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 The issue for consideration in this case is whether Respondents should be disciplined for their failure to pay a fee assessed by the Department for, and cooperate with, an examination of their business records.
Findings Of Fact At all times pertinent to the issues herein, the Department of Banking and Finance’s Bureau of Cemetery Services was the state agency in Florida responsible for the regulation of the pre-need funeral service industry. Respondent, Independent Mortuary Services International, Inc. (IMSI), doing business as Martin Funeral Home and Crematory, and as Affordable Cremation and Burial Society, both located at 5750 Swift Road in Sarasota, Florida, was engaged in the sale of pre-need funeral merchandise and service contracts to residents in Sarasota County. Respondent Martin was president and a director of IMSI and part owner of Martin Funeral Home, Tishman Funeral Home, and IMSI. Respondent Tishman was vice-president and a director of IMSI, and part-owner of Tishman Funeral Home, Martin Funeral Home, and IMSI. Both Martin and Tishman are licensed funeral directors. As the result of a complaint received by the Department, and IMSI’s January 23, 1995, application for a certificate of authority, during the period from February 3, 1995 through June 1, 1995, Mr. Timothy J. Wheaton, a financial control specialist with the Department of Banking and Finance, along with a team of auditors and examiners, conducted an examination of Respondents’ books and records. As a part of the examination, Mr. Wheaton requested certain documents from Mr. Martin and Mr. Tishman. These included all pre-need and at-need contracts; all bank account records; sales logs; all deposit and withdrawal records; all pertinent computer runs; and all accounts receivable records. Respondents did not produce the instruments asked for when asked. Although he had previously advised both Mr. Martin and Mr. Tishman that the examiners needed a numerical listing of the contract files, Mr. Wheaton found that the files were not pre-numbered as required by law, but were listed alphabetically. This caused significant extra time to be spent to reconcile the records. In addition, Mr. Wheaton compiled the contracts on file and found that some were missing and were never properly presented for examination. When Mr. Wheaton also asked for bank records he was advised they were at the accountant’s office. As a result, the first week of the examination was spent trying to put Respondents’ records in a workable order. Though superficially it appeared the Respondents were cooperating with the examiners, in fact they were not doing so, and Mr. Wheaton was forced to issue a subpoena for the records not produced. Even with the subpoena, the requested records still were not produced. Even after Mr. Wheaton met with Respondents’ attorney in April 1995, all the requested records were not released or provided. The requested records have never been produced for examination. In all, the Department’s examination of the Respondents’ books extended over a period of approximately five months. In Wheaton’s opinion, it should not have taken that long for a company the size of that owned by the Respondents. Had the proper cooperation been given by the Respondents, the examination would have taken no more than a week or so. The Department’s examiners were involved in actual examination work of Respondents’ operations on February 13 through 17, February 24, March 1, April 6, May 2 through 4, May 30, and June 1, 1995. A total of 132 hours were expended on the examination. On June 26, 1995, the Department submitted an invoice for $4,125 to Mr. Tishman, as general manager of IMSI. This figure represents the services of two examiners, one of whom expended 40 hours on the examination, and the other, who expended 92 hours on it. Both individuals billed at $31.25 per hour. None of the billed amount has been paid. IMSI failed to make the required showing of liquidity and fiscal capability in both 1997 and 1998 when, each time it filed for annual renewal of its certificate, renewal was denied by the Board of Funeral and Cemetery Services. Action on Respondents’ petitions for review in both cases was deferred, and both were consolidated in the Board’s January 1999 action. On January 26, 1999, the Board entered a Final Order denying IMSI’s certificate of authority to sell pre-need funeral services and merchandise, and denying its appeal of the prior denials. The Board’s order was based on Respondents’ failure to present evidence that IMSI had the ability to discharge its liabilities as they became due in the normal course of business, and had sufficient funds available during the calendar year to perform its obligations under its contracts.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Banking and Finance enter a Final Order finding each Respondent guilty as alleged in the charging document; revoking IMSI’s Certificate of Authority No. 650380504; assessing payment in the amount of $4,125 for invoice 95-2-604 relating to the costs of examination in 1995; and imposing an administrative fine of $10,000 upon Independent Mortuary Services International, Inc., Richard P. Martin, and Mark L. Tishman, individually and collectively. DONE AND ENTERED this 18th day of March, 1999, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of March, 1999. COPIES FURNISHED: Theresa G. Walsh, Esquire Department of Banking and Finance 101 East Gaines Street Suite 526, Fletcher Building Tallahassee, Florida 32399-0350 Ralph L. Friedland, Esquire 2033 Main Street Suite 100 Sarasota, Florida 34237-6049 Honorable Robert F. Milligan, Comptroller The Capitol, Plaza Level Tallahassee, Florida 32399-0350 Harry Hooper, General Counsel Department of Banking and Finance Suite 526, Fletcher Building 101 East Gaines Street Tallahassee, Florida 32399-0350
The Issue The issue is the amount payable to Respondent, Agency for Health Care Administration (Respondent or AHCA), in satisfaction of Respondent's Medicaid lien from a settlement offer received on behalf of Petitioner, Ciara Thomas.
Findings Of Fact Ciara Thomas is a six-year-old female who currently resides in St. Petersburg, Florida. Respondent is the state agency authorized to administer Florida's Medicaid program. See § 409.902, Fla. Stat. On October 18, 2012, Ciara, then two and one-half weeks shy of her third birthday, was severely injured when she fell into a bathtub and was scalded by hot water. At that time, Ciara, her mother, and a brother were tenants of a residential dwelling located at 8181 91st Terrace, Seminole, Florida, which was owned by Selvie Berberi, the landlord. Ciara suffered from second- and third-degree burns over 65 percent of her total body surface area, and in particular, to her back, buttocks, chest, bilateral tower extremities, bilateral upper extremities, and genitals. Ciara received extensive medical care and treatment for her scald burns at Tampa General Hospital, where she was hospitalized from October 18, 2012, through January 9, 2013. The parties have stipulated that through the Medicaid program, AHCA spent $174,675.05 on behalf of Ciara. Because of the extensive nature of the burns on her lower extremities and entire back, Ciara has undergone five skin grafts. She has completed physical therapy in the burn center and does not anticipate any further medical treatment until she is fully grown. Ciara has very visible scars over much of her body, which will not likely improve over time. The skin feels rubbery, with no smooth texture, and it is affected by the weather. Whenever she is outside, Ciara must be completely covered with clothing. She attends school but cannot play outdoors due to potential injury or infection. Because of the condition of her skin, she is subjected to stares by other persons and students, causing her to be extremely self- conscious. Petitioner filed suit in Pinellas County Circuit Court against the landlord in negligence for her failure to provide safe and proper working plumbing to the rental home. Among other things, the water heater had been set far above the legal limits of 120 degrees. During the pendency of that litigation, the landlord's homeowner's insurance company offered payment in settlement in the amount of $101,000.00, representing the $100,000.00 coverage limit for bodily injury liability, and $1,000.00 as payment of the coverage limit of the policy's medical payments provisions. At hearing, Ciara's mother indicated that she intends to accept the offer if it is approved by the court. AHCA contends it should be reimbursed for Medicaid expenditures on behalf of Petitioner pursuant to the formula set forth in section 409.910(11)(f). Under the formula, the lien amount is computed by deducting a 25 percent attorney's fee ($25,250.00) and taxable costs ($879.59) from the $101,000.00 recovery, which yields a sum of $74,870.41. This amount is then divided by two, which yields $37,435.21. Under the statute, Respondent is limited to recovery of the amount derived from the statutory formula or the amount of the lien, whichever is less. Petitioner agrees that under the statutory default allocation, AHCA would be entitled to $37,435.21. Section 409.910(17)(b) provides that a Medicaid recipient has a right to rebut the default allocation described above. Utilizing that provision, Petitioner asserts that reimbursement should be limited to the same ratio as her recovery amount is to the full or total value of her damages. Under this theory, Petitioner contends that had her case gone to trial, a jury would have awarded at least $3.5 million, or the mid-point between $3 million and $4 million. Because the settlement represents a recovery of 2.9 percent of the valuation of her total damages, Petitioner contends she should pay 2.9 percent of AHCA's past medical expenses, or $5,066.00, to satisfy the Medicaid lien. The statute requires that Petitioner substantiate her position by clear and convincing evidence. To support the proposed full value of damages, Petitioner presented the testimony of Keith Ligori, a trial attorney in Tampa for the last 15 years, who specializes in all types of personal injury cases. Mr. Ligori has handled similar cases "numerous times," and on a daily basis he makes assessments of the valuation of potential claims. He is familiar with the reasonable valuation of personal injury cases in the greater Tampa Bay area, including Pinellas County. Mr. Ligori presented fact and opinion testimony on the issue of valuation of damages. Before forming his opinion on damages in this case, Mr. Ligori reviewed the medical records, including photographs of Ciara, interviewed the child and her mother, and discussed the case with her trial counsel. He also relied on his training and experience and familiarity with other cases in the Tampa Bay area. Based on his review of the case, Mr. Ligori valued total damages, conservatively, at $3.5 million. This figure took into account non-economic factors, including mental anguish, loss of ability or capacity to enjoy life, disability, and scarring and disfigurement, and economic damages consisting of the medical expenses paid by AHCA. Mr. Ligori testified that if he was actually trying the case before a jury, he would seek damages of between $5 million and $10 million. The undersigned finds the valuation of damages at $3.5 million to be credible and persuasive and is hereby accepted. In summary, by clear and convincing evidence, Petitioner has demonstrated that, conservatively, the full value of her damages is $3.5 million. The settlement amount of $101,000.00 is 2.9 percent of the total value of Petitioner's damages. The application of this factor to total medical expenses incurred by AHCA results in an allocation of $5,066.00 as a reasonable payment of the Medicaid lien.
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.
The Issue The issue in this proceeding is the amount to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner from a settlement received by Petitioner from a third party.
Findings Of Fact On October 18, 2013, Jose Fourcoy, who was then 39 years old, was on the premises of an air-conditioning shop that refurbished air-conditioners, waiting for them to discard their scrap metal. While there, an employee who was disassembling an air conditioner with a blowtorch ignited a gas tank and caused an explosion and fire. The fire spread across the floor engulfing Mr. Fourcoy in flames. The fire was extinguished and Mr. Fourcoy’s long-term girlfriend/common law wife and young child, who were waiting for Mr. Fourcoy and witnessed the event, immediately took Mr. Fourcoy to the hospital. As a result of the accident, Petitioner suffered severe, catastrophic and very painful injuries with 2nd, 3rd and 4th degree burns to about 17 percent of his body, including both his legs, his right arm and the right side of his face, mouth and throat. He was admitted to the hospital on two occasions. Amputation of both legs was recommended but rejected by Petitioner. Eventually, Mr. Fourcoy spent one and a half months undergoing numerous surgeries and skin grafts first with pig skin and then with his own skin from other parts of his body. Throughout the process he was in extreme pain. Currently and as a result of the burn injury, he has neurological problems with his legs and other areas of his body including constrictions and chronic pain syndrome in both legs. Additionally, he has post-traumatic stress disorder, moderate to severe anxiety with flashbacks, irritability, forgetfulness and reduced self-regulation. The pain Mr. Fourcoy suffers is chronic and will be with him the rest of his life. His injuries have resulted in a 50-percent impairment of his whole body. Further, his chronic pain, anxiety and post-traumatic stress disorders have caused him not to be able to do the things he used to do, including loss of consortium, inability to enjoy playing with his young son, inability to play sports, and general inability to enjoy life. Mr. Fourcoy’s legs are deformed and disfigured and he cannot straighten them without severe pain. He is unable to wear long pants due to the pain they cause. Petitioner cannot walk and requires a wheelchair/rolling chair for mobility. He is dependent on others for activities of daily living. His condition is permanent and he most likely will not be able to obtain employment sufficient to support himself or replace the income/earning capacity he had as a scrap metal recycler prior to his injuries, which income could have provided for him during the 35.1 years he is expected to live. Petitioner is no longer a Medicaid recipient. Petitioner’s past medical expenses related to his injuries were paid by both personal funds and Medicaid. Medicaid paid for Petitioner’s medical expenses in the amount of $119,673.33. Unpaid out-of-pocket expenses totaled $36,423.04. Thus, total past healthcare expenses incurred for Petitioner’s injuries was $156,096.37. Petitioner brought a personal injury claim to recover all his damages against the owner of the air-conditioning shop and premises where the accident occurred (Defendants). Towards that end, Petitioner retained Stuart H. Share, an attorney specializing in personal and catastrophic injury claims for over 30 years, to represent Petitioner in his negligence action against the Defendants. Ultimately, Petitioner settled his personal injury action for $850,000, which did not fully compensate Petitioner for the total value of his damages. The settlement was allocated and the settling parties agreed that: 1) Mr. Fourcoy’s damages had a value in excess of $3,400,000, of which $156,096.37 represented his claim for past medical expenses; and 2) allocation of $39,024.09 of the $850,000 settlement to Mr. Fourcoy’s claim for past medical expenses was reasonable and proportionate based on the same ratio the settlement bears to the total monetary value of all Mr. Fourcoy’s damages. The General Release stated, in pertinent part: JOSE FOURCOY, has claimed damages in excess of $3,400,000, of which $156,096.37 represents JOSE FOURCOY’s claim for past medical expenses. Given the facts, circumstances, and nature of JOSE FOURCOY’s injuries and this settlement $39,024.09 has been allocated to JOSE FOURCOY’s claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all JOSE FOURCOY’s damages. Further, JOSE FOURCOY may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses JOSE FOURCOY will incur in the future. However, JOSE FOURCOY, or others on his behalf, have not made payments in the past or in advance for JOSE FOURCOY’s future medical care and JOSE FOURCOY 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. No dollar amount was assigned to Petitioner’s future medical care needs, and there remains uncertainty as to what those needs will be. Additionally, neither Petitioner nor others on his behalf made payments in the past or in advance for his future medical care, and no claim for reimbursement, restitution or indemnification was made for such damages or included in the settlement. On the other hand, given the loss of earning capacity and the past and present level of pain and suffering, the bulk of the settlement was clearly intended to provide future support for Petitioner. Respondent was notified of Petitioner’s negligence action around July 13, 2015. Thereafter, Respondent asserted a Medicaid lien in the amount of $119,673.33 against the proceeds of any award or settlement arising out of that action. No portion of the $119,673.33 paid by AHCA through the Medicaid program on behalf of Mr. Fourcoy represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. Respondent was not a party to the 2015 settlement and did not execute any of the applicable releases. Mr. Share’s expert and conservative valuation of the total damages suffered by Petitioner is at least $3,400,000. In arriving at this valuation, Mr. Share reviewed the facts of Petitioner’s personal injury claim, vetted the claim with experienced members in his law firm, and examined jury verdicts in similar cases involving catastrophic injury. The reviewed cases had an average award of $3,639,577.62 for total damages and $2,418,390.31 for non- economic damages (past and future pain and suffering). Mr. Share’s valuation of total damages was supported by the testimony of one additional personal injury attorney, R. Vinson Barrett, who has practiced personal injury law for more than 30 years. In formulating his opinion on the value of Petitioner’s damages, Mr. Barrett reviewed the discharge summaries from Petitioner’s hospitalizations. Mr. Barrett also reviewed the jury trial verdicts and awards relied upon by Mr. Share. Mr. Barrett agreed with the $3.4 million valuation of Petitioner’s total damages and thought it could likely have been higher. The settlement amount of $850,000 is 25 percent of the total value ($3.4 million) of Petitioner’s damages. By the same token, 25 percent of $156,096.37 (Petitioner’s past medical expenses paid in part by Medicaid) is $39,024.09. Both experts testified that $39,024.09 is a reasonable and rational reimbursement for past medical expenses. Their testimony is accepted as persuasive. Further, the unrebutted evidence demonstrated that $39,024.09 is a reasonable and rational reimbursement for past medical expenses since Petitioner recovered only 25 percent of his damages, thereby reducing all of the categories of damages associated with his claim. Given these facts, 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). Therefore, the amount of the Medicaid lien should be $39,024.09.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby ORDERED that the Agency for Health Care Administration is entitled to $39,024.09 in satisfaction of its Medicaid lien. DONE AND ORDERED this 27th day of April, 2016, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2016. COPIES FURNISHED: Alexander R. Boler, Esquire Xerox Recovery Services Group 2073 Summit Lake Drive, Suite 300 Tallahassee, Florida 32317 (eServed) Floyd B. Faglie, Esquire Staunton and Faglie, P.L. 189 East Walnut Street Monticello, Florida 32344 (eServed) Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed)
The Issue The issue to be determined is the amount payable under section 409.910, Florida Statutes,1/ in satisfaction of Respondent's Medicaid lien on settlement proceeds received by Petitioner, Victor Hugo Herrera, Sr., from a third party.
Findings Of Fact On July 29, 2014, unbeknownst to Mr. Herrera, an individual (hereinafter Assailant) entered the common area where Mr. Herrera rented an office. The Assailant stalked Mr. Herrera and forced his way into Mr. Herrera’s office. The Assailant attacked Mr. Herrera in his office and shot Mr. Herrera in the leg. As a result of being shot in the leg, Mr. Herrera had his leg medically amputated above the knee, suffered a collapsed lung, and was comatose for nearly two months. As a result of his severe injuries, Mr. Herrera is now permanently disabled, disfigured, and wheelchair-bound, unable to walk. Mr. Herrera’s medical expenses related to his injuries were paid by Medicaid, which provided $271,344.06 in benefits. Mr. Herrera brought a personal injury lawsuit to recover all of his damages associated with his injuries against the owner of the office and security company responsible for providing security (Defendants). The $271,344.06 paid by Medicaid constituted Mr. Herrera’s entire claim for past medical expenses. On December 11, 2015, Mr. Herrera compromised and settled his personal injury action against the Defendants for $925,000. The General Release of Claims memorializing the settlement with the Defendants stated, inter alia: The First Party, the Second Party and their respective counsel acknowledge that this settlement does not fully compensate the First Party for the damages he has allegedly suffered, but as provided herein this settlement shall operate as a full and complete release as to all claims against Second Party, without regard to this settlement only compensating the First Party for a fraction of the total monetary value of his alleged damages. These parties agree that the damages suffered by the First Party have a value in excess of $5,000,000.00, of which $271,344.06 represents First Party’s claim for past medical expenses. Given the facts, circumstances, and nature of the First Party’s alleged injuries and this settlement, $50,198.65 of this settlement has been allocated to the First Party’s claim for past medical expenses and the remainder of the settlement has been allocated 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 of the First Party’s alleged damages. Further, the parties acknowledge that the First Party may need future medical care related to his alleged injuries, and some portion of this settlement may represent compensation for those future medical expenses the First Party may incur in the future. However, the parties acknowledge that the First Party, or others on his behalf, have not made payments in the past or in advance for the First Party’s future medical care and the First Party 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. During the pendency of Mr. Herrera’s personal injury lawsuit, the Agency for Health Care Administration (AHCA) was notified of the lawsuit and AHCA, through its collections contractor Xerox Recovery Services, asserted a $271,344.06 Medicaid lien against Mr. Herrera’s cause of action and settlement of that action. By letter of January 22, 2016, AHCA was notified by Mr. Herrera’s personal injury attorney of the settlement and provided a copy of the executed release and itemization of Mr. Herrera’s $10,114.38 in litigation costs. This letter explained that Mr. Herrera’s damages had a value in excess of $5,000,000, and the $925,000 settlement represented only an 18.5 percent recovery of Mr. Herrera’s damages. Accordingly, he had recovered only 18.5 percent of his $271,344.06 claim for past medical expenses, or $50,198.65. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $271,344.06 Medicaid lien. AHCA did not respond to Mr. Herrera’s attorney’s letter of January 22, 2016. AHCA has not filed an action to set aside, void, or otherwise dispute Mr. Herrera’s settlement. AHCA has not commenced a civil action to enforce its rights under section 409.910. The Medicaid program spent $271,344.06 on behalf of Mr. Herrera, all of which represents expenditures paid for Mr. Herrera’s past medical expenses. No portion of the $271,344.06 paid by the Medicaid program on behalf of Mr. Herrera represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. Mr. Herrera and AHCA agree that application of the formula at section 409.910(11)(f) to Mr. Herrera’s $925,000 settlement would require payment to AHCA of the full $271,344.06 Medicaid lien. Petitioner has deposited the full Medicaid lien amount into an interest-bearing account pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). At the final hearing, Mr. Zebersky, who represented Mr. Herrera in his underlying personal injury action, testified and was accepted, without objection, as an expert in the valuation of damages suffered by injured parties. Mr. Zebersky has been an attorney for 27 years and has demonstrated considerable experience in handling plaintiffs’ personal injury and insurance class action claims in South Florida. In rendering his opinion as to the value of Mr. Herrera’s claim, Mr. Zebersky explained that, as a routine and daily part of his practice, he makes assessments concerning the value of damages suffered by injured parties and he explained his process for making these determinations. Mr. Zebersky was familiar with and gave a detailed explanation of the circumstances giving rise to Mr. Herrera’s claim. In making his valuation determination, Mr. Zebersky reviewed the police report, the State Attorney’s file on the shooting, all of Mr. Herrera’s medical records, and met numerous times with Mr. Herrera and his family. Mr. Zebersky testified that through his representation of Mr. Herrera, review of Mr. Herrera’s file, and based on his training and experience, he had developed the opinion that the value of Mr. Herrera’s damages was $5,000,000. Mr. Zebersky suggested that the $5,000,000 amount was conservative, by testifying that “five million dollars, you know, is probably what the pain and suffering value is especially in Broward County.” In addition to his first-hand experience with Mr. Herrera’s claim, Mr. Zebersky further supported his valuation opinion by explaining that he had “round-tabled” the case with other experienced attorneys and they agreed that the value of Mr. Herrera’s damages was $5,000,000. Further, Mr. Zebersky testified that he had reviewed jury verdicts in developing his opinion and the jury verdicts in Petitioner’s Exhibit 12 were comparable to Mr. Herrera’s case and support the valuation of Mr. Herrera’s damages at $5,000,000. Mr. Zebersky’s testimony was credible and is accepted. Petitioner also presented the testimony of Mr. Barrett, who was accepted as an expert in the valuation of damages. Mr. Barrett has been accepted as an expert in valuation of damages in a number of other Medicaid lien cases before DOAH. Mr. Barrett has been a trial attorney for 40 years, with a primary focus on plaintiff personal injury cases, including medical malpractice, medical products liability, and pharmaceutical products liability. Mr. Barrett stays abreast of jury verdicts and often makes assessments concerning the value of damages suffered by injured parties. After familiarizing himself with Mr. Herrera’s injuries through review of pertinent medical records and Petitioner’s Exhibits, including the police report, pictures of Mr. Herrera, Mr. Herrera’s complaint and Mr. Herrera’s General Release of Claims, Mr. Barrett offered his opinion, based upon his professional training and experience, that “five million was a conservative estimate” for the value of Mr. Herrera’s damages and that Mr. Herrera’s damages were “undoubtedly at least five million dollars.” Mr. Barrett also reviewed the jury verdicts in Petitioner’s Exhibit 12 and opined that those verdicts were comparable and supported his valuation of Mr. Herrera’s damages. Mr. Barrett’s testimony was credible and is accepted. AHCA’s designated expert, Mr. Bruner, was not available for testimony at the final hearing. Instead of asking for a continuance, the parties agreed to take Mr. Bruner’s deposition after the final hearing and then file the transcript with DOAH. Further, during the final hearing, AHCA agreed that Mr. Bruner would not be testifying as to the value of Mr. Herrera’s damages. In accordance with that agreement, Mr. Brunner’s deposition was subsequently taken and his deposition transcript was filed on August 3, 2016. At Mr. Bruner’s deposition, AHCA proffered Mr. Bruner as an expert in evaluation of cases and settlements. Petitioner objected on the grounds that Mr. Bruner lacked experience or expertise in personal injury cases and should not be allowed to testify as an expert. Further, Petitioner objected to the relevance of Mr. Bruner’s testimony based on AHCA’s earlier agreement that he would not be testifying concerning the value of the damages suffered. Counsel for AHCA responded to Petitioner’s objection to the relevance of Mr. Bruner’s testimony by agreeing that AHCA would not be seeking any “expert testimony as to evaluation of damages,” but would only be using Mr. Bruner’s testimony to “evaluate” the jury verdicts in Petitioner’s Exhibit 12. While Mr. Bruner does not have the same level of experience in personal injury claims as the experts offered by Petitioner, Mr. Bruner has sufficient experience to offer an opinion on the jury verdicts set forth in Petitioner’s Exhibit 12, and to that extent, his expertise in the evaluation of cases is accepted. However, because of his lack of recent experience in settling personal injury claims, Mr. Brunner is not accepted as an expert in personal injury settlements.2/ In his deposition testimony, Mr. Bruner criticized the relevance of the 12 verdicts in Petitioner’s Exhibit 12 on the grounds that, while the verdicts involved amputations of legs, there were factual differences in the mechanism of injury. Mr. Bruner further asserted that, to the extent the verdicts in Petitioner’s Exhibit 12 included awards for future medical expenses, they should not be considered because, according to Mr. Bruner’s understanding, Mr. Herrera did not recover any future medical expenses in the settlement. Finally, while the juries in the 12 jury verdicts had determined the value of the damages, Mr. Bruner criticized the verdicts because he asserted that it was possible that the cases may have settled post-verdict for less, or that the injured parties may have received less, due to reductions for comparative negligence. On this last point, it appears that Mr. Bruner confused the issue of the value of the damages with the settlement value of the case. The value of the damages is the estimation of the monetary value a jury would assign to the damages. On the other hand, the settlement value of the case is the amount it settled for with the considerations of liability, causation, the Defendant’s ability to pay, risk of trial, and other limiting factors, which are a calculus in every settlement. Despite Mr. Bruner’s criticisms of the jury verdicts in Petitioner’s Exhibit 12, the undersigned finds those verdicts supportive of the valuation opinions offered by Petitioner’s experts. Further, Petitioner’s experts’ opinions were not primarily reliant on those 12 verdicts, but were rather based upon their knowledge of Mr. Herrera’s injury and their extensive experience in handling cases involving catastrophic injury, including jury trial experience. Mr. Bruner’s testimony did not provide an alternative value of the damages suffered by Petitioner. The value of $5,000,000 for Mr. Herrera’s claim opined by Petitioner’s experts is unrebutted. Considering the valuation of Mr. Herrera’s claim in the amount of $5,000,000, his $925,000 settlement represents only an 18.5 percent recovery of Mr. Herrera’s damages. Applying that same 18.5 percent to the $271,344.06 paid by Medicaid for past medical expenses results in the sum $50,198.65 from the settlement proceeds available to satisfy AHCA’s Medicaid lien.
