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, Yesica Cardenas, 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 December 31, 2010, Yesica Cardenas (“Ms. Cardenas”) was a passenger on a motor scooter that was involved in an accident on State Road 112 in Miami, Florida. As a result of this accident, Ms. Cardenas suffered serious physical injury, including amputation of her left leg below the knee. (JPHS p. 8) Ms. Cardenas’ past medical expenses related to her injuries were paid in part by Medicaid, and Medicaid provided $89,518.80 in benefits. This $89,518.80 in benefits paid by Medicaid, combined with $12,449.80 in medical bills not paid by Medicaid, constituted Ms. Cardenas’ entire claim for past medical expenses. Accordingly, Ms. Cardenas’ claim for past medical expenses was in the amount of $101,968.60. (JPHS p. 8) Ms. Cardenas, or others on her behalf, did not make payments in the past or in advance for Ms. Cardenas’ 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. Ms. Cardenas brought a personal injury lawsuit in Miami-Dade County to recover all of her damages against those responsible for her injuries (“Defendants”). (JPHS p. 8) On September 9, 2015, Ms. Cardenas compromised and settled her lawsuit with the Defendants for the amount of $240,000. (JPHS p. 8) In making this settlement, the settling parties agreed that: 1) the settlement did not fully compensate Ms. Cardenas for all her damages; 2) Ms. Cardenas’ damages had a value in excess of $2,400,000, of which $101,968.60 represented her claim for past medical expenses; and 3) allocation of $10,196.86 of the settlement to Ms. Cardenas’ claim for past medical expenses was reasonable and proportionate. In this regard, the General Release and Settlement Agreement (“Release”) memorializing the settlement stated: Although it is acknowledged that this settlement does not fully compensate RELEASOR for the damages she has allegedly suffered, this settlement shall operate as a full and complete Release as to all claims against [Defendants] without regard to this settlement only compensating the RELEASOR for a fraction of the total monetary value of her alleged damages. The damages have a value in excess of $2,400,000, of which $101,968.60 represents RELEASOR’S claim for past medical expenses. Given the facts, circumstances, and nature of the RELEASOR’S alleged injuries and this settlement, the parties settled this matter for 10% of the value of the damages ($240,000.00) and as such, have allocated $10,196.86 of this settlement the RELEASOR’S claim for past medical expenses and the remainder of the settlement has been allocated toward the satisfaction of her other claims. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all of the RELEASOR’S alleged damages. Further, the parties acknowledge that the RELEASOR may need future medical care related to her alleged injuries, and some portion of this settlement may represent compensation for these future medical expenses that the RELEASOR may incur in the future. However, the parties acknowledge that the RELEASOR, or others on her behalf, have not made payments in the past or in advance for the RELEASOR’S future medical care and the RELEASOR 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 payments made to secure future medical care. (JPHS p. 8-9) As a condition of Ms. Cardenas’ eligibility for Medicaid, Ms. Cardenas assigned to AHCA her 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 Ms. Cardenas’ personal injury action, AHCA was notified of the action and AHCA, through its collections contractor, Xerox Recovery Services, asserted a $89,518.80 Medicaid lien against Ms. Cardenas’ cause of action and settlement of that action. (JPHS p. 9) By letter of September 11, 2015, AHCA was notified by Ms. Cardenas’ personal injury attorney of the settlement and provided a copy of the executed Release and itemization of $2,711.70 in litigation costs. This letter explained that Ms. Cardenas’ damages had a value in excess of $2,400,000, and the $240,000 settlement represented only a 10-percent recovery of Ms. Cardenas’ damages. Accordingly, she had recovered only 10 percent of her $101,968.60 claim for past medical expenses, or $10,196.86. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of its Medicaid lien. (JPHS p. 9) AHCA did not respond to Ms. Cardenas’ attorney’s letter of September 11, 2015. (JPHS p. 9) AHCA did not file an action to set aside, void, or otherwise dispute Ms. Cardenas’ settlement with the Defendants. (JPHS p. 9) AHCA has not commenced a civil action to enforce its rights under section 409.910. (JPHS p. 9) The Medicaid program spent $89,518.80 on behalf of Ms. Cardenas, all of which represents expenditures paid for Ms. Cardenas’ past medical expenses. (JPHS p. 9) No portion of the $89,518.80 paid by the Medicaid program on behalf of Ms. Cardenas represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. (JPHS p. 10) Ms. Cardenas is no longer a Medicaid recipient. (JPHS p. 10) AHCA has determined that $2,711.70 of Ms. Cardenas’ litigation costs are taxable costs for purposes of the section 409.910(11)(f) formula calculation. (JPHS p. 10) Subtracting the $2,711.70 in taxable costs and allowable attorney’s fees, the section 409.910(11)(f) formula applied to Ms. Cardenas’ $240,000 settlement requires payment of $88,644.15 to AHCA in satisfaction of its $89,518.80 Medicaid lien. Since the $89,518.80 Medicaid lien amount is more than the $88,644.15 amount required to be paid to AHCA under the section 409.910(11)(f) formula, AHCA is seeking reimbursement of $88,644.15 from Ms. Cardenas’ $240,000 settlement in satisfaction of its Medicaid lien. (JPHS p. 10) 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. 10) Testimony of Michael Weisberg Mr. Weisberg has been an attorney since 1967 and is a partner with Weisberg and Weisberg, P.A. Mr. Weisberg explained that he is a civil trial attorney who has spent 30 years handling insurance defense, and in the last 20 years has focused his practice on plaintiff personal injury. Mr. Weisberg testified that over his career, he has handled approximately 550 jury trials to verdict and he often handles cases involving catastrophic injuries. Mr. Weisberg testified that as a routine and daily part of his practice, he makes assessments concerning the value of damages suffered by injured parties. Petitioner proffered Mr. Weisberg as an expert in the valuation of damages suffered by injured parties, and AHCA did not object to the proffer. Mr. Weisberg was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Weisberg represented Ms. Cardenas relative to her personal injury action. He explained that as part of his representation, he reviewed Ms. Cardenas’ medical records, met with her doctors, reviewed the accident report, took the deposition of persons involved in the accident, took the deposition of witnesses to the accident, and met with Ms. Cardenas many times. Mr. Weisberg gave a detailed explanation of the circumstances giving rise to Ms. Cardenas’ injury. He explained that Ms. Cardenas was a hostess at a restaurant in a Miami Beach hotel. After her shift ended, she was asked to stay and continue working. After the restaurant closed, she was unable to take the Metro Mover home because it ceased running at midnight. Instead, she was given a ride home by a co-worker who had a motor scooter. The co-worker’s motor scooter was too slow for the highway he chose to travel upon, and it was struck from behind by a motorcycle. Ms. Cardenas was thrown off the motor scooter. She was taken to Jackson Memorial Hospital where her leg was amputated a few inches below the knee. Due to her lack of financial resources, Ms. Cardenas was provided limited rehabilitation and she was provided only a rigid prosthetic leg that did not have a flexible ankle/foot. Mr. Weisberg explained that this injury has had a negative impact on Ms. Cardenas’ life. Because of the limitations presented by having an amputated leg, she has had difficulty maintaining her relationship with her friends and has become isolated. She is unable to enjoy her previous pastime of shopping due to the injury and is unable to play with her son in the same manner as before. Mr. Weisberg testified that Ms. Cardenas’ injury has caused Ms. Cardenas to suffer from depression and “she is not a happy girl.” Mr. Weisberg testified that Ms. Cardenas’ claim for past medical expenses related to her injury was $101,968.60, which consisted of $89,518.80 in Medicaid benefits and $12,449.80 in medical bills not paid by Medicaid. Mr. Weisberg testified that Ms. Cardenas, or others on her 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. Weisberg testified that through his representation of Ms. Cardenas, review of Ms. Cardenas’ file, and based on his training and experience, he had developed the opinion that the value of Ms. Cardenas damages was “a minimum of five million dollars.” In support of his valuation, he compared Ms. Cardenas’ case to a case he had tried to jury verdict involving a man with a preexisting leg amputation who was struck by a bus and suffered a degloving injury to his other leg. This client regained use of the injured leg and the jury still awarded him $1.3 million. Mr. Weisberg explained that if that client’s less severe injury where he regained use of his injured leg, warranted a $1.3 million verdict, then “a person with no leg, a reasonable verdict, in my opinion . . . would be in excess of five million dollars.” Mr. Weisberg also testified that he “round tabled” Ms. Cardenas’ case with five other experienced attorneys, and they believed Mr. Weisberg’s valuation of Ms. Cardenas’ damages at $5 million was low. Further, Mr. Weisberg testified that he had reviewed the jury verdicts in Petitioner’s Exhibit 11 and he believed those cases were comparable to Ms. Cardenas’ case and supported his valuation of Ms. Cardenas’ damages as being in excess of $5 million. Mr. Weisberg explained that the driver/owner of the motor scooter Ms. Cardenas was riding, as well as the driver/owner of the motorcycle that struck the motor scooter, did not have liability insurance or assets, so no recovery was possible against them. Instead, a lawsuit was brought against the restaurant under the theory that by requesting Ms. Cardenas to work after her shift was finished, they caused her to be unable to use public transit and rely upon transport home by way of the motor scooter. Mr. Weisberg explained that the theory of liability was difficult and there were numerous disputed facts associated with the case. Based on these issues, Ms. Cardenas settled her case for $240,000. Mr. Weisberg testified that the settlement did not fully compensate Ms. Cardenas for the full value of her damages. Mr. Weisberg testified that based on the conservative valuation of all Ms. Cardenas’ damages of $2,400,000, the settlement represented a recovery of 10 percent of the value of Ms. Cardenas’ damages. Mr. Weisberg testified that because Ms. Cardenas only recovered 10 percent of the value of her damages in the settlement, she only recovered 10 percent of her $101,968.60 claim for past medical expenses, or $10,196.86. Mr. Weisberg testified that the settling Defendant was represented by experienced trial attorneys and that the settling parties agreed in the Release that Ms. Cardenas’s damages had a value in excess of $2.4 million, as well as the allocation of $10,196.86 of the settlement to past medical expenses. Mr. Weisberg further testified that the allocation of $10,196.86 of the settlement to past medical expenses was reasonable and rational, as well as conservative, because it was based on a very low-end valuation of her damages of $2.4 million. If a higher valuation of her damages was used, the amount allocated to past medical expenses would have been much less. Mr. Weisberg 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. He also testified that the parties agreed in the Release 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. Testimony of Thomas Backmeyer Thomas Backmeyer has been an attorney since 1970, and since 1996, he has worked as a mediator. Prior to becoming a mediator in 1996, he was board-certified in civil trial law by the Florida Bar and the National Board of Trial Advocates. Mr. Backmeyer testified that he has handled 100 to 125 jury trials, 90 percent of which were personal injury cases. He further testified that in his practice he regularly made assessments concerning the value of damages suffered by injured parties. Petitioner proffered Mr. Backmeyer as an expert in the valuation of damages suffered by injured parties. AHCA did not object to the proffer, and Mr. Backmeyer was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Backmeyer testified that he was familiar with Ms. Cardenas’ injuries and had reviewed the hospital records from Jackson Memorial, pictures of Ms. Cardenas, the Complaint, and Petitioner’s exhibits. Mr. Backmeyer testified that in his opinion, Ms. Cardenas’ damages had a value in excess of $5 million to $10 million. He explained that his valuation was “based on my experience in handling jury trials. It’s based on my experience of dealing with cases over the last twenty years as a mediator, some of which involve amputations of, I can think of one that involved the amputation of a leg of a young lady.” Mr. Backmeyer also testified that he had reviewed the jury verdicts in Petitioner’s Exhibit 11 and he found those verdicts comparable with Ms. Cardenas’ case and supportive of his valuation of her damages. He discussed two of the verdicts in relation to Ms. Cardenas’ case. Mr. Backmeyer testified that he was aware of the Cardenas settlement, and that the parties had allocated $10,196.86 to past medical expenses based on a valuation of all damages of $2,400,000. He further testified that he believes allocation of $10,196.86 to past medical expenses was “a generous number” because he believed the value of the damages was much higher than the $2,400,000 valuation used by the parties in calculating the allocation to past medical expenses. AHCA did not propose a differing valuation of Ms. Cardenas’ damages or contest the methodology used by the parties to calculate the $10,196.86 allocation to past medical expenses. The testimony and evidence presented concerning the value of Petitioner’s damages, and the allocation to past medical expenses, was unrebutted. The evidence presented is not in conflict or ambiguous. The parties to the settlement agreed that: 1) Ms. Cardenas was not being fully compensated for all her damages in the settlement; 2) Ms. Cardenas’ damages had a value in excess of $2,400,000, of which $101,968.60 represented her claim for past medical expenses; 3) the parties allocated $10,196.86 of the settlement to past medical expenses based on the same ratio the settlement bore to the total monetary value of all damages; and 4) because there was no claim made for reimbursement, restitution, repayment, indemnification, or to be made whole for payments made in the past for future medical care, no portion of the settlement represented reimbursement for future medical expenses. AHCA was not a party or participant in the settlement. However, the unrebutted evidence and testimony is of sufficient quality and quantity to establish that the value of Ms. Cardenas’ damages was in excess of $2,400,000; the allocation of $10,196.86 to past medical expenses under the method of calculation used was reasonable, fair, and accurate; and no portion of the settlement represented reimbursement for future medical expenses. Petitioner has proven by clear and convincing evidence that $10,196.86 of the settlement represents reimbursement for past and future medical expenses. Petitioner has 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 $88,644.15 amount calculated by the Respondent pursuant to the formula set forth in section 409.910(11)(f).
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or Agency), for medical expenses paid on behalf of Petitioner, Tyra Pierre, from a medical-malpractice settlement received by Petitioner from a third party.
Findings Of Fact On November 4, 2011, Petitioner, Tyra Pierre (Petitioner), fell from the window of the fourth floor apartment where she lived with her mother, Yanique Benjamin, in North Miami Beach, Florida. The apartment was owned by Harvard House, LLC (Harvard House). Petitioner was airlifted to, and treated at, Jackson Memorial Hospital Trauma Center. Petitioner suffered a spinal cord injury at cervical level C7-C8, and is paralyzed from the waist down, rendering her a permanent paraplegic. Medicaid paid for Petitioner’s medical expenses in the amount of $530,258.86. Petitioner was three years old at the time of her injury and has a normal life expectancy of 72.9 years. Petitioner is wheel-chair bound. She has no control of her bladder or bowels. Paraplegics suffer from a number of attendant complications, such as erosion of skin integrity, pressure ulcers, and kidney, bladder, and digestive system disorders. Paraplegics require care from neurologists, neurosurgeons, orthopedic surgeons, and gastroenterologists, among other physicians, throughout their normal life expectancy. Ms. Benjamin retained Scott Leeds, an attorney specializing in personal and catastrophic injury claims, to represent Petitioner in a personal injury claim against Harvard House. Mr. Leeds served Harvard House with a Notice of Intent to Initiate Litigation on December 29, 2011. The insurance liability of Harvard House was limited to $1 million. During discovery, Mr. Leeds determined Harvard House had no other collectible assets. Petitioner settled with Harvard House pre-suit for $750,000.1/ Mr. Leeds has practiced law in the area of catastrophic personal injury for 31 years. He has represented children in cases seeking damages for catastrophic injury. As part of his practice, Mr. Leeds routinely estimates the value of damages suffered by his clients. The components of damages in catastrophic personal injury cases generally follow the elements set out in a jury verdict form, including economic damages, such as past medical expenses (date of injury to date of trial), future medical expenses, loss of past earnings, loss of future earning capacity, past attendant care and rehabilitation, future attendant care and rehabilitation; as well as non-economic damages, such as past and future pain and suffering, and loss of enjoyment of life. Petitioner’s claim for past medical expenses is valued at $530,258.86, the amount paid by Medicaid for her past treatment. Mr. Leeds estimated Petitioner’s future medical care expenses at $8 million, based on statistics from the Christopher and Dana Reeves Foundation. Mr. Leeds testified that Petitioner’s attendant care costs for her expected lifetime are an additional $9 million. Mr. Leeds’ estimate of Petitioner’s economic damages is $17.5 million before valuing Petitioner’s loss of future earning capacity. Mr. Leeds’ opinion on the value of Petitioner’s damages is informed by his experience representing children in two separate catastrophic injury cases. In both cases, the children were under five years old and their injuries resulted in paraplegia. In both cases, Mr. Leeds negotiated structured settlements for the children in excess of $20 million in future benefits over the children’s lifetime. Mr. Leeds testified, convincingly, that a jury would likely award Petitioner a substantial sum to compensate Petitioner for her non-economic damages, given her life expectancy of over 70 years to endure the consequences of her injury. Mr. Leeds’ valuation of Petitioner’s combined economic and non-economic damages in excess of $20 million is accepted as credible and reliable, as well as persuasive. Petitioner also presented the testimony of a second expert in valuing damages in catastrophic personal injury cases, R. Vinson Barrett, Jr. Mr. Barrett is a civil trial lawyer who has practiced exclusively in the area of personal injury for the past 30 years. He is a senior partner in the law firm of Barrett, Fasig & Brooks in Tallahassee, Florida. In preparing for his testimony, Mr. Barrett reviewed Petitioner’s medical records, the police report filed on the date of Petitioner’s injury, Mr. Leeds' demand letter to Harvard House, some discovery documents, the settlement, and the court order approving the settlement. In formulating his opinion as to the value of Petitioner’s damages, Mr. Barrett also consulted with colleagues practicing personal injury law in South Florida. According to Mr. Barrett, jury awards vary by region in the state of Florida, with South Florida juries returning high jury verdicts in personal injury cases. Mr. Barrett emphatically agreed that the value of Petitioner’s damages are in excess of $20 million. In formulating his opinion, Mr. Barrett reviewed jury verdicts in cases which he considered comparable, or otherwise instructive. In one case, a four-year-old boy rendered a paraplegic in an automobile accident was awarded $19.9 million in damages in 2010. That verdict was rendered in Osceola County. Mr. Barrett testified that a jury verdict in Dade County would be expected to be higher than in Osceola County. In a second case, a jury in Pinellas County awarded over $10 million to a 57-year-old woman who was rendered paraplegic as a result of medical malpractice. The jury award allocated $3 million for future medical expenses and $7 million for future pain and suffering. Mr. Barrett testified that future pain and suffering awards are generally lower for older plaintiffs, such as this 57-year-old woman, than for younger plaintiffs, like Petitioner, with a much longer life expectancy. Another case to which Mr. Barrett referred involved an adult male construction worker rendered paraplegic in a fall from a steel beam which resulted in a spinal injury similar to Petitioner’s. The Hillsborough County jury awarded over $16 million to the plaintiff in that case. The construction worker’s life expectancy was shorter than Petitioner’s, thus Mr. Barrett believes an award greater than $16 million would be made in Petitioner’s case. Mr. Barrett would also expect a higher award in a present-day civil jury trial than this $16-million award which was made in 1995. Mr. Barrett’s opinion on the value of Petitioner’s damages was both credible and persuasive. Medicaid is to be reimbursed for medical assistance provided if resources of a liable third party become available. Thus, Respondent asserted a Medicaid lien in the amount of $530,258.86 against any proceeds Petitioner received from a third party. Respondent’s position is that it should be reimbursed for its Medicaid expenditures on behalf of Petitioner pursuant to the formula set forth in section 409.910(11)(f). Under the statutory formula, the lien amount is computed by deducting a 25 percent attorney’s fee and taxable costs (in this case, $8,704.50) from the $750,000.00 recovery, which yields a sum of $553,795.50, then dividing that amount by two, which yields $276,897.75. That figure establishes the maximum amount that could be reimbursed from the third-party recovery in satisfaction of the Medicaid lien. Petitioner’s position is that Respondent should be reimbursed $19,884.71 in satisfaction of its Medicaid lien. On August 27, 2014, Petitioner and Harvard House executed a Release of Claims (Release) based upon the settlement of $750,000. In the Release, the parties acknowledge that the settlement “only compensat[es] Tyra Pierre for a fraction of the total monetary value of her alleged damages.” The Release does not differentiate or allocate the total recovery among the components of damages, such as economic or non-economic. However, the Release allocates $19,884.71 to Petitioner’s claim for past medical expenses, and allocates the “remainder of the settlement towards the satisfaction of claims other than past medical expenses.” The Release provides that said “allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Tyra Pierre’s damages.” The settlement amount of $750,000 is 3.75% of the total value of Petitioner’s damages. The figure of $19,884.71 is 3.75% of the value of past medical expenses paid by Medicaid on Petitioner’s behalf. Respondent was not a party to the settlement. Respondent did not participate in litigation of the claim or in settlement negotiations, and no one represented Respondent’s interests in the negotiations. Respondent has not otherwise executed a release of the lien. Petitioner did not introduce the settlement in evidence. However, Petitioner did introduce the circuit court order authorizing the settlement. The order reads, in pertinent part, as follows: Given the facts, circumstances, and nature of Tyra’s injuries and this settlement, the parties have agree[d] to allocate $19,884.71 of this settlement to Tyra’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 the settlement bears to the total monetary value of all Tyra’s damages. * * * 5. The allocation of damages recited in the previous paragraph and made a material term of the settlement, is fair and accurate, and is expressly adopted by this Court. (emphasis added). Mr. Leeds testified that allocation of $19,884.71 of the settlement proceeds to Petitioner’s past medical expenses was fair and accurate, “based upon the analysis of this catastrophic injury and the future 73 years that Tyra Pierre will have and the value of this case[.]” Mr. Barrett testified that allocation of $19,884.71 for past medical expenses was reasonable and rational. Petitioner proved by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by Respondent pursuant to the formula set forth in section 409.910(11)(f).
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 Clifford J. Deyampert (“Petitioner” or “Mr. Deyampert”) pursuant to section 409.910, Florida Statutes (2015),1/ from settlement proceeds received by Mr. Deyampert from a third party.
Findings Of Fact The following findings of fact are based on exhibits accepted into evidence, admitted facts set forth in the pre- hearing stipulation, and matters subject to official recognition. Facts Pertaining to the Underlying Personal Injury Litigation and the Medicaid Lien On July 25, 2015, Mr. Deyampert was attending a party held at a friend’s house and was shot in the throat by another guest. The bullet traveled down Mr. Deyampert’s throat, struck his spinal cord, and caused Mr. Deyampert to be paralyzed from the chest down. As a result, Mr. Deyampert is permanently disabled, disfigured, and wheelchair-bound. In addition, Mr. Deyampert is bowel and bladder incontinent.2/ Medicaid paid $76,944.67 in order to cover Mr. Deyampert’s past medical expenses. No portion of the $76,944.67 paid by Medicaid on Mr. Deyampert’s behalf represents expenditures for future medical expenses, and Medicaid did not make payments in advance for medical care. Mr. Deyampert initiated a personnel injury lawsuit by making a claim against a homeowner’s insurance policy that covered the shooter. Mr. Deyampert’s personal injury action settled for $305,000, and that was the limit of an aforementioned insurance policy.3/ The General Release memorializing the settlement stated the following: Although it is acknowledged that this settlement does not fully compensate Clifford Deyampert 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 Clifford Deyampert for a fraction of the total monetary value of his alleged damages. The parties agree that Clifford Deyampert’s alleged damages have a value in excess of $6,000,000, of which $76,944.67 represents Clifford Deyampert’s claim for past medical expenses. Given the facts, circumstances, and nature of Clifford Deyampert’s injuries and this settlement, the parties have agreed to allocate $3,847.23 of this settlement to Clifford Deyampert’s claim for past medical expenses and allocate the remainder of the settlement toward 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 Clifford Deyampert’s damages. Further, the parties acknowledge that Clifford Deyampert may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses Clifford Deyampert will incur in the future. However, the parties acknowledge that Clifford Deyampert, or others on his behalf, have not made payments in the past or in advance for Clifford Deyampert’s future medical care and Clifford Deyampert 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. During the pendency of Mr. Deyampert’s personal injury action, AHCA was notified of the suit and asserted a Medicaid lien in the amount of $76,944.67 against any damages received by Mr. Deyampert. Via a letter issued on July 24, 2017, Mr. Deyampert’s attorney notified AHCA that Mr. Deyampert’s personal injury action had settled. The letter asked AHCA to specify what amount it would accept in satisfaction of the $76,944.67 Medicaid lien. AHCA responded by demanding full payment of the lien. Section 409.910(11)(f) sets forth a formula for calculating the amount that AHCA shall recover in the event that a Medicaid recipient or his or her personal representative initiates a tort action against a third party that results in a judgment, award, or settlement from a third party.4/ AHCA is seeking to recover $76,944.67 in satisfaction of its Medicaid lien. See § 409.910(11)(f)4., Fla. Stat. (providing that “[n]otwithstanding any provision in this section to the contrary, [AHCA] shall be entitled to all medical coverage benefits up to the total amount of medical assistance provided by Medicaid.”). Valuation of the Personal Injury Claim F. Emory Springfield represented Mr. Deyampert during the personal injury action and testified during the final hearing. Mr. Springfield has practiced law for 32 years. He owns his own law firm and handles cases involving personal injury, workers’ compensation, and social security disability. Mr. Springfield has experience with jury trials and monitors jury verdicts issued in his fields of practice. Mr. Springfield routinely assesses the value of damages suffered by injured parties. He makes those assessments by determining the injured person’s life expectancy, evaluating the injuries, and conferring with lifecare planners about the injured party’s need for future care. In addition, Mr. Springfield learns as much as possible about the injured party’s past life activities and compares those activities to what the injured party is presently capable of doing. Mr. Springfield also assesses an injured party’s damages by examining jury verdicts from other cases. Mr. Springfield was accepted in this proceeding as an expert regarding the valuation of damages. Mr. Springfield is of the opinion that Mr. Deyampert’s damages (including damages for pain and suffering and economic damages) are well in excess of $6 million. According to Mr. Springfield, the $305,000 settlement does not “come close” to fully compensating Mr. Deyampert for all of his damages. Furthermore, the $305,000 settlement only represents a five percent recovery of the more than $6 million in damages incurred by Mr. Deyampert. Therefore, in Mr. Springfield’s opinion, only five percent (i.e., $3,847.23) of the $76,944.67 in Medicaid payments for Mr. Deyampert’s past medical expenses were recovered. Mr. Deyampert also presented the testimony of R. Vinson Barrett, Esquire, during the final hearing. Mr. Barrett is a trial attorney who has been practicing in North Florida since the mid 1970s. Over the last 30 years, he has focused his practice on the areas of medical malpractice, medical products liability, and pharmaceutical liability. Mr. Barrett routinely handles jury trials and monitors jury verdicts issued in his practice areas. Mr. Barrett routinely assesses the value of damages suffered by injured parties. According to Mr. Barrett, a personal injury attorney must be skilled at estimating the value of a client’s claim. Otherwise, the high cost of bringing a case to trial can result in a personal injury attorney losing money and going bankrupt. Mr. Barrett was accepted in this proceeding as an expert regarding the valuation of damages. Mr. Barrett gave the following testimony regarding Mr. Deyampert’s damages: This man not only is a paraplegic, but during all this, and I couldn’t really tell from the records I read whether the bullet caused this or some intubation in the hospital, but he got air into the space between his lung and his diaphragm, which can be a very painful problem, he had to be intubated to get that out. He developed, I believe, sepsis, at some point in his -- in his treatment; and it’s already evidence early on in his situation that he’s going to be, and is very susceptible to pressure ulcers on his skin. His skin is going to be prone to breakdown from prolonged periods of sitting in the same position and that sort of thing. Fortunately, he has enough strength left in his upper body that he’s able to ameliorate that somewhat. He’s able actually, on his own, and after a lot of rehab, to roll over in his bed to different positions even though his lower extremities are not working at all. He’s able to -- he’s able to reposition himself in his chair using the strength of his arms, so that will cut down a little bit on that. But he had already developed a pressure ulcer or two by the time he got into rehab in this case. He – so, he’s got no use at all, it appears, of his lower extremities. He had a number of complications that had to be dealt with. He was in the hospital a long time. His overall prospects after rehabilitation -– and he was still in some rehabilitation as early as about February of this year, so I’m not totally sure he’s through all his rehab yet. He has to take rehabilitation courses to learn -– relearn how to do things. He’ll need his home made wheelchair accessible, cabinets, and thing[s] like that, all the things that a person normally does without thinking about, are going to be challenges for him just in daily household stuff. He will have to have modifications, most likely, of his kitchen, his bathroom, that sort of thing. And so, yeah, there’s quite a bit to work within this case to come up with an evaluation. Mr. Barrett opined that $6 million was a “very conservative” estimate of the damages suffered by Mr. Deyampert. Mr. Barrett also opined that allocating five percent of the $76,000 claim (i.e., $3,847.23) to past medical expenses was a reasonable and rational allocation to past medical expenses and reflected the ratio of the amount recovered to the actual value of Mr. Deyampert’s damages. Findings Regarding the Testimony Presented at the Final Hearing The undersigned finds that the testimony from Mr. Springfield and Mr. Barrett was compelling and persuasive. While attaching a value to the damages that a plaintiff could reasonably expect to receive from a jury is not an exact science, Mr. Springfield’s and Mr. Barrett’s decades of experience with litigating personal injury lawsuits make them very compelling witnesses regarding the valuation of damages suffered by injured parties such as Mr. Deyampert.5/ Accordingly, the undersigned finds that Mr. Deyampert proved by a preponderance of the evidence that $3,847.23 constitutes a fair and reasonable recovery for past medical expenses actually paid by Medicaid.
The Issue The issue is whether, for the 2001-02 cost-reporting year, Respondent is entitled to recoupment of Medicaid reimbursements that it paid to Petitioner, in connection with its operation of numerous intermediate care facilities for the developmentally disabled (ICF/DD) and, if so, what is the amount of the overpayments.
Findings Of Fact The Audit For over 40 years, Petitioner has operated as a not- for-profit provider of ICF/DD services. These cases involve a compliance audit of ten of Petitioner's 2001-02 cost reports. During 2001-02, Petitioner operated over 300 ICF/DDs-- both owned and leased--in eight states and earned an annual revenue of over $90 million. A typical facility is a group home serving 24 developmentally disabled residents, although some of Petitioner's facilities serve much larger numbers of residents. Respondent outsourced the compliance audit of Petitioner's 2001-02 cost reports, as well as a similar audit of Petitioner's 2002-03 cost reports, which are not involved in these cases. Prior to completing the audit, the outside auditor withdrew from the engagement because it had concluded that it would be required to issue a disclaimer of opinion--an auditing nonopinion, as described below. In late 2005, two and one-half years after the outside auditor had commenced its work, Respondent's staff auditors assumed responsibility for the compliance audit. After examining the outside auditor's workpapers, Respondent's staff auditors found it necessary to re-perform at least some of the field work. By letter dated January 3, 2006, Respondent advised Petitioner of this development and, among other things, requested information about 16 identified motor vehicles and a statement concerning the 1981 Piper airplane noted in the May 29, 2002 Insurance sub-committee minutes. What was the plane used for and in what cost centers and accounts are the costs recorded? Possible costs would include fuel, insurance, depreciation, maintenance, and any salaries. Petitioner responded by a letter dated March 3, 2006, but this letter is not part of the record. Evidently, not much audit activity took place for the next couple of years. By letter dated January 25, 2008, Respondent advised Petitioner of several potential audit adjustments and noted that Petitioner had not provided the "detail general ledger" and information on aircraft and vehicles that Respondent had sought in its January 3, 2006 letter. In March 2008, Respondent's staff auditor visited Petitioner's main office in Miami and audited Petitioner's records for three days. He confirmed the existence of a 1981 Piper aircraft and a second aircraft, which he was unable to identify. Respondent's staff auditor determined that he still lacked information necessary to determine if Petitioner's aircraft expenses were reasonable when compared to common- carrier expenses. By letter dated May 12, 2008, Respondent informed Petitioner that, after the March 2008 onsite visit, several issues remained. Among the issues listed were the costs of two private aircraft, for which Respondent requested access to all flight and maintenance logs and detailed documentation of business purpose of trips, identification of aircraft bearing two cited tail numbers, the names of pilots on Petitioner's payroll, and any other cost information justifying the cost of the aircraft compared to common-carrier costs. By letter dated June 13, 2008, Petitioner responded to the May 12, 2008 letter. This letter states that the 1981 Piper was sold at an undisclosed time, and the maintenance logs had been delivered with the plane. The letter supplies registration documentation for the two tail numbers, a personnel file checklist for the pilot, and justification for the cost of operating an aircraft compared to the cost of using common carriers. On December 4, 2008, Respondent's staff auditor conducted an exit conference by telephone with Petitioner's principals and its independent auditor. Respondent's staff auditor proposed audit adjustments of various cost items that the auditor had guessed involved the aircraft. Petitioner did not agree with these proposed audit adjustments or various others that Respondent's staff auditor proposed. For the next 17 months, neither side contacted the other, until, on May 12, 2010, Respondent issued examination reports for the 2001-02 cost-reporting period. It had taken Respondent over seven years to issue examination reports based on cost reports that Petitioner had filed on February 3, 2003, for a cost-reporting year that had ended almost two years earlier. Cost Items in Dispute On January 28, 2011, Respondent filed a Notice of Filing of a spreadsheet that lists all of the adjustments that have been in dispute. During the hearing, the parties announced the settlement of other cost items. As noted by the Administrative Law Judge, these adjustments are shown on the judge's copy of this filing, which is marked as Administrative Law Judge Exhibit 1 among the original exhibits. Most of the items in dispute are Home Office costs, which are allocated to each of Petitioner's audited facilities. With the reason for disallowance, as indicated in the examination reports, as well as the Schedule of Proposed Auditing Adjustment (SOPAA) number, the Home Office costs in dispute are: Other consultants. "To disallow out of period costs." $7,000. SOPAA #19. Professional fees--other. "To disallow out of period costs." $1,500. SOPAA #20. Administrative Travel. "To disallow out of period costs." $1,038. SOPAA #21. Transportation--repairs. "To remove airplane costs not documented as being reasonably patient care related." $36,496. SOPAA #22. Transportation--fuel and oil. "To remove airplane costs not documented as being reasonably patient care related." $78,336. SOPAA #22. Insurance. "To remove airplane costs not documented as being reasonably patient care related." $24,000. SOPAA #22. Transportation--Depreciation. "To remove airplane costs not documented as being reasonably patient care related." $106,079. SOPAA #22. Transportation--Interest. "To remove airplane costs not documented as being reasonably patient care related." $57,714. SOPAA #22. Staff Development Supplies. "To remove unreasonable cash awards." SOPAA #26. At the conclusion of the hearing, the Administrative Law Judge encouraged the parties to try to settle as many of the issues as they could and, as to the aircraft issues, consider entering into a post-hearing stipulation due to the lack of facts in the record concerning this important issue. The parties produced no post-hearing stipulation and have not advised the Administrative Law Judge of any settled issues. The Administrative Law Judge has identified the remaining issues based on the issues addressed in the parties' Proposed Recommended Orders. With two exceptions, the remaining issues are all addressed in each Proposed Recommended Order. One exception is the Country Meadows return-on-equity issue, which neither party addressed. There is a small discrepancy between the amount of this adjustment on Administrative Law Judge Exhibit 1 and elsewhere in the record, so this issue may have been settled. If so, Respondent may ignore the portions of the Recommended Order addressing it. Also, Respondent failed to address the $123,848 in transportation salaries and benefits. Based on the services corresponding to these expenses and the motivation of Respondent's staff auditor in citing these reimbursements as overpayments, as discussed below, the decision of Respondent's counsel not to mention these items is understandable. The remaining issues are thus: Burial costs of $4,535 at the Ambrose Center. Return on equity adjustment of $3,418 at the Country Meadows facility. Legal fees of $4,225 for the Bayshore Cluster as out-of-period costs. Inclusion of state overhead of $9,529 at Mahan Cluster, $9,529 at Dorchester Cluster, and $9,529 at Bayshore Cluster. Transportation Salaries and Benefits of $123,848 at Main Office. Individual Cost Items Burial Costs After the death of an indigent resident at Petitioner's Ambrose Center, the family contacted Petitioner and informed it that they desired a burial, not a cremation, but could not afford to pay for any services. Petitioner's staff contacted several vendors about the cost of a simple burial service and, after negotiating a discount due to the unfortunate circumstances, selected a vendor. The vendor duly performed the burial service, which was attended by survivors of the deceased's group home, and Petitioner paid the vendor $4,535 for the service. For a burial service, the amount paid was reasonable. Petitioner's staff determined that the burial would have therapeutic value to the surviving residents of the deceased's group home. The quality of life of the residents is enhanced to the extent that they identify with each other as family. Petitioner's staff justifiably determined that a burial service would help sustain these familial relationships by bringing to the survivors a sense of closure, rather than subjecting them to the jarring experience of an unmarked departure of their fellow resident from their lives. However, routine counseling or therapy could have achieved the same results at less cost than a burial service. Out-of-Period Costs The so-called out-of-period costs are $1,038 of rental-car fees, $1,500 of computer consultation fees, $4,225 of legal fees, and $7,000 of "duplicated" insurance broker services. "Out-of-period" means that the expenses were incurred, and should properly be reported, outside of the cost- reporting year ending June 30, 2002. Generally accepted auditing standards (GAAS) and generally accepted accounting principles (GAAP) incorporate the principle of materiality. At least for the purpose of determining the cost-reporting year in which to account for an expense, the materiality threshold for Petitioner is tens of thousands of dollars. The out-of-period issue, which involves the integrity of the cost-reporting year, is different from the other issues, which involve the allowability of specific costs. The cost items under the out-of-period issue are all allowable; the question is in which cost-reporting year they should be included. The test of materiality is thus whether the movement of these cost items from one cost-reporting year to an adjoining cost-reporting year will distort the results and, thus, Petitioner's Medicaid reimbursements. Given Petitioner's revenues, distortion would clearly not result from the movement of the subject cost items, even if considered cumulatively. In theory, Petitioner could be required to amend the cost report for the year in which any of these expenses were incurred, if they were not incurred in the subject cost- reporting year. Unfortunately, by the time Respondent had generated the SOPAAs, the time for amending the cost reports for the adjoining cost-reporting years had long since passed, so a solution of amending another cost report means the loss of the otherwise-allowable cost. This result has little appeal due to Respondent's role in not performing the audit in a timely, efficient manner, but each out-of-period cost is allowable for different reasons. The car-rental expense arises out of an employee's rental of a car for business purposes in June 2001. The submittal and approval of the travel voucher, which are parts of the internal-control process, did not take place until after June 30, 2001. Although Petitioner's liability to the rental-car company probably attached at the time of the rental, the contingency of reimbursement for an improper rental was not removed until the internal-control process was completed, so it is likely that this is not an out-of-period expense. The legal expenses included services provided over the three months preceding the start of the subject cost-reporting year. The attorney submitted the invoice to Petitioner's insurer. After determining that Petitioner had not satisfied its applicable deductible, after June 30, 2001, the insurer forwarded the bill to Petitioner for payment. Absent evidence of the retainer agreement, it is not possible to determine if Petitioner were liable to the law firm prior to the insurer's determination that the payment was less than the deductible, so it is unclear whether this is an out-of-period expense. The computer-consulting work occurred about three months before the end of the preceding cost-reporting year, but the vendor did not bill Petitioner until one year later. This is an out-of-period expense. To the extent that these three items may have been out-of-period expenses, it is not reasonable to expect Petitioner to estimate these liabilities and include them in the preceding cost-reporting year. This is partly due to the lack of materiality explained above. For the car-rental and computer expenses, it is also unreasonable to assume that Petitioner's employees responsible for the preparation of the cost reports would have any knowledge of these two liabilities or to require them to implement procedures to assure timely disclosure of liabilities as modest as these. The last cost item is $7,000 for insurance broker services. This is not an out-of-period expense. In its audit, Respondent determined that this amount represents a sum that was essentially a duplicate payment for services over the same period of time to two different insurance brokers. This is a payment for services over the same period of time to two different insurance brokers for nonduplicated services reasonably required by Petitioner. Given the size and the nature of its operations, Petitioner has relatively large risk exposures that are managed through general liability, automobile liability, director and officer liability, property, and workers' compensation insurance. Paying premiums of $4-5 million annually for these coverages, which exclude health insurance, Petitioner retains insurance brokers to negotiate the best deals in terms of premiums, collateral postings, and other matters. Petitioner experienced considerable difficulty in securing the necessary insurance in mid-2001. At this time, Petitioner was transitioning its insurance broker services from Palmer and Kay to Gallagher Bassett. Difficulties in securing workers' compensation insurance necessitated an extension of the existing policy to July 15, 2001--evidently from its original termination date of June 30, 2001. Due to these market conditions, Petitioner had to pay broker fees to Palmer and Kay after June 30, 2001, even though, starting July 1, 2001, Petitioner began to pay broker fees to Gallagher Bassett. There was no overlap in insurance coverages, and each broker earned its fee, even for the short period in which both brokers earned fees. Employee Cash Awards Petitioner paid $8,500 in employee cash awards in the 2001-02 cost-reporting year as part of a new policy to provide relatively modest cash awards to employees with relatively long terms of service. For employees with at least 20 years of service, Petitioner paid $100 per year of service. The legitimate business purpose of these longevity awards was to provide an incentive for employees to remain with Petitioner, as longer-tenured employees are valuable employees due to their experience and lack of need for expensive training, among other things. The disallowance arose from the application of a nonrule policy that has developed among Respondent's staff auditors: employee compensation is not an allowable cost unless it is includible in the employee's gross income. The evident purpose of the nonrule policy is to exclude from allowable costs payments to employees who, due to their prominence in the ranks of the provider, are able to cause the provider to structure the payments so as to avoid their inclusion in the recipient's gross income (and possibly deprive a for-profit provider of an offsetting deduction for the payments). For the 2001-02 cost-reporting year, only three employees qualified for these payments. Two had 30 years of service, so each of them received $3,000, and one had 25 years of service, so he or she received $2,500. The total of the payments at issue is thus $8,500. The record contains ample support for the finding that the addition of $3,000 to the annual compensation paid to any of Petitioner's employees would not result in excessive compensation. Return on Equity During the cost-reporting year, Petitioner maintained $128,000 in a bank account dedicated for the use of the Country Meadows facility. This sum represented about three months' working capital for Country Meadows. At the time, Respondent encouraged providers to maintain cash reserves of at least two months' working capital, so this sum was responsive to Respondent's preferred working capital levels. Consistent with its purpose as working capital, funds in this account were regularly withdrawn as needed to pay for the operation of Country Meadows. The record does not indicate whether the bank paid interest on this account. Also, the concept of return on equity does not apply to a not-for-profit corporation such as Petitioner, which, lacking shareholders, lacks equity on which a return might be calculated or anticipated. State Overhead at Three Clusters This item involves three ICF/DD clusters that, at the time, were owned by, and licensed to, the State of Florida. Petitioner operated the facilities during the cost-reporting year pursuant to a lease and operating agreement. As in prior cost-reporting years, Respondent did not disallow the depreciation included in the subject cost reports for these three clusters. The record does not reveal whether Petitioner or the State of Florida bore the economic loss of these capital assets over time. But the treatment of depreciation costs is not determinative of the treatment of operating or direct care costs. During the subject cost-reporting year, for these three clusters, the State of Florida retained various operational responsibilities, including admissions. However, the costs at issue arise from the expenditures of the State of Florida, not the provider. The costs include the compensation paid to several, state-employed Qualified Mental Retardation Professionals, who performed various operational oversight duties at the three clusters, and possibly other state employees performing services beneficial to these three clusters. Petitioner never reimbursed the State of Florida for these costs. There is no dispute concerning the reasonableness of the compensation paid these employees by the State of Florida, nor the necessity of these services. The issue here is whether Petitioner is entitled to "reimbursement" for these costs, which amount to $5,139 per cluster, when the costs were incurred by the State of Florida, not Petitioner. Disallowed Transportation Costs and Airplane Costs The $123,848 in disallowed Main Office Transportation salary and benefits represents the salary and benefits of eight Main Office van drivers, who earn about $15,000 per year in pay and benefits. At least 40 residents of the Main Office are not ambulatory, but, like all of the other residents, need to be transported for medical, recreational, and other purposes. There probably remains no dispute concerning these expenses. They are reasonable and necessary. The explanation for why these costs were disallowed starts with the inability of Respondent's staff auditor to find the aircraft expenses in the financial records of Petitioner. It is not possible to determine why the audit failed to identify these expenses prior to the issuance of the examination report. On this record, the only plausible scenario is that Respondent's outside auditor was off-the-mark on a number of items while conducting the audit, Petitioner's representatives lost patience and became defensive, and, when the outside auditor withdrew from the engagement, Respondent's staff auditors, already fully engaged in other work, may not have had the time to add this substantial responsibility to their workload. It is clear, though, that, after the departure of Respondent's outside auditor, the audit failed due to a combination of the lack of Petitioner's cooperation and Respondent's lack of diligence. Unable to identify the aircraft expenses after years of auditing left Respondent with options. It could have continued the audit process with renewed diligence until it found the aircraft expenses. Or it could have declared as noncompliant the cost report, the underlying financial records, or Petitioner itself. Instead, Respondent converted the examination report from what it is supposed to be--the product of an informed analysis of Petitioner's financial records--to a demand to pay up or identify these expenses and, if related to aircraft, justify them. The problem with Respondent's choice is that, as noted in the Conclusions of Law, an audit requires Respondent to proceed, on an informed basis, to identify the expenses, analyze them, and, if appropriate, determine that they are not allowable--before including them as overpayments in an examination report. Proceeding instead to cite overpayments on the basis of educated guesses, Respondent entirely mischaracterized the $123,848 in transportation salaries and benefits, which did not involve any aircraft expenses. Respondent's educated guesses were much better as to the remaining items, which are $36,496 in transportation repairs, $78,336 in transportation fuel and oil, $24,000 in insurance, $106,079 in transportation depreciation, and $57,714 in transportation interest. But the process still seems hit-or-miss. Thinking that he had found the pilot's salary in the item for the van drivers' salaries, Respondent's staff auditor missed the pilot's salary, which was $30,000 to $40,000, as it was contained in an account containing $1.3 million of administrative salaries. Respondent's staff auditor also missed the hanger expense, which Petitioner's independent auditor could not find either. On the other hand, Respondent's staff auditor hit the mark with the $78,336 of fuel and oil, $106,079 of depreciation, and $36,496 in repairs--all of which were exclusively for Petitioner's aircraft. Respondent's staff auditor was pretty close with the transportation interest, which was actually $60,168. It is difficult to assess the effort of Respondent's staff auditor on insurance; he picked a rounded number from a larger liability insurance account, which includes aircraft insurance, but other types of insurance, as well. Respondent correctly notes in its Proposed Recommended Order that the auditing of aircraft expenses requires, in order, their identification, analysis, and characterization as allowable or nonallowable. As Respondent argues, the analysis must compare the aircraft expenses to other means of transportation or communication to determine the reasonableness of the aircraft expenses. As Respondent notes elsewhere in its Proposed Recommended Order, the analysis also must ensure that a multijurisdictional provider, such as Petitioner, has fairly allocated its allowable costs among the jurisdictions in which it operates. Although Respondent's staff auditor found a number of aircraft expenses, he did not try to compare these expenses with other means of travel or communication, so as to determine the reasonableness of these aircraft expenses, or determine if Petitioner had allocated these costs, as between Florida and other jurisdictions, in an appropriate manner. The failure of the examination report, in its treatment of the expenses covered in this section, starts with the failure to secure the necessary information to identify the expenses themselves, but continues through the absence of any informed analysis of these expenses. Respondent's staff auditor used the examination report's treatment of the items covered in this section as a means to force Petitioner both to identify and explain these costs. The fact that Respondent's staff auditor guessed right on many of the aircraft expenses does not mean that he had an informed basis for these guesses. At one point during his testimony, Respondent's staff auditor seemed pleasantly surprised that he had been as accurate as he was in finding these expenses. But, regardless of the basis that he had for the identification of these expenses, Respondent's staff auditor never made any effort to analyze the expenses that he had chosen to include in the examination report as aircraft expenses. Nor is the record insufficient to permit such analysis now. Among the missing data is the number of planes that Petitioner owned at one time during the subject cost-reporting year. It is now clear that, for awhile, the number was two, probably at the end of the cost-reporting year, but this was unknown at the time of the issuance of the examination report. It is unclear, even now, for how long Petitioner owned two planes, or whether it operated both planes during the same timeframe. Cost comparisons are impossible without the knowledge that the cost-comparison exercise is for one or two private aircraft. Likewise, Respondent lacked basic information about the aircraft, such as the planes' capacities and costs of operation, per hour or per passenger mile. Again, this information remains unknown, so it is still impossible to establish a framework for comparison to the costs of common carriers. The record includes a three-page log provided during the audit process by Petitioner to Respondent, which appears never to have analyzed it, probably due to its determination that it had not identified the aircraft expenses adequately. The log shows 118 trips for purposes other than maintenance or engineering during the subject cost-reporting year. The log shows the cities visited and a very brief description of the purpose of the trip. Not the detailed description requested by Respondent, the proffered description is often not more than the mention of a facility or meeting. The log does not show the duration of the trip, but often notes the number of persons on the plane. If the aircraft costs identified above, including the unassessed pilot salary, are divided by the number of trips, the per trip cost is about $2,600. Some trips list several persons, as many as seven. Some trips list only one or two persons. Some trips list "staff," so it is impossible to tell how many persons traveled. And some trips provide no information about the number of travelers. It is a close question, but these findings alone do not establish that the use of the aircraft was unreasonable when compared to common carriers. Also, Respondent lacked any information about the purpose of the trips, so as to be able to determine if they were necessary or whether they could have been accomplished by videoconference or telephone. And the hearing did not provide this information. Respondent's staff auditor also never considered allocation methods, which is understandable because this analysis would necessarily have followed the identification process, in which he justifiably lacked confidence, and the cost-comparison analysis, which he had never undertaken. At the hearing, Respondent's staff auditor briefly mentioned other allocation methods, but never criticized the approved allocation method used by Petitioner. Although an approved allocation method might not offset disproportionate travel expenses to West Virginia and Connecticut, the record is insufficient to determine that the chosen allocation method was inappropriate or transferred excessive expenses to Florida for Medicaid reimbursement.
Recommendation Based on the foregoing, it is RECOMMENDED that the Agency for Health Care Administration enter a Final Order determining that, for the 2001-02 cost- reporting year, Petitioner has been overpaid $23,370 (including $3,418 for return on equity, if not already settled), for which recoupment and a recalculation of Petitioner's per-diem reimbursement rate are required. DONE AND ENTERED this 25th day of April, 2011, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 2011. COPIES FURNISHED: Daniel Lake, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Steven M. Weinger, Esquire Kurzban Kurzban Weinger Tetzeli & Pratt, P.A. 2650 Soutwest 27th Avenue Miami, Florida 33133 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Justin Senior, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308
The Issue What is the proper amount of Petitioners' personal injury settlement payable to Respondent, Agency for Health Care Administration ("AHCA"), to satisfy AHCA's $51,130.05 Medicaid lien under section 409.910(17)(b), Florida Statutes.
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: On January 31, 2007, Rickey D. ("Rickey"), who was then four years old, was struck by a car outside an apartment complex. Rickey suffered severe life-threatening injuries, including a fractured femur, fractured skull, and a closed head injury with traumatic brain damage. JPHS, pp. 9 and 10, ¶ 1. Rickey's medical care related to the injury was paid by Medicaid. Medicaid provided $51,130.05 in benefits associated with Rickey's injury. The $51,130.05 constituted Rickey's entire claim for past medical expenses. JPHS, p. 10, ¶ 2. Rickey's parents and natural guardians, Lolita D. and Rickey O.D., brought a personal injury claim against the driver/owner of the car that caused the accident and the apartment complex where the accident occurred ("Defendants"). They sought recovery of all of Rickey's damages associated with his injuries, as well as their own individual damages associated with their son's injuries. JPHS, p. 10, ¶ 3; Pet. Ex. 4. The personal injury action was settled for a lump sum, unallocated amount of $285,000.00, which consisted of $275,000.00 paid by the apartment complex and $10,000.00 in bodily injury/uninsured motorist ("BI/UM") insurance policy limits paid by the driver.1/ The circuit court in Miami-Dade County approved the minor's settlement by entry of an Order Approving Settlement, dated February 2, 2014. 2/ JPHS, p. 10, ¶ 4 and ¶ 5; Pet. Ex. 5. As a condition of Rickey's eligibility for Medicaid, Petitioners' assigned to AHCA their 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 Petitioners' lawsuit, AHCA was notified of the court action. JPHS, p. 10, ¶ 6. AHCA did not commence a civil action to enforce its rights under section 409.910, or intervene or join in Petitioners' court action against the Defendants.3/ JPHS, p. 10, ¶ 7. Instead, AHCA asserted a $51,130.05 Medicaid lien against Petitioners' cause of action and settlement of that action. JPHS, p. 10, ¶ 6. AHCA did not file a motion to set aside, void, or otherwise dispute Petitioners' settlement with the Defendants. JPHS, p. 10, ¶ 8. The Medicaid program spent $51,130.05 on behalf of Rickey, all of which represents expenditures paid for Rickey's past medical expenses. JPHS, p. 10, ¶ 9. Application of the formula at section 409.910(11)(f) to Rickey's $285,000.00 settlement requires payment to AHCA of the full $51,130.05 Medicaid lien. JPHS, p. 10, ¶ 10. As ordered by the circuit court, Petitioners deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights. This constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). JPHS, p. 11, ¶ 11. Testimony of Jorge C. Borron, Esquire The only witness called during the hearing was Borron. He has been a trial attorney for 32 years and is a sole practitioner at his Coral Gables law office, Jorge C. Borron, LLC. The majority of Borron's practice is personal injury litigation with a focus on car accidents. He has handled cases involving injuries to children. He routinely handles jury trials, and depending on the year, will have two to four jury trials each year. Borron stays current regarding personal injury verdicts by reviewing jury verdict reporters and discussing personal injury verdicts and valuations with other attorneys in his geographical area. After taking a case, Borron regularly reviews and studies his client's medical records and deposes/interviews doctors and other experts concerning his client's injuries. Borron testified that as a routine part of his practice he makes assessments concerning the value of personal injury damages suffered by his clients. Petitioners proffered Borron as an expert in the valuation of damages. It is worth noting that AHCA did not voir dire Borron and did not object to his tender as an expert in the valuation of personal injury damages.4/ The undersigned ruled that he would consider Borron's opinion testimony on the subject of the valuation of damages.5/ Borron represented Rickey and his family in the underlying personal injury lawsuit. Originally, Attorney Knecht represented Rickey and his family, but Knecht brought Borron into the case in 2013 to handle the jury trial due to Knecht's advanced age. As a part of his representation, Borron reviewed and familiarized himself with the accident report and Rickey's medical records, deposed/interviewed experts and fact witnesses, and met with Rickey and his family numerous times. Rickey's Accident, Injuries, and Prognosis On January 31, 2007, young Rickey followed his older sister out of the apartment where they lived with their parents. He walked between two cars in the parking lot and darted out in front of a car, which struck him. In the accident, Rickey suffered a compound fracture of his femur, a skull fracture, a traumatic brain injury, and lost consciousness. Rickey was transported to Jackson Memorial Hospital where he received medical treatment until he was discharged on February 22, 2007. At the hospital, his discharge papers diagnosed him with a left comminuted femur fracture and a nondisplaced skull fracture. Pet. Ex. 2. Rickey's injury had a tremendous impact on his life. Besides the adverse physical effects from his femur fracture, Rickey suffers from the effects of a traumatic brain injury with cognitive deficits, abnormal behavior issues, and an attention deficit disorder. During his representation of Rickey, Borron sent his client to two neurologists. They both separately diagnosed Rickey with problems associated with the executive function in the frontal lobe of his brain. Dr. Jorge A. Herrara issued a detailed report and concluded, among other things, that Rickey's condition points "to the presence of impairments in the executive functions mediated by the frontal lobes (referring to Rickey's brain)." Pet. Ex. 2, p. 14. The other neurologist, Dr. Ross, conducted an electrocardiograph with abnormal results. The uncontroverted evidence revealed that Rickey's traumatic brain injury is permanent and he will suffer its adverse effects and certain health and emotional-related issues for the remainder of his life. Based on his training, experience, and knowledge of the case, it was Borron's opinion that Rickey's personal injury damages had a value of between $1,500,000.00 to $2,500,000.00. In preparation for settlement mediation in the underlying personal injury case, Borron undertook to estimate the value of Petitioners' claim for future medical expenses as well. He consulted with Rickey's neurologists concerning his prognosis to determine what kind of medical treatment he would need in the future. Based on these discussions, Borron estimated that Rickey would need $815,000.00 in medical care from age nine (his age at the time of mediation) until age 22. In Borron's opinion, adding the $815,000.00 for future medical expenses to Rickey's $51,130.05 claim for past medical expenses would constitute Rickey's total economic damages. Borron opined that the claim for economic damages added to Petitioners' claim for noneconomic damages would push the full value of Rickey's personal injury damages to the range of $1,500,000.00 to $2,500,000.00. Had the case not settled and a trial taken place, Borron testified that he would have expected a jury to determine the value of Rickey's damages to be at, or between, $1,500,000.00 to $2,500,000.00. Borron discussed Petitioners' case with Attorney Knecht and consulted with several other attorneys. They concurred that Rickey's personal injury damages had a value of between $1,500,000.00 to $2,500,000.00. Borron testified that using $1,250,000.00 as the estimated value of all Rickey's personal injury damages would be a conservative value. Due to defenses raised and issues of disputed liability with the apartment complex, the case against the apartment complex settled just prior to trial for $275,000.00, plus a $10,000.00 settlement with the insurance company for uninsured motorist coverage, for a total settlement of $285,000.00. The uncontroverted evidence revealed that the combined settlement of $285,000.00 received by Petitioners did not fully compensate Rickey for the value of his damages. Borron opined that in using the value of all Rickey's damages of $1,250,000.00 compared to the $285,000.00 settlement, that the total settlement amount recovered represented a proportional recovery of 22.8 percent of the true value of all Rickey's personal injury damages. Borron testified that because Rickey only recovered 22.8 percent of the true value of his damages in the global settlement, that Petitioners had likewise recovered only 22.8 percent of Rickey's claim for past medical expenses in the settlement agreement, or $11,657.66. Borron testified that an allocation of $11,657.66 of the $285,000.00 settlement as recovery for Rickey's past medical expenses would be a reasonable and fair allocation. Of particular consequence to this case, AHCA did not call any expert witnesses nor did it present any evidence to rebut Petitioners' presentation, proof, or proposed allocation of $11,657.66 to past medical expenses. AHCA did not dispute or present any persuasive evidence or arguments that Rickey's injuries were overstated or incorrectly described by Borron. On AHCA's cross-examination of Borron, the methodology used by Borron to arrive at his opinion concerning a fair allocation of past medical expenses was not challenged or persuasively overcome by AHCA. Simply put, the amount of $11,657.66 proposed by Petitioners as a fair allocation of past medical expenses from the settlement agreement was unrefuted and unchallenged by AHCA. Petitioners proved by a preponderance of the evidence that $11,657.66 was a fair allocation of the total settlement amount to past medical expenses. There was no basis or evidence in the record to reject Borron's opinion or reach any other conclusion concerning a fair allocation other than the amount of $11,657.66 proposed by Petitioners.
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 July 31, 2012, Luca Weedo’s natural mother, who was 30 weeks pregnant with Luca, was walking on the sidewalk on the east shoulder of Airport Pulling Road in Naples, Florida. At the same time, a Jeep Wrangler was traveling on Airport Pulling Road. As the Jeep Wrangler approached Luca’s natural mother, the left front tire and wheel separated from the Jeep Wrangler. The separated wheel bounced along the roadway at a high rate of speed, crossing the median and northbound lane of Airport Pulling Road. The wheel approached Luca’s natural mother at such a high rate of speed that she was unable to avoid it. She was struck by the wheel and knocked to the ground, which caused her to lose consciousness and suffer a ruptured placenta. Luca’s natural mother was transported to Lee Memorial Hospital. Upon admission, she underwent emergency surgery due to abdominal trauma. Luca was delivered via emergency C-section. Luca was born with extreme fetal immaturity and catastrophic brain damage. Luca remained in the hospital for three months, undergoing numerous medical procedures associated with his serious medical needs and brain damage. Luca now suffers from catastrophic brain damage and a seizure disorder that causes him to have multiple seizures every day. He is unable to ambulate, speak, eat, toilet, or care for himself in any manner. Prior to Luca’s birth, his natural mother had decided to place Luca up for adoption. Accordingly, when Luca was discharged from the hospital, the Florida Department of Children and Families asked Debra and Kenneth Weedo to take Luca into their home as a foster child. Kenneth Weedo is a retired truck driver and his wife Debra is a foster parent for medically needy children. Debra and Kenneth Weedo took Luca into their home and adopted him on May 2, 2013. Luca’s past medical expenses related to his injuries were paid by Medicaid, which provided $319,188.20 in benefits. This $319,188.20 paid by Medicaid constituted Luca’s entire claim for past medical expenses. Luca, through his parents and guardians, Debra and Kenneth Weedo, brought a personal injury action to recover all his damages. The lawsuit was initially brought against the owner/driver of the Jeep Wrangler. However, through discovery, it was determined that the party responsible for the wheel separating from the Jeep Wrangler was the tire and rim shop that installed the wheel on the Jeep Wrangler approximately a year prior to the accident (“Tire Shop”). The Tire Shop maintained insurance with a policy limit of $1 million. The Tire Shop’s insurance company tendered the $1 million insurance policy limit, which was accepted by Debra and Kenneth Weedo in settlement of Luca’s claim for damages against the Tire Shop. The General Release and Hold Harmless Agreement (“Release”), executed on December 21, 2015, memorialized the settlement with the Tire Shop as follows, in relevant part: Although it is acknowledged that this settlement does not fully compensate LUCA ALECZANDER WEEDO for all of the damages that he has allegedly suffered, this settlement shall operate as a full and complete Release as to Second Parties without regard to this settlement only, compensating LUCA ALECZANDER WEEDO for a fraction of the total monetary value of his alleged damages. LUCA ALECZANDER WEEDO has alleged his damages have a value in excess of $25,000,000, of which $319,188.20 represents LUCA ALECZANDER WEEDO’s claim for past medical expenses. Given the facts, circumstances, and nature of LUCA ALECZANDER WEEDO’s injuries and allegations, $12,767.53 of this settlement has been allocated to LUCA ALECZANDER WEEDO for LUCA ALECZANDER WEEDO’s claim for past medical expenses and the remainder of the settlement towards the satisfaction of claims other than past medical expenses. LUCA ALECZANDER WEEDO alleges that this allocation is reasonable and proportionate based on the same ratio this settlement bears to the total monetary value of all LUCA ALECZANDER WEEDO’s damages. Further, LUCA ALECZANDER WEEDO acknowledges that he may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses that LUCA ALECZANDER WEEDO will incur in the future. However, LUCA ALECZANDER WEEDO alleges that his family and/or others on his behalf have not made payments in the past or in advance for LUCA ALECZANDER WEEDO’s future medical care and LUCA ALECZANDER WEEDO 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, it is LUCA ALECZANDER WEEDO’s contention that no portion of this settlement represents reimbursement for future medical expenses. Because Luca was a minor, Court approval of the settlement was required. Accordingly, on February 17, 2016, Collier County Circuit Court Judge James Shenko approved the settlement by entering an Agreed Order on Petitioner’s Unopposed Petition to Approve Minor’s Settlement. As a condition of his eligibility to receive Medicaid benefits, Luca 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. AHCA was notified of Luca’s personal injury action during its pendency. Through its collections contractor, Xerox Recovery Services, AHCA has asserted a Medicaid lien in the amount of $314,747.23 against Luca’s cause of action and settlement of the personal injury action. This is the amount that the Medicaid program spent on behalf of Luca for his past medical expenses.2/ Application of the formula set forth in section 409.910(11)(f) requires that AHCA be reimbursed for the full $314,747.23 Medicaid lien. Neither Luca nor others on his behalf made payments in the past or in advance for his future medical care. 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. Debra Ann Weedo attended the final hearing along with Luca. Ms. Weedo is a foster parent for medically needy children. She testified that she currently has four children in her home: three-year-old Luca; a six-year-old in more or less the same condition as Luca; a five-year-old who is “basically normal”; and an autistic eight-year-old. Ms. Weedo first met Luca in the hospital during his post-birth hospitalization. She was asked to take him as a foster child and visited him several times in the hospital before taking him home at age three months. Ms. Weedo stated that when she brought Luca home, the whole family fell in love with him and “he became our family.” As soon as it was possible, Ms. Weedo and her husband adopted Luca. Ms. Weedo testified that Luca’s siblings interact with him and that Luca knows the voices of his caregivers and “will kind of try to talk to us.” At the hearing, the undersigned observed that Luca is somewhat aware of his surroundings and responsive to voices. Ms. Weedo testified that her family does everything together. Luca travels, goes on vacations, and goes out to eat as part of the family. Ms. Weedo testified that Luca requires 24-hour supervision and that his condition will become progressively worse as he ages. Luca has been on oxygen since December 2014. He must use a BiPAP (Bilevel Positive Airway Pressure) machine when he sleeps because the oxygen saturation level in his blood tends to be perilously low. He receives his nutrition through a gastrostomy tube. Civil trial attorney Todd Rosen testified on behalf of Petitioner as a fact witness and an expert on the valuation of damages. Mr. Rosen has been an attorney for 15 years and is the principal of the Todd Rosen Law Group in Coral Gables. Mr. Rosen stated that his practice is exclusively devoted to representing plaintiffs in personal injury cases. Mr. Rosen is a member of the American Association for Justice, the Florida Justice Association, the American Trial Lawyers Association, and the Dade County Bar Association. Mr. Rosen has handled many jury trials and has represented plaintiffs who have suffered catastrophic brain injuries. A daily part of his practice is to assess the value of damages to injured persons. He stays abreast of jury verdicts in his area and routinely “round-tables” legal issues and damage valuations with other attorneys. Mr. Rosen testified that he was hired by Luca Weedo’s parents to investigate the potential claims they might have on behalf of their son. Mr. Rosen reviewed thousands of pages of Luca’s medical records, the accident report, and insurance policies for the defendants. The records indicated that Luca suffered catastrophic brain damage as a result of placental abruption and that this injury had a permanent and devastating impact on the child’s life. Mr. Rosen explained that he could not file a lawsuit until the adoption process was complete, about eight months after the accident. He initially brought the suit against the driver of the Jeep, who had only PIP and property damage insurance and no collectable assets. Mr. Rosen interviewed the Jeep owner and learned the name of the Tire Shop. He made a demand for payment of the Tire Shop’s $1 million insurance policy. The full policy amount was tendered very soon after Mr. Rosen’s demand. Mr. Rosen testified that no life care plan or economist’s report was prepared in this case because the case settled so quickly. He believed that it would have been imprudent to spend money out of the $1 million settlement on a life care plan when the Weedos were not facing the prospect of a jury trial. Mr. Rosen testified that Luca’s past medical care related to the accident was paid by Medicaid. He testified that Medicaid provided $319,188.20 in benefits, representing Luca’s entire claim for past medical expenses. Mr. Rosen testified that Luca, 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. Rosen opined that Luca’s damages had a value “well in excess of” $25 million. Mr. Rosen explained that based on his experience in other cases, he believed the value of Luca’s future life care needs “would be well in excess of at least 10 to 15 million dollars” and that Luca’s non-economic damages would have a high value. Mr. Rosen noted that a jury would also take into account how “wonderful” Debra and Kenneth Weedo are to have devoted their lives to caring for Luca and other children in similar circumstances. Mr. Rosen believed that the $25 million valuation on Luca’s damages was “very conservative.” Mr. Rosen stated that the Tire Shop’s insurance counsel believed they had a strong argument that the owner of the Jeep must have done something to the tires after the Tire Shop put them on the car. However, despite the contested liability, the insurance company readily agreed during informal settlement discussions to pay the policy limits because the lawyers believed they were facing a verdict of up to $50 million. Mr. Rosen testified that the biggest cost factor in assessing Luca’s damages is the 24-hour attendant care that he will require for the rest of his life. Depending on how many caregivers are employed, the skill level required, and the location, attendant care may range from $25 to $40 per hour. Mr. Rosen estimated that a life care plan for Luca would be in the neighborhood of $10 million, including attendant care, nursing, and medical expenses. Mr. Rosen testified that the $1 million settlement did not come close to fully compensating Luca for the full value of his damages. Based on the conservative valuation of all Luca’s damages at $25 million, the $1 million settlement represented a recovery of four percent of the value of Luca’s damages. Mr. Rosen testified that because Luca only recovered four percent of the value of his damages in the settlement, he only recovered four percent of his $319,188.20 claim for past medical expenses, or $12,767.53.3/ Mr. Rosen noted that the settling parties agreed in the Release that Luca’s damages had a value in excess of $25 million, as well as to the allocation of $12,767.53 to past medical expenses. Mr. Rosen testified that the allocation of $12,767.53 of the settlement to past medical expenses was reasonable, rational, and more than fair because it was based on a conservative estimate of Luca’s damages. He stated, “Me, personally, I believe it should be less, but yes, that is fair just being conservative.” Mr. Rosen 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. He noted that the parties agreed in the Release 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. Because Luca was a minor, court approval of his settlement was required. The court appointed another experienced attorney to act as Luca’s Guardian ad Litem to review the terms of the settlement and make a report to the court as to its appropriateness. The Guardian ad Litem recommended approval of the settlement, and the court adopted that recommendation. Also testifying on behalf of Petitioner as an expert in the valuation of damages was R. Vinson Barrett, a partner in the Tallahassee firm of Barrett, Fasig and Brooks, which Mr. Barrett described as a mid-sized firm that exclusively undertakes personal injury and products liability cases. Mr. Barrett stated that he has been a trial lawyer for 40 years and for the last 15 years has confined his practice to medical malpractice, medical products liability, and pharmaceutical products liability cases. Mr. Barrett testified that he has done many jury trials. He discussed the importance of accurately estimating the value of the damages suffered by his clients because of the heavy investment that a trial firm must make in a complex case. Mr. Barrett stated that a firm can easily spend a quarter of a million dollars on experts and discovery, as well as life care plans, economic analyses, and vocational rehabilitation analyses, among other items required to establish damages. He stated that it is essential not to spend so much money in putting on the case that the client has nothing left after the verdict. Mr. Barrett stated that he has reviewed dozens of life care plans and economist reports, many for children with the same kind of injuries suffered by Luca Weedo. Mr. Barrett testified that he was familiar with Luca’s injuries and had reviewed the accident report, hospital birth records, records from a second hospitalization, medical records from Luca’s neurologist, the Guardian ad Litem report, the court order approving the settlement, Mr. Rosen’s demand letter to the insurance carrier, and each of Petitioner’s exhibits. He had also spoken to Debra Weedo by phone concerning Luca’s medical condition. Mr. Barrett gave a detailed explanation of Luca’s injuries and extent of his disability. He concluded that Luca’s injury “is as bad an injury as you can possibly receive and stay alive . . . . It could not be more catastrophic.” The medical records indicate that Luca will not get better and his prognosis is poor. Mr. Barrett opined that Luca’s life care plan alone would probably exceed $25 million. He conceded “that seems like a huge, huge, huge amount of money,” but explained that it really is not such a large sum when one considers that Luca is supposed to have 24-hour attendant care throughout his lifetime. Life care plans are not limited to the cost of services provided by Medicaid, which is a safety net that “takes care of things that are absolutely essential to keep on breathing.” However, Medicaid does not cover many things that medically needy children require for quality of life, such as wheelchair-equipped vans. The life care plan includes all of the child’s needs. Mr. Barrett testified that a life care planner accounts for every cost, “pill by pill, wheelchair replacement by wheelchair replacement,” then reduces it to present value. Mr. Barrett testified that based on his experience working with life care planners in trial preparation, and his extensive experience in evaluating damages in cases similar to that of Luca Weedo, he had no doubt that $25 million is a conservative estimate of Luca’s pure losses. Mr. Barrett testified that the settlement did not come close to compensating Luca for the full value of his damages. Using $25 million as the conservative measure of all his damages, Luca had recovered only four percent of the value of his damages. Mr. Barrett testified that “by equity and basically, now by federal law, you look at the same ratio for the lien that you look at [for] the claimant.” Accordingly, Mr. Barrett testified that the settlement provided Luca with only four percent of Medicaid’s $319,188.20 claim for past medical expenses, or $12,767.53. Mr. Barrett testified that the settling parties’ allocation of $12,767.53 of the settlement to past medical expenses was reasonable, rational, and conservative. Both Mr. Rosen and Mr. Barrett testified at some length about comparable jury verdicts and prior DOAH Medicaid lien cases involving children with catastrophic brain injuries. This discussion had some value in establishing that $25 million was by no means an unreasonable estimate of Luca Weedo’s damages, but was secondary and supplemental to the directly expressed expert opinions of Mr. Rosen and Mr. Barrett. AHCA presented the testimony of attorney James Bruner, who was accepted as an expert for the limited purpose of comparing the jury verdicts in the cases cited by Petitioner to the facts of the instant case. Mr. Bruner correctly noted that it can be misleading to cite the numbers from a jury verdict without reference to later reductions made on appeal or via settlement pending appeal. Mr. Bruner also effectively demonstrated that there is never a precise correlation between the facts of one case and those of another, and therefore that there cannot be a precise comparison of damages from one case to another.4/ However, the undersigned did not look to the comparative verdicts for such a strict comparison, but simply for the purpose of establishing a range of reasonableness in broadly similar cases. AHCA called no witness to directly contest the valuation of damages made by Mr. Rosen or to offer an alternative methodology to calculate the allocation to past medical expenses. No evidence was presented that the settlement agreement was not reasonable given all the circumstances of the case. It does not appear that the parties colluded to minimize the share of the settlement proceeds attributable to Medicaid’s payment of costs for Petitioner’s medical care. In fact, the evidence established that the settlement was conservative in its valuation of Petitioner’s claim and that the settling parties could have reasonably apportioned less to Medicaid than they actually did. AHCA was not a party to the settlement of Petitioner’s claim. AHCA correctly computed the lien amount pursuant to the statutory formula in section 409.910(11)(f). Deducting the 25 percent attorney’s fee, or $250,000, as well as $8,112.70 in taxable costs, from the $1 million recovery, leaves $741,887.30, half of which is $370,943.65. That figure exceeds the actual amount expended by Medicaid on Petitioner’s medical care. Application of the formula would provide sufficient funds to satisfy the Medicaid lien of $314,747.23. Petitioner proved by clear and convincing evidence that the $25 million total value of the claim was a reasonable, even somewhat conservative, amount. Petitioner proved by clear and convincing evidence, based on the strength and sympathy of his case and on the fact that it was limited only by the inability to collect the full amount of the likely judgment, that the amount agreed upon in settlement of Petitioner’s claims constituted a fair settlement, including the portion attributed to the Medicaid lien for medical expenses.
Findings Of Fact Respondent was issued Embalmer's license No. EM645 in 1945, and Funeral Director's License No. FD504 in 1947. He was also issued a dual license No. FE64 in 1947. By Amended Final Order, dated March 27, 1980, Petitioner suspended Respondent's funeral director's and embalmer's licenses for a period of one year. Following the one year suspension, which concluded on March 26, 1981, Respondent was placed on three years license probation. The complaining witness, Samuel C. Rogers, employed Respondent between June 1980, and March, 1982, essentially to operate one of two funeral homes he owned 1/. His employment arrangements with Respondent were not clear (discussed below), but Rogers generally intended to capitalize on Respondent's ability to attract funeral business. Rogers was aware that Respondent could not embalm under the terms of his probation. He believed initially that Respondent could perform funeral directing duties and assigned him such responsibilities. However, Rogers continued to permit Respondent to perform funeral directing tasks even after he learned that this was improper under the terms of his probation. The funerals of Queenie M. Edwards, in December, 1980, and Jacob L. Maxwell, in late February or early March, 1981, were arranged and conducted by Respondent. Thus, during the period of his license suspension, Respondent held himself out to the public as a funeral director and did perform in this capacity. Respondent typically made all funeral arrangements with the family of the deceased, including caskets, flowers, limousines, drivers, and cemetery lots. He prepared itemized statements for services provided and collected direct payments as well as insurance assignments. He sometimes cashed client checks and retained the proceeds to pay funeral service expenses, purchase advertising materials and make funeral home improvements He also kept some of these funds for his own use and admits he owes Rogers up to $500. In other instances, Respondent brought cash to Rogers' office where he turned it over to the secretary-bookkeeper or Rogers himself. Respondent kept no records and Rogers' records were incomplete and therefore inconclusive. No specific funds or payments were identified which Respondent was proven to have diverted wrongfully. Rogers claims that Respondent misappropriated at least $30,000. Petitioner's evidence indicates that some $8,000 came into Respondent's hands for which there are no records to establish receipt by Rogers. However, the testimony of Respondent and two other former employees of Rogers established that Respondent did turn over cash funds to Rogers or his secretary-bookkeeper on various occasions and that an immediate record of such receipts was not always made. Further, Rogers has also accused his former secretary-bookkeeper of misappropriation and is apparently pursuing this claim in another forum. The employment arrangements between Rogers and Respondent were not supported by written agreement. Rogers claims he employed Respondent on a $300 per week salary and did not authorize him to collect funeral service payments. However, he did not discipline Respondent when be became aware of his collection practices. Rather, it was not until he personally attempted to collect on various accounts which customers had already settled with Respondent that he discharged him. Respondent contends he was in partnership with Rogers and was given latitude to make all funeral arrangements, including collections and expenditures for services, building maintenance and advertising. He further viewed his retention of certain funds as due him for his services to the business. Rogers' former secretary-bookkeeper understood that Rogers had employed Respondent on a commission basis. Therefore, no income tax or social security contributions were made on his behalf. In view of such conflicting testimony, there can be no finding that Respondent's employment arrangements precluded his collection of customer payments or required that all such funds be turned over to Rogers.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent be found guilty of violating Subsection 470.036(1)(i), F.S., as charged in Count III of the Administrative Complaint. That all other charges contained in the Administrative Complaint be dismissed. That Respondent's funeral director's license and dual license be revoked. DONE and ENTERED this 12th day of April, 1983, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of April, 1983.
