BRODY HURD, A MINOR, BY AND THROUGH HIS PARENTS AND NATURAL GUARDIANS, NICHOLAS HURD AND BRITTANY HURD,
vs.
Respondent.
Case No. 20-2152MTR
Pursuant to notice, on July 17, 2020, Administrative Law Judge Yolonda Y. Green of the Florida Division of Administrative Hearings (“Division”), held a hearing in this matter by video teleconference with locations in Panama City Beach and Tallahassee, Florida.
For Petitioner: Floyd B. Faglie, Esquire
For Respondent: Alexander R. Boler, Esquire
The issue in this proceeding is how much of Petitioner’s settlement proceeds should be paid to Respondent, Agency for Health Care Administration (“AHCA”), to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes, from settlement proceeds he received from a third party.
On May 8, 2020, Petitioner, Brody Hurd, a minor, by and through his parents and Natural Guardians, Nicholas Hurd and Brittany Hurd, filed a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien (“the Petition”) to challenge AHCA’s placement of a Medicaid lien in the amount of $266,092.46 on Petitioner’s $2,875,000.00 settlement proceeds from a third party.
The parties filed a Joint Pre-Hearing Stipulation that contained a statement of admitted and stipulated facts for which no further proof would be necessary. Those stipulated facts have been incorporated into the Findings of Fact below, to the extent necessary.
The final hearing commenced as scheduled on July 17, 2020. At hearing, Petitioner’s Exhibits 1 through 11 were admitted. Petitioner presented the testimony of two expert witnesses: Lawrence Perry, Esquire, and Karen Gievers, Esquire. AHCA did not call any witnesses and did not offer any exhibits at the hearing.
Respondent filed the official Transcript of the hearing with the Division’s Clerk, on August 21, 2020. At the close of the final hearing, the undersigned advised the parties of a 10-day time frame after the filing of the Transcript to
file post-hearing submittals. Petitioner timely filed a Proposed Final Order (PFO), which has been duly considered in preparing this Final Order.
The following findings are based on testimony, exhibits accepted into evidence, and admitted facts stated in the Joint Pre-Hearing Stipulation.
Facts Concerning Underlying Personal Injury Matter and Giving Rise to Medicaid Lien
On August 29, 2011, Brody Hurd, a male child who was then 2.7 years old, suffered injuries after a child gate gave way causing him to fall down a flight of stairs. Brody was taken to the Emergency Room (“ER”) where ER staff failed to identify a visible cerebral bleed on the cervical CT scan. Brody was discharged home where his condition worsened. The next day he was taken to his pediatrician who reviewed the CT scan and correctly noted the cerebral bleed. Thereafter, Brody was admitted to the hospital where he underwent numerous surgeries, including a significant laminectomy. After the surgery, Brody’s parents took Brody to Scottish Rite Hospital in Atlanta for recovery and he received treatment for several months. Brody is now wheelchair bound, unable to stand, walk, toilet, bathe, or care for himself in any manner. Based on his current condition, it is anticipated that Brody will require treatment and be confined to a wheelchair for the rest of his life.
As a result of the delay in proper diagnosis and treatment of the cerebral bleed, Brody was permanently rendered an incomplete quadriplegic.
Brody has a life expectancy of approximately 78 years of age.
Brody’s medical care related to the injury was paid by Medicaid. Medicaid, through AHCA, paid $266,092.46 in benefits; Medicaid, through the Department of Health Children’s Medical Services, paid $73,253.94 in benefits; and the Brain and Spinal Cord Injury Program paid $5,504.31 in benefits. The sum of benefits totaling $344,850.71 represents the amount
Medicaid paid on Brody’s behalf, which are attributed to past medical expenses.
Brody’s parents and natural guardians, Nicholas and Brittany Hurd, pursued a medical malpractice lawsuit against the parties allegedly liable for Brody’s injuries (“Defendants”) to recover all of Brody’s damages, as well as their own individual damages associated with their son’s injuries.
After nearly five years of litigation, Petitioner settled the medical malpractice action for a lump-sum amount of $2,875,000.00. The settlement did not allocate Petitioner’s award between past medical and other damage categories.
During the pendency of Brody’s medical malpractice action, AHCA was notified of the action and AHCA asserted a $266,092.46 Medicaid lien against Brody’s cause of action and settlement of that action.
The Medicaid program through AHCA spent $266,092.46 on behalf of Brody, all of which represents expenditures paid for Brody’s past medical expenses.
By letter dated January 26, 2020, AHCA was notified of Brody’s settlement.
AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Brody’s action against the Defendants.
AHCA has not filed a motion to set-aside, void, or otherwise dispute Brody’s settlement.
Brody’s taxable costs incurred in securing the settlement totaled
$68,087.32.
Application of the formula at section 409.910(11)(f) to Brody’s
$2,875,000.00 settlement requires payment to AHCA of the full $266,092.46 Medicaid lien.
Petitioner offered Brody’s life care plan and economist report as evidence of future medical expenses and loss of employment or wages.
Expert Testimony
Petitioner called two experts to testify on his behalf pertaining to valuation of Petitioner’s damages, Henry Lawrence Perry and Karen Gievers.
Mr. Perry, a founding partner of the Perry and Young Law Firm in Panama City Beach, Florida, has been practicing law for 29 years. He served as the lead attorney for the underlying case. In addition to Petitioner’s case, he has represented clients in personal injury matters, including many cases involving catastrophic injuries similar to that of Brody.
Mr. Perry evaluated Petitioner’s case and opined that $25 million was a conservative valuation of the case. The valuation of the case encompasses past medical expenses, future medical expenses, economic damages, and pain and suffering.
Mr. Perry opined that there would be no admission of liability, so no cap on medical malpractice would be applicable. Mr. Perry opined that Petitioner settled the case for the lower amount because of issues with medical causation. Since Petitioner filed his action against the radiologist group and the hospital, the defense also raised an issue of the pediatrician being a Fabre defendant.1 As a result, Brody’s recovery could have been reduced based on the liability issues related to the claim.
Mr. Perry opined that Brody’s settlement represented 11.5 percent of the full value of his claim, including past medical expenses. Mr. Perry opined that the allocation formula is 11.5 percent. The past medical expenses recovered as part of the settlement resulted in a total of $344,850.71. That figure multiplied by 11.5 percent would result in recovery of $39,657.83 allocated to past medical expenses.
Karen Gievers also testified as an expert regarding valuation of Brody’s claim. Ms. Gievers, a licensed attorney for 42 years and a former
1 A Fabre defendant is a defendant that is not named in a lawsuit, but which can still be assigned liability by a jury. See Fabre v. Marin, 623 So. 2d 1182 (Fla. 1993).
circuit court judge, focuses her practice on civil litigation. In her practice as an attorney, she has handled personal injury cases involving catastrophic injuries. She has also represented children in her practice.
Similar to Mr. Perry, she opined that the value of Brody’s case was conservatively estimated at $25 million. She opined that Brody’s settlement amount of $2,875,000.00 resulted in a recovery of 11.5 percent of the full value of his claim. She opined that applying the 11.5 percent to each damage category is the appropriate way to allocate the amount of damages across all categories. Thus, applying the allocation formula of 11.5 percent of the
$344,850.71 claim for past medical expenses would be $39,657.83.
Ms. Gievers looked at Brody’s economic and noneconomic damages in her valuation of the case.
Petitioner asserted that the $2,875,000.00 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Brody for his full value of damages. Therefore, a lesser portion of the settlement should be allocated to reimburse AHCA, instead of the full amount of the lien.
Ultimate Findings of Fact
Mr. Perry and Ms. Gievers credibly opined that a ratio should be applied based on the full value of Petitioner’s damages, $25,000,000.00, compared to the amount that Petitioner actually recovered, $2,875,000.00. Based on this formula, Petitioner’s settlement represents an 11.5 percent recovery of Petitioner’s full value of damages. Similarly, the AHCA lien should be reduced by 11.5 percent. Therefore, $39,657.83 is the portion of the third-party settlement that represents the amount AHCA should recover for its payments for Brody’s past medical care.
The expert witnesses’ testimony was supported by their extensive experience in valuing damages and their knowledge of Brody’s injuries. AHCA, on the other hand, did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Perry or
Ms. Gievers. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Perry or Ms. Gievers as to valuation or the reduction ratio. AHCA did not offer alternative opinions on the damage valuation method suggested by either Mr. Perry or Ms. Gievers. Based on the record, the testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted.
Based on the evidence in the record, the undersigned finds that, Petitioner proved by a preponderance of the evidence that a lesser portion of Brody’s settlement should be allocated as reimbursement for past medical expenses than the amount AHCA calculated. Accordingly, AHCA is entitled to recover $39,657.83 from Petitioner’s recovery of $2,875,000.00 to satisfy the Medicaid lien.
CONCLUSIONS OF LAW
The Division has jurisdiction over the subject matter and the parties in this case pursuant to sections 120.569, 120.57(1), and 409.910(17)(b), Florida Statutes.
AHCA is the agency in Florida, under federal law, authorized to administer Florida’s Medicaid program. § 409.902, Fla. Stat.
The Medicaid program “provide[s] federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.” Harris v. McRae, 448 U.S. 297, 301 (1980).
“The Medicaid program is a cooperative one. The Federal Government pays between 50 percent and 83 percent of the costs a state incurs for patient care. In return, the State pays its portion of the costs and complies with certain statutory requirements for making eligibility determinations, collecting and maintaining information, and administering the program.” Est. of Hernandez v. Ag. for Health Care Admin., 190 So. 3d 139, 141-42 (Fla. 3rd DCA 2016)(internal citations omitted).
Though participation is optional, once a State elects to participate in the Medicaid program, it must comply with federal requirements. Harris, 448 U.S. at 301.
One condition for receipt of federal Medicaid funds requires states 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); see also Est. of Hernandez, 190 So. 3d at 142 (noting that one such requirement is that “each participating state implement a third-party liability provision, which requires the state to seek reimbursement for Medicaid expenditures from third parties who are liable for medical treatment provided to a Medicaid recipient.”).
Consistent with this federal requirement, the Florida Legislature enacted section 409.910, designated as the “Medicaid Third-Party Liability Act,” 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, award, or settlement from a third party. Smith v. Ag. for Health Care Admin., 24 So. 3d 590 (Fla. 5th DCA 2009); see also Davis v. Roberts, 130 So. 3d 264, 266 (Fla. 5th DCA 2013)(stating that in order “[t]o comply with federal directives the Florida legislature enacted section 409.910, Florida Statutes, which authorizes the State to recover from a personal injury settlement money that the State paid for the plaintiff’s medical care prior to recovery.”).
Section 409.910(1) sets forth the Florida Legislature’s clear intent that Medicaid be repaid in full for medical care furnished to Medicaid recipients as set forth by the plain language of the statute, which provides:
It is the intent of the Legislature that Medicaid be the payor of last resort for medically necessary goods and services furnished to Medicaid recipients. All other sources of payment for medical care are primary to medical assistance provided by Medicaid. If benefits of a liable third party are discovered or become available after medical assistance has been provided by Medicaid, it is the intent of the Legislature that
Medicaid be repaid in full and prior to any other person, program, or entity. Medicaid is to be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid. Principles of common law and equity as to assignment, lien, and subrogation are abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources. It is intended that if the resources of a liable third party become available at any time, the public treasury should not bear the burden of medical assistance to the extent of such resources.
In addition, the Florida Legislature has authorized AHCA to recover the monies paid from any third party, the recipient, the provider of the recipient’s medical services, and any person who received the third-party benefits.
§ 409.910(7), Fla. Stat.
AHCA’s effort to recover the full amount paid for medical assistance is facilitated by section 409.910(6)(a), which provides that AHCA:
[I]s automatically subrogated to any rights that an applicant, recipient, or legal representative has to any third-party benefit for the full amount of medical assistance provided by Medicaid. Recovery pursuant to the subrogation rights created hereby shall not be reduced, prorated, or applied to only a portion of a judgment, award, or settlement, but is to provide full recovery by the agency from any and all third-party benefits. Equities of a recipient, his or her legal representative, a recipient’s creditors, or health care providers shall not defeat, reduce, or prorate recovery by the agency as to its subrogation rights granted under this paragraph.
AHCA’s efforts are also facilitated by the fact that AHCA has “an automatic lien for the full amount of medical assistance provided by Medicaid to or on behalf of the recipient for medical care furnished as a result of any covered injury or illness by which a third-party is or may be liable, upon the collateral, as defined in
s. 409.901.” § 409.910(6)(c), Fla. Stat.
The amount to be recovered by AHCA 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.
Applying the formula in section 409.910(11)(f) to the $2,875,000.00 settlement in the instant case results in AHCA being owed $266,092.46, the full amount of its Medicaid lien. However, the analysis does not end there because section 409.910(17)(b) provides a method by which a Medicaid recipient may contest the amount designated as recovered medical expenses payable under section 409.910(11)(f).
Section 409.910(17)(b) provides:
If federal law limits the agency to reimbursement from the recovered medical expense damages, a recipient, or his or her legal representative, 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 designated as recovered medical expenses, the recipient must prove, by clear and convincing evidence,[2] 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.
Petitioner argued in his PFO that AHCA is restricted to recover from only that portion of Brody’s settlement recovery allocated to past medical expenses. More importantly, the parties stipulated to being restricted to recovery from past medical expenses in the Joint Pre-Hearing Stipulation, which the undersigned accepts.
Where uncontradicted testimony is presented by the recipient, the factfinder must have a "reasonable basis in the record" to reject it. Giraldo, 248 So. 3d at 56 (quoting Wald v. Grainger, 64 So. 3d 1201, 1205-06 (Fla. 2011)). In the instant case, AHCA has provided no reasonable basis to reject the testimony of Mr. Perry and Ms. Gievers.
2 In the Joint Pre-Hearing Stipulation, the parties stipulated that the appropriate standard of proof applicable in this matter shall be a preponderance of the evidence, which the undersigned accepts.
The full amount of all past medical expenses, totaling $344,850.71, must be considered in calculating the amount payable to AHCA. Petitioner proved by a preponderance of the evidence that the settlement proceeds of $2,875,000.00 represent only 11.5 percent of Petitioner’s claim valued at $25 million, which both testifying experts (who are experienced attorneys) reasonably believed was a very conservative valuation. Therefore, AHCA's Medicaid lien should be reduced to the ratio of Petitioner's actual recovery to the total value of his claim.
The application of the 11.5 percent ratio to the Petitioner’ total past medical expenses of $344,850.71 results in $39,657.83, which is the portion of the settlement proceeds reasonably and proportionately allocable to Brody’s past medical expenses to satisfy AHCA’s lien.
Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Agency for Health Care Administration is entitled to
$39,657.83 from Petitioner’s settlement proceeds in satisfaction of its Medicaid lien.
DONE AND ORDERED this 11th day of September, 2020, in Tallahassee, Leon County, Florida.
YOLONDA Y. GREEN
Division of Administrative Hearings this 11th day of September, 2020.
Floyd B. Faglie, Esquire Staunton & Faglie, PL 189 East Walnut Street Monticello, Florida 32344 (eServed)
Shena L. Grantham, Esquire
Alexander R. Boler, Esquire Suite 330
Richard J. Shoop, Agency Clerk
Thomas M. Hoeler, Esquire
Bill Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Mary C. Mayhew, Secretary
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.
