STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARLA BARRIENTOS, A MINOR, BY AND THROUGH HER PARENTS AND NATURAL GUARDIANS, ASUNCION GUTIERREZ AND CARLOS BARRIENTOS,

Petitioners,

Case No. 20-2266MTR

vs.

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

/

FINAL ORDER

The final hearing in this matter was conducted before Andrew D. Manko, Administrative Law Judge of the Division of Administrative Hearings (“DOAH”), pursuant to sections 120.569, 120.57(1), and 409.910(17)(b), Florida Statutes,1 on September 17, 2020, in Tallahassee, Florida.

APPEARANCES

For Petitioners: Floyd B. Faglie, Esquire

Staunton & Faglie, PL 189 East Walnut Street Monticello, Florida 32344

For Respondent: Alexander R. Boler, Esquire

2073 Summit Lake Drive, Suite 330

Tallahassee, Florida 32317

1 All references to the Florida Statutes are to the 2020 version, unless otherwise indicated.

STATEMENT OF THE ISSUE

What amount is payable to Respondent, Agency for Health Care Administration (“AHCA”), as reimbursement for medical expenses paid on behalf of Petitioners, Carla Barrientos, a minor, by and through her parents and natural guardians, Asuncion Gutierrez and Carlos Barrientos, pursuant to section 409.910, Florida Statutes, from settlement proceeds they received from third parties?

PRELIMINARY STATEMENT

On May 13, 2020, Petitioners filed a Petition to Determine Amount Payable to Agency for Health Care Administrative in Satisfaction of Medicaid Lien. The Petition challenged AHCA’s placement of a Medicaid lien in the amount of $228,964.35 on Petitioners’ receipt of $1.75 million in settlement proceeds from third parties.

On May 29, 2020, the parties filed a Joint Motion for Scheduling of Hearing, requesting that the undersigned set this case for final hearing outside the 90-day statutory time frame based on their respective attorneys’ professional obligations. The undersigned granted the Motion because good cause existed to schedule the hearing outside of the statutory time frame.

The final hearing occurred on September 17, 2020. Petitioners presented the testimony of two expert witnesses: (1) Pamela Padilla, Esquire; and

1. Vincent Barrett, Esquire. Petitioners’ Exhibits 1 through 10 were admitted in evidence without objection. Respondent did not present witness testimony or introduce any exhibits.

   
   

   A one-volume Transcript of the final hearing was filed on October 13, 2020. The undersigned granted the parties’ Joint Motion for Extension of Time to File Proposed Final Orders (“PFOs”) until November 2, 2020. The

   
   

   parties thereafter timely filed their PFOs, which the undersigned duly considered in preparing this Final Order.

   
   

   In making the findings below, the undersigned only considered hearsay evidence that either supplemented or explained other evidence or would be admissible over objection in civil actions. § 120.57(1)(c), Fla. Stat.

   
   

   FINDINGS OF FACT

   1. AHCA is the state agency charged with administering the Florida Medicaid program, pursuant to chapter 409, Florida Statutes.

   2. On April 12, 2013, Asuncion Gutierrez gave birth to a baby girl named Carla. Although Ms. Gutierrez’s pregnancy and labor were uncomplicated, the delivery was not. During the delivery, Wilfredo Ortiz, M.D., utilized a vacuum to help guide the baby out. The vacuum “popped off” of Carla’s head four times and ultimately Ms. Gutierrez had to push for an additional two hours before Carla was born. At birth, Carla had a cephalhematoma on her scalp, which is essentially a collection of blood, but otherwise looked normal.

   3. By day two, however, Carla decompensated. She developed sepsis, began having seizures, and had to be placed on life support. Her scalp filled with fluid, which caused a subgaleal hemorrhage to a non-superficial section of the brain that required removal of her scalp. She spent six weeks in the hospital and has undergone over 30 surgeries. She is severely brain damaged, she cannot dress, bathe, or toilet herself, and her vocabulary is limited to just ten words. As a result of the brain injury, she will never live independently and will need 24-hour assistance for the rest of her life.

   4. Medicaid paid $251,081.89 for Carla’s medical care, including

      $228,964.35 by AHCA and $22,116.74 by the Department of Health (“DOH”).

   5. As a result of the delivery complications and brain injury, Petitioners filed a medical malpractice action against Dr. Ortiz and the U.S. Department of Health and Human Services (“DHHS”), as Dr. Ortiz worked for a clinic

      
      

      that received federal funds. Petitioners alleged that Dr. Ortiz improperly used the vacuum when Carla was too high in the birth canal, which caused the buildup of blood in her brain, a serious infection, and severe brain damage. The litigation was hotly contested and the primary dispute focused on whether the infection and resulting brain injury were caused by the alleged improper use of the vacuum and delivery complications. The parties retained a total of 13 experts, including pediatric neurologists, obstetricians, pediatric infectious disease doctors, a life care planner, and an economist.

   6. Pamela Padilla, Esquire, represented Petitioners in the malpractice suit and testified on their behalves. Ms. Padilla is a 17-year trial lawyer who focuses on plaintiff’s medical malpractice litigation. She discussed her experience in assessing damages in medical malpractice cases. Among other things, she meets with the family, reviews the medical records, researches jury verdicts, engages in round-table discussions with other members of her firm, and uses life care planners and economists to assess economic damages in a catastrophic brain-damage case.

   7. Based on Ms. Padilla’s review of the medical records, 25 or more meetings with the family, and consultation with the retained experts, she opined that Carla’s future medical damages ranged from $16 to $30 million and noneconomic damages ranged from $16 to $40 million. She conducted a focus group where the average assessment of damages (excluding one member’s outlier assignment of $1 billion in damages) was $18 million. She also researched jury verdicts in similar catastrophic injury cases involving botched deliveries with the improper use of vacuums and confirmed that the damages in those cases ranged from $24 to $63 million. Although Ms. Padilla believed that a jury would likely have assigned at least $30 million in damages had it gone to trial, she agreed that $17.5 million was an extremely conservative value.

   8. Ms. Padilla testified that Petitioners ultimately settled the malpractice case for $1.75 million through an undifferentiated settlement agreement.

      
      

      Ms. Padilla confirmed that, although the settlement did not fully compensate Carla for all of her damages, Petitioners settled because of concerns about the issue of causation. They received no other recovery beyond the settlement.

   9. Based on the $1.75 million settlement, Ms. Padilla offered an opinion as to the portion fairly allocable to past medical expenses. She believed that the past medical expenses of $251,089.89 represented between one and a half to five percent of just the total economic damages in the case, which excluded a substantial amount of noneconomic damages. However, she agreed that assigning ten percent of the settlement proceeds, i.e., comparing a conservative valuation of $17.5 million in total damages with the

      $1.75 million settlement, to past medical expenses was “more than reasonable” and a very favorable position to AHCA. Applying that ten percent to the total medical expenses, Ms. Padilla opined that $25,108.19 was an “extremely reasonable” and “very conservative” allocation for the settlement proceeds attributable to past medical expenses and that is the figure that should be reimbursed to AHCA.

   10. Petitioners also presented the testimony of Vinson Barrett, Esquire, a trial lawyer with over forty years of experience handling medical malpractice and personal injury cases, including catastrophic injuries to children.

       Mr. Barrett routinely assesses potential damages as part of his practice. He stays abreast of jury verdicts and discusses cases with colleagues at his firm in order to assess the value of damages and the potential litigation costs. He is familiar with settlement allocations, health insurance, and Medicaid liens. He has offered expert testimony in about 30 similar Medicaid lien cases in both federal court and at DOAH.

   11. Mr. Barrett reviewed Carla’s medical history, the life care plan, economist report, and Petitioners’ exhibits. Based on his review of those documents, his experience as a trial lawyer and an expert in these types of cases, and his review of jury verdicts in similar baby catastrophic injury cases, Mr. Barrett offered opinions as to the value of the damages in this

       
       

       case. He opined that the value of past and future economic damages in the case was between $16.5 and $29.2 million, including the roughly $251,000 in past medical expenses, and that the value of noneconomic damages was within the same range as the economic damages. Although he believed that the damages in this case could reasonably be valued at $20 to $30 million, Mr. Barrett opined that a reasonable and “very conservative” estimate of total value of the damages was $17.5 million.

   12. Mr. Barrett acknowledged the $1.75 million settlement, but confirmed that it did not compensate Carla for all of her damages. Rather, it conservatively represented ten percent of the value of her damages. Applying a ten-percent ratio to the total medical expenses, Mr. Barrett opined that

       $25,108.19 was a “very reasonable” and “very conservative” allocation for the settlement proceeds attributable to past medical expenses. He confirmed that the methodology of determining the ratio of the settlement to the value of all damages and applying that same ratio to the claim for past medical expenses was reasonable in this case. Indeed, it was the same methodology he had used in prior Medicaid lien cases.

   13. AHCA did not present witness testimony or any exhibits, and it did not object to the admission of any of Petitioners’ exhibits. Instead, AHCA conducted limited cross examination of Ms. Padilla and Mr. Barrett in an attempt to impeach them for purported inconsistencies in their testimony. However, the undersigned finds that both witnesses offered credible, persuasive, and undisputed opinions as to the total value of the damages, the applicable ratio and its reasonable application herein, and the portion of the settlement reasonably and fairly allocable to past medical expenses. In fact, although the undisputed evidence would have supported the application of a ratio of five percent or less, Petitioners pursued a much more conservative approach and only requested a reduction of the Medicaid lien by ten percent.

       
       

       ULTIMATE FINDINGS OF FACT

   14. Based on the weight of the credible and undisputed evidence, the total value of Petitioners’ medical malpractice damages was $17.5 million and, thus, the $1.75 million undifferentiated settlement resulted in Petitioners recovering ten percent of Carla’s past medical expenses.

   15. Based on the weight of the credible and undisputed evidence,

       $25,108.19—representing ten percent of total amount of past medical expenses of $251,081.89—is a fair and reasonable determination of the past medical expenses actually recovered by Petitioners and payable to AHCA.

       
       

       CONCLUSIONS OF LAW

   16. DOAH has jurisdiction over the parties and exclusive jurisdiction over the subject matter of this case. §§ 120.57(1) and 409.910(17), Fla. Stat.

   17. AHCA is the state agency that administers Florida’s Medicaid program. § 409.902, Fla. Stat.

   18. Medicaid is a cooperative federal-state medical assistance program. 42 U.S.C. § 1396, et seq. Florida elected to participate in the program, and, thus, must comply with federal Medicaid laws and regulations. See Wilder v.

       Virginia Hosp. Ass’n, 496 U.S. 498 (1990); Public Health Trust of Dade Cty. v. Dade Cty. Sch. Bd., 693 So. 2d 562, 564 (Fla. 3d DCA 1997).

   19. As required under 42 U.S.C. § 1396a(a)(25), Florida enacted the Medicaid Third-Party Liability Act (the “Act”). § 409.910, Fla. Stat. The Act directs the State to seek reimbursement for Medicaid expenditures from third parties if those resources are available. § 409.910(4), (6), and (7), Fla. Stat.

   20. Several provisions of the Act achieve this directive. Subsection (6)(a) provides that AHCA “is 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.” Subsection (7) authorizes AHCA to recover payments that Medicaid provided on behalf of

       
       

       the recipient by collecting directly from the recipient or his or her legal representative if either has received third-party benefits.

   21. Section 409.910(11)(f) provides the following statutory formula to establish the amount AHCA may recover from a third party settlement:

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

       
       

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

          
          

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

          
          

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

          
          

       4. Notwithstanding any provision of this section to the contrary, the agency shall be entitled to all medical coverage benefits up to the total amount of medical assistance provided by Medicaid. For purposes of this paragraph, “medical coverage” means any benefits under health insurance, a health maintenance organization, a preferred provider arrangement, or a prepaid health clinic, and the portion of benefits designated for medical payments under coverage for workers’ compensation, personal injury protection, and casualty.

          
          

          See also § 409.910(1), Fla. Stat. (noting Legislature’s intent “that Medicaid 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”); Id. at § 409.910(6)(a) (“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.”).

   22. This statutory formula provides an initial determination of AHCA’s recovery for past medical expenses paid on a Medicaid recipient’s behalf. Applying the formula to the $1.75 million settlement here results in AHCA recovering $228,964.35, which represents 100 percent of its lien.

   23. Petitioners, however, assert that a lesser amount is owed based on the settlement proceeds they received. Subsection (17)(b) of the Act sets forth the following procedure to contest the amount of AHCA’s lien:

       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 expense 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.

       
       

       Indeed, “when AHCA has not participated in or approved a settlement, the administrative procedure created by section 409.910(17)(b) ... serves as a means for determining whether a lesser portion of the total recovery should be allocated as reimbursement for medical expenses in lieu of the amount calculated by application of the [statutory] formula.” Eady v. Ag. for Health Care Admin., 279 So. 3d 1249, 1255 (Fla. 1st DCA 2019) (quoting Delgado v. Ag. for Health Care Admin., 237 So. 3d 432, 435 (Fla. 1st DCA 2018)).

       
       

   24. The parties stipulated that Petitioners must prove by a preponderance of the evidence that the amount payable to AHCA to satisfy its Medicaid lien, i.e., the portion of the settlement proceeds “fairly allocable” to past medical expenses, is less than the statutory formula. Eady, 279 So. 3d at 1255.2 A preponderance means “the greater weight of the evidence,” or evidence that “more likely than not tends to prove a certain proposition.” S. Fla. Water Mgmt. Dist. v. RLI Live Oak, LLC, 139 So. 3d 869, 872 (Fla. 2014).

   25. Based on the Findings of Fact and Ultimate Findings of Fact above, Petitioners proved by a preponderance of the evidence—indeed, undisputed evidence—that the total value of Petitioners’ medical malpractice damages was at least $17.5 million and that, as such, the $1.75 million settlement represents ten percent of the total value of Petitioners’ claim.

   26. The parties agree that all past medical expenses paid by AHCA and DOH shall be considered and that this total is $251,081.89. See, e.g., Smith v. Ag. for Health Care Admin., 24 So. 3d 590, 591 (Fla. 5th DCA 2009) (recognizing that evidence of the total amount of medical expenses is required to determine the medical expense portion of a settlement). Ten percent of the total past medical expenses is $25,108.19.

   27. Based on the Findings of Fact and Ultimate Findings of Fact above, Petitioners proved by a preponderance of the evidence—indeed, undisputed evidence—that $25,108.19 represents the portion of the settlement proceeds fairly and reasonably allocable to past medical expenses and that is the amount payable to AHCA to satisfy its lien. Indeed, the First District Court of Appeal has repeatedly held that where petitioners present unrebutted and unimpeached expert testimony as to the full value of the damages and the

2 Consistent with precedent from the First District Court of Appeal, the undersigned applies the preponderance of the evidence standard based on the parties’ stipulation. See Eady, 279 So. 3d at 1258-59 (recognizing that the parties agreed to the preponderance of the evidence standard and applying same on appeal). In the event that it is later determined that the clear and convincing evidence standard should apply, the Findings of Fact and Ultimate Findings of Fact herein are based on undisputed, credible expert testimony that would meet the heightened clear and convincing standard.

reasonable allocation of the settlement proceeds to past medical expenses, application of the pro rata methodology consistent with the undisputed and credible evidence is not only proper but required. Bryan v. Ag. for Health Care Admin., 291 So. 3d 1033, 1036 (Fla. 1st DCA 2020); Mojica, 285 So. 3d

at 394; Eady, 279 So. 3d at 1259.

DISPOSITION

Based upon the Findings of Fact and Conclusions of Law provided above, it is ORDERED that the Agency for Health Care Administration is entitled to

$25,108.19 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 30th day of November, 2020, in Tallahassee, Leon County, Florida.

S

ANDREW D. MANKO

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 30th day of November, 2020.

COPIES FURNISHED:

Alexander R. Boler, Esquire

2073 Summit Lake Drive, Suite 330

Tallahassee, Florida 32317 (eServed)

Floyd B. Faglie, Esquire Staunton & Faglie, PL 189 East Walnut Street Monticello, Florida 32344 (eServed)

Shena L. Grantham, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Building 3, Room 3407B Tallahassee, Florida 32308

(eServed)

Bill Roberts, Acting General Counsel Agency For Health Care Administration 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 (eServed)

Shevanun L. Harris, Acting Secretary Health Quality Assurance

Agency For Health Care Administration 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

Richard J. Shoop, Agency Clerk

Agency For Health Care Administration 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 (eServed)

Thomas M. Hoeler, Esquire

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, accompanied by 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: 20-002266MTR

Orders for Case No: 20-002266MTR