The Issue What amount of Petitioners' $7,250,000.00 settlement related to personal injuries he received and also arising from a bad faith claim he intended to file, is payable to Respondent, Agency For Health Care Administration ("AHCA"), to satisfy AHCA's Medicaid lien totaling $356,714.94.
Findings Of Fact Based on the stipulations of the parties, the evidence presented at the hearing, and the record as a whole, the following Findings of Fact are made: Stipulated Facts From the Parties On June 21, 2013, Wilsin Guzman ("Guzman"), who was then 22 years old, was involved in a motor vehicle accident when his motorcycle struck a car that did not yield the right-of-way and turned left into Guzman's lane. In the accident, Guzman suffered catastrophic and permanent injuries including fractures to his left and right femur, fractures to his left wrist, chest contusion, multiple facial fractures, and catastrophic brain damage. Guzman is now unable to ambulate, eat, toilet, or care for himself in any manner. JPHS p. 9 ¶1. Guzman's medical care related to the injuries was paid by Medicaid. Medicaid, through AHCA, provided $356,714.94 in benefits. This $356,714.94 constituted Guzman's entire claim for past medical expenses. JPHS p. 9 ¶2. Adela Mayra Aguila was appointed Guzman's guardian and she pursued a personal injury lawsuit against the driver/owner of the car that struck Guzman's motorcycle ("Defendants") to recover all Guzman's damages. JPHS p. 9 ¶3; Pet. Ex. 8 Guzman's personal injury action was settled through a series of confidential settlements in a lump-sum unallocated amount of $7,250,000.00. Because Guzman was incapacitated, court approval of the settlement was required and the circuit court, by order of December 5, 2019, approved the settlement. JPHS p. 9 ¶4. As a condition of Guzman's eligibility for Medicaid, Guzman assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See 42 U.S.C. §1396a (a)(25)(H) and § 409.910(6)(b), Fla. Stat. During the pendency of Guzman's personal injury action, AHCA was notified of the action. JPHS p. 10 ¶5. AHCA did not "institute, intervene in, or join in" the personal injury action to enforce its rights as provided in section 409.910(11) or participate in any aspect of Guzman's personal injury action against the Defendants. JPHS p. 10 ¶6. Instead, AHCA asserted a $356,714.94 Medicaid lien against Guzman's cause of action and settlement of that action. JPHS p. 10 ¶5. By letter, AHCA was notified of Guzman's settlement. JPHS p. 10 ¶7. AHCA has not filed a motion to set-aside, void, or otherwise dispute Guzman's settlement. JPHS p. 10 ¶8. The Medicaid program through AHCA spent $356,714.94 on behalf of Guzman, all of which represents expenditures paid for Guzman's past medical expenses. JPHS p. 10 ¶9. Guzman's taxable costs incurred in securing the settlement totaled $281,958.20. JPHS p. 10 ¶10. Application of the formula at section 409.910(11)(f) to Guzman's $7,250,000.00 settlement requires payment to AHCA of the full $356,714.94 Medicaid lien. JPHS p. 10 ¶11. Petitioners have deposited the 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). JPHS p.10 ¶12. Evidence From the Hearing Testimony of Alejandro Garcia-Halenar, Esquire Alejandro Garcia-Halenar, Esquire ("Garcia"), has been a trial attorney for 20 years and practices with Steinger, Greene & Feiner in Fort Lauderdale, Florida. He is the head of his firm's Fort Lauderdale litigation department and handles four to six jury trials each year. Most of his cases involve traumatic catastrophic brain injury. He is familiar with reviewing medical records, life care plans, economist reports, and interviewing/deposing expert witnesses. Garcia stays abreast of jury verdicts by reviewing jury reports and discussing cases with other attorneys. Garcia is a member of a number of trial attorney associations, including the Florida Justice Association and the Broward County Justice Association. As a routine part of his law practice, he makes assessments concerning the value of damages suffered by injured clients and he explained his process for making these determinations. Garcia is familiar with, and routinely participates in, allocation of settlements in the context of health insurance liens, worker compensation liens, and Medicare set-asides, as well as, allocations of judgments made by trial judges, post-verdict. Garcia represented Guzman in his personal injury claim. Garcia reviewed the accident report, reviewed Guzman's medical records, reviewed the life care plan, reviewed the economist report, interviewed/deposed fact and expert witnesses, and met with Guzman and his family numerous times. On the day of the accident, Guzman left work around 3:00 p.m. on his motorcycle. A short distance from work, the defendant turned her Cadillac Escalade left in front of Guzman's motorcycle. Guzman laid-down his motorcycle in an attempt to avoid hitting the defendant's vehicle, but ultimately struck the side of her vehicle. There were no line of sight issues or anything blocking her view, and the defendant was cited by law enforcement for making an illegal left turn and reckless driving. Guzman was taken to the hospital where it was determined that he had multiple broken bones, internal injuries, and catastrophic brain damage. It was questionable if Guzman was going to survive and he remained in a coma for over two months and in the ICU for some time longer. Garcia felt that Guzman's injuries profoundly and negatively impacted his life. Due to the catastrophic brain damage, Guzman is unable to walk, feed himself, bathe, and requires 24-hour-a-day care. He has limited speech and only short-term memory. Guzman's mother quit her job as a home health aide to stay home and care for Guzman 24/7. Further, Guzman's fiancée moved out of her parents' home and into Guzman's parents' home to help care for Guzman. Based on his professional training and experience, Garcia testified that Guzman's total damages have a value in excess of $50 to $60 million. Garcia explained that during the litigation of the case, a life care plan and economist report was prepared calculating the present value of Guzman's past and future lost wages and future medicals. The economist report provided a low and a high valuation based on whether Guzman remained in-home or was transferred to a nursing home. The lower calculation placed a value of past lost wages at $28,208.00, future lost wages at $194,761.00, and future medicals at $15,160,055.00. The higher calculation valued past lost wages at $28,208.00, future lost wages at $240,814.00, and future medicals at $30,664,888.00. Garcia explained that taking these numbers and adding them to the $356,714.94 claim for past medical expenses, Guzman's total claim for economic damages would be between $15,739,738.00 and $31,290,624.00. Garcia opined that Guzman's life care plan and economist report were consistent with life care plans and economist reports he had seen in other cases involving catastrophic brain damage. He concluded that the calculation of Guzman's economic damages was conservative. Garcia explained that added to the estimated $15 million to $31 million in economic damages, would be Guzman's claim for noneconomic damages. This added amount was necessary to calculate the full value of Guzman's damages. Garcia testified that typically the noneconomic damages awarded by a jury alone are in excess of the value of the economic damages. Garcia explained that his law firm routinely presents cases to focus groups and mock juries to gauge the potential reaction of a jury. Garcia testified that in Guzman's case, the focus groups and mock juries consistently placed a high value on Guzman's noneconomic damages, and that each focus group assessed noneconomic damages with numbers ranging from $50 million, up to as high as $100 million. Garcia testified that the jury verdicts in Petitioners' Exhibit 12 were comparable to Guzman's case and supported his valuation of Guzman's damages. Garcia testified that Guzman's noneconomic damages could have been in this $22 to 39 million range, based on the focus groups and mock jury results for noneconomic damages. Adding the $15 to $31 million in economic damages to the noneconomic damages, Garcia testified that Guzman's damages had a total value in excess of $50 to $60 million. Garcia testified that it is a routine part of his practice to round-table cases with other attorneys. His discussions regarding Guzman's case with attorneys in his firm, as well as with the law firm handling the potential insurance bad faith claim, resulted in a consensus that Guzman's total damages had a value in excess of $50 to $60 million. Garcia recapped his total damage valuation and concluded that it would be extremely conservative to value all of Guzman's damages at $30 million. Garcia testified that after his evaluation and investigation of the case, a personal injury lawsuit was filed against the owner and driver of the vehicle. He explained that prior to filing the suit, a demand was made for the defendant/owner's $30,000.00 insurance policy limits in settlement of the personal injury claim because there was no other insurance available. The insurance company did not appropriately tender the $30,000.00 in a timely manner. In Garcia's professional opinion, this gave rise to a potential claim for bad faith against the driver's insurance company, making it potentially liable for all personal injury damages suffered by Guzman. Garcia summarized the procedures related to a bad faith claim brought against an insurance company. He explained that in such circumstances the initial lawsuit for personal injuries is brought against the underlying at-fault party, in this case, the driver. If and when a judgment is entered against the at-fault party, a separate bad faith lawsuit is ripe and may be brought against the insurance company to recover on the judgment. In Garcia's opinion, a bad faith claim against an insurance company and related litigation, can be a lengthy process and is extremely complicated with mixed results. In this case, the initial lawsuit was brought against the owner and driver of the vehicle. The insurance company was notified of the lawsuit against the driver and was aware of its potential bad faith liability if a judgment was entered against the Defendants.1 After five years of litigation, the personal injury case settled on the eve of trial for $7,250,000.00. Garcia testified that the settlement was based, in part, on the risk of proceeding forward with a future complicated bad faith lawsuit and the extensive time involved in such a proceeding.2 Garcia testified that the $7,250,000.00 settlement did not fully compensate Guzman for the total or full value of his damages arising from the accident. He opined that based on a conservative value of total damages of $30 million, Guzman recovered only 24.16% of the total value of his damages in the settlement. He further explained that because Guzman recovered only 24.16% of his total damages, he recovered only 24.16% of his $356,714.94 claim for past medical expenses in the settlement, or $86,182.33. Garcia concluded, without objection, that it would be reasonable and fair to allocate $86,182.33 of the settlement to past medical expenses. Garcia also testified that because the allocation to past medical expenses was based on a conservative value of all damages at $30 million, the allocation of $86,182.33 of the settlement to past medical expenses was conservative as well. 1 Guzman had attorneys working on his personal injury case who specialized in bad faith litigation. The insurance company participated in the litigation of the personal injury lawsuit. 2 Regardless of what considerations drove the settlement amount, the evidence showed that Petitioners' experts still valued Guzman’s total damages at $30 million. Testimony of R. Vinson Barrett, Esquire Barrett has been a trial attorney for over 40 years and is a partner with the law firm of Barrett, Nonni and Homola, P.A., in Tallahassee, Florida. His practice is dedicated to plaintiff's personal injury and wrongful death cases. He has handled cases involving catastrophic brain injury and routinely handles jury trials. Barrett is familiar with reviewing medical records, life care plans, and economist reports. Barrett stays abreast of jury verdicts by reviewing jury verdict reports and discussing cases with other trial attorneys. He is a member of the Florida Justice Association and the Capital City Justice Association. As a regular part of his practice, Barrett makes assessments concerning the value of damages suffered by injured parties. He explained his process for making these assessments. Barrett testified that he is familiar with settlement allocation in the context of health insurance liens, Medicare set-asides, and workers' compensation liens. He is familiar with the process of allocating settlements in the context of Medicaid liens and described that process. Barrett has been accepted as an expert in the valuation of damages in federal court as well as numerous Medicaid lien hearings at DOAH. Barrett reviewed the exhibits filed in this proceeding, the JPHS, and listened to Garcia's testimony. He was familiar with Guzman's injuries. Barrett detailed the extensive nature of Guzman's injuries and the impact Guzman's injuries had on his life. Barrett commented that Guzman had suffered as catastrophic an injury as you can possibly suffer, and he could not imagine how an individual could be hurt much worse. In Guzman's case, the injuries were made worse by the fact that Guzman was not just in a coma or "completely out of it." Guzman had enough mental capacity remaining to realize that his life, as he would have hoped for it, was over. Based on his professional training and experience, Barrett believed Guzman's total damages had a conservative value between $30 and $50 million. Barrett outlined that the economist report placed the present value of Guzman's economic damages at between $15 and $31 million. Barrett testified that this present valuation of the economic damages was very similar to valuations he had seen in other economic reports involving catastrophic brain damage, and he believed the valuations were reasonable. He believed that in addition to the $15 to $31 million in economic damages, he would add Guzman's claim for noneconomic damages. According to Barrett, Guzman's claim for noneconomic damages would have a significantly high value. He felt that it would be extremely unlikely for a jury to award less than $15 million to Guzman for his noneconomic damages. Barrett noted that the jury verdicts included in Petitioners' Exhibit 12 were comparable to Guzman's case--noting that the average award for pain and suffering in those verdicts was $24.7 million. The $24.7 million value of noneconomic damages was in-line with his opinion that Guzman's noneconomic damages alone would be in the same range as Guzman's economic damages--$15 to $31 million. Barrett testified that, in light of the fact that he believed Guzman's damages would have a total combined value of between $30 and 50 million, a total value of $30 million was extremely conservative. Barrett was aware that the case settled for $7,250,000.00. He concluded that this settlement amount did not fully compensate Guzman for all the damages he had suffered. Using a value of total damages of $30 million, the $7,250,000.00 settlement represented a recovery of 24.16% of the value of the damages. Because only 24.16% of the total damages were recovered by Guzman, only 24.16% of the $356,714.94 claim for past medical expenses was recovered in the settlement, or $86,182.33.3 Barrett concluded that it was reasonable and conservative to allocate $86,182.33 of the settlement to past medical expenses. AHCA did not call any witnesses, present any evidence regarding a different value of the damages or utilize experts to propose a different way or method to value the total damages suffered by Guzman. Nor did AHCA persuasively contest the experts' valuation of Petitioners' total damages or the methodology used to calculate the $86,182.33 allocation to past medical expenses. As a result, Petitioners' testimony and evidence presented regarding his total damages was essentially unrebutted and uncontradicted. To recap the evidence, Petitioners presented the unrebutted expert testimony of two trial lawyers who made projections as to the amount of total damages suffered by Guzman. This evidence, in turn, adequately proved what portion of Guzman's undifferentiated settlement was "fairly allocable to past medical expenses." More specifically, and in "doing the math" under the proportionality methodology--the $7,250,000.00 settlement represents a 24.16% recovery of all damages. ($7,250,000.0 is 24.16% of $30 million). Applying the same ratio of 24.16% to the $356,714.94 in past medical expenses paid by AHCA, the undersigned finds that $86,182.33 in the settlement agreement is "fairly allocable" to past medical expenses.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner, Summer Bass, from personal injury settlements received by Petitioner from third parties.
Findings Of Fact On September 9, 2014, Petitioner, then 13 years old, was a passenger on a motor scooter, the driver of which ran a stop sign and collided with a truck that was passing through the intersection. Petitioner was thrown from the motor scooter. Petitioner was airlifted to St. Mary’s Medical Center in West Palm Beach, Florida, where she was diagnosed with a skull fracture, a severe traumatic brain injury, a large right-side epidural hematoma, and a fractured clavicle. Petitioner underwent surgery and was placed in an induced coma with ventilator support. During her hospitalization, Petitioner experienced complications including infection, femoral deep venous thrombosis, and pneumonia. She was discharged from the hospital more than a month from her admission. As a result of her brain injury, Petitioner suffers from a seizure disorder and requires 24-hour supervision. Thus far, medication has not brought her seizures under control. Petitioner has difficulty with cognitive thinking and memory, and has been unable to return to school since the accident. Petitioner was enrolled in Florida Virtual School in the fall of 2015, but was unable to keep up with the pace of courses. Currently, Petitioner receives schooling at home with her mother and a tutor. Petitioner’s mother, a registered nurse, left the workforce and is Petitioner’s full-time caregiver. Petitioner’s past medical expenses related to her injuries were paid by Medicaid in the amount of $123,533.53. Petitioner, through her mother and natural guardian, brought a personal injury action for damages against both the owner of the motor scooter (Scooter Owner) and the driver of the truck (Truck Driver). The Scooter Owner maintained insurance coverage limited to $300,000. The Scooter Owner’s insurance company tendered the $300,000 policy pre-suit, which was accepted by Petitioner’s guardian in settlement of Petitioner’s claim for damages against the Scooter Owner. The release memorializing the settlement between Petitioner and the Scooter Owner provided, in part, as follows: The parties agree that Summer Bass’ alleged damages have a value in excess of $2,000,000, of which $123,533.53 represents Summer Bass’ claim for past medical expenses. Given the facts, circumstances and nature of Summer Bass’ injuries and this settlement, the parties have agreed to allocate $18,530.03 of this settlement to Summer Bass’ claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. Respondent, Agency for Health Care Administration, was not a party to the settlement between Petitioner and the Scooter Owner. The Truck Driver maintained insurance coverage limited to $100,000. The Truck Driver’s insurance company tendered the $100,000 policy pre-suit, which was accepted by Petitioner’s guardian in settlement of Petitioner’s claim for damages against the Truck Driver. The release memorializing the settlement with the Truck Driver provided, in part, as follows: The parties agree that Summer Bass’ alleged damages have a value in excess of $2,000,000, of which $123,533.53 represents Summer Bass’ claim for past medical expenses. Given the facts, circumstances and nature of Summer Bass’ injuries and this settlement, $6,176.68 of this settlement has been allocated to Summer Bass’ claim for past medical expenses and the remainder of the settlement has been allocated towards the satisfaction of claims other than past medical expenses. Respondent was not a party to the settlement between Petitioner and the Truck Driver. Respondent spent $123,533.53 on behalf of Petitioner through the Medicaid program for past medical expenses. During the pendency of Petitioner’s personal injury claim, Respondent was notified of the action and asserted a lien in the amount of $123,533.53 against the proceeds of any settlement or award in that action. Section 409.910(11)(f), Florida Statutes, provides, in pertinent part, as follows: (f) [I]n 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 . . . 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 . . . shall be calculated at 25 percent of the judgement, award, or settlement. Pursuant to the formula set forth in 409.910(11)(f), Respondent should be reimbursed $123,533.53, the full amount of its lien. However, the statute provides a method by which a recipient may contest the amount designated as recovered medical expense damages payable to the agency pursuant to the formula set forth in paragraph (11)(f). “In order to successfully challenge the amount payable to the agency, the recipient must prove, by clear and convincing evidence, that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated by the agency” pursuant to the formula. § 409.910(17)(b), Fla. Stat. Eric Romano is an attorney with 19 years’ experience representing plaintiffs in personal injury and wrongful death claims. The majority of Mr. Romano’s cases are tried in the Lake Worth and West Palm Beach areas. Mr. Romano represented Petitioner in the underlying personal injury claims against both the Scooter Owner and the Truck Driver. Mr. Romano is a member of the Florida Justice Association, the American Association for Justice, and the Palm Beach Justice Association, which organizations each offer a forum for collecting and evaluating jury verdicts in personal injury and wrongful death cases. Mr. Romano was accepted as an expert in valuation of damages (in personal injury cases), and testified as to his opinion of the total value of damages in Petitioner’s underlying personal injury action. To arrive at his opinion, Mr. Romano considered cases involving brain-injured victims which were tried to jury verdict. For example, Mr. Romano considered the case of Gladin v. Brecht, 22 Fla. J.V.R.A. 8:C2, 1000 WL 176493 (Fla. 18th Cir. [no date given]), in which a minor suffered a traumatic brain injury during an automobile collision. The minor plaintiff in Gladin suffered from a seizure disorder and cognitive weaknesses similar to, but not as severe as, Petitioner’s injuries. In Gladin, the jury awarded $2.025 million in damages to the minor plaintiff. Mr. Romano also considered a settlement in the case of Gomez v. Avis Rent-a-Car System, Inc., 10 Nat. J.V.R.A. 5:31, 1994 WL 16886597 (Fla. 11th Cir. 1994), in which a minor was thrown from a vehicle and suffered massive head trauma, subdural hematomas and intracerebral hematomas, underwent brain surgery to remove dead brain tissue, and had a plate placed in her skull. The minor plaintiff’s injuries were similar to, but more severe than, Petitioner’s. In Gomez, the parties settled prior to trial for $2.075 million. Finally, Mr. Romano considered a bench verdict issued in the case of Carter v. O’Guin, 24 Fla. J.V.R.A 9:14, 2014 WL 5463441 (Fla. 7th Cir. 2014), in which an adult suffered a traumatic brain injury when the vehicle in which she was riding collided with a tractor trailer. Plaintiff was in a coma for three weeks and became totally and permanently disabled. In Carter, the plaintiff’s injuries were similar to, but more severe than, Petitioner’s injuries. In Carter, the judge awarded a verdict for Plaintiff in the amount of $4.3 million. In formulating his opinion of the total value of Petitioner’s damages, Mr. Romano also considered cases for clients which his firm had tried to jury verdict. In Mr. Romano’s opinion, the total value of Petitioner’s damages is conservatively estimated at $2 million. Mr. Vince Barrett also testified on behalf of Petitioner. Mr. Barrett is a trial attorney with almost 40 years’ experience in personal injury, medical malpractice, and medical products liability cases. Mr. Barrett was accepted as an expert in valuation of damages (in personal injury cases). Mr. Barrett reviewed the accident report relating to Petitioner’s scooter accident, Petitioner’s medical records, a report from Petitioner’s Guardian ad Litem, Petitioner’s settlement documents, and all of Petitioner’s Exhibits. Mr. Barrett also reviewed the Gladin and Gomez cases. Mr. Barrett found the Gladin case to be a good comparator to Petitioner’s case, given their minority age status, similar injuries, and cognitive impairments. Mr. Barrett agreed that valuation of Petitioner’s total damages at $2 million was appropriate, although conservative. Total recovery for Petitioner’s damages through settlement was $400,000. Thus Petitioner was compensated 20 percent of the total value of her damages. Twenty percent of $123,533.53, the amount of the Medicaid lien for past medical expenses, is $24,706.71. An allocation of $24,706.71 to Petitioner’s claim for past medical expenses is reasonable and proportionate to the percentage of the settlement to the total value of damages.
The Issue The issue in this case is the amount that must be paid to Respondent, Agency for Health Care Administration (AHCA or Respondent) from the proceeds of Petitioner’s confidential settlement to satisfy Respondent’s Medicaid lien against the proceeds pursuant to section 409.910, Florida Statutes (2019).1
Findings Of Fact Paragraphs 1 through 9 are the facts admitted8 and agreed upon by the parties, and required no proof at hearing. On December 7, 2012, A.F., an eight-year-old female, underwent an initial psychiatric evaluation. Following this assessment, A.F. was started on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD). A.F. was 4 Respondent’s Proposed Final Order provided that “Petitioner presented two witnesses: Andrew Needle, Esq., and Kenneth Bush, Esq.” The undersigned did not hear any testimony from Mr. Needle or Mr. Bush. 5 Respondent’s Exhibit 1, a “Provider Processing System Report,” contained a different “Total Claims” amount than the amount of A.F.’s medical expenses paid by AHCA to which the parties stipulated. Without testimony this exhibit is hearsay, and cannot support a finding of fact. As discussed at hearing, the parties agreed to use the stipulated amount: $261,334.61. 6 Although Petitioner’s PFO recites that Petitioner “did not order a transcript of the proceedings,” a review of the filed transcript shows otherwise. See Hearing Tran, pg. 10, lines 4–7. 7 The Hearing Transcript was electronically filed with DOAH on August 3, 2020; the hard– copy original Transcript was filed with DOAH on August 14, 2020. 8 Statement 3 has been reworded for clarity purposes. prescribed 18mg of the ADHD drug9 that was the subject of the personal injury litigation. On March 30, 2013, at the age of nine, and shortly after her ADHD medication was uptitrated from 18mg to 27mg daily, A.F. attempted suicide by way of hanging with a scarf fastened to her bunk bed. That action detrimentally impeded oxygen flow to A.F.’s brain for a dangerously prolonged period of time, resulting in extensive neurological damage and substantial motor impairment; ultimately leaving A.F. in a permanent vegetative state. Ms. Lopez, on behalf of A.F., brought a product liability and medical malpractice action to recover all of A.F.’s damages related to her prescription of the ADHD drug. This action was brought against various pharmaceutical and medical malpractice defendants. As a result of the alleged medical malpractice and pharmaceutical product liability claims, A.F. suffered a massive hypoxic brain injury. Since this incident and the resulting hypoxic brain injury, A.F. has been in a permanent vegetative state requiring 24/7 skilled nursing care. In 2020, Ms. Lopez, on behalf of A.F., settled her tort action for a limited confidential amount, due to significant liability challenges with her claims; even though she believed that A.F.’s injuries were tens of millions of dollars in excess of the recovery. AHCA was properly notified of A.F.’s lawsuit against the defendants and indicated it had paid benefits related to the injuries from the incident in the amount of $261,334.61. AHCA has asserted a lien for the full amount it paid, $261,334.61, against A.F.’s settlement proceeds. AHCA has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory 9 The name of the drug is not being used based on the terms in the confidential settlement. reduction formula to this particular settlement would result in no reduction of the lien given the amount of the settlement. AHCA paid $261,334.61 on behalf of A.F., related to her claim against the liable third parties. The parties stipulated that AHCA is limited by section 409.910(17)(b) to the past medical expense portion of the recovery and that a preponderance of the evidence standard should be used in rendering this Final Order. There were two settlements regarding A.F.’s care and treatment: one with the doctor(s) who allegedly committed medical malpractice; and the second involving the pharmaceutical maker of the ADHD drug prescribed to A.F. Although AHCA was notified when the medical malpractice case was settled, AHCA did not file a lien on any of the recovery from the medical malpractice settlement. Limited information about the medical malpractice settlement was discussed, but the medical malpractice settlement is not considered in this Final Order. Petitioner’s Exhibit 1 is a February 16, 2019, letter (lien letter) from Conduent Payment Integrity Solutions, a subcontractor to Health Management Systems which is an authorized agent of AHCA “to operate the Florida Medicaid Casualty Recover Program.” In addition to directing A.F.’s counsel to review section 409.910, to determine the “responsibilities to Florida Medicaid,” Mark Lyles, Conduent’s case manager and author of this letter also posted the amount of the lien asserted by AHCA: $261,334.61. A.F. lives with her mother, sister, grandmother, and Ms. Lopez’s significant other. Everyone in the household can and does provide care and assistance to A.F. when necessary. Ms. Lopez rarely leaves A.F. in someone else’s care. A.F. is unable to speak and requires total care. Ms. Lopez described the injuries sustained by A.F. Ms. Lopez also detailed the care she has provided and is continuing to provide to A.F. since the event. A.F.’s activities of daily living (ADLs) must be met with assistance in every aspect of her being. When A.F. wakes up each morning: she is given all her medications; her diaper is changed; she is fed via a feeding tube; she is given lung treatments each morning; her trachea tube is cleaned and changed at times; and she is turned or moved every two hours to prevent sores forming on her skin. A.F. is on a ventilator at night and every four hours she is catheterized because she stopped urinating. In October 2019, A.F. started having seizures. Ms. Lopez testified that A.F.’s care is mentally and emotionally draining, and very tiring. She further added A.F.’s care is very repetitive and the “best way to describe it [each day] is the movie GROUNDHOG DAY,” (Columbia Pictures 1993); the same thing, every day. A.F. is confined to her hospital bed, a wheelchair, or a chair to which she can be secured. Although Ms. Lopez testified that A.F. is “entitled” to skilled nursing care 24/7, Ms. Lopez has learned how to care for A.F. because “they can’t staff me” with a skilled nurse (presumably referring to a Medicaid standard for care). Mr. Rafferty is a Florida board-certified civil trial lawyer with 26 years’ experience in personal injury law. He concentrates and specializes in pharmaceutical cases, including defective drug cases involving catastrophic injury, throughout Florida and the United States. As part of his ongoing practice, he routinely evaluates the damages suffered by injured clients, and relies on his own experience and his review of other jury verdicts to gauge any likely recovery for non-economic damages. Mr. Rafferty continues to handle cases involving similar injuries suffered by A.F. Mr. Rafferty was tendered and without objection was accepted as an expert regarding valuation of personal injury damages. Mr. Rafferty, along with Nathan Carter as co-counsel, represented A.F. and her mother in the civil litigation. He testified to the difficulties associated with pharmaceutical litigation in general, and then focused on the problematic causation and liability issues related to A.F. and her injuries. Mr. Rafferty met with the family; observed A.F. can no longer perform her ADLs; reviewed all of A.F.’s medical information; evaluated how the medication was uptitrated causing A.F.’s injury; analyzed the causation, liability issues, and fault; developed economic damages figures; and valued non-economic damages. Mr. Rafferty credibly testified regarding the evaluations he made regarding A.F.’s injuries and the pharmaceutical product prescribed. The non-economic damages included A.F.’s pain and suffering, both future and past, her loss of capacity to enjoy life, and her mental anguish. Mr. Rafferty explained the importance of assessing all of the elements of damages A.F. suffered as a result of her catastrophic injuries. Mr. Rafferty’s unrefuted testimony placed the total full value of A.F.’s damages conservatively in excess of $100,000,000.00.10 Mr. Rafferty included A.F.’s pain and suffering, mental anguish, and loss of quality of life, plus the economic damages. Further, using the $100,000,000.00 valuation amount and the confidential settlement proceeds, Mr. Rafferty opined that A.F. recovered only 4.75% of the full measure of all her damages. Mr. Rafferty reviewed Petitioner’s Exhibit 1, and as an experienced trial attorney understood the letter to contain the “lien for past medical” expenses of $261,334.61. Mr. Rafferty added that he routinely uses this type of approach with lien holders in his practice. Mr. Rafferty’s testimony was uncontradicted and persuasive on this point. Mr. Carter is an AV-rated Florida civil trial lawyer with 25 years’ experience in personal injury law, with an active civil trial practice. He has always handled plaintiff’s medical malpractice, product liability, and car accident-type litigation. As a routine part of his practice, he makes assessments concerning the value of damages suffered by injured clients, including the liability, causation, and possible damages. Mr. Carter 10 For ease of discussion, the conservative total amount, $100,000,000.00 will be used. All the witnesses agreed that the economic value of the case was above $70 million and the non- economic damages were at least $30 million. confirmed that it is essential to have every element (liability, causation, and damages) evaluated because these types of cases are expensive in both time and money. Mr. Carter specifically looks at the injuries sustained, who the plaintiff is, how the injuries have affected their life, and the permanency of those injuries. He continues to handles cases with catastrophic injuries. Mr. Carter testified that the injuries suffered by A.F. were “worse than almost, almost any case … handled.” He added that A.F.’s damages were “catastrophic” and “one of the worst damage cases [he had] ever seen.” Mr. Carter was tendered and without objection was accepted as an expert regarding valuation of medical malpractice damages.11 Mr. Carter testified that “as a matter of course, [we] put every lienholder on notice as soon as we learn about them” and “then throughout the case.” Mr. Carter was in regular contact with Mr. Lyles. The medical malpractice case was settled before the pharmaceutical action. After the medical malpractice case was settled, Mr. Carter understood that AHCA would not negotiate on the medical malpractice settlement. When the “entire case” was completed, Mr. Carter notified Mr. Lyles, and then received the lien letter. As an experienced trial attorney he understood the letter to contain the “final lien figure:” $261,334.61. Mr. Carter also met with the family, reviewed all of A.F.’s medical information and records, and evaluated the medication that was uptitrated. Mr. Carter utilized a similar detailed analysis of A.F.’s injuries and her current condition. Mr. Carter also described the severity of A.F.’s injuries that entered into his decision to pursue the civil case and to testify in this proceeding. Mr. Carter analyzed the causation, liability issues, and fault. He evaluated the economic damages figures and valued non-economic damages 11 Mr. Carter was offered as an expert in medical malpractice damages. His insight in the combined totality of the medical malpractice and pharmaceutical product litigation warranted consideration, but AHCA’s failure to include the medical malpractice settlement precluded any consideration of that settlement. Without a more decisive understanding of what “pretty significant” means, ACHA’s attempt to question Mr. Carter’s knowledge of A.F.’s past medical expenses is unpersuasive. such as pain and suffering, both future and past, loss of capacity to enjoy life, scarring and disfigurement, and mental anguish. Mr. Carter opined A.F.’s damages could have easily been in excess of $100,000,000.00. Mr. Carter further opined that A.F.’s non-economic damages were “very significant” and “could have driven the total value of damages in excess of the $100,000,000.00.” However, Mr. Carter testified he used $100,000,000.00 in order to resolve the Medicaid lien. Mr. Carter used the same mathematical approach he has used in other lien issues: he divided the confidential settlement amount by the conservative full value of damages ($100,000,000.00) and arrived at a recovery of 4.75% of the full measure of her damages. Mr. Carter’s testimony was uncontradicted and persuasive on this point. Mr. McKenna is a board-certified, AV-rated Florida civil trial lawyer with 25 years’ experience in personal injury law, who maintains an active civil trial practice. He has always practiced plaintiff’s work, and has tried between 40 and 50 cases to verdict. In the last 15 years, Mr. McKenna testified that “at least half … focused on … catastrophic cases either from the medical malpractice arena or from general liability trucking arena.” Mr. McKenna has reviewed thousands of personal injury cases relative to damages, and provided a detailed explanation of how he evaluates damages of catastrophic injury cases. He further provided that half of his cases were wrongful death cases and the other half were physical or brain injury cases. Mr. McKenna also provided the various resources he uses to keep abreast of personal injury verdicts and settlements. Mr. McKenna was tendered as “an independent expert attorney as to valuation of damages.” Mr. McKenna was not involved in the underlying civil litigation, but became A.F.’s guardian ad litem, appointed by the trial judge, to offer his “opinions regarding the reasonableness of the potential medical malpractice settlement, and ... the pharmaceutical settlement” which is the subject of this Final Order. Respondent did not object to Mr. McKenna’s tender and he was accepted as an expert in the valuation of damages. Mr. McKenna testified that he reviewed the facts and circumstances of both the medical malpractice and the pharmaceutical sides and the chronologies of A.F.’s medical records. He acquired an “intimate understanding” of A.F’s on going care and treatment in light of the injuries she sustained. Mr. McKenna agreed with Messrs. Rafferty and Carter that the non-economic damages in this case were very significant, and he agreed with their conservative $100,000,000.00 valuation of her total damages. Further, Mr. McKenna testified that the normal course for resolving liens in Florida was to look at the total value of damages in relation to the recovery to get a ratio by which to reduce the lien amount. Based on his past experiences in resolving Medicaid liens, other courts have resolved such liens using the formula from the Arkansas Department of Health & Human Services. v. Ahlborn, 547 U.S. 268 (2006), with the only other alternative formula found in section 409.910. The testimony of Petitioner’s three experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the confidential settlement does not fully compensate A.F. for the full value of her damages. As testified to by the experts, A.F.’s recovery represents only 4.75% of the total value of her claim. AHCA did not call any witnesses, present any evidence as to the value of damages, or propose a different valuation of the damages. In short, Petitioner’s evidence was unrebutted. AHCA did, however, contest the methodology used to calculate the allocation of past medical expenses, but was unpersuasive. The parties stipulated to the value of the services provided by Florida Medicaid as $261,334.61. It is logical and rational to conclude that this figure is the amount expended for A.F.’s past medical expenses. Applying the 4.75% pro rata ratio to $261,334.61 equals $12,413.39, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien. Petitioner proved by a preponderance of the evidence as set forth in section 409.910(11)(f) that AHCA should be reimbursed at the lesser amount: $12,413.39.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure payment of workers’ compensation coverage, as alleged in the Second Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact Jurisdiction The Department is the state agency responsible for enforcing the requirement of chapter 440 that employers in Florida secure workers’ compensation coverage for their employees and corporate officers, pursuant to section 440.107. Patrick Hoffman was the owner and sole corporate officer for American. At all times material to this proceeding, American sold materials for window screens, patio sliding doors, screws, and spline screening; and it provided window and screen installation services. Investigation On June 29, 2016, the Department commenced an investigation following the observation of Patrick Hoffman and Timothy Barnett (also known as Adam Barnett) performing window installation services at a residential property. Kent Howe, an investigator in the Department’s compliance division, conducted an investigation regarding American’s operation of its business without proper workers’ compensation coverage. On June 29, 2016, Mr. Howe personally served a Stop-Work Order requiring American to cease all business operations and Order of Penalty Assessment on Mr. Hoffman. On June 29, 2016, Mr. Howe also served Mr. Hoffman with a Request for Production of Business Records for Penalty Calculation, requesting records to enable the Department to calculate the appropriate penalty for the period of June 30, 2014, through June 29, 2016. On June 30, 2016, the Department issued a conditional release from the Stop-Work Order. The conditional release required Respondent to pay $1,000, and agree to pay the penalty assessment within 28 days after the penalty calculation. American paid the $1,000 payment but it disputed the calculated penalty amount. An employer is required to maintain workers’ compensation coverage for employees unless there is an exemption from coverage. In the construction industry, a company must maintain coverage if it employs one or more persons. In the non-construction industry, a company is required to maintain coverage if it employs three or more persons. A contractor serving as a corporate officer in the construction industry may obtain an exemption from coverage requirements. See § 440.05, Fla. Stat. A contractor must demonstrate compliance with the workers’ compensation requirements or produce a copy of an employee leasing agreement or exemption for each employee. If an employee is a subcontractor without their own workers’ compensation coverage or an exemption, the individual is considered an employee of the contractor. American did not dispute that Timothy Barnett and Roger Wilson were employees of the company. American also did not dispute that it did not have workers’ compensation coverage for the employees as required by chapter 440. As a corporate officer, Mr. Hoffman elected to be exempted from workers’ compensation coverage. Penalty Calculation The Department assigned Eunika Jackson, a Department penalty auditor, to calculate the appropriate penalty for American. Ms. Jackson conducts penalty audits for construction and non-construction employers. Ms. Jackson testified that workers’ compensation coverage penalties are calculated based on a statutory formula in which the auditor calculates two-times the amount of the insurance premium the employer would have paid for each employee over the two-year period preceding the Stop-Work Order. The two-year period is commonly referred to as the look-back period. The penalty calculation is based on the employer’s payroll, the classification code for the industry of operation during the audit period, and the manual rate assigned to that classification code. To determine the appropriate code, the auditor uses the classification code in the Scopes® Manual, which has been adopted by Petitioner through Florida Administrative Code Rules 69L-6.021 and 69L-6.031. Ms. Jackson used business records Mr. Hoffman provided to determine the appropriate industry code and the penalty amount for each employee. Ms. Jackson reviewed bank statements to determine the gross payroll paid to Mr. Wilson and Mr. Barnett during the two-year non-compliance period. The records demonstrated that Roger Wilson received payment during the period of June 30, 2014, through December 31, 2015. Timothy (Adam) Barnett received payment during the period of January 1, 2015, through June 29, 2016. Ms. Jackson determined that American operated in the construction industry and initially assigned each employee a classification code of 5102. On August 11, 2016, the Department issued the Amended Order that assessed a total penalty of $10,785.04. The Amended Order was personally served on Mr. Hoffman on August 16, 2016. In response to the Amended Order, Respondent disputed the classification code assigned to Mr. Wilson. Mr. Hoffman testified that Mr. Wilson did not perform construction work, but rather worked as a retail employee selling merchandise in the store front. Mr. Hoffman further testified that contractors purchased items at American for use in their businesses. Mr. Hoffman’s description of Mr. Wilson’s job responsibilities and description of merchandise sold at American clearly demonstrates that Mr. Wilson did not perform construction work. Ms. Jackson correctly determined that the classification code 8018, which applies to retail and wholesale salespersons, was the appropriate code for Mr. Wilson. The classification code change resulted in a manual rate reduction and a reduced assessment applied to Mr. Wilson. On November 18, 2016, the Department filed a Motion for Leave to Amend Order of Penalty Assessment, which the undersigned granted. The Second Amended Order reduced the penalty assessment to $6,818.00. During the hearing, American continued to dispute the calculation of the penalty for Mr. Hoffman because he maintained an exemption as a corporate officer. The Department ultimately agreed to remove Mr. Hoffman from the penalty assessment worksheet and reduced the penalty assessment to $6,764.96. At hearing, there was no dispute regarding the penalty assessment related to Mr. Barnett. However, Respondent argued in the post-hearing statement for the first time that Timothy Barnett had an exemption. There was no evidence to support Respondent’s assertion. Therefore, Ms. Jackson correctly included payment to Mr. Barnett as payroll for purposes of calculating the penalty. Regarding Mr. Wilson, Mr. Hoffman argued that Mr. Wilson had an exemption from workers’ compensation coverage when he began working for American.1/ However, Mr. Hoffman could not produce a copy of the exemption and Mr. Wilson was not present at the hearing for testimony. Ms. Jackson conducted research using the Coverage Compliance Automated System (“CCAS”), a database used by the Department to maintain information regarding workers’ compensation policies, employee leasing plans, and exemptions for employees. Ms. Jackson found no record of an exemption for Mr. Wilson in CCAS. While Ms. Jackson did not exhaust all efforts to locate an exemption for Mr. Wilson, it was American’s burden to produce evidence of an exemption. Mr. Hoffman’s testimony with nothing more was insufficient to demonstrate that Mr. Wilson had an exemption and as such, Ms. Jackson appropriately included payments to Mr. Wilson as payroll to calculate the penalty. The calculation of the penalty for Mr. Wilson in the amount of $2,784.58 is correct. However, the penalty calculation for Mr. Barnett is incorrect. The amount should be $3,872.27. Therefore, the amount of the penalty should be reduced to $6,656.85. Ultimate Findings of Fact American was actively involved in business operations within the construction industry during the audit period of June 30, 2014, through June 29, 2016. Based upon the description of American’s business and the duties performed, Mr. Wilson was properly classified with a code 8018. Ms. Jackson used the correct manual rates and methodology to determine the appropriate penalty.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order determining that: Respondent, American Aluminum Concepts, Inc., violated the requirement in chapter 440, by failing to secure workers’ compensation coverage for its employees; and Imposing a total penalty assessment of $6,656.85. DONE AND ENTERED this 16th day of December, 2016, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 16th day of December, 2016.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (AHCA), for medical expenses paid on behalf of Petitioner, Shamarion Manley, from a personal injury settlement received by Petitioner from a third party.
Findings Of Fact Based on the stipulations of the parties, evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: On June 12, 2010, Shamarion Manley (“Shamarion”) suffered a severe left brachial plexus injury, right humerus fracture, neurological injury, and cardiac arrest during his birth. He was hospitalized until July 7, 2010, when he was discharged home to the care of his parents. Due to his severe left brachial plexus injury and other injuries suffered during birth, Shamarion is unable to use his left arm and hand and suffers from a speech impairment. (JPHS p. 8) Shamarion’s past medical expenses related to his injuries were paid in part by Medicaid and Sunshine State Health. Medicaid paid $74,061.27 in benefits and Sunshine State Health paid $106,656.23 in benefits. The amounts paid by Medicaid and Sunshine State Health, together with $22,118 in unpaid medical bills, constituted Shamarion’s entire claim for past medical expenses. Accordingly, Shamarion’s entire claim for past medical expenses was $202,835.50. (JPHS p. 8-9) Shamarion, or others on his behalf, did not make payments in the past or in advance for Shamarion’s future medical care, and no claim for damages was made for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Shamarion’s parents and natural guardians, Victoria and Sharmane Manley, brought a medical malpractice action to recover all of Shamarion’s damages, as well as their individual damages associated with their son’s injury, against the medical providers allegedly responsible for Shamarion’s injuries (“Defendants”). (JPHS p. 9) Shamarion’s parents compromised and settled the medical malpractice lawsuit with the Defendants for the amount of $410,000. (JPHS p. 9) In making this settlement, the settling parties agreed that: 1) the settlement did not fully compensate Shamarion for all his damages; 2) Shamarion’s damages had a value in excess of $2,250,000, of which $202,835.50 represented his claim for past medical expenses; and 3) allocation of $36,916.06 of the settlement to Shamarion’s claim for past medical expenses was reasonable and proportionate. In this regard the two (2) Releases (“Releases”) memorializing the settlement stated: Although it is acknowledged that this settlement does not fully compensate Shamarion Manley for all of the damages he has allegedly suffered, this settlement shall operate as a full and complete Release as to RELEASEES without regard to this settlement only compensating Shamarion Manley for a fraction of the total monetary value of his alleged damages. The parties agree that Shamarion Manley’s alleged damages have a value in excess of $2,250,000, of which $202,835.50 represents Shamarion Manley’s claim for past medical expenses. Given the facts, circumstances, and nature of Shamarion Manley’s injuries and this settlement, the parties have agreed to allocate {$36,916.06}[1/] of this settlement to Shamarion Manley’s claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Shamarion Manley’s damages. Further, the parties acknowledge that Shamarion Manley may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses Shamarion Manley will incur in the future. However, the parties acknowledge that Shamarion Manley, or others on his behalf, have not made payments in the past or in advance for Shamarion Manley’s future medical care and Shamarion Manley has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses. (JPHS p. 9) Because Shamarion was a minor, court approval of the settlement was required. Accordingly, on December 14, 2015, the Palm Beach County Circuit Court Judge handling the litigation of the medical malpractice action, the Honorable Edward Artau, approved the settlement by entering an Order on Plaintiffs’ Petition for Approval of Settlement (Order Approving Settlement). (JPHS p. 10) As a condition of Shamarion’s eligibility for Medicaid, Shamarion assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) and § 409.910(6)(b), Fla. Stat. During the pendency of Shamarion’s medical malpractice action, AHCA was notified of the action, and AHCA, through its collections contractor, Xerox Recovery Services, asserted a $74,061.27 Medicaid lien against Shamarion’s cause of action and settlement of that action. (JPHS p. 9) By letter of January 5, 2016, AHCA was notified by Shamarion’s medical malpractice attorney of the settlement and provided a copy of the executed Releases, Order Approving Settlement, and itemization of $146,540.70 in litigation costs. This letter explained that Shamarion’s damages had a value in excess of $2,250,000, and the $410,000 settlement represented only an 18.2 percent recovery of Shamarion’s damages. Accordingly, he had recovered only 18.2 percent of his $202,835.50 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of its Medicaid lien. (JPHS p. 10) AHCA did not respond to Shamarion’s attorney’s letter of January 5, 2016. (JPHS p. 10) AHCA did not file an action to set aside, void, or otherwise dispute Shamarion’s settlement with the Defendants. (JPHS p. 10) AHCA has not commenced a civil action to enforce its rights under section 409.910. (JPHS p. 10) The Medicaid program spent $74,061.27 on behalf of Shamarion, all of which represents expenditures paid for Shamarion’s past medical expenses. (JPHS p. 10) No portion of the $74,061.27, paid by the Medicaid program on behalf of Shamarion, represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. (JPHS p. 10) AHCA has determined that $146,540.70 of Shamarion’s litigation costs are taxable costs for purposes of the section 409.910(11)(f) formula calculation. (JPHS p. 11) Subtracting the $146,540.70 in taxable costs and 25 percent in allowable attorney’s fees, the section 409.910(11)(f) formula, applied to Shamarion’s $410,000 settlement, requires payment of $80,479.65 to AHCA in satisfaction of its $74,061.27 Medicaid lien. Since the $80,479.65 formula amount is more than the $74,061.27 Medicaid lien, AHCA is seeking payment of the full $74,061.27 Medicaid lien from Shamarion’s $410,000 settlement. (JPHS p. 11) Petitioner has deposited the 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). (JPHS p. 11) Testimony of Scott M. Newmark Mr. Newmark has been an attorney for 30 years, and during that entire time he has practiced plaintiff personal injury and medical malpractice law. Mr. Newmark testified that he handles jury trials and routinely represents children who have suffered catastrophic injury, particularly at birth. He is a member of the Florida Justice Association, the Palm Beach Justice Association, and the Trial Lawyer Section of the Florida Bar. Mr. Newmark testified that he stays abreast of jury verdicts in his area and that he routinely makes assessments concerning the value of damages suffered by injured parties, explaining his process for these determinations. He testified that he has been accepted as an expert in the valuation of damages suffered by injured parties by DOAH in the past. Mr. Newmark was accepted as an expert in the valuation of damages suffered by injured parties. He represented Shamarion and his parents relative to Shamarion’s medical malpractice action. He explained that as part of his representation, he reviewed Shamarion’s medical records, met with his doctors, met with experts, reviewed expert reports, and met with Shamarion and his parents many times. Mr. Newmark gave a detailed explanation of the injuries suffered by Shamarion during his birth. He explained that during the birth process, improper force was used and Shamarion suffered a brachial plexus injury when the nerves in his left shoulder were ripped off the spinal column. As a result of this injury, he is unable to use his left arm and has no grip strength in his left hand. Mr. Newmark testified that this injury is a permanent neurological injury and for the remainder of his life will continue to have a “tremendously dramatic impact on Shamarion.” Mr. Newmark testified that Shamarion’s claim for past medical expenses related to his injury was $202,835.50, which consisted of $74,061.27 in Medicaid benefits paid by AHCA, $106,656.23 in benefits paid by Sunshine State Health, and $22,118 in unpaid medical bills. Mr. Newmark testified that Shamarion, or others on his behalf, did not make payments in the past or in advance for future medical care, and no claim was brought to recover reimbursement for past payments for future medical care. Mr. Newmark testified that through his representation of Shamarion, review of Shamarion’s file, and based on his training and experience, he had developed the opinion that the value of Shamarion’s damages “would be in excess of $2,250,000.” He explained that he had discussed Shamarion’s case with other experienced attorneys and they concurred in this damage valuation. Further, to supplement his opinion concerning the value of Shamarion’s damages, Mr. Newmark outlined that the jury verdicts in Petitioner’s Exhibit 12 were comparable to Shamarion’s case. He outlined that the Cherenfant v. Lewis 2016 Broward County $4,821,000 verdict was most supportive. Mr. Newmark outlined that in Lewis, the same plaintiff and defense experts were used as were used in Shamarion’s case, and the facts and injury in Lewis were nearly identical to the facts and injury in Shamarion’s case. Mr. Newmark outlined that in Lewis, the jury awarded $3,000,000 in pain and suffering to the child and this underscores that his valuation of all Shamarion’s damages at $2,250,000 is extremely conservative. Mr. Newmark explained that Shamarion’s medical malpractice lawsuit was brought against the obstetrician who delivered Shamarion and the hospital where the birth took place. He noted that there were many considerations that led to settlement, including most importantly that the primarily responsible party, the obstetrician, was uninsured, and the parents needed the certainty of a settlement over the risk of a defense verdict or verdict that may or may not be collectable. Based on these considerations, the case settled for $410,000. Mr. Newmark testified that the settlement did not fully compensate Shamarion for the full value of his damages. He testified that based on the conservative valuation of all Shamarion’s damages of $2,250,000, the settlement represented a recovery of 18.2 percent of the value of Shamarion’s damages. Mr. Newmark testified that because Shamarion only recovered 18.2 percent of the value of his damages in the settlement, he only recovered 18.2 percent of his $202,835.50 claim for past medical expenses, or $36,916.06. Mr. Newmark testified that the settling parties agreed in the Releases that Shamarion’s damages had a value in excess of $2,250,000, as well as the allocation of $36,916.06 of the settlement to past medical expenses. He further testified that the allocation of $36,916.06 of the settlement to past medical expenses was reasonable and rational, as well as “the fair thing to do.” Mr. Newmark testified that the allocation of $36,916.06 to past medical expenses was conservative because it was based on a low-end valuation of Shamarion’s damages of $2,250,000, and if a higher valuation of the damages was used, the amount allocated to past medical expenses would have been much less. Mr. Newmark testified that because no claim was made to recover reimbursement for past payments for future medical care, no portion of the settlement represented reimbursement for past payments for future medical care. Mr. Newmark testified that the parties agreed in the Releases that no claim was made for reimbursement of past payments for future medical care, and no portion of the settlement represented reimbursement for future medical expenses. Mr. Newmark testified that because Shamarion was a minor, court approval of the settlement was required. Mr. Newmark testified that the court reviewed the settlement and entered an order approving it. Testimony of R. Vinson Barrett Mr. Barrett has been a trial attorney since 1977 and has dedicated his practice to handling plaintiff personal injury cases, including medical malpractice, medical products liability, and pharmaceutical products liability. He is the senior partner with the Tallahassee law firm of Barrett, Fasig & Brooks, which exclusively works in the area of plaintiff’s personal injury. Mr. Barrett has handled many jury trials and has handled many catastrophic injury cases, including medical malpractice cases involving injury to children. Mr. Barrett testified that he has handled a number of cases involving brachial plexus birth injuries similar to Shamarion’s injury. Mr. Barrett testified that he stays abreast of jury verdicts and he daily makes assessments concerning the value of damages suffered by injured parties explaining his process for making these determinations. He testified that he has been accepted as an expert in the valuation of damages by DOAH in Medicaid lien dispute proceedings in other cases. Mr. Barrett was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Barrett testified that he was familiar with Shamarion’s injuries and had reviewed Shamarion’s medical records and the exhibits filed in this proceeding. He provided a detailed explanation of Shamarion’s brachial plexus birth injury noting that “he’s probably never going to be able to have anywhere near a normal childhood or work-hood because of the limitations that he has from this injury.” Mr. Barrett testified that based on his review of Shamarion’s case, and based on his professional experience and training, Shamarion’s damages had a value higher than the $2,250,000 value used by the settling parties. Mr. Barrett testified that Shamarion’s damages have a value of $2,500,000. He further testified that Shamarion’s “loss of enjoyment of life is going to be huge for him, remember, he is going to have birth to death in actual pain and suffering . . . so with all that in mind, you know, the opinion that I have $2,000,000 wouldn’t trouble me as a jury verdict for pain and suffering and loss of enjoyment of life” alone. Mr. Barrett outlined that the jury verdicts in Petitioner’s Exhibit 12 were comparable with Shamarion’s case and supported his valuation of the damages. Consistent with Mr. Newmark’s testimony, Mr. Barrett identified the Lewis $4,821,000 verdict as most relevant and comparable to Shamarion’s case. Mr. Barrett testified that he was aware of the settlement amount and he testified that the settlement did not fully compensate Shamarion for the full value of his damages. He explained that he was aware that the parties had allocated $36,916.06 to past medical expenses based on a valuation of all damages of $2,250,000. Mr. Barrett testified that he believes allocation of $36,916.06 to past medical expenses was reasonable, rational, and conservative. “I think it’s conservative because it’s based on a total damage number ($2,250,000) which I think is conservative.” AHCA did not propose a differing valuation of Shamarion’s damages or contest the methodology used by the parties to calculate the $36,916.06 allocation to past medical expenses. Consequently, the testimony and evidence presented concerning the value of Petitioner’s damages and the allocation to past medical expense was unrebutted. The Agency was not a party to settlements or written settlement agreements, if any exist, separate and apart from the Releases. Nor were the Defendants signatories to the settlement agreement, apparently accepting the Releases signed by Petitioners in exchange for the settlement payments. No value of Shamarion’s future medical expenses was advanced by either party. As noted earlier, both Releases contained the following provision: Further, the parties acknowledge that Shamarion Manley may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses Shamarion Manley will incur in the future. Given the nature and severity of Shamarion’s injury, it can reasonably be expected that Shamarion will incur future medical expenses. Notably, Mr. Newmark testified that Shamarion has suffered a permanent neurological impairment, and has “already had five surgeries down at Miami Children’s with Dr. Grossman and Dr. Price.” Moreover, the Life Care Plan prepared for Shamarion reflects regular pediatric orthopedist and psychiatric evaluations and treatments to age 18. Mr. Newmark further testified that Shamarion’s total damages would be in excess of $2,250,000, which “would take into account his future life care needs, his past medicals, his future earning and earning capacity, benefits, losses.” Petitioner offered in evidence a Preliminary Economic Damages Analysis, which presented life care cost computations and earnings capacity losses. A summary of those computations is presented below: BASIC INFORMATION Shamarion Manley All Figures are in Present Value LOW AVERAGE HIGH LIFE CARE PLAN: EARNINGS LOSSES: BENEFIT LOSSES: $556,109.16 $858,606.03 $1,161,102.90 $262,214.24 $262,214.24 $262,214.24 $52,442.85 $52,442.85 $52,442.85 Overall Range LOW AVERAGE HIGH $870,766.24 $1,173,263.11 $1,475,759.99 Mr. Newmark also noted that some portion of the $2,250,000 valuation would be for non-economic (pain and suffering) damages. Mr. Newmark testified that Shamarion’s non- economic damages would be factored in “at over a million dollars.” Other than the Life Care Plan and Preliminary Economic Damages Analysis, at hearing, Petitioner did not advance a valuation for future medical expenses. However, given the figures contained in the economic damages analysis, it is clear that the vast majority of future economic damages will relate to the costs associated with the life care plan, including future medical expenses. Petitioner has not proven by clear and convincing evidence that $36,916.06 of the settlement represents reimbursement for past medical expenses and payment for future medical expenses. Petitioner has not proven by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the $74,061.27 amount calculated by Respondent pursuant to the formula set forth in section 409.910(11)(f).
The Issue 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.1/
Findings Of Fact On the night of April 2, 2015, Mitchell Williams was riding his bicycle along a public sidewalk in Destin, Florida. The sidewalk intersected privately-owned driveways. At the north side of a privately-owned driveway at 239 Main Street, the concrete was broken at the point where the sidewalk and private driveway connected. The broken concrete created a dangerous condition to anyone riding along the sidewalk. Mr. Williams rode his bicycle into soft sand where the sidewalk should have been, causing his front wheel to bury into the sand before striking the leading edge of the undamaged portion of the sidewalk. Mr. Williams flipped over the handlebars of his bicycle and struck the concrete sidewalk face first. Mr. Williams underwent an anterior cervical discectomy and fusion (“ACDF”), placement of an inferior vena cava (“IVC”) filter, open reduction and internal fixation (“ORIF”) of a nasal maxillary fracture, and repair of facial lacerations. Mr. Williams was hospitalized for nine months. During his post- operative hospitalization, Mr. Williams developed stage IV decubitus ulcers that left him with significant scar tissue over his tailbone. The accident rendered Mr. Williams a partial quadriplegic from a cervical spinal cord injury. He remains confined to a wheelchair for mobility. Mr. Williams is totally dependent on others for his activities of daily living. Mr. Williams made a personal injury damages claim against the owner of the sidewalk, the City of Destin (“City”). On or about April 29, 2019, Mr. Williams entered into a pre-suit settlement of his tort claim against the City for $200,000, the statutory maximum provided by section 768.28(5), Florida Statutes. Because the City tendered the full amount for which it could be held liable, no express allocation for past medical expenses was made in the settlement. After settling with the City, Mr. Williams brought an action against Wagih Gargas, Gargas Commercial and City Produce of Fort Walton Beach, alleged as tortfeasors by virtue of their ownership and/or control of the private driveway where Mr. Williams was injured. The case against these parties remains pending with a very uncertain outcome as to liability. AHCA was properly notified of Mr. Williams’s personal injury action and indicated it had paid benefits related to his injuries in the amount of $70,460.35. AHCA’s payments were the only payments made for Mr. Williams’s past medical expenses. AHCA has asserted a lien for the full amount of $70,460.35 against Mr. Williams’s settlement proceeds. Mr. Williams will never fully recover from his injuries. He will require medical treatment and assistance with his activities of daily living for the rest of his life. Application of the formula in section 409.910(11)(f) would require Mr. Williams to pay back Medicaid all of its $70,460.35 lien. Mr. Williams contends that only a fraction of the settlement represents his recovery for past medical expenses. 10. Sections 409.910(11)(f) and 409.910(17)(b), as amended, provide for recovery by Medicaid for future medical expenses as well as past medical expenses. Section 409.910(17)(b) further imposes a clear and convincing burden of proof on a recipient attempting to show that the portion of the total recovery that should be allocated as past and future medical expenses is less than the amount calculated by AHCA. However, in Gallardo v. Dudek, 263 F. Supp. 3d 1247 (N.D. Fla. 2017), the court held that the provisions allowing Medicaid to recover future medical expenses and imposing a clear and convincing standard on recipients contesting AHCA’s calculations violate and are preempted by federal law. The parties have stipulated that Gallardo v. Dudek preempts the application of the future medical expenses provision and that Petitioner’s burden of proof in this section 409.910(17)(b) proceeding is a preponderance of the evidence. See also Giraldo v. Ag. for Health Care Admin., 248 So. 3d 53 (Fla. 2018)(under federal law AHCA may only reach the past medical expenses portion of a Medicaid recipient's tort recovery to satisfy its Medicaid lien). At the hearing, Mr. Williams testified as to the extent of the injuries and damages he suffered in the April 2, 2015, bicycle accident. Mr. Williams testified persuasively as to the overwhelming impact of the injuries on his life. Prior to the accident, Mr. Williams made a good living as a skilled carpenter and enjoyed fishing and golfing in his spare time. None of these activities is possible now. He is an “incomplete” quadriplegic, meaning that he is confined to a wheelchair but has limited use of his arms. John Wesley is the attorney who represented Mr. Williams in his personal injury lawsuit. Mr. Wesley is an 18-year practicing attorney who is board certified in civil trial practice. He is a partner with Wesley, McGrail & Wesley in Ft. Walton Beach. Mr. Wesley testified that he handles catastrophic personal injury and death cases, including cases involving injuries similar to those suffered by Mr. Williams. Mr. Wesley regularly evaluates the damages suffered by injured people. He testified that he does all of his work on a contingency fee basis, which makes the valuation of cases critical to his livelihood. Mr. Wesley’s representation of Mr. Williams gave him intimate familiarity with his client’s injuries and damages. Mr. Wesley testified that there are two aspects to the valuation of a case: liability and damages. As to liability, the attorney must ask whether the potential client is partly or wholly responsible for his own injuries due to factors such as comparative negligence or alcohol intake, and whether the tortfeasor is shielded under a legal concept such as sovereign immunity. The attorney must then decide whether the damages are worth pursuing even if the tortfeasor’s liability is unquestioned. Mr. Wesley testified that there was no question in this case as to the damages, which were catastrophic. The problem in Mr. Williams’s case was liability, because of the presence of contributory negligence and alcohol defenses. The most significant factor limiting Mr. Williams’s recovery was the sovereign immunity cap on damages. The City of Destin tendered $200,000, the full limit it would be required to pay under the cap. To recover more would require passing a claim bill in the legislature, an unlikely outcome given Mr. Williams’s contributory negligence. Under the circumstances, Mr. Wesley determined that nothing further could be recovered from the City. Mr. Williams’s net recovery, after attorney’s fees, was $140,000. Mr. Wesley provided detailed testimony about how the accident occurred and the mechanism of injury. He credibly testified regarding the process he undertook in evaluating and arriving at his opinion related to the value of the damages suffered by Mr. Williams. He met with Mr. Williams, evaluated the facts of the case, reviewed all the medical information and all other records and reports regarding Mr. Williams’s injuries, analyzed liability issues and comparative fault, developed economic damages estimates, and valued non-economic damages such as past and future pain and suffering, loss of capacity to enjoy life, and mental anguish. Mr. Wesley testified that the full value of Mr. Williams’s damages was likely in excess of $19 million. That figure included Mr. Williams’s pain and suffering, mental anguish, loss of quality of life, and economic damages. Mr. Wesley testified that non-economic damages were the greatest element of the damages sustained by Mr. Williams, and therefore were the largest driver of the valuation and the greatest portion of damages recovered in the settlement. Mr. Wesley stated that he used a very conservative valuation figure of $6 million for the purpose of resolving Medicaid’s lien, rather than his actual valuation of more than $19 million. If the conservative valuation of $6 million is accepted, then the $200,000 recovery is only 3.33 percent of the value of the damages. Mr. Williams’s $140,000 net recovery amounted to only 2.33 percent of the full measure of his damages. Mr. Wesley’s testimony was uncontroverted, reasonable, and persuasive. Charles F. Beall, Jr., a member of the Pensacola firm Moore, Hill & Westmoreland, P.A., testified on behalf of Mr. Williams. Mr. Beall is board certified in both civil trial and appellate practice. His practice focuses on defending large scale personal liability and mass tort cases. Mr. Beall has handled more than 225 appellate cases in state and federal courts. His cases have resulted in over 60 published opinions. At the trial court level, Mr. Beall has represented hundreds of clients ranging from individual homeowners to multinational corporations in a wide variety of civil litigation, including product liability suits, contract claims, and insurance coverage disputes. He has tried more than a dozen civil jury trials to verdict as lead counsel and has served on the trial team for several multi-week trials. Mr. Beall was accepted without objection as an expert in the valuation of personal injury claims. Mr. Beall and his firm specialize in defending serious and catastrophic personal injury cases throughout Florida. Mr. Beall has reviewed thousands of personal injury cases and formally reported potential verdicts and valuations to insurance companies that have retained him to defend their insureds. Mr. Beall has worked closely with economists and life care planners to identify the relevant damages of persons suffering catastrophic injuries. Mr. Beall testified that he has handled cases involving catastrophic injuries similar to those suffered by Mr. Williams. Mr. Beall testified that he arrived at his valuation opinion by examining all the elements of damages suffered by Mr. Williams. He agreed with Mr. Wesley that Mr. Williams’s greatest element of loss was non-economic damages. Mr. Beall reviewed numerous verdicts that had been affirmed on appeal involving injuries similar to those suffered by Mr. Williams. Mr. Beall opined that the valuation of the total damages suffered by Mr. Williams was in excess of $10 million. He agreed that Mr. Wesley’s more conservative $6 million valuation was appropriate for purposes of the lien reduction formula. AHCA did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Wesley or Mr. Beall. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Wesley and Mr. Beall as to valuation or the reduction ratio. AHCA did not offer alternative opinions on the damage valuation method suggested by either Mr. Wesley or Mr. Beall, both of whom testified knowledgably and credibly as experienced practitioners. The testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the settlement of $200,000 does not begin to fully compensate Mr. Williams for the full value of his damages. Petitioner asserts that the settlement allocation should be based on the ratio between the net settlement, $140,000, and the conservative valuation of $6 million, meaning that 2.33 percent of the settlement proceeds should be allocated to past medical expenses. Petitioner cited no authority and the undersigned is not otherwise persuaded that section 409.910 allows attorney’s fees to be deducted from the settlement prior to calculating the percentage of the settlement that should be allocated to past medical expenses. With that correction, the undersigned finds that Petitioner has proven by a preponderance of the evidence that 3.33 percent (the ratio that $200,000 bears to $6 million) is the appropriate pro rata share of Mr. Williams’s past medical expenses to be applied to determine the amount recoverable by AHCA in satisfaction of its Medicaid lien. ACHA’s lien for past medical expenses is $70,460.35. Applying the 3.33 percent pro rata ratio to this total yields $2,346.33, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien.
