The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (17b), Petitioner1 has proved that Respondent's recovery, under section 409.910(11)(f) (11f), of $685,615 in medical assistance expenditures2 from $10.4 million in proceeds from the settlement of a personal injury action must be reduced to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti-Lien Statute)3 ; and, if so, what is the maximum allowable amount of Respondent's recovery.
Findings Of Fact Shortly before midnight, on January 20, 2015, Petitioner, then 11 years old, suffered catastrophic injuries when she was ejected from a vehicle that rolled over on Interstate 75 near Micanopy. Petitioner has been left in a persistent vegetative state after suffering a traumatic brain injury, malignant cerebral edema, a depressed skull fracture, a contrecoup subdural hematoma, bilateral pulmonary hemorrhage, and fractured ribs. The vehicle, a 2003 Ford Expedition, was driven by its owner, a 42-year-old woman who was a friend of a cousin of one of Petitioner's family members. The driver had transported Petitioner, her brother, and two other persons from Tampa to Gainesville. After attending a college basketball game, the driver discovered that the right rear tire was flat, so she called a national automobile service company to install the spare tire. Even though the spare tire was 11 years old, the person whom the company dispatched on the service call replaced the flat tire with the spare tire. While driving south on Interstate 75 in the left lane, the installed spare tire blew out. The driver lost control of the vehicle, which rolled over once, hurdled the guardrail, and came to rest, upright, in the emergency lane adjacent to the left lane of the northbound lanes. The primary liability for the accident was borne by the driver. Two of the tires on the vehicle were so worn as to reveal their steel belts. The driver had ignored a warning five months earlier to replace at least two of the vehicle's tires. Additionally, expert witnesses testified that the driver could have controlled the vehicle after the blowout, so as to avoid the rollover. Due to the age of the tire, it is difficult to find fault with the manufacturer of the vehicle or the manufacturer or vendors of the tire. The automobile service company and the technician bore more blame than the manufacturers, although there was a factual dispute about whether, prior to changing the tire, the technician had warned the driver that it was unsafe. Petitioner herself bore considerable responsibility for her injuries because she was not wearing a seat belt at the time of the blowout. The other passengers were belted, remained within the vehicle, and suffered no more than minor injuries. The roof over Petitioner's seat survived the wreck intact, so she likely would have suffered no more than minor injuries if she had been wearing her seatbelt. Petitioner filed a personal injury action against the manufacturers of the vehicle and the failed tire, vendors of the failed tire, companies responsible for changing the tire, and driver of the vehicle. In confidential settlements, Petitioner obtained $10.4 million, which was unallocated among the damages components. Claiming a true value of $40 million for the case, Petitioner accurately calculates a 74% settlement discount.5 The driver was unable to satisfy a large judgment. The driver carried liability insurance with a policy limit of $25,000, which the insurer immediately offered to avoid a bad-faith claim. The record is silent as to the creditworthiness of the other, less-liable parties. The parties agree that the past medical expenses component of the settlement proceeds was $685,614. This sum represents the total medical assistance expenditures made by Respondent and another agency. 5 From the settlement proceeds, Petitioner's attorneys collected $4 million in attorneys' fees and $400,000 in costs, leaving Petitioner with a net recovery of $6 million, but Petitioner has not sought to reduce Respondent's recovery by a proportional share of these fees and costs. A conservative estimate of the loss of future earning capacity was $1.3 million. These sums support about $2 million of the $40 million putative true value of the case. The question is thus whether another $38 million in damages was supported by other damages components--mostly future medical expenses and past and future noneconomic damages, such as pain and suffering. The 1st Update of the Life Care Plan, dated November 5, 2018 (Life Care Plan), includes all applicable treatments, except the cost of hyperbaric oxygen therapy, which is $7150 per set of 26 sessions. Treatments include periodic evaluations by a neuropsychologist, physiatrist, physical therapist, occupational therapist, speech therapist, pediatric pulmonary consultant, pulmonary consultant, pediatric ear, nose and throat consultant, pediatric gastroenterology consultant, pediatric neurologist, and multidisciplinary team. Other listed expenses include pharmaceuticals; periodic diagnostic services, such as imaging studies and lab work; the preparation and maintenance of orthiotics and durable medical equipment, such as wheelchairs, hospital and shower beds, lifts, suction machines, oxygenation equipment, a home generator, and an augmentive communication device; feeding and incontinence equipment and supplies; in-home skilled care on a continual basis; adaptive vans and medical transportation services; architectural modifications to the home; the installation of a special in-home ventilation system; annual hospitalizations of one-week duration each; and various surgeries. The components of the Life Care Plan, including the costs of the goods and services and the stated intervals on which they are to be provided, all appear to be reasonable and necessary. An important issue regarding the Life Care Plan is the number of years that these costs are reasonably expected to be incurred. The evidentiary record provides no basis to find that Petitioner will recover significant function, so the question is whether the Life Care Plan has incorporated a reasonable remaining life expectancy in light of the catastrophic injuries that Petitioner has suffered. Having progressed from a coma to a minimally conscious state, Petitioner exhibits some awareness of her surroundings and her mother and father, who report that she has verbalized once or twice in the past two years, although she is incapable of speech. Petitioner's youth at the time of the accident may have helped her avoid organic decline, at least over the first five years after the accident. She is now five feet, nine inches tall and weighs 163 pounds. Her height prior to the accident is unavailable, but she weighed 110 to 115 pounds. Petitioner cannot walk or assist with transfer, but she can stand without assistance and can move her limbs. Petitioner no longer is fed by a PEG tube and her ability to swallow is slowly improving. She can open her mouth in response to the sight of a spoon and is able to eat puréed food. Petitioner requires oxygenation and suffers from sleep apnea, but needed a ventilator only for the first six months after the accident. She has had only an occasional respiratory infection and has suffered no seizures. On these facts, the Life Care Plan reasonably projected Petitioner's remaining life expectancy to be slightly in excess of 30 years. Thus, the Life Care Plan conservatively estimates the present value of the future medical expenses at not less than $37 million. The pain and suffering that Petitioner has suffered are considerable, as are other noneconomic damages. Given the relatively short span between the accident and the settlement and the longer span between the settlement and the projected end of Petitioner's life, the greater amount of these noneconomic damages probably will relate to the future. Based on comparable jury verdicts, a reasonable estimate of past and future noneconomic damages is not less than $10 million. The presentation of damages to a jury would not have been impeded by extrinsic factors. Petitioner's family would have made excellent witnesses to support the damages claims. Petitioner's lead trial counsel is experienced in personal injury cases, has produced numerous large verdicts and settlements, and presented himself at hearing as a thoughtful, patient, and effective communicator with a firm grasp of the facts and law--in sum, an attorney who would have maximized Petitioner's chances for a good damages verdict. The settlement discount was partly explained by the family's need for funds to care for Petitioner. Medicaid has not paid for the hyperbaric oxygen treatments that have proven somewhat efficacious, nor for renovations to the family home necessitated by Petitioner's disabilities. Petitioner's family lacks the financial means to pay these expenses on their own. At the time of the accident, Petitioner's father was on full disability due to back injuries, her mother worked as an administrative assistant, and the family's home had been constructed by Habitat for Humanity. The sooner the family received the settlement proceeds, the sooner they could obtain additional goods and services for Petitioner. Petitioner has proved by any standard of proof that the true value of the case exceeds $40 million. Applying the settlement discount of 74% to the past medical expenses component of the settlement proceeds, Respondent's recovery is limited to 26% of $685,614, or $178,260, as Petitioner contends. For the benefit of Respondent, Petitioner has deposited into an interest-bearing account an amount equal to the Medicaid lien, pending a determination of Respondent's proper recovery amount.
The Issue The issue to be decided is the amount to be paid by Petitioner to Respondent, Agency for Health Care Administration ("AHCA"), out of her settlement proceeds, as reimbursement for past Medicaid expenditures pursuant to section 409.910, Florida Statutes.
Findings Of Fact On or about September 17, 2007, Alicia M. Fallon ("Alicia"), then 17 years old, drove to the mall to meet friends and became involved in an impromptu street race. Alicia lost control of the vehicle she was driving, crossed the median into oncoming traffic, and was involved in a motor vehicle crash. Her injuries consisted of traumatic brain injury ("TBI") with moderate hydrocephalus, right subdural hemorrhage, left pubic ramus fracture, pulmonary contusions (bilateral), and a clavicle fracture. Since the time of her accident, she has undergone various surgical procedures including the insertion of a gastrostomy tube, bilateral frontoparietal craniotomies, insertion of a ventriculoperitoneal shunt, and bifrontal cranioplasties. As a result of the accident, in addition to the physical injuries described above, Alicia suffered major depressive disorder, and Post-Traumatic Stress Disorder injuries. She is confined to a wheelchair for mobility, has no bowel or bladder control, and suffers from cognitive dysfunction. Alicia is totally dependent on others for activities of daily living and must be supervised 24 hours a day, every day of the week. A lawsuit was brought against the driver of the other car in the race, as well as the driver's mother, the owner of the vehicle. It could not be established that the tortfeasor driver hit Alicia's car in the race, or that he cut her off. The theory of liability was only that because Alicia and the other driver in the race were racing together, that the tortfeasor was at least partially responsible for what happened. It was viewed that there was no liability on the part of the driver of the third vehicle. The tortfeasor only had $100,000 in insurance policy limits, but the insurance company did not timely offer payment. The tortfeasor had no pursuable assets. The lawsuit was bifurcated and the issue of liability alone was tried. The jury determined that the tortfeasor driver was 40 percent liable for Alicia's damages. Because of the risk of a bad faith judgment, the insurance company for the tortfeasor settled for the gross sum of $2.5 million. AHCA, through its Medicaid program, provided medical assistance to Ms. Fallon in the amount of $608,795.49. AHCA was properly notified of the lawsuit against the tortfeasors, and after settlement, asserted a lien for the full amount it paid, $608,795.49, against the settlement proceeds. AHCA did not "institute, intervene in, or join in" the medical malpractice action to enforce its rights as provided in section 409.910(11), or participate in any aspect of Alicia's claim against the tortfeasors or their insurance company. Application of the formula at section 409.910(11)(f), to the settlement amount requires payment to AHCA in the amount of $608,795.49. Another provider, Optum, provided $592,554.18 in past medical expense benefits on behalf of Ms. Fallon. However, that amount was reduced through negotiation to a lien in the amount of $22,220.78.1/ Petitioner 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). Petitioner, Donna Fallon, the mother of Alicia, testified regarding the care that was and is continuing to be provided to Alicia after the accident. She is a single parent, and with only the assistance of an aide during the day, she is responsible for Alicia's care. Alicia must be fed, changed, bathed, and turned every few hours to avoid bed sores. Alicia can communicate minimally by using an electronic device and by making noises that are usually only discernable by her mother. Although she needs ongoing physical therapy and rehabilitation services, the family cannot afford this level of care. Petitioner presented the testimony of Sean Domnick, Esquire, a Florida attorney with 30 years' experience in personal injury law, including catastrophic injury and death cases, medical malpractice, and brain injury cases. Mr. Domnick is board certified in Civil Trial by the Florida Bar. He represented Alicia and her mother in the litigation against the tortfeasors and their insurance company. As a routine part of his practice, he makes assessments concerning the value of damages suffered by injured clients. He was accepted, without objection, as an expert in valuation of damages. Mr. Domnick testified that Alicia's injuries are as catastrophic as he has handled. Alicia has no strength, suffers contractions and spasms, and is in constant pain. Alicia has impaired speech, limited gross and fine motor skills, is unable to transfer, walk, or use a wheelchair independently. Alicia is unable to self-feed. All of her food must be cooked and cut up for her. Alicia is unable to perform self-hygiene and has no ability to help herself in an emergency and therefore requires constant monitoring. As part of his work-up of the case, Mr. Domnick had a life care plan prepared by Mary Salerno, a rehabilitation expert, which exceeded $15 million on the low side, and $18 million on the high side, in future medical expenses alone for Alicia's care. Mr. Domnick testified that the conservative full value of Alicia's damages was $45 million. That figure included $30 million for Alicia's pain and suffering, mental anguish and loss of quality of life, disability, and disfigurement, extrapolated for her life expectancy, plus the low end of economic damages of $15 million. Petitioner also presented the testimony of James Nosich, Esquire, a lawyer who has practiced primarily personal injury defense for 29 years. Mr. Nosich and his firm specialize in defending serious and catastrophic personal injury/medical malpractice cases throughout Florida. As part of his practice, Mr. Nosich has reviewed more than 1,000 cases of personal injury/medical malpractice cases and formally reported the potential verdict and full value to insurance companies that retained him to defend their insureds. Mr. Nosich has worked closely with economists and life care planners to identify the relevant damages of those catastrophically injured in his representation of his clients. Mr. Nosich has also tried over 30 cases in Broward County in which a plaintiff suffered catastrophic injuries similar to those of Alicia. Mr. Nosich was tendered and accepted, without objection, as an expert in the evaluation of damages in catastrophic injury cases. In formulating his expert opinion with regard to this case, Mr. Nosich reviewed: Alicia's medical records and expenses; her life care plan prepared by Ms. Salerno; and the economist's report. He took into consideration the reputation of Alicia's lawyer (Mr. Domnick); and the venue in which the case would be tried. Mr. Nosich opined that Broward County is known for liberal juries who tend to award high amounts in catastrophic cases. He also testified that Mr. Domnick is known as a lawyer with extreme capability and who has an excellent rapport with juries and the ability to get higher dollar verdicts. Mr. Nosich agreed with Mr. Domnick that the estimated $45 million figure for the total value of Alicia's case was conservative. He agreed with Ms. Salerno's estimated economic damages of $15 million and a doubling of that amount ($30 million) for Alicia's noneconomic damages. Mr. Nosich credibly explained that the $45 million total value was very conservative in his opinion based on Alicia's very high past medical bills and the fact that she will never be able to work. The testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the settlement of $2.5 million does not fully compensate Alicia for the full value of her damages. As testified to by Mr. Domnick, Alicia's recovery represents only 5.55 percent of the total value of her claim. However, in applying a ratio to reduce the Medicaid lien amount owed to AHCA, both experts erroneously subtracted attorney's fees and costs of $1.1 million from Alicia's $2.5 million settlement to come up with a ratio of 3 percent to be applied to reduce AHCA's lien.2/ Further, in determining the past medical expenses recovered, Petitioner's experts also failed to include the Optum past medical expenses in the amount of $592,554.18. AHCA did not call any witnesses, present any evidence as to the value of damages, or propose a different valuation of the damages. In short, Petitioner's evidence was unrebutted. However, through cross-examination, AHCA properly contested the methodology used to calculate the allocation to past medical expenses. Accordingly, the undersigned finds that Petitioner has proven by a preponderance of the evidence that 5.55 percent is the appropriate pro rata share of Alicia's past medical expenses to be applied to determine the amount recoverable by AHCA in satisfaction of its Medicaid lien. Total past medical expenses is the sum of AHCA's lien in the amount of $608,795.49, plus the Optum past medicals in the amount of $592,554.18, which equals $1,201,349.67. Applying the 5.55 percent pro rata ratio to this total equals $66,674.91, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien.
The Issue On the merits, the issues for determination are, first, whether a lesser portion of Petitioner's total recovery from a third-party tortfeasor should be designated as recovered medical expenses than the share presumed by statute; if so, then the amount of Petitioner's recovery to which Respondent's Medicaid lien may attach must be determined. Before the merits may be addressed, however, it will be necessary to decide whether, in light of the recent judicial invalidation of portions of the Medicaid Third-Party Liability Act, an administrative remedy remains available to Petitioner.
Findings Of Fact On June 1, 2012, Petitioner Michael Lee Smathers, II ("Smathers"), was shot two times while sitting in a vehicle parked outside of Club Lexx, a nightclub in Miami-Dade County. The shooter was a security guard who worked for Force Security, LLC ("Force"), which provided security for Club Lexx as an independent contractor. The guard also shot Smathers's friend, the driver of the vehicle, who died as a result of his injuries. The record is silent as to the circumstances giving rise to this violence. One bullet struck Smathers in the arm, the other in the stomach, which caused life-threatening injuries. Smathers received aggressive emergency medical care and survived, but he is permanently and severely disabled. Bullet and bone fragments damaged his spinal cord, leaving Smathers paralyzed from the waist down. He is incontinent, has serious gastric difficulties, experiences constant pain, cannot have sex or reproduce, and suffers from chronic depression, among other conditions. Because it is undisputed that Smathers's injuries are severe, permanent, and indeed catastrophic, there is no need to catalogue them all here. Smathers requires round-the-clock care and will never return to the workforce due to his impairments and chronic pain. He will incur medical expenses stemming from the gunshot wounds for the rest of his life. At all relevant times, Smathers's health insurance was provided, at least in part, by Medicaid. Medicaid is a program "which provides for payments for medical items or services, or both, on behalf of any person who is determined by the Department of Children and Families . . . to be eligible on the date of service for Medicaid assistance." § 409.901(16), Fla. Stat. Medicaid is jointly funded by the federal government and the states that have elected to participate in the program, which include Florida. Respondent Agency for Health Care Administration ("AHCA") is the agency responsible for administering Medicaid in the state of Florida. It is undisputed that Medicaid provided $206,445.41 in medical assistance on Smathers's behalf as a result of the injuries he sustained in the attack at Club Lexx. Unfortunately for Smathers, the Club Lexx shooting gave him many causes of action but no deep-pocket defendants to sue for damages. He brought suit, nonetheless, against Force and others in the state circuit court (the "Smathers Lawsuit"). Force, it happened, was insured against general liability, but only up to $1 million per occurrence, which obviously would be woefully inadequate to compensate Smathers. Force's insurer ("Evanston") sought a judicial declaration in the U.S. district court that its policy did not provide coverage for the allegations made against Force in the Smathers Lawsuit. The federal court rejected Evanston's coverage position and held that the insurer had a duty to defend Force. Evanston appealed the decision. While this appeal was pending, Evanston, Force, and Smathers entered into a settlement agreement, pursuant to which Evanston paid the policy limit of $1 million to Smathers in exchange for the usual releases. (Smathers did not release the other defendants in the Smathers Lawsuit.) The settlement is undifferentiated——that is, no attempt was made therein to apportion the proceeds between the various elements of compensatory damages potentially available to Smathers. After deducting attorney's fees and costs, Smathers's net recovery from the settlement was $546,894.15. Upon learning of the settlement, AHCA asserted its rights under the Medicaid Third-Party Liability Act (the "Act"), section 409.910, which grants AHCA an automatic lien upon "collateral" such as settlements and settlement agreements for the full amount of medical assistance provided by Medicaid to a recipient for which a third party might be liable. There is, however, an important limitation on AHCA's right of repayment from liable third parties: Because federal law prohibits a state from attaching a Medicaid lien to any part of a recipient's tort recovery not designated as payments for medical care, the lien can encumber only the portion of a settlement or recovery that represents compensation for medical expenses. As a means of complying with this anti-lien law, section 409.910(11)(f) prescribes a formula for determining how the proceeds of a settlement or other recovery from a third-party tortfeasor should be divided between medical expense damages and all other (i.e., nonmedical) compensatory damages, and it directs that the portion attributable to payments for medical care be paid to AHCA up to the total amount spent by Medicaid. The parties agree that, under this statutory formula, AHCA is entitled to be reimbursed in full for Medicaid's outlays on Smathers's behalf ($206,445.41) because that amount, which represents approximately 20.6% of Smathers's gross settlement proceeds ("GSP"), is less than the portion of his GSP that paragraph (11)(f) otherwise presumptively designates as recovered medical expense damages. Exercising his rights under section 409.910(17)(b), which provides the "exclusive method for challenging the amount of third-party benefits payable to" AHCA, Smathers initiated this proceeding to contest the statutory designation of $206,445.41 as payments for medical care. Paragraph (17)(b) confers upon DOAH final order authority over this administrative remedy. Smathers presented evidence regarding his total provable damages ("TPD"),1/ which he asserts are between $16 million and $22 million. Smathers's TPD includes past medical expenses of $2.7 million and future medical expenses of $5.7 million, for a total of $8.4 million in medical expense damages.2/ Medical expense damages and general damages comprising injury, pain, disability, disfigurement, and loss of capacity for enjoyment of life (collectively, "pain and suffering") constitute, effectively, the entirety of Smathers's TPD.3/ Smathers contends that the amount of his settlement that should be allocated as reimbursement for medical expense damages, and thus become subject to the Medicaid lien, is $12,903. Smathers arrives at this figure as follows. He reasons that because he recovered just 6.25% of his TPD ($1 million is 6.25% of $16 million), AHCA likewise should be paid just 6.25% of its total expenditures, which works out to $12,903. (That sum is 1.29% of $1 million.) For ease of discussion, this approach will be referred to as the settlement- ?????? to-value ratio method, expressed as ?????? (??), where ?? = actual Medicaid expenditures. The amount payable to AHCA pursuant to the formula set forth in section 409.910(11)(f) (the "Statutory Distribution") is either (a) an amount equal to .75 times the gross settlement, minus taxable costs, divided by 2 (hereafter, the "Presumed Recovered Medical Expense Damages" or "PRMED"); or (b) the total dollar amount of medical assistance that Medicaid actually has provided (hereafter, the "Actual Expenditure"), whichever is lower. The ratio of PRMED to GSP reflects the portion of the GSP that the statutory formula allocates by default as reimbursement to the injured party for both past and future medical expenses (hereafter collectively referred to as "Medical Damages"). ?????? The statute, it will be seen, presumes that a uniformly calculable percentage (i.e., ??????????) of any recipient's undifferentiated GSP constitutes compensation for Medical Damages. In the run of cases, this percentage likely will be somewhere in the neighborhood of one-third, although in particular cases, as here, the percentage——which cannot exceed 37.5%——can be smaller.4/ Section 409.910(17)(b), Florida Statutes (2017), provides that "[i]n order to successfully challenge the amount designated as recovered medical expenses, the recipient must prove, by clear and convincing evidence, that the portion of the total recovery which should be allocated as past and future medical expenses is less than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f)."5/ Thus, the presumption regarding the allocation of the recipient's recovery to Medical Damages is one which affects the burden of proof. See §§ 90.302(2) and 90.304, Fla. Stat. To elaborate, paragraphs (11)(f) and (17)(b) operate in tandem to create the rebuttable presumption that a certain percentage of the recipient's GSP is attributable to Medical Damages (the presumed fact), and paragraph (17)(b) makes plain that the recipient has the burden of proving, by clear and convincing evidence, the nonexistence of the presumed fact. The presumption at issue, according to paragraph (17)(b), is not a "bursting bubble" presumption that vanishes upon the introduction of credible evidence contrary to the presumed fact, see section 90.302(1), Florida Statutes, but rather it imposes upon the recipient the burden to prove that a smaller portion of the settlement is attributable to Medical Damages. On April 18, 2017, the U.S. District Court for the Northern District of Florida entered a Final Judgment in Gallardo v. Dudek, No. 4:16-cv-116, 2017 U.S. Dist. LEXIS 59848 (N.D. Fla. Apr. 18, 2017), which declared that section 409.910(17)(b) is preempted by federal law (and thus unconstitutional under the Supremacy Clause) at least insofar as the statute authorizes AHCA to "seek[] reimbursement of past Medicaid payments from portions of a recipient's recovery that represents [sic] future medical expenses." Id. at *31. The court enjoined AHCA from "enforcing that statute in its current form" and specifically forbade AHCA from "requiring a Medicaid recipient to affirmatively disprove" the statutory allocation of third-party recoveries as reimbursement for past and future medical expenses "where . . . that allocation is arbitrary." Id. Three months later, on AHCA's motion, the court amended its judgment, slightly, to read as follows: [P]ortions of § 409.910(11)(f), Fla. Stat. (2016) and § 409.901(17)(b), Fla. Stat. (2016) are preempted by federal law. It is declared that the federal Medicaid Act prohibits the State of Florida Agency for Health Care Administration from seeking reimbursement of past Medicaid payments from portions of a recipient's recovery that represents [sic] future medical expenses. The State of Florida Agency for Health Care Administration is therefore enjoined from doing just that: seeking reimbursement of past Medicaid payments from portions of a recipient's recovery that represents [sic] future medical expenses. It is also declared that the federal Medicaid Act prohibits the State of Florida from requiring a Medicaid recipient to affirmatively disprove § 409.910(17)(b)'s formula-based allocation with clear and convincing evidence to successfully challenge it where, as here, that allocation is arbitrary and there is no evidence that it is likely to yield reasonable results in the mine run of cases. Gallardo v. Senior, 2017 U.S. Dist. LEXIS 112448, *24 (N.D. Fla. July 18, 2017).
The Issue What amount of Petitioner’s malpractice settlement must be paid to Respondent, Agency for Health Care Administration (Agency), to satisfy the Agency’s $13,904.06 Medicaid Lien?1/
Findings Of Fact On September 12, 2015, [Petitioner] was a 28-year-old single male living alone in Tampa, Florida and enrolled as a student at the University of South Florida working on his master’s degree in education. Because he recently ceased his employment with the Hillsborough County School Board, [Petitioner] had no health insurance. He called 911 for emergency medical services due to severe abdominal pain and was taken by EMS to the Emergency Department at St. Joseph’s Hospital where he was diagnosed with acute pancreatitis and admitted. His condition worsened and was complicated by abdominal distention that made his breathing difficult. In the evening of September 13th, [Petitioner] was transferred to the Medical Intensive Care Unit (“ICU”) because of a rapidly worsening condition and need for close monitoring. Over the next several hours, vital sign monitoring showed high heart and respiratory rates. A consulting physician found “acute respiratory insufficiency likely developing ARDS,” and directed he be “monitor closely, may need to be on mechanical ventilation, his work of breathing is hard to keep current sats [sic]”. During the early morning of September 14, [Petitioner’s] heart rate and respiratory rates remained high, he was short of breath, and given multiple doses of Morphine for severe pain and Ativan for agitation/anxiety, which drugs are known to suppress respiratory function. Throughout the morning, [Petitioner] was in a perilous condition due to a combination of his prolonged efforts to breathe, suppressive medications, and systemic complications of acute pancreatitis including electronical abnormalities associated with hypokalemia and hypocalcemia, and with electrocardiographic changes resulting in arrhythmia, conduction abnormalities and changes in cardiac T wave and QT period. At around 11:30, [Petitioner] attempted to perform a breathing exercise as instructed earlier that morning which required him to get on his hand and knees to relieve the pressure on his chest. [Petitioner’s mother], a licensed and practicing RN herself, was present and attempted to help him when his cardiac monitoring leads became disconnected. At this time, the attending RN was on break. An unknown RN reported [Petitioner] to have a change in the condition “with increased confusion and restlessness” and a call was made to the ICU specialist who issued verbal orders for Haldol, a medication used for sedation but in combination with the Morphine, Ativan and Labetatol, further lowers blood pressure and is contraindicated for cardiac arrhythmias. Without informing [Petitioner or his mother], the nursing staff mistakenly issued a "code grey" to control [Petitioner] and the nursing supervisor approved the administration of the Haldol without any physician assessment or knowing his cardiac status because the monitor was not connected. The ICU specialist who ordered the Haldol was close by in the ICU area but did not evaluate [Petitioner] or assess his condition, cardiac status and need for mechanical ventilation before the Haldol was administered. Immediately upon administration of the Haldol, [Petitioner] became “agonal” and his heart was thrown into a cardiac arrhythmia (PEA) causing a prolonged time period where his brain was deprived of oxygen that resulted in permanent hypoxic encephalopathy so that [Petitioner] now lives in a persistent minimally conscious state. The acute pancreatitis which [Petitioner] initially sought treatment resolved without further complications. His current medical condition is only complicated by the sequelae of his hypoxic encephalopathy and persistent minimally conscious state. Petitioner complied with all requirements of Chapter 766, Florida Statutes, including, all pre-suit requirements and presuit investigation of claims against the treating Hospital, the ICU Specialist and her employer that were corroborated by an expert witness, which were rejected. On October 27, 2017, Petitioner filed a lawsuit in the Circuit Court for Hillsborough County Florida, Case No. 17-CA-009829, against the treating Hospital and the ICU Specialist asserting claims for medical negligence. Based on the foregoing limitations, the medical malpractice claims were settled for a total of $1,975,000, which was approved by the Court to be in the best interest of [Petitioner]. [The Agency], through its Medicaid program, provided medical assistance to [Petitioner] in the amount of $13,904.36. During the pendency of the medical negligence case, [the Agency] was notified of the action and asserted a $13,904.06 Medicaid lien against Petitioner's cause of action and settlement. [The Agency] did not commence a civil action to enforce its rights under §409.910 or intervene or join in [Petitioner’s] action against Defendants. [The Agency] did not file a motion to set-aside, void or otherwise dispute Petitioner's settlement with Defendants. Application of the formula at §409.910(1l)(f) to the settlement requires payment to [the Agency] in the amount of the full $13,904.06 Medicaid lien. Petitioner deposited the full Medicaid lien amount in an interest-bearing account for the benefit of [the Agency] pending an administrative determination of [the Agency’s] rights, and this constitutes "final agency action" for purposes of chapter 120, pursuant to §409.910(17). Credible, Unimpeached, and Unrebutted Testimony Mr. Tonelli is the only person who testified about the value of the various elements of damages making up Petitioner’s malpractice claim. Mr. Tonelli has practiced law for 44 years. He has practiced in Tampa, Florida, the venue where Petitioner’s case would have been tried if it had not settled. He first practiced primarily in the area of personal injury defense. Presently, Mr. Tonelli spends over 25 percent of his time as a mediator. Since 1985, he has mediated many medical negligence cases. Mr. Tonelli also serves as a guardian ad litem in approximately 50 cases per year. Usually two to five of the cases involve catastrophic injury. Mr. Tonelli has served as counsel in 50 to 75 civil trials. Approximately 20 were jury trials. Mr. Tonelli’s practice includes review of medical records and life care plans. He also consults with economists about lost wage claims and works with doctors to identify the nature and extent of injuries and costs of medical services for injured persons. Mr. Tonelli participates in regular intake review of personal injury cases for his firm. The review includes evaluating the recoverable damages. He informs himself about jury awards and settlement amounts through his firm work, his participation in the American Board of Trial Attorneys, and his mediation practice. Mr. Tonelli was Petitioner’s Guardian Ad Litem. He reviewed the case and the proposed settlement and reported to the court about whether the settlement was in Petitioner’s best interests. Mr. Tonelli’s knowledge, skill, and experience qualify him to provide an opinion about the value of the elements of the damages for Petitioner’s malpractice claims against the hospital and the physician. Mr. Tonelli reviewed Petitioner’s hospital and physician medical records. He also reviewed the deposition of Roland Snyder, M.D., who prepared the life care plans admitted into evidence. Between Mr. Tonelli’s service as Guardian Ad Litem for Petitioner and his record review to prepare for his testimony, he had sufficient facts and data to form an opinion about the value of elements of damages of Petitioner’s malpractice claims. Also, he reasonably and reliably applied principles and methods based upon his knowledge, skill, and experience to provide a credible and conservative determination of the value of each element of damages that make up Petitioner’s malpractice claim. His testimony was unrebutted, unimpeached, credible, and persuasive. Injuries and Negligence Petitioner suffers from profound anoxic encephalopathy. This brain damage leaves him in a permanent, minimally conscious state, just barely more conscious than a patient in a vegetative state. He cannot speak, walk, or care for himself. Petitioner lives in pain. He breathes and eats only with the assistance of a tracheostomy. He takes nourishment through a “G-tube.” This is a gastrojejunostomy tube that delivers nutrients directly to the stomach. Petitioner requires daily care and assistance in every task of life from eating to waste elimination. His condition will not change for his estimated 20-year remaining life span. Petitioner’s multiple, severe medical conditions require that he live those 20 years in a long-term care facility with medical services, such as a skilled nursing home. This condition resulted from treatment he received for pancreatitis, a condition from which he fully recovered. While in the hospital, Petitioner developed cardiac and respiratory problems. A cascading series of improper prescriptions exacerbated Petitioner’s medical problems leading to catastrophic injuries resulting in his current condition. Damages The elements of damages for Petitioner’s malpractice claims are past medical expenses, future medical expenses, loss of current income, loss of future income, pain and suffering, and loss of enjoyment of life. The value of the damages in Petitioner’s malpractice claims falls within a range of $25,000,000 to $35,000,000. The amount of $25,000,000 is a reasonable, conservative value to place on Petitioner’s damage claims. The only evidence of past medical expenses is the stipulation that Medicaid paid $13,904.36. Consequently, that is the amount of past medical expenses. Future medical expenses in the form of costs for continued treatment and supports necessary to maintain Petitioner’s existence are a significant part of the damages. As explicated in two detailed life care plans, those expenses will range from $14,535,508.26, for residence in a modified home with supportive caregivers, to $31,082,301.36, for residence in a skilled long-term nursing facility. Loss of current income, comparatively, is not a major factor in this case. Loss of future income is. Petitioner was 30 years old earning $34,000 per year teaching “at-risk” children who would have otherwise been suspended from school. He was dedicated to his profession, volunteered at Boys and Girls Clubs, and had just been accepted to a master’s degree program. Petitioner’s lost future income ranges between $750,000 to $1,000,000. Petitioner’s injuries and resulting conditions are catastrophic. Pain and suffering damages and loss of enjoyment of life damages easily range between 10 and 20 million dollars. They could reasonably exceed 50 million dollars. Consideration of the value of the elements of damages affirms that the total damages that would have been proven if Petitioner’s claims had been tried would have been at least $25,000,000. Settlement Realities Petitioner’s claims were not tried. Petitioner had a strong malpractice claim against the doctor. The doctor, however, had only $500,000 worth of insurance coverage. There is no evidence of assets of the doctor that could have been reached to enforce a judgment. Petitioner’s claim against the hospital was not as strong. The hospital had significant liability and causation defenses. The doctor was not an employee or agent of the hospital. Hospital employees in most instances were following the doctor’s instructions, including when administering the medications that caused the damages. The limits of the doctor’s insurance coverage and the liability and causation issues of the claim against the hospital resulted in the decision to settle. Uncertainty about the provability or amount of damages was not a factor. The trial court approved the settlement. The settlement amount is 7.9 percent of the value of Petitioner’s claims. The stipulated amount of medical expenses the Agency paid through the Medicaid program is $13,904.36. The reasonable inference from the record in this case is that applying the 7.9 percent ratio of claims value to settlement recovery to the stipulated amount of medical expenses paid by the Medicaid program demonstrates that $1,098.44 of Petitioner’s settlement recovery was for past medical expenses. The Agency did not call witnesses, present evidence of the value of damages, or propose an alternative way to value damages.
The Issue What amount of Petitioners' $7,250,000.00 settlement related to personal injuries he received and also arising from a bad faith claim he intended to file, is payable to Respondent, Agency For Health Care Administration ("AHCA"), to satisfy AHCA's Medicaid lien totaling $356,714.94.
Findings Of Fact Based on the stipulations of the parties, the evidence presented at the hearing, and the record as a whole, the following Findings of Fact are made: Stipulated Facts From the Parties On June 21, 2013, Wilsin Guzman ("Guzman"), who was then 22 years old, was involved in a motor vehicle accident when his motorcycle struck a car that did not yield the right-of-way and turned left into Guzman's lane. In the accident, Guzman suffered catastrophic and permanent injuries including fractures to his left and right femur, fractures to his left wrist, chest contusion, multiple facial fractures, and catastrophic brain damage. Guzman is now unable to ambulate, eat, toilet, or care for himself in any manner. JPHS p. 9 ¶1. Guzman's medical care related to the injuries was paid by Medicaid. Medicaid, through AHCA, provided $356,714.94 in benefits. This $356,714.94 constituted Guzman's entire claim for past medical expenses. JPHS p. 9 ¶2. Adela Mayra Aguila was appointed Guzman's guardian and she pursued a personal injury lawsuit against the driver/owner of the car that struck Guzman's motorcycle ("Defendants") to recover all Guzman's damages. JPHS p. 9 ¶3; Pet. Ex. 8 Guzman's personal injury action was settled through a series of confidential settlements in a lump-sum unallocated amount of $7,250,000.00. Because Guzman was incapacitated, court approval of the settlement was required and the circuit court, by order of December 5, 2019, approved the settlement. JPHS p. 9 ¶4. As a condition of Guzman's eligibility for Medicaid, Guzman assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See 42 U.S.C. §1396a (a)(25)(H) and § 409.910(6)(b), Fla. Stat. During the pendency of Guzman's personal injury action, AHCA was notified of the action. JPHS p. 10 ¶5. AHCA did not "institute, intervene in, or join in" the personal injury action to enforce its rights as provided in section 409.910(11) or participate in any aspect of Guzman's personal injury action against the Defendants. JPHS p. 10 ¶6. Instead, AHCA asserted a $356,714.94 Medicaid lien against Guzman's cause of action and settlement of that action. JPHS p. 10 ¶5. By letter, AHCA was notified of Guzman's settlement. JPHS p. 10 ¶7. AHCA has not filed a motion to set-aside, void, or otherwise dispute Guzman's settlement. JPHS p. 10 ¶8. The Medicaid program through AHCA spent $356,714.94 on behalf of Guzman, all of which represents expenditures paid for Guzman's past medical expenses. JPHS p. 10 ¶9. Guzman's taxable costs incurred in securing the settlement totaled $281,958.20. JPHS p. 10 ¶10. Application of the formula at section 409.910(11)(f) to Guzman's $7,250,000.00 settlement requires payment to AHCA of the full $356,714.94 Medicaid lien. JPHS p. 10 ¶11. Petitioners have deposited the Medicaid lien amount in an interest- bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, and this constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). JPHS p.10 ¶12. Evidence From the Hearing Testimony of Alejandro Garcia-Halenar, Esquire Alejandro Garcia-Halenar, Esquire ("Garcia"), has been a trial attorney for 20 years and practices with Steinger, Greene & Feiner in Fort Lauderdale, Florida. He is the head of his firm's Fort Lauderdale litigation department and handles four to six jury trials each year. Most of his cases involve traumatic catastrophic brain injury. He is familiar with reviewing medical records, life care plans, economist reports, and interviewing/deposing expert witnesses. Garcia stays abreast of jury verdicts by reviewing jury reports and discussing cases with other attorneys. Garcia is a member of a number of trial attorney associations, including the Florida Justice Association and the Broward County Justice Association. As a routine part of his law practice, he makes assessments concerning the value of damages suffered by injured clients and he explained his process for making these determinations. Garcia is familiar with, and routinely participates in, allocation of settlements in the context of health insurance liens, worker compensation liens, and Medicare set-asides, as well as, allocations of judgments made by trial judges, post-verdict. Garcia represented Guzman in his personal injury claim. Garcia reviewed the accident report, reviewed Guzman's medical records, reviewed the life care plan, reviewed the economist report, interviewed/deposed fact and expert witnesses, and met with Guzman and his family numerous times. On the day of the accident, Guzman left work around 3:00 p.m. on his motorcycle. A short distance from work, the defendant turned her Cadillac Escalade left in front of Guzman's motorcycle. Guzman laid-down his motorcycle in an attempt to avoid hitting the defendant's vehicle, but ultimately struck the side of her vehicle. There were no line of sight issues or anything blocking her view, and the defendant was cited by law enforcement for making an illegal left turn and reckless driving. Guzman was taken to the hospital where it was determined that he had multiple broken bones, internal injuries, and catastrophic brain damage. It was questionable if Guzman was going to survive and he remained in a coma for over two months and in the ICU for some time longer. Garcia felt that Guzman's injuries profoundly and negatively impacted his life. Due to the catastrophic brain damage, Guzman is unable to walk, feed himself, bathe, and requires 24-hour-a-day care. He has limited speech and only short-term memory. Guzman's mother quit her job as a home health aide to stay home and care for Guzman 24/7. Further, Guzman's fiancée moved out of her parents' home and into Guzman's parents' home to help care for Guzman. Based on his professional training and experience, Garcia testified that Guzman's total damages have a value in excess of $50 to $60 million. Garcia explained that during the litigation of the case, a life care plan and economist report was prepared calculating the present value of Guzman's past and future lost wages and future medicals. The economist report provided a low and a high valuation based on whether Guzman remained in-home or was transferred to a nursing home. The lower calculation placed a value of past lost wages at $28,208.00, future lost wages at $194,761.00, and future medicals at $15,160,055.00. The higher calculation valued past lost wages at $28,208.00, future lost wages at $240,814.00, and future medicals at $30,664,888.00. Garcia explained that taking these numbers and adding them to the $356,714.94 claim for past medical expenses, Guzman's total claim for economic damages would be between $15,739,738.00 and $31,290,624.00. Garcia opined that Guzman's life care plan and economist report were consistent with life care plans and economist reports he had seen in other cases involving catastrophic brain damage. He concluded that the calculation of Guzman's economic damages was conservative. Garcia explained that added to the estimated $15 million to $31 million in economic damages, would be Guzman's claim for noneconomic damages. This added amount was necessary to calculate the full value of Guzman's damages. Garcia testified that typically the noneconomic damages awarded by a jury alone are in excess of the value of the economic damages. Garcia explained that his law firm routinely presents cases to focus groups and mock juries to gauge the potential reaction of a jury. Garcia testified that in Guzman's case, the focus groups and mock juries consistently placed a high value on Guzman's noneconomic damages, and that each focus group assessed noneconomic damages with numbers ranging from $50 million, up to as high as $100 million. Garcia testified that the jury verdicts in Petitioners' Exhibit 12 were comparable to Guzman's case and supported his valuation of Guzman's damages. Garcia testified that Guzman's noneconomic damages could have been in this $22 to 39 million range, based on the focus groups and mock jury results for noneconomic damages. Adding the $15 to $31 million in economic damages to the noneconomic damages, Garcia testified that Guzman's damages had a total value in excess of $50 to $60 million. Garcia testified that it is a routine part of his practice to round-table cases with other attorneys. His discussions regarding Guzman's case with attorneys in his firm, as well as with the law firm handling the potential insurance bad faith claim, resulted in a consensus that Guzman's total damages had a value in excess of $50 to $60 million. Garcia recapped his total damage valuation and concluded that it would be extremely conservative to value all of Guzman's damages at $30 million. Garcia testified that after his evaluation and investigation of the case, a personal injury lawsuit was filed against the owner and driver of the vehicle. He explained that prior to filing the suit, a demand was made for the defendant/owner's $30,000.00 insurance policy limits in settlement of the personal injury claim because there was no other insurance available. The insurance company did not appropriately tender the $30,000.00 in a timely manner. In Garcia's professional opinion, this gave rise to a potential claim for bad faith against the driver's insurance company, making it potentially liable for all personal injury damages suffered by Guzman. Garcia summarized the procedures related to a bad faith claim brought against an insurance company. He explained that in such circumstances the initial lawsuit for personal injuries is brought against the underlying at-fault party, in this case, the driver. If and when a judgment is entered against the at-fault party, a separate bad faith lawsuit is ripe and may be brought against the insurance company to recover on the judgment. In Garcia's opinion, a bad faith claim against an insurance company and related litigation, can be a lengthy process and is extremely complicated with mixed results. In this case, the initial lawsuit was brought against the owner and driver of the vehicle. The insurance company was notified of the lawsuit against the driver and was aware of its potential bad faith liability if a judgment was entered against the Defendants.1 After five years of litigation, the personal injury case settled on the eve of trial for $7,250,000.00. Garcia testified that the settlement was based, in part, on the risk of proceeding forward with a future complicated bad faith lawsuit and the extensive time involved in such a proceeding.2 Garcia testified that the $7,250,000.00 settlement did not fully compensate Guzman for the total or full value of his damages arising from the accident. He opined that based on a conservative value of total damages of $30 million, Guzman recovered only 24.16% of the total value of his damages in the settlement. He further explained that because Guzman recovered only 24.16% of his total damages, he recovered only 24.16% of his $356,714.94 claim for past medical expenses in the settlement, or $86,182.33. Garcia concluded, without objection, that it would be reasonable and fair to allocate $86,182.33 of the settlement to past medical expenses. Garcia also testified that because the allocation to past medical expenses was based on a conservative value of all damages at $30 million, the allocation of $86,182.33 of the settlement to past medical expenses was conservative as well. 1 Guzman had attorneys working on his personal injury case who specialized in bad faith litigation. The insurance company participated in the litigation of the personal injury lawsuit. 2 Regardless of what considerations drove the settlement amount, the evidence showed that Petitioners' experts still valued Guzman’s total damages at $30 million. Testimony of R. Vinson Barrett, Esquire Barrett has been a trial attorney for over 40 years and is a partner with the law firm of Barrett, Nonni and Homola, P.A., in Tallahassee, Florida. His practice is dedicated to plaintiff's personal injury and wrongful death cases. He has handled cases involving catastrophic brain injury and routinely handles jury trials. Barrett is familiar with reviewing medical records, life care plans, and economist reports. Barrett stays abreast of jury verdicts by reviewing jury verdict reports and discussing cases with other trial attorneys. He is a member of the Florida Justice Association and the Capital City Justice Association. As a regular part of his practice, Barrett makes assessments concerning the value of damages suffered by injured parties. He explained his process for making these assessments. Barrett testified that he is familiar with settlement allocation in the context of health insurance liens, Medicare set-asides, and workers' compensation liens. He is familiar with the process of allocating settlements in the context of Medicaid liens and described that process. Barrett has been accepted as an expert in the valuation of damages in federal court as well as numerous Medicaid lien hearings at DOAH. Barrett reviewed the exhibits filed in this proceeding, the JPHS, and listened to Garcia's testimony. He was familiar with Guzman's injuries. Barrett detailed the extensive nature of Guzman's injuries and the impact Guzman's injuries had on his life. Barrett commented that Guzman had suffered as catastrophic an injury as you can possibly suffer, and he could not imagine how an individual could be hurt much worse. In Guzman's case, the injuries were made worse by the fact that Guzman was not just in a coma or "completely out of it." Guzman had enough mental capacity remaining to realize that his life, as he would have hoped for it, was over. Based on his professional training and experience, Barrett believed Guzman's total damages had a conservative value between $30 and $50 million. Barrett outlined that the economist report placed the present value of Guzman's economic damages at between $15 and $31 million. Barrett testified that this present valuation of the economic damages was very similar to valuations he had seen in other economic reports involving catastrophic brain damage, and he believed the valuations were reasonable. He believed that in addition to the $15 to $31 million in economic damages, he would add Guzman's claim for noneconomic damages. According to Barrett, Guzman's claim for noneconomic damages would have a significantly high value. He felt that it would be extremely unlikely for a jury to award less than $15 million to Guzman for his noneconomic damages. Barrett noted that the jury verdicts included in Petitioners' Exhibit 12 were comparable to Guzman's case--noting that the average award for pain and suffering in those verdicts was $24.7 million. The $24.7 million value of noneconomic damages was in-line with his opinion that Guzman's noneconomic damages alone would be in the same range as Guzman's economic damages--$15 to $31 million. Barrett testified that, in light of the fact that he believed Guzman's damages would have a total combined value of between $30 and 50 million, a total value of $30 million was extremely conservative. Barrett was aware that the case settled for $7,250,000.00. He concluded that this settlement amount did not fully compensate Guzman for all the damages he had suffered. Using a value of total damages of $30 million, the $7,250,000.00 settlement represented a recovery of 24.16% of the value of the damages. Because only 24.16% of the total damages were recovered by Guzman, only 24.16% of the $356,714.94 claim for past medical expenses was recovered in the settlement, or $86,182.33.3 Barrett concluded that it was reasonable and conservative to allocate $86,182.33 of the settlement to past medical expenses. AHCA did not call any witnesses, present any evidence regarding a different value of the damages or utilize experts to propose a different way or method to value the total damages suffered by Guzman. Nor did AHCA persuasively contest the experts' valuation of Petitioners' total damages or the methodology used to calculate the $86,182.33 allocation to past medical expenses. As a result, Petitioners' testimony and evidence presented regarding his total damages was essentially unrebutted and uncontradicted. To recap the evidence, Petitioners presented the unrebutted expert testimony of two trial lawyers who made projections as to the amount of total damages suffered by Guzman. This evidence, in turn, adequately proved what portion of Guzman's undifferentiated settlement was "fairly allocable to past medical expenses." More specifically, and in "doing the math" under the proportionality methodology--the $7,250,000.00 settlement represents a 24.16% recovery of all damages. ($7,250,000.0 is 24.16% of $30 million). Applying the same ratio of 24.16% to the $356,714.94 in past medical expenses paid by AHCA, the undersigned finds that $86,182.33 in the settlement agreement is "fairly allocable" to past medical expenses.
The Issue The issue in this proceeding is how much of Petitioner’s settlement proceeds should be paid to Respondent, the Agency for Health Care Administration (“AHCA”) to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes.1/
Findings Of Fact In mid-October 2012, Petitioner, a trial lawyer, woke up on a Friday morning with a pain in the big toe of his left foot. He called his family practice physician2/ and was able to obtain an appointment for the following Tuesday. At the appointment, Petitioner saw a nurse practitioner who examined him and pronounced that he had gout. The nurse practitioner prescribed a gout medication. Over the course of the next week, Petitioner’s condition worsened, with pain radiating all the way to his hip. On the following Tuesday, he saw the physician. Despite blood testing that showed an elevated white blood cell count, the physician concurred with the nurse practitioner that Petitioner was suffering from an extreme case of gout. The physician prescribed a regimen of steroids for the gout. By the next Saturday, November 3, 2012, Petitioner was so sick that a neighbor drove him to Tampa General Hospital. His blood pressure was extremely low and his kidneys had ceased functioning. Petitioner was on the verge of death. At the hospital, he learned that the physician and his nurse practitioner had misdiagnosed Petitioner’s condition. He in fact had a raging staphylococcus aureus infection. Over the course of the next several days, Petitioner underwent several surgeries to save his life. First, the toes on his left foot were amputated. Then, his left foot was amputated. Next, his left leg was amputated below the knee. Finally, the left leg was amputated above the knee. Still, the infection was not controlled. Petitioner was in and out of a coma for a month. He testified that his infectious disease doctor told him that the infection was so bad that the treatment team was at a loss on how to proceed. However, the infection ultimately was brought under control. Once he was stabilized, Petitioner was transferred to Tampa General’s rehabilitation facility and finally released to return to his home. Petitioner was sixty-one years old at the time his leg was amputated. He testified that he practiced as a trial lawyer in Florida from 1977 until his illness. Petitioner stated that he does not find it possible to be a trial lawyer with a prosthetic leg and a walker, but that he does some mediation work. His basic income is $1,653 per month in Social Security benefits. Petitioner testified that this amount is never enough to cover his expenses and that he is required to dip into the proceeds of his settlement with the medical providers in order to make ends meet. He stated that it is “terrifying” to watch the money going out and to wonder what he will do when it is gone. Petitioner lost his Tampa home to foreclosure and was forced to move 40 miles away to find a house that he could afford. Moving away from his longtime home further isolated Petitioner and necessitated paying money for things that he could previously rely on friends and neighbors to help with, such as grocery shopping. Petitioner testified that prior to the amputation he had led an active lifestyle. He ran, rode a bike, and played golf twice a week. He was an instructor pilot. Petitioner is now incapable of engaging in any of those activities. Petitioner testified that if he falls and is not near a piece of furniture or other object that allows him to use his upper body strength to lift himself, he is helpless until someone comes along to assist him. Merely going to the bathroom involves a complicated transfer from his wheelchair using specially installed bars. Petitioner testified that prior to his settlement he had not, and to his knowledge others had not, made payments in the past or in advance for his future medical care. Civil trial attorney William E. Hahn testified on behalf of Petitioner. Mr. Hahn has practiced since 1972, is a board certified civil trial lawyer, and is a past president of the Florida chapter of the American Board of Trial Advocates, a group that named Mr. Hahn “trial lawyer of the year” in 2012. Mr. Hahn testified that he generally represents plaintiffs in medical malpractice cases and has tried over 100 complex jury trials. He has won verdicts as high as $22.5 million, as low as zero, and “all in between.” Mr. Hahn takes cases involving “devastating, catastrophic” injuries such as that suffered by Petitioner. A routine part of his practice is to make a determination of the value of a client’s damages. Mr. Hahn was accepted without objection as an expert in assessing the value of damages suffered by injured parties. Mr. Hahn testified that his evaluation process begins with acquainting himself with the nature of the injury. He then calculates the expenses that have been incurred in the past for the client’s treatment and predicts the costs of future treatment. He looks at the medical records and performs his own medical research. He speaks with the treating physicians as well as the client. Mr. Hahn bases his assessments on his experience and training and the experience of other lawyers in handling similar cases throughout Florida and the United States. Mr. Hahn testified that he has known Petitioner since they were both young lawyers practicing in Tampa. When Petitioner called him and explained his situation, Mr. Hahn agreed to represent Petitioner in his medical malpractice action. Mr. Hahn noted that with proper medical treatment Petitioner would have been spared multiple surgeries and the amputation of his leg. He would likely have recovered and returned to law practice. Mr. Hahn opined that the value of Petitioner’s case was “well in excess of $2 million,” based on Petitioner’s background, his training and experience, and the devastating injury and its long term effects. Given Petitioner’s status in Tampa and the legal community, and the outrageousness of what happened, Mr. Hahn believed the verdict would have “exceeded two, four or many more millions of dollars.” Mr. Hahn explained that in order to proceed with a medical malpractice claim in Florida, the plaintiff must go through a number of administrative steps called the “notice of intent” process. Mr. Hahn secured the services of a board certified internal medicine physician as his expert. The surgeon confirmed what Mr. Hahn had surmised from the medical records, that this was a case of gross malpractice. Mr. Hahn obtained an affidavit from the surgeon and notified the potential defendants that he was about to make a claim on Petitioner’s behalf. Mr. Hahn was aware that Petitioner had received services from Medicaid and initiated a correspondence with AHCA.3/ The correspondence indicated that Medicaid had paid $135,047.86 in medical expenses for Petitioner. Mr. Hahn stated that this amount would have been part of Petitioner’s claim had the matter been fully litigated. Mr. Hahn testified that, despite the clear liability, the recoverable assets complicated any potential award of damages from the medical providers. The total insurance available was $500,000. The insurance company was acting in good faith in trying to settle the case, which ruled out a bad faith case against the insurer. The only other potential sources of funds were the personal assets of the nurse practitioner and the physician. The defense attorney informed Mr. Hahn that any assets possessed by these individuals were protected from judgment. The defendants recognized that this was a “terrible” case and wanted to settle. Mr. Hahn stated that it became apparent to him that the best business decision for Petitioner was to get the case resolved within the limits of the insurance coverage. He was able to reduce his fee, keep the litigation costs down, and get the matter resolved quickly. Mr. Hahn secured a settlement of $492,500. Mr. Hahn testified that no amount of money could ever make Petitioner whole, but that the amount of the settlement did not come close to fully compensating him for his damages and would not come close to taking care of him for the rest of his life. Mr. Hahn pointed out that in the document memorializing the settlement agreement, the defendants acknowledged that the settlement would not come close to making Petitioner whole. The portion of the settlement agreement referenced by Mr. Hahn was the “Allocation of Settlement” language, which read as follows: Although it is acknowledged that this settlement does not fully compensate the Releasor for the damages he has allegedly suffered, this settlement shall operate as a full and complete release as to all claims against the Releasees, without regard to this settlement only compensating the Releasor for a fraction of the total monetary value of his alleged damages. These damages have a value in excess of $2,000,000, of which $135,047.86 represents Releasor’s claim for past medical expenses. Given the facts, circumstances, and nature of the Releasor’s alleged injuries and this settlement, $33,255.54 of this settlement has been allocated to the Releasor’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 Releasor’s alleged damages. Further, the parties acknowledge that the Releasor may need future medical care related to his 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 his 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. Mr. Hahn testified that the allocation of settlement paragraphs were the product of a negotiation with the defendants’ lawyer. The language was acknowledged and agreed to by all parties. The defendants agreed with the valuation of damages “in excess of $2 million.” The allocation of $33,255.54 to past medical expenses was “simple math,” its relation to the $492,500 settlement amount being proportional to the relation of $135,047.86 to the $2 million value of the claim. Petitioner was settling for 24.625% of his claim’s value, and therefore the Medicaid lien should be reduced proportionately. Mr. Hahn testified that all the parties believed this settlement to be reasonable. Mr. Hahn stated that in his professional judgment, the allocation of $33,255.54 was not only reasonable, it was overly generous. The real value of the case was well in excess of $2 million. Mr. Hahn believed that it would have been reasonable to value the claim at $4 million, in which case the Medicaid allocation would have been cut in half. Mr. Hahn testified that the parties were trying to recognize that Medicaid did “wonderfully” by Petitioner. They valued the case conservatively at $2 million. Many lawyers would have valued it much higher, and could have supported their valuation with documentation. Mr. Hahn stated that the parties’ concern was to be appropriate, conservative, and provide a fair recovery to Medicaid. AHCA called no witness to contest the valuation of damages made by Mr. Hahn or to offer an alternative methodology to calculate the allocation to past medical expenses. No evidence was presented indicating the settlement agreement was not reasonable given all the circumstances of the case. It does not appear that the parties colluded to minimize the share of the settlement proceeds attributable to Medicaid’s payment of costs for Petitioner’s medical care. In fact, the evidence established that the settlement was extremely conservative in its valuation of Petitioner’s claim and that the settling parties could have reasonably apportioned far less to Medicaid than they actually did. AHCA was not a party to the settlement of Petitioner’s claim. AHCA correctly computed the lien amount pursuant to the statutory formula in section 409.910(11)(f). Deducting the 25 percent attorney’s fee, or $123,125, from the $492,500 recovery leaves $371,375, half of which is $185,687.50. That figure exceeds the actual amount expended by Medicaid on Petitioner’s medical care. Application of the formula would provide sufficient funds to satisfy the Medicaid lien of $135,047.86. Petitioner proved by clear and convincing evidence that the $2 million total value of the claim was a reasonable, if not unduly conservative, amount. Petitioner proved by clear and convincing evidence, based on the clear strength of his case and on the fact that it was limited only by the inability to collect the full amount of the likely judgment, that the amount agreed upon in settlement of Petitioner’s claims constituted a fair settlement, including the portion attributed to the Medicaid lien for medical expenses.
The Issue What is the proper amount of Petitioner's personal injury settlement payable to Respondent, Agency for Health Care Administration ("AHCA"), to satisfy AHCA's $191,298.99 Medicaid lien under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulations of the parties, the evidence presented at the hearing, and the record as a whole, the following findings of fact are made: On August 9, 2018, Petitioner, Russell Wellington ("Wellington"), who was 59 years old, was driving a motorcycle in the inside northbound lane of U.S. Highway 1 at or near mile marker 99 in Monroe County, Florida. A vehicle driven by JI Young Chung ("Chung"), and owned by a car rental company, was northbound in the outside lane on U.S. Highway 1. Chung turned left into Wellington’s motorcycle causing him to be ejected from the motorcycle. As a result of the accident, Wellington sustained catastrophic injuries including a right leg amputation, a fractured pelvis, fractured humerus, fractured ribs, kidney failure, and a head injury. Wellington is now disabled and unable to work. JPHS p. 10, ¶1. Wellington’s medical care related to the injury was paid by Medicaid, and Medicaid, through AHCA, provided $191,298.99 in benefits. This $191,298.99 constituted Wellington’s entire claim for past medical expenses. JPHS p. 10, ¶2. Wellington pursued a personal injury claim against the driver and owner of the car that struck his motorcycle (“tortfeasors”) to recover all his damages. JPHS p. 10, ¶3. The other driver, Chung, maintained an insurance policy with only $100,000 in insurance limits, and had no other recoverable assets. The rental company that owned the vehicle maintained an insurance policy with only $10,000 in insurance limits. Wellington’s personal injury claim against the tortfeasors was settled for an unallocated lump sum amount of $110,000.00. JPHS p. 10, ¶4. As a condition of Wellington’s eligibility for Medicaid, Wellington assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) ; § 409.910(6)(b), Fla. Stat. During the pendency of Wellington’s personal injury claim, AHCA was notified of the claim and asserted a $191,298.99 Medicaid lien against Wellington’s cause of action and settlement of that action. JPHS p. 10, ¶5. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Wellington’s claim against the tortfeasors. JPHS p. 10, ¶6. By letter, AHCA was notified of Wellington’s settlement. JPHS p. 10, ¶7. AHCA has not filed a motion to set-aside, void, or otherwise dispute Wellington’s settlement. JPHS p. 10, ¶8. The Medicaid program, through AHCA, spent $191,298.99 on behalf of Wellington, all of which represents expenditures paid for Wellington’s past medical expenses. JPHS p. 10, ¶9. Wellington’s taxable costs incurred in securing the $110,000.00 settlement totaled $766.78. JPHS p. 10, ¶10. Application of the formula at section 409.910(11)(f) to Wellington’s $110,000.00 settlement requires payment to AHCA of $40,866.61. JPHS p. 11, ¶11. Petitioner has deposited the section 409.910(11)(f) formula amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). JPHS p.11, ¶12. Testimony of Steven G. Jugo, Esquire Steven G. Jugo, Esquire ("Jugo"), was called by Petitioner. He has been an attorney for 41 years and practices with the law firm of Jugo & Murphy in Miami, Florida. For the past 37 years, Jugo has practiced exclusively plaintiff’s personal injury, medical malpractice, and wrongful death law. He routinely handles jury trials and cases involving catastrophic injury. He is familiar with reviewing medical records, reviewing accident reports, and deposing fact and expert witnesses. He stays abreast of jury verdicts in his geographic area by reviewing jury verdict reporters and discussing cases with other trial attorneys. He is a member of several trial attorney organizations including the Florida Justice Association and the American Association for Justice. As a routine part of his practice, Jugo makes assessments concerning the value of damages suffered by injured clients. He briefly explained his process for making these determinations. Jugo is familiar with, and routinely participates in, processes involving the allocation of settlements in matters including health insurance liens, workers' compensation liens, and Medicare set-asides, as well as, allocations of judgments made by judges post-verdict. Jugo represented Wellington in his underlying personal injury claim. Jugo reviewed the accident report, reviewed Wellington’s medical records, met with Wellington numerous times, and deposed the driver of the vehicle that struck Wellington’s motorcycle. As a result of the accident, Wellington underwent many surgeries and extensive medical intervention. Jugo felt that Wellington’s injuries have tremendously impacted his life in a negative way. He explained that Wellington is no longer able to work and he is no longer able to adequately care for or play with the three young children he adopted. Without objection by AHCA, Jugo testified that based on his professional training and experience, it was his opinion that a very conservative value for Wellington’s damages would be $4 million. Jugo explained that his valuation of Wellington’s total projected damages was based on his experience, his comparison of Wellington’s case to similar jury verdicts, and discussions about the case with other attorneys. He explained that the jury verdicts outlined in Petitioner’s Exhibit 9 were comparable to Wellington’s case and supported his valuation of Wellington’s total and projected damages in this case. Jugo detailed that about 70 percent of the verdicts he reviewed which were similar in nature, were in the $5 million range. He opined that this demonstrated that Wellington’s total and projected damages would also have a minimum value of $4 million. Jugo discussed the value of Wellington’s damages with other attorneys, and they agreed with the valuation of Wellington’s total projected damages being in excess of $4 million. Wellington’s personal injury claim was brought against the driver and the rental car company that owned the vehicle which struck Wellington’s motorcycle. The vehicle driver, Chung, maintained an insurance policy with only $100,000.00 in coverage, and had no other recoverable assets. Jugo explained that because the vehicle was owned by a rental car company, the law shielded the rental car company from suit. Nonetheless, he explained that the rental car company had a $10,000.00 insurance policy it made available. As a result, the total settlement was $110,000.00. Jugo believed that the personal injury settlement did not fully compensate Wellington for all of his projected personal injury damages. Without objection by AHCA’s counsel, Jugo testified that based on a conservative value of all damages of $4 million, Wellington recovered in the settlement only 2.75 percent of the value of his total and projected damages. Again, without objection, he testified that because Wellington recovered only 2.75 percent of his total and projected damages, he recovered in the settlement only 2.75 percent of his $191,298.99 claim for past medical expenses, or $5,260.72. Jugo also testified that it would be reasonable to allocate $5,260.72 of the settlement to past medical expenses, stating “[t]hat’s the maximum amount I believe should be allocated to past medical expenses.” Testimony of R. Vinson Barrett, Esquire R. Vinson Barrett, Esquire ("Barrett"), has been a trial attorney for over 40 years. He is a partner with the law firm of Barrett, Nonni and Homola, P.A., in Tallahassee. His legal practice is dedicated to plaintiff’s personal injury and wrongful death cases. He has handled cases involving automobile accidents and catastrophic injuries. Barrett routinely handles jury trials. Barrett stays abreast of jury verdicts by periodically reviewing jury verdict reports and discussing cases with other trial attorneys. He is a member of the Florida Justice Association and the Capital City Justice Association. As a routine part of his practice, Barrett makes assessments concerning the value of damages suffered by injured parties. He briefly explained his process for making these assessments. It has been part of his law practice to gain familiarity with settlement allocation involving health insurance liens, Medicare set-asides, and workers’ compensation liens. He is also familiar with the process of allocating settlements in the context of Medicaid liens, and he described that process. Barrett has been accepted as an expert in the valuation of personal injury damages in federal court, as well as numerous Medicaid lien hearings at DOAH. Barrett addressed the instant case. He was familiar with Wellington’s injuries and the circumstances resulting in the injuries. Barrett detailed the extensive nature of Wellington’s injuries and the general impact of such injuries. Barrett testified, without objection, that based on his professional training and experience, he believed Wellington’s damages had a conservative value of $4 million. More specifically, he stated, “I felt that the damages were conservatively, very conservatively, $4 Million. I believe this case, if it had gone to a jury could well have gone up into the eight figures, probably would have, I think. If I was asking for damages in this case in front of a jury, it would probably be somewhere, between $8 and 12 million or even a little higher, if I was in South Florida jurisdiction.” Barrett has been accepted as an expert in the valuation of personal injury damages in other cases at DOAH. Barrett explained that the jury verdicts outlined in Petitioner’s Exhibit 9 involved injuries comparable to Wellington’s injuries and supported his valuation of Wellington’s total and projected damages at $4 million. Barrett went on to explain that the average trial verdict and award he reviewed from Exhibit 9 was $5.5 million and the average award for pain and suffering was $3,788,333.00. Barrett believed that the jury verdict in the Nummela case, from Exhibit 9, most closely tracked Wellington’s case. Barrett explained that the injuries suffered by Nummela compared most closely with Wellington’s injuries and he noted the similarities. Barrett also pointed out that the jury in Nummela had determined that the damages had a value of $9.5 million, which Barrett testified was in line with what he believed a jury would have awarded to Wellington, if this matter had proceeded to trial. Barrett was aware that Wellington’s case had settled for the insurance policy limits of $110,000.00. He testified that this settlement amount did not fully compensate Wellington for all the personal injury damages he had suffered. Barrett testified, without objection by AHCA’s counsel, that using a conservative value of $4 million for all projected damages, the $110,000.00 settlement represented a recovery of 2.75 percent of the total and projected damages. Barrett testified, again without objection, that because only 2.75 percent of his damages were recovered in the settlement, only 2.75 percent of the $191,298.99 claim for past medical expenses was recovered by Wellington in the settlement, namely $5,260.72. Barrett testified that it would be reasonable to allocate $5,260.72 of Wellington’s settlement to his past medical expenses. Inexplicably, AHCA did not call any witnesses, present any contradictory evidence as to a lower value of Wellington’s projected or total damages, or call any witnesses to contest the methodology used to calculate the $5,260.72 allocation to past medical expenses. The unrebutted evidence supports that Wellington’s total and projected damages had a value in excess of $4 million. By applying the same ratio to AHCA's lien that the settlement ($110,000.00) bears to the total projected monetary value of all the damages ($4,000,000.00), a finding is reached that $5,260.72 of the settlement is fairly allocable to past medical expenses. Under the proportionality methodology, the $110,000.00 settlement represents a 2.75 percent recovery of the expert’s total and projected damages of $4 million ($110,000.00 is 2.75 percent of $4 million). Applying this same 2.75 percent to the $191,298.99 claim for past medical expense, the experts opined that Wellington recovered $5,260.72 in past medical expenses in the settlement.2 Of particular consequence to this case, AHCA did not call any expert witnesses, nor did it present any evidence, to rebut or contradict Petitioner's experts or proposed allocation of $5,260.72 in the settlement to past medical expenses. Likewise, AHCA did not dispute or present any persuasive evidence or arguments that Wellington’s injuries were overstated or incorrectly described by Messrs. Jugo or Barrett. 2 This methodology is commonly referred to as the proportionality test or pro-rata formula. On AHCA's cross-examination of the attorney experts, the methodology used by them to arrive at their opinion concerning a fair allocation of past medical expenses in Wellington’s settlement was not persuasively challenged or overcome by AHCA. Simply put, the amount of $5,260.72 proposed by Petitioner as a fair allocation of past medical expenses from the settlement agreement was not successfully refuted or challenged by AHCA. Under the circumstances and proof presented in this case, Petitioner proved by a preponderance of the evidence that $5,260.72 was a fair allocation of the total settlement amount to past medical expenses. AHCA failed to develop any adequate basis or evidence in the record to reject Jugo’s or Barrett’s opinion, or to reach any other conclusion concerning a fair allocation, other than the amount of $5,260.72 presented by the evidence and proposed by Petitioner.
The Issue The issue is the amount payable to Respondent, Agency for Health Care Administration (Respondent or AHCA), in satisfaction of Respondent's Medicaid lien from a settlement offer received on behalf of Petitioner, Ciara Thomas.
Findings Of Fact Ciara Thomas is a six-year-old female who currently resides in St. Petersburg, Florida. Respondent is the state agency authorized to administer Florida's Medicaid program. See § 409.902, Fla. Stat. On October 18, 2012, Ciara, then two and one-half weeks shy of her third birthday, was severely injured when she fell into a bathtub and was scalded by hot water. At that time, Ciara, her mother, and a brother were tenants of a residential dwelling located at 8181 91st Terrace, Seminole, Florida, which was owned by Selvie Berberi, the landlord. Ciara suffered from second- and third-degree burns over 65 percent of her total body surface area, and in particular, to her back, buttocks, chest, bilateral tower extremities, bilateral upper extremities, and genitals. Ciara received extensive medical care and treatment for her scald burns at Tampa General Hospital, where she was hospitalized from October 18, 2012, through January 9, 2013. The parties have stipulated that through the Medicaid program, AHCA spent $174,675.05 on behalf of Ciara. Because of the extensive nature of the burns on her lower extremities and entire back, Ciara has undergone five skin grafts. She has completed physical therapy in the burn center and does not anticipate any further medical treatment until she is fully grown. Ciara has very visible scars over much of her body, which will not likely improve over time. The skin feels rubbery, with no smooth texture, and it is affected by the weather. Whenever she is outside, Ciara must be completely covered with clothing. She attends school but cannot play outdoors due to potential injury or infection. Because of the condition of her skin, she is subjected to stares by other persons and students, causing her to be extremely self- conscious. Petitioner filed suit in Pinellas County Circuit Court against the landlord in negligence for her failure to provide safe and proper working plumbing to the rental home. Among other things, the water heater had been set far above the legal limits of 120 degrees. During the pendency of that litigation, the landlord's homeowner's insurance company offered payment in settlement in the amount of $101,000.00, representing the $100,000.00 coverage limit for bodily injury liability, and $1,000.00 as payment of the coverage limit of the policy's medical payments provisions. At hearing, Ciara's mother indicated that she intends to accept the offer if it is approved by the court. AHCA contends it should be reimbursed for Medicaid expenditures on behalf of Petitioner pursuant to the formula set forth in section 409.910(11)(f). Under the formula, the lien amount is computed by deducting a 25 percent attorney's fee ($25,250.00) and taxable costs ($879.59) from the $101,000.00 recovery, which yields a sum of $74,870.41. This amount is then divided by two, which yields $37,435.21. Under the statute, Respondent is limited to recovery of the amount derived from the statutory formula or the amount of the lien, whichever is less. Petitioner agrees that under the statutory default allocation, AHCA would be entitled to $37,435.21. Section 409.910(17)(b) provides that a Medicaid recipient has a right to rebut the default allocation described above. Utilizing that provision, Petitioner asserts that reimbursement should be limited to the same ratio as her recovery amount is to the full or total value of her damages. Under this theory, Petitioner contends that had her case gone to trial, a jury would have awarded at least $3.5 million, or the mid-point between $3 million and $4 million. Because the settlement represents a recovery of 2.9 percent of the valuation of her total damages, Petitioner contends she should pay 2.9 percent of AHCA's past medical expenses, or $5,066.00, to satisfy the Medicaid lien. The statute requires that Petitioner substantiate her position by clear and convincing evidence. To support the proposed full value of damages, Petitioner presented the testimony of Keith Ligori, a trial attorney in Tampa for the last 15 years, who specializes in all types of personal injury cases. Mr. Ligori has handled similar cases "numerous times," and on a daily basis he makes assessments of the valuation of potential claims. He is familiar with the reasonable valuation of personal injury cases in the greater Tampa Bay area, including Pinellas County. Mr. Ligori presented fact and opinion testimony on the issue of valuation of damages. Before forming his opinion on damages in this case, Mr. Ligori reviewed the medical records, including photographs of Ciara, interviewed the child and her mother, and discussed the case with her trial counsel. He also relied on his training and experience and familiarity with other cases in the Tampa Bay area. Based on his review of the case, Mr. Ligori valued total damages, conservatively, at $3.5 million. This figure took into account non-economic factors, including mental anguish, loss of ability or capacity to enjoy life, disability, and scarring and disfigurement, and economic damages consisting of the medical expenses paid by AHCA. Mr. Ligori testified that if he was actually trying the case before a jury, he would seek damages of between $5 million and $10 million. The undersigned finds the valuation of damages at $3.5 million to be credible and persuasive and is hereby accepted. In summary, by clear and convincing evidence, Petitioner has demonstrated that, conservatively, the full value of her damages is $3.5 million. The settlement amount of $101,000.00 is 2.9 percent of the total value of Petitioner's damages. The application of this factor to total medical expenses incurred by AHCA results in an allocation of $5,066.00 as a reasonable payment of the Medicaid lien.
The Issue What is the amount to be reimbursed to Respondent, Agency for Health Care Administration (AHCA), for medical expenses paid on behalf of Petitioner Bryant (Petitioner) pursuant to section 409.910, Florida Statutes, from a personal injury settlement received by Petitioner from a third party?
Findings Of Fact Factual Allegations that Served As a Basis for the Underlying Personal Injury Litigation On March 11, 2009, Petitioner, then 21 years old, suffered catastrophic physical injury and brain damage when her bicycle was struck by a car near the Oakland Park I-95 overpass in Broward County. Petitioner was taken to the North Broward Hospital, where she was intubated with mechanical ventilation. Imaging revealed a right subdural hematoma, and Petitioner showed signs of increased intracranial pressure. On March 12, 2009, Petitioner underwent bilateral frontoparietal craniotomies through separate incisions with evacuation of a left parietooccipital epidural hematoma and right frontal temporoparietal subdural hematoma; bilateral duraplasty to accommodate brain swelling; and repair of a left occipital laceration. On that same date, a CT scan revealed that Petitioner had numerous pelvic and hip fractures. Petitioner underwent an upper gastrointestinal endoscopy with a PEG tube placement. Eventually, her medical condition stabilized and she was discharged to rehabilitation. Petitioner is now unable to move the left side of her body. She receives her nutrition through a g-tube and is bowel and bladder incontinent. She suffers from cognitive deficits. Petitioner is cognizant of her condition and her surroundings, but has extreme difficulty with communication. Petitioner is severely disabled and unable to ambulate or care for herself in any manner. Prior to the accident, Petitioner was a healthy 21-year-old. It is anticipated that Petitioner's life span will be approximately another 60 years, her condition is permanent, and she will always need full-time medical care. The Personal Injury Litigation Due to Petitioner's incapacity, Freda Bryant (Bryant) was appointed the guardian of the person and property of Petitioner. As Petitioner's guardian, Bryant brought a personal injury action to recover all of Petitioner's damages against the company responsible for maintaining the lights on the highway where Petitioner's accident occurred ("Defendant"). Freda Bryant retained the Krupnick, Campbell, Malone, et al., law firm of Fort Lauderdale, a firm concentrating in the areas of catastrophic personal injury, wrongful death, and products liability. The Medicaid Lien Petitioner is a Medicaid recipient and her medical care was paid for by Medicaid. AHCA, through the Medicaid program, paid $404,399.68 on behalf of Petitioner for medical benefits related to the injuries sustained by Petitioner. This $404,399.68 paid by Medicaid represented Petitioner's entire claim for past medical expenses up until the time of settlement. During the pendency of Petitioner's personal injury action, AHCA was notified of the action and AHCA, through its collections contractor Xerox Recovery Services, asserted a $404,399.68 Medicaid lien against Petitioner's cause of action and settlement of that action. Valuation of the Personal Injury Claim Joseph Slama (Slama), the attorney representing Petitioner in her personal injury action, prepared an evaluation of her claim in preparation for trial and/or settlement negotiations. Slama has extensive experience representing parties in catastrophic personal injury, wrongful death, and product liability cases since 1982. Slama has practiced in this field for 33 years, is a board-certified civil trial attorney, first certified in 1987, who has litigated hundreds of these types of cases. Slama is a member of the American Board of Trial Advocates (ABOTA), the Florida chapter of ABOTA (FLABOTA), Attorneys Information Exchange Group, Florida Justice Association, Broward Justice Association, and the Florida Bar. Slama was offered and accepted, without objection, as an expert in the valuation of damages in catastrophic injury cases. In making the determination regarding the valuation of Petitioner's personal injury claim, Slama reviewed Petitioner's medical records, accident report, prepared fact and expert witnesses for trial, and personally interacted with Petitioner on multiple occasions. Slama is very familiar with the injuries suffered by Petitioner and her need for constant care. Slama was present during the filming of Petitioner's "Day in the Life" video which was intended to be shown to the jury if Petitioner's case went to trial. Slama also reviewed Petitioner's economic damages report prepared by an economist1/ and is familiar with the mental pain and suffering Petitioner experiences as a result of her ability to understand the change in her life from a normal functioning individual to someone requiring total care for the rest of her life. To properly determine the value of Petitioner's claim, Slama researched Florida jury verdicts in personal injury cases with catastrophic brain injuries for young people requiring total care. Slama reviewed five comparable cases with verdicts for the plaintiff. The average jury award per plaintiff in these five cases was $51,474,346.00, and the average pain and suffering component of that award was $28,735,850.00. The case most closely comparable to that of Petitioner was the 2014 case of Mosley v. Lloyd, Case No. CACE09-025532, 2014 WL 7910512, a Broward County Circuit Court trial in which the jury awarded $75,543,527.00, of which $39,500,000.00 represented damages for past and future pain and suffering. Another similar case was that of Lymans v. Bynum Transportation, Case No. 2007CA-007728, 2009 WL 9051959, decided by a Pasco County jury. According to Slama, Pasco County juries are generally considered very conservative. In the Lymans case, a 21-year-old sustained a catastrophic brain injury resulting in her requiring 24/7 total care, much like the Petitioner. The jury awarded $65,000,000.00, of which $41,000,000.00 represented damages for pain and suffering. Based upon the five verdicts, including the Mosley and Lymans jury verdicts, review of the medical records, extensive personal interaction with Petitioner, and his personal experience and knowledge in valuing catastrophic personal injury cases from decades of practice in this field, Slama conservatively valued the damages for mental pain and suffering to be $15 million or greater. Slama acknowledged litigation risk issues with this personal injury action, which included a reduction or elimination of liability based on the defense of contributory negligence and a statutory restriction on liability for a utility company unless there was prior written notice to the utility company of deficient lighting. Slama consulted Allen McConnaughhay, Esquire, an attorney with the Tallahassee law firm of Fonvielle, Lewis, Foote & Messer, for an independent assessment of Petitioner's claim. McConnaughhay has practiced in the field of catastrophic personal injury cases for 15 years. He was offered and accepted, without objection, as an expert in the field of valuation of catastrophic injury cases. McConnaughhay explained that his firm, like that of Slama, relies on the expertise of its partners, a review of the injured party's medical records, research of jury verdicts in comparable cases, and it conducts a roundtable discussion to determine the value of a catastrophic personal injury claim. McConnaughhay and his partners engaged in such review of Petitioner's claim and found that a figure in excess of $50 million was a proper value for her pain-and-suffering damages. McConnaughhay opined that the $15 million figure ascertained by Slama was extremely conservative. The Settlement Allocation On May 18, 2015, Bryant settled Petitioner's personal injury lawsuit for $1,164,000. 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 by AHCA. The General Release with the settling Defendants stated, inter alia: Although it is acknowledged that this settlement does not fully compensate Petitioner Bryant for all of the damages she has allegedly suffered, this settlement shall operate as a full and complete Release as to Released Parties without regard to this settlement only compensating Petitioner Bryant for a fraction of the total monetary value of her alleged damages. The parties agree that Petitioner Bryant's alleged damages have a value in excess of $15,000,000, of which $404,399.68 represents Petitioner Bryant's claim for past medical expenses. Given the facts, circumstances, and nature of Petitioner Bryant's injuries and this settlement, the parties have agreed to allocate $31,381.42 of this settlement to Petitioner Bryant's claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Petitioner Bryant's damages. Further, the parties acknowledge that Petitioner Bryant may need future medical care related to her injuries, and some portion of this settlement may represent compensation for future medical expenses Petitioner Bryant will incur in the future. However, the parties acknowledge that Petitioner Bryant, or others on her behalf, have not made payments in the past or in advance for Petitioner Bryant's future medical care and Petitioner Bryant has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses. Because Petitioner was incapacitated, court approval of the settlement was required. Accordingly, on June 4, 2015, the Honorable Circuit Court Judge Cynthia Imperato approved the settlement by entering an Order Approving Settlement. By letter of May 26, 2015, Petitioner's personal injury attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Release, Order Approving Settlement, and itemization of Petitioner's $75,852.90 in litigation costs. This letter explained that Petitioner's damages had a value in excess of $15,000,000, and the settlement represented only a 7.76 percent recovery of Petitioner's $404,399.68 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $404,399.68 Medicaid lien. AHCA responded to Petitioner's attorney's letter by letter of June 25, 2015, and demanded a "check made payable to 'Agency for Health Care Administration' in the amount of $404,399.68." AHCA has not filed an action to set aside, void, or otherwise dispute Petitioner's settlement. AHCA has not commenced a civil action to enforce its rights under Section 409.910, Florida Statutes. No portion of the $404,399.68 paid by AHCA through the Medicaid program on behalf of Petitioner represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. AHCA has determined that of Petitioner's $75,852.90 in litigation costs, $63,375.06 are taxable costs for purposes of the section 409.910(11)(f) formula calculation. Based on $63,375.06 in taxable costs, the section 409.910(11)(f) formula applied to Petitioner's $1,164,000 settlement, results in $404,812.47 payable to AHCA in satisfaction of its $404,399.68 Medicaid lien. Because $404,399.68 is less than the $404,812.47 amount derived from the formula in section 409.910(11)(f), AHCA is seeking reimbursement of $404,399.68 from Petitioner's settlement in satisfaction of its Medicaid lien. Petitioner has deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, which constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). Petitioner proved by clear and convincing evidence that the $15 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 settlement, including $31,381.42, the amount attributable to the Medicaid lien for medical expenses as its 7.76 percent proportionate share of the total settlement.
The Issue The issue in this case is the amount that must be paid to Respondent, Agency for Health Care Administration (AHCA or Respondent), from the proceeds of Petitioners’ confidential settlement to satisfy Respondent’s Medicaid lien against the proceeds pursuant to section 409.910, Florida Statutes (2020).1
Findings Of Fact Paragraphs 1 through 10 are the enumerated stipulated facts admitted and agreed upon by the parties, and required no proof at hearing. Petitioners commenced a medical malpractice action in 2013 to recover damages related to the injuries sustained by Tavarion Sanders at the time of his birth in 2009. Tavarion Sanders was born September 16, 2009. Misty Mobley is Tavarion Sanders’ mother. The medical malpractice action contains a cause of action asserted on behalf of Tavarion Sanders’ parents, Misty Mobley and Tavaris Sanders, for their own injuries, including for the loss of services, earnings, companionship, society, and affection of the infant, and for the value and expense of the infant’s hospitalizations in the past and future. The injuries related to Tavarion Sanders’ medical malpractice claim include hypoxic brain damage, cerebral palsy with decreased muscle tone in all four extremities, global developmental delays, and a neurogenic bowel and bladder. As a result of these permanent injuries, Tavarion Sanders requires, for the rest of his life, total assistance with all of his activities of daily living, including dressing, feeding, grooming, bathing, and toileting. Medicaid first made payments for medical care on behalf of Tavarion Sanders in 2010. 4 Page one of the Transcript provides that “the Honorable Lawrence P. Stevenson, Administrative Law Judge” heard this case. That is inaccurate. The undersigned was assigned this case on September 9, 2020. As found on page four of the Transcript, the undersigned called this hearing to order and presided throughout the hearing. In 2020, the medical malpractice action settled for a confidential amount. Petitioners assert that the settlement amount was not for the full value of Petitioners’ claims because of the challenges with proving liability and the risk of litigating the case to trial. AHCA was properly notified of the medical malpractice action, and the instant Petition was timely commenced by Petitioners. AHCA has asserted a lien against Tavarion Sanders’ settlement proceeds in the amount of $129,939.87. AHCA paid $129,939.87 on behalf of Tavarion Sanders, related to his claim against the liable third parties in the Petitioners’ medical malpractice action. The amount of the settlement in the medical malpractice action, and the allocation of the proceeds of the settlement as between Tavarion Sanders and Misty Mobley, is identified in Petitioners’ Lien Allocation and Reduction Worksheet. (Petitioners’ Exhibit 25). Petitioners’ Exhibit 1 is an August 18, 2020, letter (lien letter) from Conduent Payment Integrity Solutions, a subcontractor to Health Management Systems, which is an authorized agent of AHCA “to operate the Florida Medicaid Casualty Recover Program.” In addition to directing Tavarion Sanders’ counsel to review section 409.910 to determine the “responsibilities to Florida Medicaid,” Mark Lyles, Conduent’s case manager and author of this letter also posted the amount of the lien asserted by AHCA: $129,939.87.6 Ms. Tejedor is a Florida board-certified civil trial lawyer with 23 years’ experience in personal injury law. She focuses on “birth-related injuries of 5 As noted in footnote 3 above, Petitioners’ Exhibit 2 was amended during the course of the hearing, and Exhibit 2a was filed at the conclusion of the hearing. 6 At some time during the course of this proceeding, Petitioners challenged approximately $3,000.00 of the stipulated amount. However, at hearing, Ms. Tejedor conceded and confirmed as correct the figure found in Petitioners’ Exhibit 2a: the stipulated amount, $129,939.87. children suffering birth injuries during delivery.” As part of her ongoing practice, she routinely evaluates the damages suffered by injured clients. Ms. Tejedor relies on her own experience including her daily legal practice, three of her most recent medical malpractice trials, plus her review of other jury verdicts to gauge any likely recovery. Ms. Tejedor continues to handle cases involving similar injuries suffered by Tavarion Sanders. Ms. Tejedor met and observed Tavarion Sanders; met with Tavarion Sanders’ family and discussed Tavarion Sanders’ condition with his parents and treating medical personnel; and reviewed Tavarion Sanders’ medical information, including the actual medical records of the treating physicians and the multiple MRI reports. Ms. Tejedor represented Petitioners in the civil litigation. She testified to the difficulties associated with this type of medical malpractice litigation in general, and then focused on the problematic causation and liability issues related to Tavarion Sanders and his injuries. Ms. Tejedor credibly testified regarding the evaluations she made of Tavarion Sanders’ injuries and the legal actions she orchestrated.7 In addition to the stipulated injuries listed in paragraph 4 above, Ms. Tejedor described, in laymen’s terms, Tavarion Sanders’ injuries based upon the evidence discovered in the civil litigation: Tavarion Sanders has a severe brain injury; a form of cerebral palsy with motor impairment and cognitive delays; significant mental retardation with seizure disorders; and he is essentially nonverbal. She also explained Tavarion Sanders’ current situation as he is “really not capable of learning;” will never be “gainfully employed any time in the future;” will “require 24/7 care;” and will never live alone. 7 The medical malpractice action was initially brought through the “Neurological Impairment Compensation Association: fund and dismissed because the presiding ALJ found that Tavarion Sanders had not suffered a birth-related neurological injury. Following an appeal, the civil medical malpractice action was restarted, which resulted in a confidential settlement. Ms. Tejedor’s unrefuted testimony placed the total full value of Tavarion Sanders’ damages conservatively at $21,972,186.87. Included in this total value are: Tavarion Sanders’ future medical care, $14,516,878.00; Tavarion Sanders’ loss of earnings capacity, $2,325,369.00; Tavarion Sanders’ pain and suffering, $5,000,000.00; and the past medical expenses, stipulated to by Petitioners and AHCA, $129,939.87. Further, using the $21,972,186.87 valuation amount and the confidential settlement proceeds, Ms. Tejedor averred she used the same formula to determine that 6.8% is the ratio of the settlement to the full value of Tavarion Sanders’ claim. Ms. Tejedor followed the formula as set forth in: Valeria Alcala, a Minor, by Yobany E. Rodriguez- Camacho and Manuel E. Alcala, as Natural Guardians and next friends vs. Agency for Health Care Administration, Case No. 20-0605MTR, 2020 Florida Division of Administrative Hearings, 2020 WL 4934729 (Fla. DOAH August 18, 2020); and Amy Lopez, Individually and as Parent and Natural Guardian of A.F., a Minor, vs. Agency for Health Care Administration, Case No. 20-2124MTR (Fla. DOAH Sept. 3, 2020). Ms. Tejedor testified she used the “same formula that other jurisdictions in Florida have followed, which is the, you know, Ahlborn[8] decision, which basically ... lists out how you determine the percentage that ... the percentage of the value of the case that represents past medical expenses, and that’s exactly the way we did it in this case.” Ms. Tejedor’s testimony was competent, substantial, persuasive and uncontradicted on this point. Mr. Copeland is a Florida civil trial lawyer with 28 years’ experience in personal injury law, with an active civil trial practice. He has handled and continues to practice in the areas of products liability and medical malpractice litigation. As part of his every day practice, Mr. Copeland is involved in resolving liens. 8 Ark. Dept of Health & Human Serv. v. Ahlborn, 547 U.S. 268 (2006). In addition to serving as a witness for damage valuation cases and an expert in the reduction of liens, Mr. Copeland has worked with the legislation that deals with “damages, calculation of damages, and to some extent on occasion lien resolution was part of those calculations.” Mr. Copeland has “spent quite a bit of time testifying before committees in the House and Senate,” and on “Blue Ribbon panels appointed by governors that dealt in part with damages, and evaluating personal injury statutes.” Mr. Copeland’s expert testimony has always been accepted in evidence. Mr. Copeland was tendered and without objection was accepted as an “expert witness in the valuation of damages in medical malpractice actions and in the resolution of health care liens.” Mr. Copeland testified that Florida “courts generally are following the Ahlborn formula.” Mr. Copeland routinely works with life care planners and economists in his practice, and used the economic damage numbers provided to him for this case. Further, Mr. Copeland testified that he based his opinion on Tavarion Sanders’ future medical care expense, lost earnings capacity, the medical expenses identified in the lien letter, Tavarion Sanders’ loss of enjoyment for the capacity of life, and Tavarion Sanders’ pain and suffering (both past and future) “just like you’re going through a jury verdict form” in Florida. Mr. Copeland opined that the full value of Tavarion Sanders’ claim, using his conservative approach, was $21,972,186.87. Using the Ahlborn pro rata methodology or formula, that is, using the $21,972,186.87 valuation amount and the confidential settlement proceeds, Mr. Copeland testified that Tavarion Sanders recovered only 6.8% of the full measure of all his damages. Then, by applying that 6.8% to the full amount that Medicaid claimed of $129.939.87, the full satisfaction of the lien is $8,835.91. Mr. Copeland’s testimony was uncontradicted and persuasive on this point. The testimony of Petitioners’ expert regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioners proved that the confidential settlement does not fully compensate Tavarion Sanders for the full value of his damages. AHCA did not call any witnesses, present any evidence as to the value of damages, or propose a different methodology to the valuation of the damages. In short, Petitioners’ evidence was unrebutted. Respondent’s attempt to quibble with how many significant figures were used in determining the appropriate percentage for the pro rata methodology calculation is tenuous and unpersuasive. The parties stipulated to the value of the services provided by Florida Medicaid as $129,939.87. It is logical and rational to conclude that this figure is the amount expended for Tavarion Sanders’ past medical expenses. Respondent explored an additional past medical expense of $762.66, however the parties stipulated to the past medical expense figure. There is a lack of evidence to support this purported additional past medical expense, and the undersigned is not persuaded to amend the stipulated amount. Applying the 6.8% pro rata ratio to $129,939.87 equals $8,835.91, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien. Petitioners proved by a preponderance of the evidence as set forth in section 409.910(11)(f) that AHCA should be reimbursed at the lesser amount: $8,835.91.
