payable to AHCA in Satisfaction of Medicaid Lien with the Division. The Petition asserts that Petitioner brought medical malpractice claims in circuit court against the treating physician and a hospital that provided services. It also asserts that Medicaid spent $13,904.36 for Petitioner’s treatment between September 14, 2015, and December 31, 2015, and $335,312.20 after January 1, 2016, for a total of $349,904.36. The Petition does not state the amount of the settlement. However, it maintains that the settlement amount is less than ten percent of the value of Petitioner’s damages. Consequently, the Petition says that the Agency may only recover less than ten percent of Medicaid payments for Petitioner’s past medical expenses, or approximately

$35,000. The parties filed a pre-hearing stipulation that included stipulated facts. Findings of Fact 1 through 14 replicate those stipulated facts verbatim unless otherwise indicated.

Petitioner presented the testimony of his mother and

Mike Tonelli, Esquire. Petitioner’s Exhibits 1 through 7 were received in evidence without objection.

The Agency did not present a witness. The Agency did not offer an exhibit.

Neither party ordered a transcript. Both parties timely filed proposed final orders. They have been considered in the preparation of this Final Order.

Stipulated Facts2/

FINDINGS OF FACT

1. On September 12, 2015, [Petitioner] was a 28-year-old single male living alone in Tampa, Florida and enrolled as a student at the University of South Florida working on his master’s degree in education. Because he recently ceased his employment with the Hillsborough County School Board, [Petitioner] had no health insurance. He called 911 for emergency medical services due to severe abdominal pain and was taken by EMS to the Emergency Department at St. Joseph’s Hospital where he was diagnosed with acute pancreatitis and admitted. His condition worsened and was complicated by abdominal distention that made his breathing difficult. In the evening of

   September 13th, [Petitioner] was transferred to the Medical Intensive Care Unit (“ICU”) because of a rapidly worsening condition and need for close monitoring.

   
   

2. Over the next several hours, vital sign monitoring showed high heart and respiratory rates. A consulting physician found “acute respiratory insufficiency likely developing ARDS,” and directed he be “monitor closely, may need to be on mechanical ventilation, his work of breathing is hard to keep current sats [sic]”.

3. During the early morning of September 14, [Petitioner’s] heart rate and respiratory rates remained high, he was short of breath, and given multiple doses of Morphine for severe pain and Ativan for agitation/anxiety, which drugs are known to suppress respiratory function. Throughout the morning, [Petitioner] was in a perilous condition due to a combination of his prolonged efforts to breathe, suppressive medications, and systemic complications of acute pancreatitis including electronical abnormalities associated with hypokalemia and hypocalcemia, and with electrocardiographic changes resulting in arrhythmia, conduction abnormalities and changes in cardiac T wave and QT period.

4. At around 11:30, [Petitioner] attempted to perform a breathing exercise as instructed earlier that morning which required him to get on his hand and knees to relieve the pressure on his chest. [Petitioner’s mother], a licensed and practicing RN herself, was present and attempted to help him when his cardiac monitoring leads became disconnected. At this time, the

   
   

   attending RN was on break. An unknown RN reported [Petitioner] to have a change in the condition “with increased confusion and restlessness” and a call was made to the ICU specialist who issued verbal orders for Haldol, a medication used for sedation but in combination with the Morphine, Ativan and Labetatol, further lowers blood pressure and is contraindicated for cardiac arrhythmias.

5. Without informing [Petitioner or his mother], the nursing staff mistakenly issued a "code grey" to control [Petitioner] and the nursing supervisor approved the administration of the Haldol without any physician assessment or knowing his cardiac status because the monitor was not connected. The ICU specialist who ordered the Haldol was close by in the ICU area but did not evaluate [Petitioner] or assess his condition, cardiac status and need for mechanical ventilation before the Haldol was administered.

6. Immediately upon administration of the Haldol, [Petitioner] became “agonal” and his heart was thrown into a cardiac arrhythmia (PEA) causing a prolonged time period where his brain was deprived of oxygen that resulted in permanent hypoxic encephalopathy so that [Petitioner] now lives in a persistent minimally conscious state. The acute pancreatitis which [Petitioner] initially sought treatment resolved without further complications. His current medical condition is only

   
   

   complicated by the sequelae of his hypoxic encephalopathy and persistent minimally conscious state.

7. Petitioner complied with all requirements of Chapter 766, Florida Statutes, including, all pre-suit requirements and presuit investigation of claims against the

   treating Hospital, the ICU Specialist and her employer that were corroborated by an expert witness, which were rejected. On October 27, 2017, Petitioner filed a lawsuit in the Circuit Court for Hillsborough County Florida, Case No. 17-CA-009829, against the treating Hospital and the ICU Specialist asserting claims for medical negligence.

8. Based on the foregoing limitations, the medical malpractice claims were settled for a total of $1,975,000, which was approved by the Court to be in the best interest of [Petitioner].

9. [The Agency], through its Medicaid program, provided medical assistance to [Petitioner] in the amount of $13,904.36.

10. During the pendency of the medical negligence case, [the Agency] was notified of the action and asserted a $13,904.06 Medicaid lien against Petitioner's cause of action and settlement.

11. [The Agency] did not commence a civil action to enforce its rights under §409.910 or intervene or join in [Petitioner’s] action against Defendants.

    
    

12. [The Agency] did not file a motion to set-aside, void or otherwise dispute Petitioner's settlement with Defendants.

13. Application of the formula at §409.910(1l)(f) to the settlement requires payment to [the Agency] in the amount of the full $13,904.06 Medicaid lien.

14. Petitioner deposited the full Medicaid lien amount in an interest-bearing account for the benefit of [the Agency] pending an administrative determination of [the Agency’s] rights, and this constitutes "final agency action" for purposes of chapter 120, pursuant to §409.910(17).

    Credible, Unimpeached, and Unrebutted Testimony

    
    

15. Mr. Tonelli is the only person who testified about the value of the various elements of damages making up Petitioner’s malpractice claim.

16. Mr. Tonelli has practiced law for 44 years. He has practiced in Tampa, Florida, the venue where Petitioner’s case would have been tried if it had not settled. He first practiced primarily in the area of personal injury defense. Presently, Mr. Tonelli spends over 25 percent of his time as a mediator. Since 1985, he has mediated many medical negligence cases.

    Mr. Tonelli also serves as a guardian ad litem in approximately

    
    

    50 cases per year. Usually two to five of the cases involve catastrophic injury. Mr. Tonelli has served as counsel in 50 to

    75 civil trials. Approximately 20 were jury trials.

    
    

    Mr. Tonelli’s practice includes review of medical records and life care plans. He also consults with economists about lost wage claims and works with doctors to identify the nature and extent of injuries and costs of medical services for injured persons.

17. Mr. Tonelli participates in regular intake review of personal injury cases for his firm. The review includes evaluating the recoverable damages. He informs himself about jury awards and settlement amounts through his firm work, his participation in the American Board of Trial Attorneys, and his mediation practice.

18. Mr. Tonelli was Petitioner’s Guardian Ad Litem. He reviewed the case and the proposed settlement and reported to the court about whether the settlement was in Petitioner’s best interests. Mr. Tonelli’s knowledge, skill, and experience qualify him to provide an opinion about the value of the elements of the damages for Petitioner’s malpractice claims against the hospital and the physician.

19. Mr. Tonelli reviewed Petitioner’s hospital and physician medical records. He also reviewed the deposition of Roland Snyder, M.D., who prepared the life care plans admitted into evidence. Between Mr. Tonelli’s service as Guardian Ad Litem for Petitioner and his record review to prepare for his testimony, he had sufficient facts and data to form an opinion

    
    

    about the value of elements of damages of Petitioner’s malpractice claims. Also, he reasonably and reliably applied principles and methods based upon his knowledge, skill, and experience to provide a credible and conservative determination of the value of each element of damages that make up Petitioner’s malpractice claim. His testimony was unrebutted, unimpeached, credible, and persuasive.

    Injuries and Negligence

    
    

20. Petitioner suffers from profound anoxic encephalopathy.

    
    

    This brain damage leaves him in a permanent, minimally conscious state, just barely more conscious than a patient in a vegetative state. He cannot speak, walk, or care for himself. Petitioner lives in pain. He breathes and eats only with the assistance of a tracheostomy. He takes nourishment through a “G-tube.” This is a gastrojejunostomy tube that delivers nutrients directly to the stomach. Petitioner requires daily care and assistance in every task of life from eating to waste elimination. His condition will not change for his estimated 20-year remaining life span. Petitioner’s multiple, severe medical conditions require that he live those 20 years in a long-term care facility with medical services, such as a skilled nursing home.

21. This condition resulted from treatment he received for pancreatitis, a condition from which he fully recovered. While in the hospital, Petitioner developed cardiac and respiratory

    
    

    problems. A cascading series of improper prescriptions exacerbated Petitioner’s medical problems leading to catastrophic injuries resulting in his current condition.

    Damages

    
    

22. The elements of damages for Petitioner’s malpractice claims are past medical expenses, future medical expenses, loss of current income, loss of future income, pain and suffering, and loss of enjoyment of life. The value of the damages in Petitioner’s malpractice claims falls within a range of

    $25,000,000 to $35,000,000. The amount of $25,000,000 is a reasonable, conservative value to place on Petitioner’s damage claims.

23. The only evidence of past medical expenses is the stipulation that Medicaid paid $13,904.36. Consequently, that is the amount of past medical expenses.

24. Future medical expenses in the form of costs for continued treatment and supports necessary to maintain Petitioner’s existence are a significant part of the damages. As explicated in two detailed life care plans, those expenses will range from $14,535,508.26, for residence in a modified home with supportive caregivers, to $31,082,301.36, for residence in a skilled long-term nursing facility. Loss of current income, comparatively, is not a major factor in this case. Loss of future income is. Petitioner was 30 years old earning $34,000

    
    

    per year teaching “at-risk” children who would have otherwise been suspended from school. He was dedicated to his profession, volunteered at Boys and Girls Clubs, and had just been accepted to a master’s degree program. Petitioner’s lost future income ranges between $750,000 to $1,000,000.

25. Petitioner’s injuries and resulting conditions are catastrophic. Pain and suffering damages and loss of enjoyment of life damages easily range between 10 and 20 million dollars. They could reasonably exceed 50 million dollars. Consideration of the value of the elements of damages affirms that the total damages that would have been proven if Petitioner’s claims had been tried would have been at least $25,000,000.

    Settlement Realities

    
    

26. Petitioner’s claims were not tried. Petitioner had a strong malpractice claim against the doctor. The doctor, however, had only $500,000 worth of insurance coverage. There is no evidence of assets of the doctor that could have been reached to enforce a judgment.

27. Petitioner’s claim against the hospital was not as strong. The hospital had significant liability and causation defenses. The doctor was not an employee or agent of the hospital. Hospital employees in most instances were following the doctor’s instructions, including when administering the medications that caused the damages.

    
    

28. The limits of the doctor’s insurance coverage and the liability and causation issues of the claim against the hospital resulted in the decision to settle. Uncertainty about the provability or amount of damages was not a factor. The trial court approved the settlement.

29. The settlement amount is 7.9 percent of the value of Petitioner’s claims.

30. The stipulated amount of medical expenses the Agency paid through the Medicaid program is $13,904.36. The reasonable inference from the record in this case is that applying the

    7.9 percent ratio of claims value to settlement recovery to the stipulated amount of medical expenses paid by the Medicaid program demonstrates that $1,098.44 of Petitioner’s settlement recovery was for past medical expenses.

31. The Agency did not call witnesses, present evidence of the value of damages, or propose an alternative way to value damages.

CONCLUSIONS OF LAW

32. Sections 120.569, 120.57(1), and 409.910(17), Florida Statutes (2018),3/ grant the Division jurisdiction over the subject matter and parties in this case.

1. The Legislature authorized the Agency to administer Florida’s Medicaid program. See § 409.902, Fla. Stat.

   
   

2. 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). If a state participates in the Medicaid program, it must comply with federal requirements governing the program. Id.

3. Federal law requires states to seek reimbursement for medical expenses incurred on behalf of Medicaid recipients who recover from third parties. See Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 276 (2006).

4. Florida’s Legislature enacted section 409.910, Florida Statutes, to comply with that requirement. Section 409.910 authorizes and requires the Agency to recover for Medicaid funds paid for a Medicaid recipient’s medical care when the 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 the proceeds of any judgment or settlement for the medical services provided by Medicaid. See § 409.910(6)(c), Fla. Stat.

5. The formula in section 409.910(11)(f) determines the amount the Agency may recover from a judgment, award, or settlement from a third party for Medicaid medical expenses. Ag. for Health Care Admin. v. Riley, 119 So. 3d 514, 515 n.3

   (Fla. 2d DCA 2013).

   
   

6. Section 409.910(17)(b) establishes the right to contest a Medicaid lien and provides that section 409.910(11) establishes the default allocation of damage amounts attributable to medical costs.

7. The parties stipulated that the amount Petitioner owes the Agency to satisfy its lien, pursuant to the formula in section 409.910(11)(f), is $13,904.06.4/ However, the stipulated value of the medical services provided by Medicaid is $1,904.36.5/ Petitioner maintains that he owes less because he did not recover the full value of his damages, including his claim for past medical expenses.

8. Section 409.910(17)(b) also creates a right to challenge the statutory allocation at the Division. It requires the Medicaid recipient to “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” resulting from application of the statutory formula. See Harrell v. State, 143 So. 3d 478, 480 (Fla. 1st DCA 2014) (adopting the holding in Riley, 119 So. 3d at 516, 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)).

   
   

9. Despite the language of section 409.910(17)(b); because of rulings in Gallardo v. Dudek, 263 F. Supp. 3d 1247 (N.D. Fla. 2017); and by stipulation of the parties, the burden of proof is a preponderance of the evidence. In addition, the lien may not be calculated or satisfied from settlement proceeds attributed to future medical expenses or other damages. Giraldo v. Ag. for

   Health Care Admin., 248 So. 3d 53, 56 (Fla. 2018).

   
   

10. Petitioner proved by a preponderance of the evidence that the settlement proceeds of $1,975,000 are 7.9 percent of the total value of the malpractice claim. Applying that 7.9 percent to the value of the services for which Medicaid paid is a rational way to determine the portion of the settlement amount attributable to past medical expenses and therefore recoverable by the Agency.

11. The Agency criticizes this allocation method. However, it did not offer evidence to support its criticism. “Although a factfinder may reject ‘uncontradicted testimony,’ there must be a ‘reasonable basis in the evidence’ for the rejection.” Wald v. Grainger, 64 So. 3d 1201, 1205-06 (Fla. 2011). See also Giraldo

    v. Ag. for Health Care Admin., 248 So. 3d 53, 56 (Fla. 2018).

    
    

12. The Agency cites the Final Order in Mojica v. Agency

    
    

    for Health Care Administration, Case No. 17-1966MTR (Fla. DOAH

    
    

    May 3, 2018), to support its argument that the evidence is insufficient to prove the proportion of the recovery that should be allocated to past medical expenses. The record in that case differs significantly from the record here. The evidence in Mojica did not establish the value of any damages element other

    than past medical expenses. The record did not support findings about the value of other elements of damages such as lost earning capacity, future medical expenses, and loss of consortium. In addition, the Agency provided evidence in that case, including testimony of an expert witness.

13. The Agency also cites Savain v. Agency for Health Care Administration., Case No. 17-5946MTR (Fla. DOAH Feb. 26, 2018).

    The record in Savain also differs materially from the record in this case. In Savain the petitioner did not prove how to

    allocate the various elements of damages. Endnote five of the Final Order specifically notes that the record included two general releases but no settlement agreement or comparable document allocating the settlement amount among elements of damages. Endnotes two, six, and ten of the Savain Order point

    out that petitioner’s exhibit 24 was not admitted into evidence. Paragraph 18 of the Savain Order states that without exhibit 24

    petitioner “did not present any admissible evidence to support a finding of the actual value of her personal injury claim or to support the ‘pro-rata’ or ‘proportionality’ formula she advanced

    
    

    through her counsel’s arguments.” Petitioner’s Proposed Final Order in Savain makes it clear that exhibit 24 was an attorney’s affidavit presenting a method for allocating damage amounts, much like the testimony of Mr. Tonelli here.

14. The Savain Order includes dicta stating that the

    
    

    Administrative Law Judge found the approach in Smith v. Agency for Health Care Administration, 24 So. 3d 590 (Fla. 5th DCA

    2009), more persuasive. The Smith opinion, however, emphasized that the record “proffered nothing from which the trial judge could determine how much of the $7,000,000.00 in damages represented Thomas’ medical expenses, and made no other showing to support her argument that the medical expense portion of the

    $2,225,000.00 settlement was less than $122,783.87.” Smith v. Ag. for Health Care Admin., 24 So. 3d 590, 592 (Fla. 5th DCA

    2009). The Smith petitioner relied upon a narrow legal argument that Arkansas Department of Health & Human Services. v. Ahlborn,

    547 U.S. 268, 292, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006),

    
    

    mandated a percentage reduction in the Medicaid lien in the same ratio as the settlement bore to the actual damages. Smith and

    Savain correctly state that Ahlborn does not require use of a percentage reduction. That does not mean a percentage allocation may not be used when the record supports it. In addition, the Smith opinion and Savain Order predate the supreme court’s

    opinion in Giraldo v. Agency for Health Care Administration.

    
    

15. Courts have accepted the allocation approach used in this Order. Lugo v. Beth Israel Med. Ctr., 819 N.Y.S. 2d 892, 897 (N.Y. Sup. Ct. 2006). See also Delgado v. Ag. for Health

Care Admin., Case No. 1D16-5786, 2018 Fla. App. LEXIS 1012, 43

Fla. L. Weekly D 245 (Fla. 1st DCA, Jan. 26, 2018)(accepting use of this allocation process in Delgado v. Ag. for Health Care Admin., Case No. 16-2084 (Fla. DOAH Nov. 30, 2016)). The

evidence in this case proved that the allocation process described in this Order is reasonable, proper, and rational.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that Respondent, Agency for Health Care Administration, is entitled to recover $1,098.44 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 12th day of June, 2019, in Tallahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 12th day of June, 2019.

ENDNOTES

1/ This Order uses Petitioner to refer both to the guardian and to her son to preserve his privacy.

2/ A prehearing stipulation binds the parties and the tribunal. Gunn Plumbing, Inc. v. Dania, 252 So. 2d 1, 4 (Fla. 1971).

3/ All citations to Florida Statutes are to the 2018 compilation unless otherwise noted.

4/ Prehearing Stipulation at paragraph 13.

5/ Prehearing Stipulation at paragraph 10.

COPIES FURNISHED:

Alexander R. Boler, Esquire Suite 300

2073 Summit Lake Drive Tallahassee, Florida 32317 (eServed)

David D. Dickey, Esquire The Yerrid Law Firm Suite 3900

101 East Kennedy Boulevard Tampa, Florida 33602 (eServed)

Kim Annette Kellum, Esquire

Agency for Health Care Administration Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

Thomas M. Hoeler, Esquire

Agency for Health Care Administration Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

Mary C. Mayhew, Secretary

Agency for Health Care Administration Mail Stop 1

2727 Mahan Drive

Tallahassee, Florida 32308 (eServed)

Stefan Grow, General Counsel

Agency for Health Care Administration Mail Stop 3

2727 Mahan Drive

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.

Docket for Case No: 19-001889MTR

Orders for Case No: 19-001889MTR