Findings Of Fact On August 23, 1995, the undersigned entered a Recommended Order in DOAH Case 94-1365. The Petitioner in that proceeding was Billy Beeks, M.D., and the Respondent was the Agency for Health Care Administration (AHCA). At issue in that proceeding was whether Dr. Beeks had been overpaid by the Medicaid program. The Recommended Order contained extensive findings of fact, including findings as to the appropriate levels at which certain services should have been billed to the Medicaid program by Dr. Beeks. It was concluded that because certain of his services were billed at levels higher than justified by Medicaid protocol, Dr. Beeks had been overpaid by the Medicaid program. Because the calculation of such overpayments are done by computer, it was recommended that the overpayment be recalculated based on the findings of fact contained in the Recommended Order. On October 19, 1995, Douglas M. Cook, Director of AHCA, entered a Final Order in DOAH Case 94-1365. That Final Order adopted the findings of fact and conclusions of law contained in the Recommended Order and provided, in pertinent part, as follows: The dollar amount of the overpayment liability shall be calculated based on the findings and conclusions made by the hearing officer. The amount of the overpayment claimed by AHCA at the beginning of the hearing in DOAH Case 94-1365 was $50,852.56. An overpayment to Medicaid is calculated by computer using a statistical analysis of a sampling of the provider's billings to Medicaid. AHCA asserted that the level at which Dr. Beeks had billed Medicaid for certain of these services in the sample was excessive. It was found in that underlying proceeding that while Dr. Beeks had billed certain of his services at excessive levels as asserted by AHCA, some of the challenged billings were not excessive and others were not as excessive as asserted by AHCA. Logically, one would expect that the recalculation of overpayment would result in a smaller figure than that claimed prior to the hearing. Following the entry of the Final Order, Vickie Givens, an employee of AHCA, made a detailed analysis of the evidence presented at the formal hearing, including the deposition of Joni Leterman, M.D.. Ms. Givens compared her analysis with the findings of fact contained in the Recommended Order and discovered certain billings by Dr. Beeks that she believed should have been included in the Recommended Order as being excessive. 1/ These billings were not included in the Recommended Order and, consequently, were not incorporated by reference into the Final Order. Thereafter the overpayment was recalculated by an appropriately trained AHCA employee. As instructed, this employee included in the recalculation of the overpayment the additional billings for the services identified by Ms. Givens, but not included in the Recommended Order. AHCA staff recalculated the amount of the overpayment to Dr. Beeks to be $51,745.13, which is slightly higher than the amount claimed prior to the hearing in DOAH Case NO. 94-1365. The figure that resulted from this recalculation was higher than it would have been had these additional billings not been included.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order that adopts the findings of fact and conclusions of law contained herein and that the Agency recalculate the total amount of the overpayment during the audit period based solely on the findings of fact contained in the Recommended Order in DOAH Case 94-1365. DONE AND ENTERED this 8th day of July, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 1996.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or AHCA), for medical expenses paid on behalf of Petitioner, Patrick Osmond (Petitioner), from settlement proceeds received by Petitioner from third parties.
Findings Of Fact Petitioner was injured in a single-vehicle collision after he and several underage friends were served alcoholic beverages at an Applebee’s restaurant, owned by Neighborhood Restaurant Partners, LLC (Applebee’s). As a result of his injuries, Petitioner brought suit against Applebee’s, for dram shop liability, and against Joseph Raub, the driver of the vehicle in which Petitioner was a passenger, for negligence. The Complaint also included a claim against the bartender from Applebee’s, however, she was eventually dropped from the lawsuit. After a two-week jury trial, the jury returned a verdict in favor of Petitioner, awarding a total of $41,956,473.73 in damages, allocated as follows: Past Medical Expenses: $436,473.73 Future Medical Expenses: $15,000,000.00 Past Lost Wages: $20,000.00 Future Loss of Earning Capacity: $1,500,000.00 Past Non-Economic Damages: $5,000,000.00 Future Non-Economic Damages: $20,000,000.00 The past medical expenses included $303,757.77 for payments made by Medicaid through AHCA, $13,985.96 for payments administered through the Rawlings Company, and $118,730.00 which represented an outstanding bill from Petitioner’s neurosurgeon. After the verdict, Petitioner reached a settlement agreement with Applebee’s, whereby Applebee’s agreed to pay the sum of $4,300,000.00 to Petitioner. As a condition of the settlement with Applebee’s, the parties executed a Release that included the following language: 1.6 The parties agree that Patrick Osmond’s damages have a total value of $41,956,473.73 (Forty-One Million, Nine Hundred Fifty-Six Thousand, Four Hundred Seventy-Three Dollars and Seventy-Three Cents), of which $317,743.73 (Three Hundred Seventeen Thousand, Seven Hundred Forty-Three Dollars and Seventy-Three Cents)[1/] represents the past medical expenses paid for by Medicaid. Given the facts, circumstances and nature of Patrick Osmond’s injuries and this settlement, $35,568.73 (Thirty-Five Thousand, Five Hundred Sixty-Eight Dollars and Seventy-Three Cents) of this settlement has been allocated to Patrick Osmond’s claim for past medical expenses paid by Medicaid and the remainder of the settlement has been allocated toward the satisfaction of claims other than past medical expenses paid by Medicaid. After the jury verdict was rendered, Petitioner recovered $25,000.00 in settlement from Joseph Raub and his insurers. As a condition of the settlement with Mr. Raub, the parties executed a Release that included the following language: The parties agree that Patrick Osmond’s damages have a total value of $41,956,473.73 (Forty-One million, Nine Hundred Fifty-Six Thousand, Four Hundred Seventy-Three Dollars and Seventy-Three Cents), of which $317,743.73 (Three Hundred Seventeen Thousand, Seven Hundred Forty-Three Dollars and Seventy-Three Cents) represents the past medical expenses paid for by Medicaid. Given the facts, circumstances and nature of Patrick Osmond’s injuries and this settlement, $190.43 (One Hundred ninety Dollars and Forty-Three Cents) of this settlement has been allocated to Patrick Osmond’s claim for past medical expenses paid by Medicaid and the remainder of the settlement has been allocated toward the satisfaction of claims other than past medical expenses paid by Medicaid. After the verdict, Petitioner’s insurer, Geico General Insurance Company (“Geico”), paid its policy limits of $10,000.00 to Petitioner under his Uninsured and/or Underinsured Motorist Coverage. The documentary evidence did not reflect that payment, but its existence was acknowledged by both parties during the argument, and is accepted as a stipulation. The purpose for the payment was not disclosed. The burden in this case is on Petitioner to prove “that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses.” There is no proof that the Geico settlement should be excluded from the amount available to satisfy the Medicaid lien. The $303,757.77 in Medicaid funds paid by AHCA is the maximum amount that may be recovered by AHCA. There was no evidence to suggest that statutory conditions precedent to AHCA asserting its claim or Petitioner bringing this action were not met. The Pre-hearing Stipulation, Respondent’s statement, the stipulation of facts, and the statement of issues of fact that remained to be litigated, indicate clearly that the issue of allocation of the settlement proceeds under sections 409.910(11)(f) and 409.910(17)(b) were the only issues in dispute remaining for disposition. There was no evidence that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. There was no evidence of any manipulation or collusion by the parties to minimize the share of the settlement proceeds attributable to past medical expenses for Petitioner’s medical care. However, an issue remains as to the correct amount of “past medical expenses” to be used in establishing the proportional amount of those expenses vís-a-vís the total settlement. No portion of the $303,757.77 paid by AHCA through the Medicaid program on behalf of Petitioner represented expenditures for future medical expenses, with all amounts reflected in its Provider Processing System Report being for past medical expenses incurred.
The Issue The issue to be decided is the amount to be paid by Petitioner to Respondent, Agency for Health Care Administration (Agency), out of her settlement proceeds, as reimbursement for past Medicaid expenditures pursuant to section 409.910, Florida Statutes.
Findings Of Fact On August 11, 2014, Amanda Baker, then 15 years old, was transferred from a medical center to a specialty pediatric hospital where she presented with complaints and symptoms of back pain, weakness, and paresthesia in her lower extremities. Over the next few days, she underwent examinations and assessments, but no steps were taken to prevent her development of blood clots/embolisms due to her immobility nor were signs and symptoms of her development of blood clots/embolisms recognized. On August 13, 2014, Amanda suffered two cardiac arrests due to blood clots/embolisms traveling to her heart and lungs. She was resuscitated, but due to a lack of oxygen to her brain, Amanda suffered a catastrophic hypoxic brain injury. She is now in a persistent vegetative state. The Agency provided $162,146.65 in Medicaid benefits associated with Amanda's injuries, all of which represent expenditures paid for her past medical expenses. Amanda's parents brought a medical malpractice action against the medical providers responsible for her care to recover all of the damages associated with her injuries, as well as their individual damages associated with their daughter's injuries. Seven defendants maintained insurance policies with a policy limit of $250,000. The medical malpractice action was settled for each of the insurance policy limits, resulting in a lump sum unallocated settlement of $1,750,000. This settlement was approved by the court. During the pendency of the malpractice action, the Agency was notified of the action. It asserted a $162,146.65 Medicaid lien against the Bakers' cause of action and settlement of that action. However, it did not institute, intervene in, or join in the action to enforce its rights, as provided in section 409.910(11), or participate in any aspect of the litigation. Application of the formula in section 409.910(11)(f) to Amanda's $1,750,000 settlement requires full payment of the Medicaid lien. Petitioner presented the testimony of Daniel Moody, Esquire, a Lakeland attorney with 30 years' experience in personal injury law, including medical malpractice. He represented Amanda and her family in the medical malpractice action. As a routine part of his practice, he makes assessments concerning the value of damages suffered by injured clients. He also stays abreast of jury verdicts in his area by reviewing jury verdict reporters and discussing cases with other trial attorneys. He has been accepted as an expert in valuation of damages. Based on his training and experience, Mr. Moody opined that the damages recoverable in Amanda's case had a conservative value of $30 million. Petitioner also presented the testimony of R. Vinson Barrett, Esquire, a Tallahassee trial attorney with more than 40 years' experience. His practice is dedicated to plaintiff's personal injury, as well as medical malpractice, medical products liability, and pharmaceutical products liability. He routinely makes assessments concerning the value of damages suffered by injured parties. He was accepted as an expert in the valuation of damages. Based on his training and experience, Mr. Barrett opined that Amanda's damages are "worth at a bare minimum – and we're talking very conservatively here -- $30,000,000." Both experts testified that using $30,000,000 as the value of all damages, Amanda only recovered 5.83 percent of the value of her damages. Accordingly, they opined that it would be reasonable, rational, and conservative to allocate 5.83 percent of the settlement, or $9,453.15, to past medical expenses paid by the Agency through the Medicaid program. The Agency did not call any witnesses, present any evidence as to the value of damages, propose a different valuation of the damages, or contest the methodology used to calculate the allocation to past medical expenses. In short, Petitioner's evidence was unrebutted. The testimony from Mr. Moody and Mr. Barrett is compelling and persuasive. Accordingly, the undersigned finds that Petitioner has proven by a preponderance of the evidence that $9,453.15 of the settlement represents reimbursement for past medical expenses.
The Issue The issue to be decided is the amount payable to Respondent in satisfaction of the Agency’s Medicaid lien from a settlement, judgment, or award received by Petitioner from a third-party under section 409.910(17), Florida Statutes.
Findings Of Fact On June 7, 2005, 14-year-old Michael Mobley attended a beach party. The party occurred on, near, or about the beach premises of a hotel. Michael became intoxicated through consumption of alcohol, and drowned in the Gulf of Mexico. He was revived but suffered brain damage, leaving him unable to communicate, ambulate, eat, toilet, or care for himself in any manner. Michael is now dependent on his father for all aspects of his daily life. As a result of this incident, Michael suffered both economic and noneconomic damages. These damages included, at least, physical and mental pain and suffering, past and future medical expenses, disability, impairment in earning capacity, and loss of quality and enjoyment of life. Michael’s parents also suffered damages. Michael’s father’s employer maintained a self-funded Employee Benefit Plan governed by the Employee Retirement Income Security Act (ERISA Plan). The Florida Statutes provide that Respondent, Agency for Health Care Administration (AHCA), is the Florida state agency authorized to administer Florida’s Medicaid program. § 409.902, Fla. Stat.1/ Michael’s past medical care related to his injury was provided through health benefits from the ERISA Plan administered through CIGNA HealthCare and Horizon Blue Cross Blue Shield of New Jersey, and the Florida Medicaid program. The health benefits extended to Michael through his father’s employer totaled $515,860.29. The Florida Medicaid program provided $111,943.89 in benefits. The combined amount of medical benefits Michael received as a result of his injury is $627,804.18. The ERISA Plan provided the employer (through its administrators CIGNA and Horizon Blue Cross Blue Shield), with subrogation and reimbursement rights which provided entitlement to reimbursement from any settlement of 100 percent of what the plan had paid. ACS Recovery Services represented CIGNA and Horizon Blue Cross Blue Shield, the administrators of the Employee Benefit Plan, and on behalf of these clients ACS Recovery Services asserted a $515,860.29 claim against any settlement Michael received. The Florida Statutes provide that Medicaid shall also be reimbursed for medical assistance that it has provided if resources of a liable third party become available. § 409.910(1), Fla. Stat. In 2006, Michael’s parents, David Mobley and Brenda Allerheiligen, brought a lawsuit in Okaloosa County Circuit Court to recover all of Michael’s damages. By letter dated May 24, 2011, Petitioner’s attorney sent AHCA a Letter of Representation requesting the amount of any Medicaid lien and the itemization of charges. The letter also invited AHCA to participate in litigation of the claim or in settlement negotiations. AHCA through ACS Recovery Services by letter of June 9, 2011, asserted a Medicaid lien against any settlement in the amount of $111,943.89. Testimony at hearing established that a conservative “pure value” of Michael’s economic damage claims in the case, before consideration of such factors as comparative fault, application of the alcohol statute, a defendant’s bankruptcy, and the novel theories of legal liability, was $15 million. A Joint Petition for Approval of Settlement was filed in the Circuit Court in and for Okaloosa County, Florida, on or about June 14, 2012. It stated that although the damages Michael received far exceeded the sum of $500,000, the parties had agreed to fully resolve the action for that amount in light of the parties’ respective assessments of the strengths and weaknesses of their cases. The Petition specifically alluded to pending bankruptcy proceedings, summary judgment dismissal of claims premised upon a duty to provide lifeguarding services, Plaintiff’s remaining theories of liability, available defenses, specifically including the statutory “alcohol defense” as interpreted by the Florida courts, and anticipated costs of trial and appeal. The Petition also stated: “Plaintiff’s claim for past medical expenses related to the incident total $627,804.18. This claim consists of $515,860.29 paid by a self-funded ERISA plan and $111,943.89 paid by Medicaid.” As an attached exhibit, the Petition incorporated a Distribution Sheet/Closing Statement which allocated the $500,000 total recovery among the categories of attorneys’ fees, costs, outside attorneys’ fees, lien/subrogation/medical expenses, and net proceeds to client. The Distribution Sheet allocated $140,717.54 to “lien/subrogation/medical expenses,” subdivided into $120,000.00 to Blue Cross Blue Shield of Florida/CIGNA and $20,717.54 to Medicaid Lien. The proposed settlement did not further describe the $331,365.65 amount identified as “net proceeds to client,” or allocate that amount among distinct claims or categories of damages, such as physical or mental pain and suffering, future medical costs discounted to present value, disability, impairment in earning capacity, or loss of quality and enjoyment of life. Under the Joint Petition for Approval of Settlement, most of the total recovery thus remains uncategorized as to the type of damages it represents. The Joint Petition for Approval of Settlement was submitted on behalf of the Defendants and Plaintiffs in the lawsuit, including Michael Mobley, Petitioner here. Respondent did not participate in settlement negotiations or join in the Release, and no one represented its interests in the negotiations. The Agency has not otherwise executed a release of the lien. A Release was signed by the Plaintiffs contingent upon court approval of the Petition for Approval of Settlement. The court approved the settlement, with the exception of the Medicaid lien, pending an administrative determination of the amount of the lien to be paid. This $500,000 settlement is the only settlement received and is the subject of AHCA’s claim lien. In regard to the $500,000 settlement: Michael’s parents, Brenda Allerheiligen and David Mobley waived any claim to the settlement funds in compensation for their individual claims associated with their son’s injuries; The law firm of Levin, Papantonio, Mitchell, Rafferty & Proctor, P.A., agreed to waive its fees associated with its representation of Michael and his parents; The law firm of Levin, Papantonio, Mitchell, Rafferty & Proctor, P.A., agreed to reduce its reimbursement of the $60,541.22 in costs it advanced in the litigation of the case by 75% and accept $15,135.31 in full payment of its advanced costs; and ACS Recovery Services on behalf of CIGNA and Horizon Blue Cross Blue Shield agreed to reduce its $515,860.29 ERISA reimbursement claim asserted against the settlement and accept $120,000 in satisfaction of its $515,860.29 claim. AHCA is seeking reimbursement of $111,943.89 from the $500,000 settlement in satisfaction of its $111,943.89 Medicaid lien. AHCA correctly computed the lien amount pursuant to statutory formula. Deducting 25 percent for attorney’s fees and $60,541.22 taxable costs from the $500,000.00 recovery leaves a sum of $314,458.78, half of which is $157,229.39. In this case, application of the formula therefore results in a statutory lien amount of $111.943.89, the amount actually paid. § 409.910(17), Fla. Stat. The settlement agreement allocated $120,000.00 to be paid to the ERISA plan in partial reimbursement of the $515,860.29 it had paid for medical expenses. This amount must be added to the amount of $20,717.54 allocated for other medical expenses paid by Medicaid, to reflect a total amount of $140,717.54 allocated for past medical expenses in the settlement. The $500,000 total recovery represents approximately 3.3 percent of the $15 million total economic damages. The $20,717.54 allocated to “Medicaid Lien” in the distribution sheet of the settlement represents approximately 3.3 percent of the $627,804.18 of total past medical expenses. The sum of $3,694.15 represents approximately 3.3 percent of the $111,943.89 in medical costs paid by Medicaid. The 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. The parties have stipulated that this constitutes “final agency action” for purposes of chapter 120, pursuant to section 409.910(17). Petitioner filed his Petition on December 13, 2013, within 21 days after the Medicaid lien amount was deposited in an interest-bearing account for the benefit of AHCA. While the evidence presented as to the settlement agreement was not sufficient to show the full amount allocated to medical expenses, the evidence does show that the total recovery includes at least $140,717.54 allocated as reimbursement for past medical expenses, which was to be divided unevenly between the ERISA plan and Medicaid. Petitioner failed to prove by clear and convincing evidence that the statutory lien amount of $111,943.89 exceeds the amount actually recovered in the settlement for medical expenses.
The Issue The issue to be determined is the amount payable to the Agency for Health Care Administration (AHCA or Respondent) in satisfaction of its $157,983.63 Medicaid lien asserted against medical malpractice settlement proceeds received by Hunter Lamendola (Hunter), a minor, by and through his mother and natural guardian, Ashley Lamendola (Petitioner).
Findings Of Fact On June 26, 2012, Petitioner presented to the hospital with a history of contractions for six hours prior to her arrival at the hospital. She had been placed on bed rest for gestational hypertension five days prior to arriving at the hospital. When she arrived, she had hypertension. Petitioner was admitted to the labor and delivery unit at 8:33 p.m. Petitioner was placed on a fetal monitor and progressed through her course of labor. Her initial fetal monitoring showed the baby was healthy and well-oxygenated, however, throughout the course of labor, the fetal monitor exhibited signs that the baby was in significant distress. At 4:01 a.m. on June 27, 2012, Petitioner was given an epidural, and after a course of labor, Hunter was delivered at 3:47 p.m. through an operative vaginal delivery. Hunter suffered permanent and catastrophic brain damage during his birth. As a result, Hunter is unable to eat, speak, toilet, ambulate, or care for himself in any manner. Hunter’s medical care related to the delivery was paid by Medicaid. The Medicaid program through AHCA provided $157,983.63 in benefits. The Medicaid program through the Department of Health Children’s Medical Services Title XIX MMA – Pedicare (DOH), provided $26,189.66 in benefits; the Medicaid program through a Medicaid-managed care organization, known as Amerigroup Community Care (Amerigroup), provided $51,696.99 in benefits; and the Medicaid program through a Medicaid-managed care organization, known as WellCare of Florida (WellCare), provided $13,239.19 in benefits. Accordingly, the sum of these Medicaid benefits, $249,109.47, constituted Hunter’s entire claim for past medical expenses. Petitioner brought a medical malpractice action against the medical providers and staff responsible for Hunter’s care (Defendant medical providers) to recover all of Hunter’s damages, as well as her own individual damages associated with Hunter’s injuries. The medical malpractice lawsuit was settled through a series of confidential settlements totaling $10,000,000 and this settlement was approved by the Court. During the pendency of Hunter’s medical malpractice action, AHCA was notified of the action, and AHCA asserted a $157,983.63 Medicaid lien against Hunter’s cause of action and settlement of that action. AHCA, through the Medicaid program, spent $157,983.63 on behalf of Hunter, all of which represents expenditures paid for Hunter’s past medical expenses. No portion of the $157,983.63 paid through the Medicaid program on behalf of Hunter represent expenditures for future medical expenses, and Medicaid did not make payments in advance for medical care. Application of the formula set forth in section 409.910(11)(f), Florida Statutes, to Hunter’s settlement requires payment to AHCA of the full $157,983.63 Medicaid lien. 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). At the final hearing, Mr. Harwin, who represented Hunter and his family in the underlying medical malpractice action, testified, and was accepted, without objection, as an expert in the valuation of damages suffered by injured parties. Mr. Harwin is a member of several trial attorney associations, stays abreast of jury verdicts relative to birth injuries, and ascertains the value of damages suffered by injured parties as a routine part of his practice. Mr. Harwin was familiar with and explained Hunter’s catastrophic brain injury giving rise to Petitioner’s claim. He also explained that, as a result of Hunter’s injury, Hunter is blind, fed through a feeding tube, unable to control his arms, legs or head, and suffers between six to eight seizures per day. Mr. Harwin testified that Hunter’s injury has also had a devastating impact on Hunter’s mother, Ashley Lamendola. According Mr. Harwin, considering Hunter’s past medical expenses, a life care plan for Hunter’s care prepared by an economist, and the extent of non-economic damages, and in light of determinations of mock juries and a jury consultant in this case, as well as Mr. Harwin’s familiarity with jury verdicts reached in similar cases, Hunter and his mother’s damages have a value in excess of $35,000,000. Mr. Harwin’s testimony as to the value of Petitioner’s claim was credible and is accepted. Petitioner also presented the testimony of Mr. Barrett, who was accepted as an expert in the valuation of damages. Mr. Barrett has been accepted as an expert in valuation of damages in a number of other Medicaid lien cases before DOAH. Mr. Barrett has been a trial attorney for 41 years, with a primary focus on plaintiff personal injury cases, including medical malpractice, medical products liability, and pharmaceutical products liability. Mr. Barrett stays abreast of jury verdicts and often makes assessments concerning the value of damages suffered by injured parties. After familiarizing himself with Hunter’s injuries through review of pertinent medical records and Petitioner’s exhibits, Mr. Barrett offered his opinion, based upon his professional training and experience, as well as review of comparable jury verdicts, that a conservative value of the damages suffered would be “$35,000,000 to $50,000,000.” Mr. Barrett’s testimony as to the value of Petitioner’s claim was credible and is accepted. AHCA did not call any witnesses, present any evidence as to the value of Petitioner’s claim, or propose a differing valuation of the damages. Based upon the unrebutted evidence presented by Petitioner’s experts, it is found that a conservative value of Petitioner’s claim is $35,000,000. Attorney’s fees for the underlying medical malpractice case leading to Petitioner’s $10,000,000.00 settlement totaled $4,500,000.00, with costs of $490,486.33. While the formula under section 409.910(11)(f) determines amounts distributable to Medicaid after attorney’s fees and taxable costs, there is no language in section 409.910(17)(b) suggesting that attorney’s fees or costs should be subtracted from settlement proceeds in determining whether a lesser portion of the total recovery should be allocated to reimburse Medicaid. Costs and attorney’s fees are not an element of Petitioner’s damages and were not subtracted from the settlement proceeds in determining whether a lesser portion of the total recovery should be allocated to AHCA’s Medicaid lien. Considering the valuation of Petitioner’s claim at $35,000,000.00, Petitioner’s $10,000,000.00 settlement represents only a 10/35ths recovery of Petitioner’s damages. Multiplying that same 10/35 fraction to the $157,983.63 paid by AHCA through the Medicaid program for past medical expenses results in the proportional sum of $45,138.18 from the settlement proceeds available to satisfy AHCA’s Medicaid lien.
The Issue What is the amount from Petitioners' settlement proceeds that should be paid to satisfy Respondent's Medicaid lien under section 409.910, Florida Statutes (2013)?1/
Findings Of Fact By Order entered August 15, 2013, the Circuit Court of the Twelfth Judicial Circuit, in and for Manatee County, Florida, appointed Robert Gibbons and Robert Gibbons, Jr., as joint plenary guardians of Georgia-Rose Gibbons. On April 6, 2012, Georgia-Rose Gibbons (Ms. Gibbons), who was a college freshman at the time, sustained numerous severe and permanent injuries, including a traumatic head injury, when she was struck by a motor vehicle while walking across a multi-lane road. Ms. Gibbons is totally incapacitated and currently resides in a nursing home. As of the date of this Order, Ms. Gibbons has a rated life expectancy of approximately 47 additional years. At the final hearing, Petitioners presented the testimony of Jeffrey A. Luhrsen, an attorney with extensive experience representing injured claimants in personal injury litigation. Mr. Luhrsen has practiced law in the State of Florida for more than twenty years and has tried multiple personal injury cases to jury verdict. Mr. Luhrsen opined that based upon a reasonable degree of certainty, and taking into consideration issues of comparative fault, $20,000,000 is the value of Ms. Gibbons' claim. AHCA did not offer evidence to the contrary. Mr. Luhrsen also credibly opined that the $400,000 settlement (explained below), which Ms. Gibbons received as a consequence of her injuries, did not fully compensate Ms. Gibbons for her damages. Mr. Luhrsen's opinions are accepted. The operator of the vehicle that collided with Ms. Gibbons was uninsured. Pursuant to an automobile insurance policy with AAA Auto Club South Insurance Company, Ms. Gibbons was insured in the amount of $400,000.00 against personal injury resulting from the negligent operation of a motor vehicle by an uninsured motorist. By correspondence dated September 19, 2013, Respondent informed Petitioners' personal injury attorney (PI attorney) that $220,519.42 is the amount of Respondent's Medicaid lien. In response, Petitioners' PI attorney, by correspondence dated October 3, 2013, advised Respondent that Ms. Gibbon's uninsured motorist claim against AAA was settled, pending approval of the Circuit Court, for $400,000. A copy of the proposed limited release and settlement agreement was included with the correspondence. The Circuit Court approved the settlement agreement on October 4, 2013. On October 17, 2013, Petitioners' PI attorney provided Respondent with copies of the Circuit Court's Order Granting Authority to Settle Claim on Behalf of Ward, and the executed Limited Release and Settlement Agreement. Respondent neither joined in the settlement nor participated in any way in settlement negotiations. The Limited Release and Settlement Agreement provides in part as follows: For and in consideration of the payment of $400,000, the receipt of which is hereby acknowledged, the Releasors being of lawful age, do hereby release, acquit and forever discharge, AAA AUTO CLUB, limited to the uninsured/underinsured liability limits of the Subject Policy, of or in any way growing out of any and all known or unknown personal injuries result[ing] from, related to and/or arising out of the Subject Accident. The Releasors acknowledge that the damages sustained as a result of the Subject Accident are permanent and that recovery therefrom is uncertain and indefinite. * * * 8. It is understood and agreed that this is a partial release and settlement agreement and that the payment referenced herein does not fully compensate the Releasors for the damages arising out of or related to the Subject Accident. . . . * * * 11. Although this settlement does not fully compensate GEORGIA ROSE GIBBONS for all the damages she has suffered, this settlement shall operate as a full and complete Release as to the Releasees without regard to this settlement only compensating GEORGIA ROSE GIBBONS for a fraction of the total monetary value of her damages. The Releasees in this settlement are specifically not compensating one element of damage disproportionately from any other element of damage. Given the nature of the injuries suffered by GEORGIA ROSE GIBBONS, the value of the damages associated with those injuries, and the limited ability of this settlement to compensate even a fraction of GEORGIA ROSE GIBBONS' damages, the parties have agreed to an allocation of the settlement. The parties agree that a fair assessment would place 20% of her total claim for damages as past and future medical expenses, and the remaining 80% of her total claim for damages for other economic damages and non-economic damages. Accordingly, the parties have allocated 20% of the settlement, $80,000, to past and future medical expenses and the remainder of the settlement, $320,000, towards satisfaction of other damages.2/ Respondent, pursuant to section 409.910(11)(f), calculates the amount that it is to be paid to satisfy its lien as follows: $400,000 less 25% (attorney fees) is $300,000; $300,000 less $11,029.89 in taxable costs is $288,970.01; $288,970.01 divided by 2 is $144,485.01, which is less than Respondent paid for Ms. Gibbons' treatment. Accordingly, Respondent seeks $144,485.01 in satisfaction of its Medicaid lien.3/ For the period mid-September 2013 through January 5, 2014, Medicaid paid $14,402.94 in additional medical assistance benefits on behalf of Ms. Gibbons. There is no evidence of record indicating that Respondent amended its lien to reflect the additional benefits paid.
The Issue Is proposed rule 59G-3.010(4)(b)2.c. an invalid exercise of delegated legislative authority, for reasons described in the respective petitions that formed the basis of this dispute? See Section 120.56(2), Florida Statutes.
Findings Of Fact The party Florida Medical Association, Inc., a not for profit corporation is organized and maintained for the benefit of approximately 17,000 licensed physicians who are its members. It represents the common interests of those members. Some of its members provide services under the terms contemplated by proposed rule 59G-3.010(4)(b)2.c. Likewise, Robert Anthony Savona, D.O.; John F. Hull, D.O.; and Robert Kagan, M.D., as licensed physicians, provide services contemplated by a proposed rule 59G- 3.010(4)(b)2.c. Respondent is the agency responsible for administering the state Medicaid Program under Title XIX of the Social Security Act, 42 U.S.C. Section 1396 et seq. and Section 409.901, et seq. Florida Statutes. This responsibility includes reimbursement of Medicaid providers. Respondent offered the proposed rule for adoption. The services contemplated by proposed rule 59G- 3.010(4)(b)2.c., in which the rule describes a payment mechanism, are in association with patients who are Medicare and Medicaid eligible. The arrangement contemplated by the proposed rule is in relation to Medicaid reimbursable services which complement Medicare. Under the proposed rule, Medicare Supplemental Insurance (Part B) is paid for the deductible and coinsurance for the Medicare and Medicaid eligible recipients by the Medicaid fiscal agent, in accordance with a rate identified in the proposed rule. The recipients of the services from physicians under the proposed rule, eligible for both Medicare and Medicaid benefits, are also referred to as Qualified Medicare Beneficiaries (QMBs). QMBs are described as poor, elderly and disabled persons. In pertinent part the proposed rule states: 59G-3.010 Medicaid Services Complementing Medicare. * * * (4) Medicaid Reimbursable Services which Complement Medicare. * * * (b) Medicare Supplemental Insurance (Part B). * * * 2. The Medicare Part B deductible and coinsurance is paid for the Medicare and Medicaid eligible recipient by the Medicaid fiscal agent at the following rates: * * * c. Physician services, including doctors of medicine, doctors of osteopathy, and providers of chiropractic and podiatric services are reimbursed 100 percent of the deductible and 100 percent of the coinsurance only to the extent that the total payment received does not exceed the Medicaid fee for the service provided. If there is no comparable Medicaid fee for the service, the Medicaid fee is calculated to be 50 percent of the Medicare approved charge for the service provided. In these situations, whether the physician did or did not receive a payment from Medicaid, by billing Medicaid he is bound to the Medicaid payment schedule as payment in full. Other parts of proposed rule 59G-3.010(4)(b)2. at a., b., d., and e. address Medicare Part B deductibles and coinsurance for other providers as follows: Part B patient hospital services are reimbursed 100 percent of the deductible and coinsurance. Rural health centers, federally qualified health centers and county health departments are reimbursed their encounter rate minus the amount of Medicare's payment. * * * Pharmacy providers are reimbursed 100 percent of the deductible and 100 percent of the coinsurance only to the extent that the total payment does not exceed the Medicaid fee for the service provided. Other Part B suppliers are reimbursed 100 percent of the coinsurance and 100 percent of deductible. Under Medicare Part B, 80 percent of reasonable costs or charges for the delivery of health care to Medicare eligible patient is paid through the Medicare program as a premium. That program is administered by the federal government under Title XVIII of the Social Security Act, 42 U.S.C., Section 1395 et seq. That payment is a form of insurance. The remaining 20 percent is anticipated to be paid by the patient as copayments or coinsurance, in addition to an annual deductible. The proposed rule in relation to physician services addresses the manner in which some portion of the 20 percent is "crossed-over" to be paid for potential payment through the Medicaid program administered by Respondent using federal and state funding, pursuant to Title XIX of the Social Security Act, 42 U.S.C., Section 1396 et seq. and Section 409.901 et seq., Florida Statutes. Payment to the physicians for their services in relation to the deductible and coinsurance depends upon the application of the formula in the proposed rule. The formula contemplates reimbursement to the physicians at less than 100 percent of the deductible and 100 percent of the coinsurance because the Medicaid fee schedule is generally lower than the federal Medicare fee schedule for the same services. In fact, in most cases the physicians will receive no payment for the deductible or coinsurance above the 80 percent payment under the Medicare fee structure in relation to the basic Medicare premium. By comparison to other health care and service providers discussed in the proposed rule, some other individuals and entities are reimbursed at 100 percent of the deductible and coinsurance and others are not guaranteed reimbursement at 100 percent. The formulas for reimbursement for services provided under the proposed rule related to Medicare Part B deductible and coinsurance are influenced by the results of quarterly estimating conferences held between legislative and executive branch staff. Those estimators, within respective categories of services, examine the performance of the various categories of services concerning fiscal impact through a comparison of available revenues against expenditures. This assists in the preparation of future budgets upon the recommendation of the governor to be passed by the legislature. Respondent assists in preparation of budget requests, to include recommendation for policy changes related to the amount of expenditures for the various services performed for the benefit of Medicare and Medicaid eligible recipients, QMBs, who are entitled to the payment of their deductible and coinsurance under Medicare Part B. However, the impetus for the reimbursement formula for physician services described in the proposed rule has a more precise origin, for reasons now explained. A prior version of Rule 59G-3.010(4), Florida Administrative Code in effect on April 8, 1996, was challenged in an administrative proceeding before the Division of Administrative Hearings. That version limited the amount of reimbursement for physician services associated with Medicare Part B deductible and coinsurance in a different manner than the proposed rule. In the decision of Reynolds v. Agency for Health Care Administration, 18 F.A.L.R. 3474 (Fla. DOAH 1996) the rule was held invalid. Among the cases cited for this decision was Pennsylvania Medical Society v. Snider, 29 F.3d 886 (3d Cir. 1994) and Haynes Ambulance Service, Inc. v. State of Alabama, 36 F.3d 1974 (11th Cir. 1994). The federal court cases refer to the recipients of cost reimbursement for deductibles and coinsurance as QMBs. Essentially, they are the same persons who are described in the proposed rule as Medicare and Medicaid eligible. Although the rule had been declared invalid, Respondent continued to exercise the policy of denying payment of Medicare deductibles and coinsurance on physician crossover claims at 100 percent of the deductible and 100 percent of the coinsurance as contemplated by the federal court cases. Following Respondent's return to the policy of not paying the deductible and coinsurance at 100 percent for physician services, Petitioner's Savona, Hull, and Kagan brought a lawsuit in federal count to compel payment for physician services to QMBs at the Medicare rate. On March 3, 1997, the United States District Court for the Northern District of Florida granted a final injunction that required Respondents to pay the physician class in the lawsuit at the Medicare rate for services provided to QMBs. See Savona v. Cook, Case No. 4:96CV14-WS (N.D. Fla. 1997). After the decision in Savona, Respondent pursued a policy of paying the deductible and coinsurance at 100 percent of the Medicare rate. This policy lasted from March 3, 1997 until October 1, 1997. To facilitate the payment for physician services at 100 percent of the Medicare rate for the crossover claims related to the deductible and coinsurance, Respondent amended its state Medicaid plan, with the federal Health Care Financing Administration (HCFA). In addition, Respondent sought an appropriation through the legislature to fund the increase in copayments to assure that physician services were reimbursed at 100 percent of the Medicare rate for the deductible and coinsurance. This led to the passage of Chapter 97-152, Laws of Florida, Item 248, the 1997-98 General Appropriations Act, which set aside monies from the General Revenue Fund and from the Medical Care Trust Fund, totaling $87 million for Medicare Part B copayment for reimbursement of physician services for the dually eligible recipients. This refers to recipients eligible for services under Medicare and Medicaid. The 1997-98 fiscal year for that appropriation began July 1, 1997, and continues until June 30, 1998. The amount appropriated has proven more than adequate to meet the copayment for physician services at the 100 percent Medicare rate. Another document, prepared by persons unknown, was associated with the appropriations process for 1997-98. That document is referred to as Respondent's Ex No. 1 and is entitled 1997-98 General Appropriations and Summary Statement of Intent. It sets out the exact language in Chapter 97-152, Laws of Florida, Item 248, related to the $87 million for full Medicare Part B copayment for physician services. It also sets out a summary statement of intent that is not found within the General Appropriations Act. The language in that summary statement of intent is as follows: It is the intent of the Legislature that the funds in Specific Appropriation 248 which are provided to pay the full Medicare part B co- payment for physician services to clients who are dually eligible for Medicare and Medicaid, be expended only to the extent currently required by federal law. In the event that changes in federal law relating to reimbursement for these services occurs, the Agency for Health Care Administration shall directly submit to the federal Health Care Financing Administration any amendments to the state Medicaid Plan which are necessary to realize cost savings options permitted by and in compliance with federal law. As anticipated by the summary statement of intent, federal law relating to reimbursement for physician services did change in August of 1997 when Congress enacted the Congressional Balanced Budget Act of 1997, Section 4714. In pertinent part it stated: * * * (2) In carrying out paragraph (1), a State is not required to provide any payment for any expenses incurred relating to payment for deductibles, coinsurance or copayments for medicare cost-sharing to extent that payment under title XVIII for the service would exceed the payment amount that otherwise would be made under the State plan under this title for such service if provided to an eligible recipient other than a medicare beneficiary. That law became effective October 1, 1997. By its terms it created the option for states to reduce payments on crossover claims to the state Medicaid rate, although it did not mandate that outcome. The payment option created by the congressional enactment had application to all categories of providers. In view of the Congressional Balanced Budget Act of 1997, Respondent decided to change its payment policy to disallow payment for physician services at the 100 percent Medicare rate in all instances for physician services related to the deductible and coinsurance for dually eligible recipients. The effective date of the change in policy was October 1, 1997, coinciding with the effective date of the Congressional Budget Act. Respondent implemented its policy change without the benefit of rule adoption. The failure to implement the payment policy by rule adoption was challenged in the case of Savona v. Agency for Health Care Administration, DOAH Case No. 97-5909RU (Fla. DOAH 1998). On January 16, 1998, Respondent gave notice of rule development, to include the preliminary text of the rule. For this reason, the February 12, 1998, order entered in DOAH Case No. 97-5909RU denied the petition for determination of invalidity of the non-rule policy brought in accordance with Section 120.56(4), Florida Statutes. Consistent with its notice of rule development, Respondent published notice of proposed rulemaking pertaining to the rule under challenge here. That publication was made on February 13, 1998, through the Florida Administrative Weekly, Volume 24, No. 7. The specific authority for rule promulgation was Section 409.919, Florida Statutes, and the law to be implemented was Section 409.908, Florida Statutes. No mention was made of the summary statement of intent associated with the 1997-98 General Appropriations Act in Florida and the Congressional Balanced Budget Act of 1997. The testimony of Richard T. Lutz, Director of the Division of State Health Purchasing, Agency for Health Care Administration, at hearing established his reliance upon those latter two items as authority for promulgating the proposed rule in relation to the copayment for physician services under Medicare Part B, for the deductible and coinsurance. Mr. Lutz was principally responsible for the promulgation of the rule as policymaker for the Respondent. In addressing the difference in the reimbursement policies for physician services, contrasted with other services detailed in the proposed rule, Mr. Lutz indicated that changes in relation to reimbursement policies, other than for physicians, would be the product of an estimating conference showing the financial impact of the changes, followed by a budget item to effect the changes. In the absence of that impetus, Mr. Lutz described that he had been instructed that the methodologies that were in place for various services under Medicare Part B utilizing established methodologies for the reimbursement practices would remain in effect. Unlike the circumstances existing in the proposed rule, for classes of providers other than physicians, Mr. Lutz in behalf of Respondent took the initiative in dealing with reimbursement for physicians care under Medicare Part B when promulgating the proposed rule. He concluded that the terms of the federal court order in Savona were subject to the language in the summary statement of intent, and with the advent of the Congressional Balanced Budget Act of 1997 Respondent was at liberty to change its reimbursement scheme for physician services effective October 1, 1997. In making the policy choice to promulgate the proposed rule, Mr. Lutz recognized the option which Florida had to either limit copayments or continue copayments at the Medicare rate for physician services under Medicare Part B. In promulgating the proposed rule Mr. Lutz identified that the Agency did not consider language in Section 409.908(13), Florida Statutes. He did indicate in his testimony the belief that the preamble to Section 409.908, Florida Statutes, creates authority for promulgation of the proposed rule in its comment about the Respondent's ability to make payments in accordance with methodologies that are set forth in its rules, manuals, and handbooks, consistent with limitations placed in the General Appropriations Act and any statement of legislative intent. Mr. Lutz in promulgating the proposed rule recognized that the physician services under Medicare Part B copayment for deductible and coinsurance would eventuate in no payment beyond the 80 percent premium in many instances. Although Mr. Lutz expresses the opinion that the proposed rule for payment of physician services under Medicare Part B has retroactive application to October 1, 1997, he acknowledges that the language in the proposed rule makes no reference to its retroactivity to that date.
