The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (sometimes referred to as "17b"), Respondent's recovery of medical assistance expenditures from $500,000 in proceeds from the settlement of a products liability action must be reduced from its allocation under section 409.910(11)(f) (sometimes referred to as "11f")1 to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti-Lien Statute)2; and, if so, the amount of Respondent's recovery.
Findings Of Fact As a result of a motor vehicle accident that took place on May 27, 2012, Petitioner sustained grave personal injuries, including damage to his spinal cord that has left him a paraplegic incapable of self-ambulation of more than a few steps, except by means of a wheelchair or rolling walker. Petitioner was a passenger in a 2003 extended-cab Ford F-150 pickup truck that was driven at a high rate of speed by his brother, who lost control of the vehicle in a curve, over-corrected, and caused the vehicle to rollover three times, ejecting Petitioner with such force that he traveled a distance of 150 feet in the air. The force of the rollovers crushed the vehicle's roof, which caused Petitioner's door latch to fail, allowing Petitioner's door to open and Petitioner to be expelled from the relative safety of the passenger compartment. In settlement negotiations, Petitioner's trial counsel claimed that Ford F-150s of the relevant vintage suffered from deficient door latches, but the forces to which the latch were subjected were overwhelming and well beyond reasonable design limits: the truck's door could not have resisted these forces unless it had been welded to the frame. The one-vehicle accident was substantially, if not entirely, caused by Petitioner's brother, who was intoxicated and is now serving a five-year sentence in prison for his role in the crash. Petitioner shared some responsibility because he likely was not wearing a seatbelt when the truck rolled over. Petitioner's brother and another passenger who were not ejected from the vehicle sustained minor injuries. Petitioner commenced a products liability action against Ford Motor Company and the manufacturer of the door latch. Ford Motor Company defended the case vigorously. Expert witnesses were unable to find any federal safety standards that had been violated in connection with the vehicle, the door latch, or the performance of the vehicle and door latch during the rollovers. The manufacturer of the door latch raised a substantial defense of a lack of personal jurisdiction. At the time of the incident, Petitioner was a 25-year-old plumber and construction worker. He was the sole means of support for his three young children. He has undergone an arduous course of rehabilitation to gain wheelchair-dependent self-autonomy. At the time of the settlement, which appears to have resolved the products liability action, the putative true value of Petitioner's case was $6 million, consisting of $154,219 of past medical expenses, $2.1 million of future medical expenses, $800,000 of lost wages and loss of future earning capacity, and about $2.95 million of noneconomic damages, including pain and suffering and loss of consortium. Petitioner has proved each of these damages components, so the putative true value is the true value (sometimes referred to as the "actual true value"). Petitioner settled the case for $500,000, representing a settlement discount of 91.7% from the true value of $6 million (Settlement Discount). Petitioner has paid or incurred $147,000 in attorneys' fees and about $123,000 in recoverable costs in prosecuting the products liability action. Respondent has expended $154,219 of medical assistance. Under the 11f formula, which is described in the Conclusions of Law, Respondent would recover approximately $126,000 from the $500,000 settlement. This provisional 11f allocation provides the point of reference for determining whether Petitioner has proved in this 17b proceeding a reduced recovery amount for Respondent. Having proved the Settlement Discount of 91.7% from the actual, not putative, true value to the settled value, Petitioner has proved that each damages component of the true value, including past medical expenses, must be proportionately reduced by 91.7% to identify the portion of the settlement proceeds representing past medical expenses, which, as discussed in the Conclusions of Law, is the only portion of the proceeds subject to the Medicaid lien. Reducing the past medical expenses of $154,219 by 91.7% yields about $12,800, which is Respondent's tentative 17b recovery. As mentioned in the Conclusions of Law, Respondent's recovery must bear its pro rata share of the attorneys' fees and costs paid or incurred to produce the settlement. The total fees and costs of $270,000 represent 54% of the settlement. The record provides no reason to find that these fees and costs are unreasonable in amount or were not reasonably expended to produce the $500,000 settlement. Reducing Respondent's recovery of $12,800 by 54% yields $5888, which is Respondent's 17b recovery.
The Issue The issue for the undersigned to determine is the amount payable to Respondent, Agency for Health Care Administration (AHCA or Respondent), as reimbursement for medical expenses paid on behalf of Petitioner pursuant to section 409.910, Florida Statutes (2020),1 from settlement proceeds he received from third parties.
Findings Of Fact AHCA is the state agency charged with administering the Florida Medicaid program, pursuant to chapter 409. On September 6, 2019, Mr. St. Surin was severely injured when his motorcycle struck a car. In this accident, Mr. St. Surin suffered severe and permanent injury to his back, neck, scapula, ribs, and knee. 1 All references to Florida Statutes are to the 2020 codification, unless otherwise indicated. Mr. St. Surin’s medical care related to the injury was paid by Medicaid. Medicaid, through AHCA, provided $28,482.15 in benefits. In addition, Medicaid, through a Medicaid managed care organization known as WellCare of Florida, paid $7,278.25 in benefits. The combined total amount of these benefits, $35,760.40, constitutes Mr. St. Surin’s entire claim for past medical expenses. Mr. St. Surin pursued a personal injury claim against the owner and driver of the car who caused the accident (collectively the “Tortfeasors”) to recover all of his damages. The Tortfeasors’ insurance policy limits were $100,000, and the Tortfeasors had no other collectable assets. Mr. St. Surin’s personal injury claim was settled for the insurance policy limits of $100,000. During the pendency of Mr. St. Surin’s personal injury claim, AHCA was notified of the claim and AHCA asserted a Medicaid lien in the amount of $28,482.15 against Mr. St. Surin’s cause of action and the settlement proceeds. AHCA did not commence a civil action to enforce its rights under section 409.910, or intervene or join in Mr. St. Surin’s action against the Tortfeasors. AHCA was notified of Mr. St. Surin’s settlement by letter. AHCA has not filed a motion to set aside, void, or otherwise dispute Mr. St. Surin’s settlement. Application of the formula found in section 409.910(11)(f) would require payment to AHCA of the full $28,482.15 Medicaid lien given the $100,000 settlement. Petitioner has deposited the Medicaid lien amount in an interest- bearing account for the benefit of AHCA pending a final administrative determination of AHCA’s rights. Petitioner presented testimony from Scott Kimmel, Esquire. Mr. Kimmel represented Mr. St. Surin in his personal injury claim against the Tortfeasors. Mr. Kimmel is a personal injury attorney and has practiced law for 30 years. Mr. Kimmel testified that he placed a conservative value of $1 million on Mr. St. Surin’s personal injury claim, but that the personal injury claim was settled for policy limits of $100,000 because the Tortfeasors had no other collectable assets. Using the pro rata allocation methodology, Mr. Kimmel testified that $3,576 of the $100,000 settlement proceeds should be allocated to past medical expenses because the personal injury claim was settled for ten percent of its conservative value. Mr. Kimmel’s testimony was credible, persuasive, and uncontradicted. AHCA did not challenge Mr. Kimmel’s valuation of the personal injury claim, or his use of the pro rata allocation methodology to determine the amount of settlement proceeds that should be allocated to past medical expenses, nor did AHCA offer any evidence from which the undersigned could arrive at a different valuation or allocation. There is no reasonable basis to reject Mr. Kimmel’s testimony, and it is accepted here in its entirety. The undersigned finds that the value of Mr. St. Surin’s personal injury claim is $1 million, and that $3,576.04 of the $100,000 settlement proceeds should be allocated to past medical expenses.
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 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.
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, Leigh Ann Holland (Petitioner), from a medical-malpractice settlement received by Petitioner from a third-party.
Findings Of Fact On or about November 19, 2010, Petitioner entered the North Florida Women’s Physicians, P.A. facility in Gainesville, Florida, for the birth of her second child. North Florida Women’s Physicians, P.A. (NFWP) operates in space leased from the North Florida Regional Medical Center (NFRMC). The two are separate entities. By all accounts, Petitioner was in good health at the time of her admission. The child, Colt, was delivered on November 19, 2010, by a nurse midwife employed by NFWP. After Colt was delivered, Petitioner was transferred to a room at the NFRMC, where she was attended to by staff of the NFRMC. However, decisions regarding her care remained the responsibility of the health care providers and staff of the NFWP. On November 21, 2010, Petitioner was slated for discharge. The NFRMC nurse attending was concerned that Petitioner was exhibiting low blood pressure, an elevated heart rate, and some shaking. Petitioner’s nurse midwife was off-work on November 21, 2010. The NFRMC nurse called the nurse midwife at her home. The substance of the call was disputed, with the NFRMC nurse asserting that she expressed her concern with Petitioner’s condition, and with the nurse midwife asserting that the NFRMC nurse failed to convey the potential seriousness of Petitioner’s condition.3/ Regardless, Petitioner was discharged on November 21, 2010. Over the course of the following two days, Petitioner’s health deteriorated. On November 23, 2010, Petitioner was taken to the hospital in Lake City. Her condition was such that she was sent by Life Flight to Shands Hospital (Shands) in Gainesville. While in route to Shands, Petitioner “coded,” meaning that, for practical purposes, she died. She was revived by the Life Flight medical crew. As a result of the efforts to revive her, drugs were administered that had the effect of drawing blood away from her extremities and toward her core organs. Petitioner’s fingers and toes were affected by blood loss. They mostly recovered, except for her right big toe, which later had to be partially amputated. Petitioner has since experienced some difficulty in balance and walking normally. Upon arrival at Shands, Petitioner was admitted with post-partum endometritis which had developed into a widespread sepsis infection. She spent the next three months in the hospital, and underwent five surgeries. She had 2/3 of her colon removed and underwent two ileostomies. She bears scars that extend from sternum to pelvis. While in the hospital, her body temporarily swelled to twice its normal size, leaving her with scars and stretch marks on her torso and legs. Medicaid paid for Petitioner’s medical expenses in the amount of $148,554.69. Because Petitioner’s ability to process food and absorb nutrients is so dramatically compromised, she must use the restroom 9 to 15 times per day, occasionally with no advance warning which can lead to accidents. Thus, both her social life and her ability to get and hold employment are severely limited. Petitioner has little stamina or endurance, limiting her ability to play and keep-up with her six-year-old son. Her sex life with her husband is strained, due both to issues of physical comfort and body image. Finally, Petitioner can have no more children, a fact rendered more tragic by Colt’s unexpected death at the age of three months, scarcely a week after Petitioner’s release from the hospital. As a result of the foregoing, Petitioner suffered economic and non-economic damages. Therefore, Petitioner filed a lawsuit in Alachua County seeking recovery of past and future economic and non-economic damages. Petitioner’s husband also suffered damages, and was named as a plaintiff in the lawsuit. Named as defendants to the lawsuit were NFWP and NFRMC. 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 $148,554.69 against any proceeds received from a third party. NFWP was under-insured, which compelled Petitioner to settle with NFWP for its policy limits of $100,000. As a result, NFWP was removed as a party to the ongoing lawsuit. Of the NFWP settlement proceeds, $18,750.00 was paid to Respondent in partial satisfaction of its Medicaid lien, leaving a remaining lien of $129,804.69. On July 10, 2013, and November 15, 2013, Petitioner’s counsel, Mr. Smith, provided NFRMC’s counsel, Mr. Schwann, with his assessment of the damages that might reasonably be awarded by a jury. Mr. Smith testified convincingly that a jury would have returned a verdict for non-economic damages well in excess of $1.5 million. However, in calculating the total damages, he conservatively applied the statutory cap on non-economic damages of $1.5 million that would have been allowed by the judgment. With the application of the capped amount, the total damages -- i.e., the “value” of the case -- came to $3.1 million. That figure was calculated by the application of the following: Past lost wages - $61,000 Future loss of earning capacity - between $360,000 and $720,000 Past medical expenses - $148,982.904/ Future medical expenses - $682,331.99 Past and future non-economic damages - $1,500,000 (capped) The elements of damages are those that appear on a standard jury form. The numbers used in assessing Petitioner’s economic damages were developed and provided by Mr. Roberts. The evidence in this case was convincing that the calculation of economic damages reflected a fair, reasonable, and accurate assessment of those damages. Mr. Smith was confident that the damages could be proven to a jury, a belief that is well-founded and supported by clear and convincing evidence. However, the existence of a Fabre defendant5/ led to doubt on the part of Petitioner as to the amount of proven damages that would be awarded in a final judgment. Counsel for NFRMC, Mr. Schwann, performed his own evaluation of damages prior to the mediation between the parties. Mr. Schwann agreed that a jury verdict could have exceeded $3 million. Although he believed the strengths of the NFRMC’s case to be significant, he had concerns as to “what the worst day would have looked like,” especially given the wild unpredictability of juries. In Mr. Schwann’s opinion, the NFRMC nurse, Ms. Summers, was a credible, competent and believable witness. However, the nurse midwife presented with a reasonably nice appearance as well. Thus, there was little to tip the balance of believability far in either direction, leaving it to the jury to sort out. Mr. Schwann understood Petitioner’s personal appeal, and the significant personal and intangible damages suffered by Petitioner, that could lead a jury to award a large verdict. He also credibly testified that juries were consistent in awarding economic damages “to the penny.” The case was submitted to mediation, at which the parties established a framework for a settlement. Given the uncertainty of obtaining a verdict for the full amount of the damages due to the Fabre defendant, NFWP, the parties agreed that the most likely scenarios would warrant a settlement with NFRMC for some fraction of the total damages. After mediation, Petitioner ultimately accepted a settlement offer of $700,000 from NFRMC, which reflected, after rounding, 22.5% percent of the total value of the case as estimated by Mr. Smith. Given the facts of this case, the figure agreed upon was supported by the competent professional judgment of the trial attorneys in the interests of their clients. There is no evidence that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement, taking into account all of the strengths and weaknesses of their positions. There was no evidence of any manipulation or collusion by the parties to minimize the share of the settlement proceeds attributable to the payment of costs expended for Petitioner’s medical care. On December 6, 2013, Petitioner and NFRMC executed a Release of Claims which differentiated and allocated the $700,000 total recovery in accordance with the categories identified in Mr. Smith’s earlier letters. As a differentiated settlement, the settlement proceeds were specifically identified and allocated, with each element of the total recovery being assigned an equal and equitable percentage of the recovery. The parties knew of the Medicaid lien, and of the formula for recovery set forth in section 409.910(11)(f). They understood that if the damages were undifferentiated, the rote formula might apply. However, since the Medicaid lien applied only to medical expenses, the parties took pains to ensure a fair allocation as to each element of the damages, including that element reflecting the funds spent by Medicaid. The differentiated settlement proceeds, after rounding, were allocated as follows: Past lost wages - $15,000 Future loss of earning capacity - $160,000 Past medical expenses - $35,000 Future medical expenses - $150,000 Past and future non-economic damages - $340,000 The evidence was clear and convincing that all elements of the damages were subject to the same calculation and percentage of allocation, were fact-based and fair, and were subject to no manipulation to increase or decrease any element. The full amount of the Medicaid lien (prior to the partial payment from the NFWP described herein) was accounted for and allocated as “past medical expenses” in the stipulated Release of All Claims that was binding on all parties. Respondent was not a party to the lawsuit or the settlement. Petitioner did not invite Respondent to participate in litigation of the claim or in settlement negotiations, and no one represented Respondent’s interests in the negotiations. Except for the amount recovered from the settlement with NFWP, Respondent has not otherwise executed a release of the lien. Respondent correctly computed the lien amount pursuant to the statutory formula in section 409.910(11)(f). Deducting the 25 percent attorney’s fee from the $700,000.00 recovery leaves a sum of $525,000.00, half of which is $262,500.00. That figure establishes the maximum amount that could be reimbursed from the third-party recovery in satisfaction of the Medicaid lien. Thus, application of the formula allows for sufficient funds to satisfy the unsatisfied Medicaid lien amount of $129,804.69. Petitioner proved by clear and convincing evidence that the $3.1 million total value of the claim was a reasonable and realistic value. Furthermore, Petitioner proved by clear and convincing evidence, based on the relative strengths and weaknesses of each party’s case, and on a competent and professional assessment of the likelihood that Petitioner would have prevailed on the claims at trial and the amount she reasonably could have expected to receive on her claim if successful, that the amount agreed upon in settlement of Petitioner’s claims constitutes a fair, just, and reasoned differentiated settlement for each of the listed elements, including that attributable to the Medicaid lien for medical expenses.
The Issue On October 3, 2016, Petitioners, Ammar Al Batha, as Personal Representative of the Estate of Abdel-Kader Al Batha, deceased, and Shahira Alshami, individually, filed a Petition to Determine Amount Payable to Agency for Health Care Administration in Satisfaction of Medicaid Lien (Petition) with the Division of Administrative Hearings (DOAH) pursuant to section 409.910(17)(b), Florida Statutes (2016).1/ The final hearing was scheduled for December 14, 2016. On November 30, 2016, Respondent filed a Motion for Summary Final Order. In the Motion for Summary Final Order, Respondent asserted that Petitioners, as a matter of law, cannot successfully challenge the amount payable to AHCA under section 409.910(17)(b) because Petitioners are not the Medicaid recipients. On December 2, 2016, Petitioners filed a Motion for Continuance and Extension of Time to Respond to Motion for Summary Final Order. That motion was granted by the undersigned on December 6, 2016, and the hearing scheduled for December 14, 2016, was canceled. On December 12, 2016, Petitioners filed an Objection to Respondent’s Motion for Summary Final Order, asserting that a Medicaid recipient’s right to challenge the payment of a Medicaid lien through DOAH does not die with the recipient, and the recipient’s representative is entitled to challenge the amount payable to AHCA under the procedure in section 409.910(17)(b). Both Respondent’s Motion for Summary Final Order and Petitioners’ Objection to Respondent’s Motion for Summary Final Order have been duly considered in preparation of this Summary Final Order.
Findings Of Fact Based on the record as a whole, the following Findings of Fact are made: On July 2, 2015, Abdel-Kader Al Batha (Mr. Al Batha) was involved in a car accident in Broward County, Florida. In this accident, Mr. Al Batha suffered catastrophic physical and neurological injuries, and, as a result, died on July 20, 2015. Mr. Al Batha was survived by his spouse, Shahira Alshami (Ms. Alshami). Mr. Al Batha’s medical care related to his injury was paid by Medicaid, and AHCA, through the Medicaid program. Medicaid provided $143,663.18 in benefits associated with Mr. Al Batha’s injury. This $143,663.18 represented the entire claim for past medical expenses. Mr. Al Batha’s funeral expenses were in the amount of $3,850. As a result of Mr. Al Batha’s injury and death, Ms. Alshami suffered economic and non-economic damages, which are defined and limited by the Florida Wrongful Death Act to loss of support, services, companionship, and protection from the date of injury, as well as her mental pain and suffering from the date of injury per section 768.21, Florida Statutes. In addition, the Estate of Abdel-Kader Al Batha (the Estate) suffered economic damages, which are defined and limited, by the Florida Wrongful Death Act, to medical expenses, funeral expenses, and loss of net accumulations per section 768.21(6). Altogether, the total combined monetary value of Ms. Alshami and the Estate’s individual damages, and the value a jury would assign to these damages, are no less than $2,500,000 to $5,000,000. Ammar Al Batha, as the Personal Representative of the Estate, brought a wrongful death action to recover both the individual statutory damages of Ms. Alshami, as well as the individual statutory damages of the Estate, against the driver/owner of the vehicle that caused the accident (Defendant). While Ms. Alshami and the Estate’s damages have an exceedingly high monetary value in excess of $2,500,000 to $5,000,000, there were significant limitations to recovering the full value of these damages from the Defendant associated with disputed facts, liability, and policy insurance limits of the primary responsible parties. Based on these significant limiting factors, the wrongful death action was settled through a confidential settlement. While settlement was appropriate given the limiting factors, that does not negate that in the settlement, Ms. Alshami and the Estate are not being fully compensated for all their damages, and they are only receiving a fraction of the total monetary value of all their damages. Understanding that the settlement does not fully compensate Ms. Alshami and the Estate for all their damages, and in the settlement they are only receiving a fraction of the total monetary value of all the damages, including only a fraction of the $143,663.18 claim for past medical expenses, the parties to the settlement made an allocation to the claim for past medical expenses. This allocation was based on the calculation of the ratio the settlement bore to the total monetary value of all damages. Using the conservative valuation of all damages of $2,500,000, the parties calculated that Ms. Alshami and the Estate were receiving 44.5 percent of the total monetary value of all their damages in the settlement, and accordingly they were receiving in the settlement 44.5 percent, or $63,930.12, of their $143,663.18 claim for past medical expenses. In making this allocation, the parties agreed that: The settlement does not fully compensate Mr. Al Batha’s surviving spouse and the Estate of Abdel-Kader Al Batha for all the damages they have suffered and the settlement only compensates them for a fraction of the total monetary value of all the damages; The damages have a value in excess of $2,500,000; The claim for past medical expenses was $143,663.18; and Allocation of the $63,930.12 of the settlement to past medical expenses, and the remainder of the settlement toward the satisfaction of claims other than the past medical expenses, is reasonable and proportionate based on the same ratio this settlement bears to the total monetary value of all the damages. The parties memorialized the allocation of $63,930.12 of the settlement to past medical expenses in the General Release (Release). The Release stated: Although it is acknowledged that this settlement may not fully compensate Releasing Party for all of the damages they have allegedly suffered, this settlement shall operate as a full and complete Release as to Released Parties without regard to this settlement only compensating Releasing Party for a fraction of the total claimed monetary value of their alleged damages. The parties agree that Releasing Party’s alleged damages may have a value in excess of $2,500,000, of which approximately $143,663.18 represents the claimed amount for past medical expenses. Given the facts, circumstances, and nature of Releasing Party’s damages and this settlement, the parties have agreed to allocate $63,930.12 of this settlement to Releasing Party’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 claimed total monetary value of all Releasing Party’s damages. As a condition of Mr. Al Batha’s eligibility for Medicaid, Mr. Al Batha, before his death, assigned to AHCA his right to recover from liable third parties, medical expenses paid by Medicaid. During the pendency of the wrongful death action, AHCA was notified of the action, and AHCA, through its collections contractor, Xerox Recovery Services, asserted a $143,663.18 Medicaid lien against the Estate’s cause of action and settlement of that action. The attorney handling the wrongful death claim notified AHCA of the settlement by letter and provided AHCA with a copy of the executed General Release. The letter explained that the damages had a value in excess of $2,500,000, and the settlement represented only a 44.5 percent recovery of the $143,663.18 claim for past medical expenses, or $63,930.12. The letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $143,663.18 Medicaid lien. AHCA calculated its payment pursuant to the formula in section 409.910(11)(f) based on the gross settlement, which includes those funds compensating Ms. Alshami for her individual claim for pain and suffering and loss of support, services, and companionship. This resulted in AHCA demanding payment for the full amount of the Medicaid lien, or $143,663.18.
The Issue The issue to be determined in this matter is the amount of money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Amora Gonzalez, a Medicaid recipient, following Petitioner’s recovery from a third party.
Findings Of Fact On August 14, 2015, Amora, who was then five years old, was the backseat passenger in a car driven by her mother, Nicalea R. Gonzalez. Amora was secured in a child seat. While Ms. Gonzalez was stopped at a traffic light, a commercial cargo van collided directly into the rear end of her car at a speed of approximately 50 to 60 miles per hour. The impact crumpled the back of Ms. Gonzalez’s vehicle. The collision also severed the seat belt securing Amora’s child seat. Amora was thrown violently forward. Following the accident, Amora was found lying on the back floor of the vehicle, wedged between the front seats. When emergency services personnel arrived, Amora was found lying on the ground exhibiting signs of a severe brain injury. Subsequent CT scans and an MRI revealed that Amora had suffered diffuse axonal injury to her corpus callosum region of the brain, a temporal lobe hematoma, and a subdural hematoma in her right tentorial region. Due to elevated cranial pressure, Amora underwent neurosurgery for placement of an external ventricular drain, and she was placed in a medically induced coma. Amora also underwent a decompressive craniotomy due to continued intracranial pressure. Amora was diagnosed with a neuro cognitive disorder due to traumatic brain injury with a behavioral disorder. As a result of her brain injury, Amora suffers from serious cognitive impairment, executive functioning level disabilities, and behavioral disturbances. Amora’s past medical expenses related to the 2015 automobile accident total $108,725.29. Of that amount, the Agency, through the Medicaid program, paid $108,656.31 for Petitioner’s medical care and services. Petitioner did not make any payments on Amora’s behalf for past medical care or in advance for Amora’s future medical care. Ms. Gonzalez pursued a personal injury claim as Natural Guardian and Legal Guardian of the Property of Amora to recover all of Amora’s damages against the driver/owner of the vehicle that caused the car accident (the “Tortfeasor”). The Tortfeasor maintained an insurance policy with limits of $1,000,000 and had no other collectable assets. Prior to filing the lawsuit, the Tortfeasor tendered the $1,000,000 insurance policy limit in compromise and settlement of Amora’s claim for damages. No evidence or testimony was presented at the final hearing indicating that a specific portion of the $1,000,000 settlement was designated to cover past medical expenses. Neither was there any evidence or testimony offered segregating the $1,000,000 settlement between medical and non-medical expenses. The Agency was not a party to the settlement or settlement agreement. When notified of Ms. Gonzalez’s recovery on behalf of Amora, the Agency asserted a Medicaid lien for $108,656.31, the full amount of its medical expenses paid for Amora’s medical costs and services. This administrative proceeding centers on the amount the Agency should be reimbursed to satisfy its Medicaid lien following Petitioner’s recovery of $1,000,000 from a settlement with a third party. Under section 409.910, the Agency may be repaid for its Medicaid expenditures from any recovery from liable third parties. The Agency claims that, pursuant to the formula set forth in section 409.910(11)(f), it should collect the full amount of its Medicaid lien ($108,656.31) regardless of the actual value of Petitioner’s damages. Using the section 409.910(11)(f) formula, the Agency subtracted a statutorily recognized attorney fee of $250,000 from $1,000,000 leaving $750,000. One-half of $750,000 is $375,000. Because the $375,000 formula amount exceeds the Medicaid lien, the Agency seeks the full $108,656.31. Petitioner asserts that, pursuant to section 409.910(17)(b), the Agency should be reimbursed a lesser portion of Petitioner’s recovery than the amount it calculated under section 409.910(11)(f). Petitioner specifically argues that the Medicaid lien must be reduced pro rata, taking into account the full value of Amora’s injuries which Petitioner calculates as $8,000,000. Otherwise, application of the default statutory formula under section 409.910(11)(f) would permit the Agency to collect more than that portion of the settlement representing compensation for medical expenses. Petitioner maintains that such reimbursement violates the federal Medicaid law’s anti-lien provision, 42 U.S.C. § 1396p(a)(1). Petitioner contends that the Agency’s allocation from Petitioner’s recovery should be reduced to the amount of $13,590.66. To establish the full value of Amora’s injuries, Petitioner presented the testimony of attorneys Paul Catania and Vince Barrett. Mr. Catania represented Petitioner in the underlying personal injury claim and obtained the $1,000,000 settlement for Amora. Mr. Catania explained that prior to finalizing the settlement, he explored the possibility of collecting a verdict in excess of the policy limits. Mr. Catania concluded that not only were the defendants uncollectable, but multiple claimants were going after the same insurance proceeds. Consequently, Mr. Catania believed that it was in his clients’ best interest to settle expeditiously for the tendered insurance policy limits. Mr. Catania also opined on what he considered to be the actual value of Amora’s damages. Mr. Catania heads a plaintiff’s injury firm and has represented plaintiffs in personal injury cases for over 28 years. Mr. Catania has extensive experience handling cases involving automobile accidents, including catastrophic injury claims and traumatic brain injuries to children. Mr. Catania expressed that he routinely evaluates damages suffered by injured parties as part of his practice. He stays current on jury verdicts throughout Florida and the United States. Mr. Catania was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Catania valued Amora’s damages as conservatively between $8,000,000 and $10,000,000. In deriving this figure, Mr. Catania reviewed the neuro psychological report in Amora’s discharge summary, as well as the subsequent neuro psychological updates that were performed on Amora approximately one year later. Mr. Catania noted Amora’s memory problems, inattention, hyperactivity, and behavioral issues. Mr. Catania relayed how these deficits will affect Amora’s ability to learn and be gainfully employed over her lifetime. Amora will need ongoing speech and occupational therapy. Mr. Catania also considered Amora’s past medical expenses, her wage loss or lost wage capacity, and her past and future pain and suffering. Finally, Mr. Catania testified that, in placing a dollar value on Amora’s injuries, he reviewed nine jury verdicts involving catastrophic injuries similar to Amora’s. Based on these sample results, Mr. Catania was comfortable valuing Amora’s damages conservatively in the $8 million to $10 million range given her injuries and her life expectancy. Mr. Catania testified that the $1,000,000 settlement did not fully or fairly compensate Amora for her injuries. Therefore, Mr. Catania urged that a lesser portion of Petitioner’s settlement be allocated to reimburse the Agency instead of the section 409.910(11)(f) formula amount of $108,656.31. Mr. Catania proposed applying a ratio based on the true value of Amora’s injuries ($8,000,000) compared to the amount Petitioner actual recovered ($1,000,000). Using his estimate of $8 million, the settlement represents a 12.5 percent recovery of the total value of all Amora’s damages. In like manner, the amount of medical expenses should also be reduced to 12.5 percent or $13,590.66. Therefore, in Mr. Catania’s professional judgment, $13,590.66 is the portion of Amora’s settlement that represents her compensation for past medical expenses. Mr. Catania testified that no portion of the settlement represents future medical expenses.2/ Mr. Catania expressed that allocating $13,590.66 for Amora’s past medical expenses is “reasonable” and “rational” under the circumstances. Mr. Barrett also testified on behalf of Petitioner. Mr. Barrett is a trial attorney with almost 40 years’ experience and works exclusively in the area of plaintiff’s personal injury, medical malpractice, and medical products liability cases. Mr. Barrett has handled many catastrophic injury matters involving catastrophic injuries and traumatic brain injury to children. Mr. Barrett was accepted as an expert in valuation of damages in personal injury cases. Prior to the final hearing, Mr. Barrett had reviewed Amora’s medical records, as well as Petitioner’s exhibits. He also reviewed the sample jury verdicts Petitioner presented at the final hearing as Exhibit 14. Based on his valuation of Amora’s injuries and his professional training and experience, Mr. Barrett expressed that injuries similar to Amora’s would result in jury awards averaging between $8 and $20 million dollars. In light of Amora’s “catastrophic” injuries, Mr. Barrett valued Amora’s injuries as at least $8 million. Mr. Barrett opined that Mr. Catania’s valuation of $8 million to $10 million was appropriate, if conservative. Mr. Barrett supported Mr. Catania’s proposed method of calculating a reduced portion of Petitioner’s $1,000,000 to represent past medical expenses. With injuries valued at $8 million, the $1,000,000 settlement only compensated Amora for 12.5 percent of the total value of her damages. Therefore, because Amora only recovered 12.5 percent of her damages, the most “reasonable and rational” manner to apportion the $1,000,000 settlement is to apply that same percentage to determine Amora’s recovery for past medical expenses. Petitioner asserts that applying the same ratio to the total amount of medical costs produces a definitive value of that portion of Petitioner’s $1,000,000 settlement that represents compensation for past medical expenses, i.e., $13,590.66 ($108,725.29 times 12.5 percent). The undersigned finds that the competent substantial evidence in the record establishes, clearly and convincingly, that the full value of Amora’s injuries is $8 million. However, the evidence in the record is not sufficient to prove that a lesser portion of Petitioner’s $1,000,000 settlement recovery should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Accordingly, the Agency is entitled to recover $108,656.31 from Petitioner’s recovery from a third party to satisfy its Medicaid lien.
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).
