The Issue The amount to be paid by Petitioners, Pedro Garcia, a minor by and through his parents and natural guardians, Jesus Garcia and Norma Cisneros ("Petitioners") to Respondent, Agency for Health Care Administration ("AHCA"), out of the settlement proceeds, as reimbursement for past Medicaid expenditures pursuant to section 409.910, Florida Statutes.
Findings Of Fact Pedro Garcia ("Pedro") was born on October 30, 2014. When he was two months old, he presented to the emergency room ("ER") with vomiting and excessive crying. The doctors failed to diagnose an intestinal blockage and discharged Pedro home. Pedro was taken again to the ER in dire distress. He was airlifted to a pediatric hospital where emergency surgery was performed to remove 90 percent of his intestine. Pedro now suffers from the effects of having 90 percent of his intestine removed, including: nutritional deficiencies, diarrhea, dehydration, and abdominal distress. He cannot play with exertion and his activities are limited. Pedro will suffer the effects of his injury for the remainder of his life. A portion of Pedro's medical care related to the injury was paid by AHCA through the Medicaid program and Medicaid, through AHCA, provided $71,230.43 in benefits. Pedro's parents and natural guardians, Jesus Garcia and Norma Cisneros, brought a medical malpractice action against the medical providers and staff responsible for Pedro's care ("Defendants") to recover all of Pedro's damages, as well as their individual damages associated with their son's injury. Because of uncertainty on issues of liability and only a $250,000 insurance policy on the most culpable defendant, Pedro's medical malpractice action against the Defendants was settled for a confidential unallocated lump sum of $2,000,000. During the pendency of Pedro's medical malpractice action, AHCA was notified of the action and AHCA asserted a $71,230.43 Medicaid lien against Pedro's cause of action and settlement of that action. The Medicaid program through AHCA, spent $71,230.43 on behalf of Pedro, all of which represents expenditures paid for Pedro's past medical expenses. Another non-AHCA Medicaid provider, Integral Quality Care, provided $223,089.26 in past medical expenses on behalf of Pedro. Another non-AHCA Medicaid provider, Department of Health, Child's Medical Services, provided $168,161.12 in past medical expenses on behalf of Pedro. Accordingly, a total of $462,480.81 was paid for Pedro's past medical expenses. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Pedro's action against the Defendants. By letter, AHCA was notified of Pedro's settlement. AHCA has not filed a motion to set-aside, void, or otherwise dispute Pedro's settlement. Application of the formula in section 409.910(11)(f) to Pedro's $2,000,000 settlement requires payment to AHCA of the full $71,230.43 Medicaid lien. At the hearing, Petitioners presented the expert testimony of attorney Edward H. Zebersky, who represented Pedro throughout the underlying medical malpractice action against the Defendants. Without objection, Mr. Zebersky was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Zebersky has been an attorney since 1991. Since 1992, Mr. Zebersky has been a plaintiff's trial lawyer, with a substantial portion of his practice devoted to personal injury cases, including medical malpractice matters. He is a partner with the law firm of Zebersky Payne Shaw Lewenz, LLP and AV rated by Martindale-Hubbell. Mr. Zebersky is a member of numerous trial attorney associations and has held leadership positions in several associations, including president of the Florida Justice Association in 2006 and serving on the Board of Governors of the American Association for Justice for the past ten years. Mr. Zebersky handles jury trials. He has secured multiple eight-figure verdicts and several seven-figure verdicts, and he stays abreast of jury verdicts on other cases in his area. As a routine part of his practice, Mr. Zebersky makes assessments concerning the value of damages suffered by his clients. Mr. Zebersky was accepted as an expert in a Medicaid lien dispute at DOAH in the case of Herrera v. Agency for Health Care Administration, Case No. 16-1270MTR, 2016 Fla. Div. Admin. Hear. LEXIS 493 (Fla. DOAH Oct. 11, 2016). Mr. Zebersky was familiar with the circumstances surrounding Pedro's injury and medical malpractice claims and gave a detailed explanation of them. Mr. Zebersky reviewed Pedro's life care plan, which details Pedro's future medical needs, and an economist report, which calculated the present value of Pedro's future medical care and present value of Pedro's lost future earnings. The economist placed the present value of Pedro's future medical expenses and lost future earnings at approximately $9,500,000. According to Mr. Zebersky, past medical expenses would also be added to arrive at the full value of Pedro's economic damages. Mr. Zebersky testified that in addition to economic damages, a jury would also be asked to assign a value to past and future noneconomic damages (i.e., pain and suffering and loss of enjoyment of life). Mr. Zebersky testified that Pedro's claim for noneconomic damages would have an exceedingly high number, which as a "rule of thumb" is three times the value of his economic damages. Mr. Zebersky persuasively and credibly testified that the total value of all of Pedro's damages would be in excess of $20,000,000, and that valuing Pedro's damages at $15,000,000 is a very conservative and low valuation of his damages. Mr. Zebersky persuasively and credibly testified that the $2,000,000 settlement did not fully compensate Pedro for the full value of his damages. Mr. Zebersky testified that based on a conservative value of all of Pedro's damages of $15,000,000, the $2,000,000 settlement represents a recovery of 13.33 percent of 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 valuation of damages. Mr. Zebersky's testimony regarding the total value of Pedro's damages was credible, unimpeached, and unrebutted. Petitioner proved that the settlement of $2,000,000 does not fully compensate Pedro for the full value of his damages. Mr. Zebersky further testified that because Pedro only recovered in the settlement 13.33 percent of the full value of his damages, he only recovered 13.33 percent of AHCA's $71,230.43 Medicaid lien, or $9,495.01. Mr. Zebersky testified that it would be reasonable to allocate $9,495.01 of the settlement to past medical expenses paid by AHCA through the Medicaid program. Following the settlement, Mr. Zebersky negotiated the non-AHCA Integral Quality Care Medicaid lien from $233,089.26 to $18,737.00, and the non-AHCA Department of Health, Child's Medical Services lien from $168,161.12 to $22,415. On cross-examination, Mr. Zebersky acknowledged that the $233,089.26 and $168,161.12 from Integral Quality Care and Department of Health, Child's Medical Services are part of Pedro's claim for past medical expenses. However, Mr. Zebersky failed to include these past medical expenses in applying the ratio to reduce the Medicaid lien amount owed to AHCA. AHCA successfully contested the methodology used to calculate the allocation to past medical expenses based on Mr. Zebersky's failure to include these past medical expenses in applying the ratio. Accordingly, Petitioners proved by a preponderance of the evidence that 13.33 percent is the appropriate pro rata share of Pedro'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 $71,230.43, and the past medical expenses in the amounts of $233,089.26 and $168,161.12, which equals $462,480.81. Accordingly, following Mr. Zebersky's methodology and applying the $15,000,000 valuation to the proper amount of total past medical expenses of $462,480.81, the settlement portion properly allocable to Pedro's past medical expenses to satisfy AHCA's lien is $61,648.69 ($462,480.81 x 13.33 percent = $61,648.69).
The Issue The issue is the amount of money, if any, that must be paid to the Agency for Health Care Administration (AHCA) to satisfy its Medicaid lien under section 409.910, Florida Statutes (2013).
Findings Of Fact Harry Silnicki, at age 52, suffered devastating brain injuries when a ladder on which he was standing collapsed. Mr. Silnicki, now age 59, has required, and will for the remainder of his life require, constant custodial care as a result of his injuries. He has been, and will be into the indefinite future, a resident of the Florida Institute of Neurological Rehabilitation (FINR) or a similar facility that provides full nursing care. Debra Silnicki is the wife and guardian of Mr. Silnicki. Mr. Silnicki, through his guardian, brought a personal injury lawsuit in Broward County, Florida, against several defendants, including the manufacturer of the ladder, the seller of the ladder, and two insurance companies (Defendants), contending that Mr. Silnicki's injuries were caused by a defective design of the ladder. The lawsuit sought compensation for all of Mr. Silnicki's damages as well as his wife's individual claim for damages associated with Mr. Silnicki's damages. When referring to the personal injury lawsuit, Mr. and Mrs. Silnicki will be referred to as Plaintiffs. During the course of the trial, before the jury reached its verdict, the Plaintiffs entered into a High-Low Agreement (HLA) with the Defendants by which the parties agreed that, regardless of the jury verdict, the Defendants would pay to the Plaintiffs $3,000,000 if the Plaintiffs lost the case, but would pay at most $9,000,000 if the Plaintiffs won the case. After a lengthy trial, on March 27, 2013, the jury returned a verdict finding no liability on the part of the manufacturer or any other defendants. Consequently, the jury awarded the Plaintiffs no damages. The Defendants have paid to the Plaintiffs the sum of $3,000,000 pursuant to the HLA (the HLA funds). The HLA constitutes a settlement of the claims the Plaintiffs had against the Defendants.1/ As shown in their Closing Statement (Petitioners' Exhibit 7), dated September 23, 2013, the Silnickis' attorneys have disbursed $1,100,000 of the HLA funds as attorney's fees and $588,167.40 as costs. The sum of $1,011,832.602/ was paid under the heading "Medical Liens/Bills to be Paid/Waived/Reduced by Agreement Pending Court Approval." Included in that sum were payments to Memorial Regional Hospital in the amount of $406,464.49 and a payment to FINR in the amount of $600,000.00. Also included was the sum of $245,648.57, which was to be deposited in an interest-bearing account. Subject to court approval, the Closing Statement earmarked, among other payments, $100,000 for a special needs trust for Mr. Silnicki and a $100,000 payment to Mrs. Silnicki for her loss of consortium claim. AHCA has provided $245,648.57 in Medicaid benefits to Mr. Silnicki. AHCA has asserted a Medicaid lien against the HLA funds in the amount of $245,648.57. As required by section 409.910(17)(a), the amount of the Medicaid lien has been placed in an interest-bearing account. The Closing Statement reflects that should Petitioners prevail in this proceeding by reducing or precluding the Medicaid lien, any amounts returned to Petitioners will be split 50% to FINR, 25% to attorney's fees, and 25% to the Petitioners. Section 409.910(11)(f) provides as follows: (f) Notwithstanding any provision in this section to the contrary, in the event of an action in tort against a third party in which the recipient or his or her legal representative is a party which results in a judgment, award, or settlement from a third party, the amount recovered shall be distributed as follows: After attorney's fees and taxable costs as defined by the Florida Rules of Civil Procedure, one-half of the remaining recovery shall be paid to the agency up to the total amount of medical assistance provided by Medicaid. The remaining amount of the recovery shall be paid to the recipient. For purposes of calculating the agency's recovery of medical assistance benefits paid, the fee for services of an attorney retained by the recipient or his or her legal representative shall be calculated at 25 percent of the judgment, award, or settlement. The parties stipulated that the amount of Petitioners' "taxable costs as defined by the Florida Rules of Civil Procedure" is $347,747.05. The parties have also stipulated that if the section 409.910(11)(f) formula is applied to the $3,000,000 settlement funds received by Mr. and Mrs. Silnicki, the resulting product would be greater than the amount of AHCA's Medicaid lien of $245,648.57. That amount is calculated by deducting 25% of the $3,000,000 for attorneys' fees, which leaves $2,250,000. Deducting taxable costs in the amount of $347,747.05 from $2,250,000 leaves $1,902,352.95. Half of $1,902,352.95 equals $951,176.48 (the net amount). The net amount exceeds the amount of the Medicaid lien. Section 409.910(17)(b) provides the method by which a recipient can challenge the amount of a Medicaid lien as follows: (b) A recipient may contest the amount designated as recovered medical expense damages payable to the agency pursuant to the formula specified in paragraph (11)(f) by filing a petition under chapter 120 within 21 days after the date of payment of funds to the agency or after the date of placing the full amount of the third-party benefits in the trust account for the benefit of the agency pursuant to paragraph (a). The petition shall be filed with the Division of Administrative Hearings. For purposes of chapter 120, the payment of funds to the agency or the placement of the full amount of the third-party benefits in the trust account for the benefit of the agency constitutes final agency action and notice thereof. Final order authority for the proceedings specified in this subsection rests with the Division of Administrative Hearings. This procedure is the exclusive method for challenging the amount of third-party benefits payable to the agency. In order to successfully challenge the amount payable to the agency, the recipient must prove, by clear and convincing evidence, that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f) or that Medicaid provided a lesser amount of medical assistance than that asserted by the agency. Scott Henratty and his firm represented the Plaintiffs in the underlying personal injury case. Mr. Henratty is an experienced personal injury attorney. Mr. Henratty testified that the Plaintiffs asked the jury for a verdict in the amount of $50,000,000 for Mr. Silnicki for his total damages, not including his wife's consortium claim. Mr. Henratty valued the claim at between $30,000,000 and $50,000,000. There was no clear and convincing evidence that the total value of Mr. Silnicki's claim exceeded $30,000,000. Mr. Henratty testified that Plaintiffs presented evidence to the jury that Mr. Silnicki's past medical expenses equaled $3,366,267, and his future medical expenses, reduced to present value, equaled $8,906,114, for a total of $12,272,381. Those two elements of damages equal approximately 40.9% of the total value of the claim if $30,000,000 is accepted as the total value of the claim.3/ The Closing Statement reflects that more than the amount of the claimed Medicaid lien was to be used to pay past medical expenses. Petitioners assert in their Petition and Amended Petition three alternatives to determine what should be paid in satisfaction of the Medicaid lien in the event it is determined that the HLA funds are subject to the lien. All three alternatives are premised on the total value of Mr. Silnicki's recovery being $30,000,000 (total value) and compare that to the recovery under the HLA of $3,000,000, which is one-tenth of the total value. All three methods arrive at the figure of $24,564.86 as being the most that can be recovered by the Medicaid lien, which is one-tenth of the Medicaid lien. Future medical expenses is not a component in these calculations. The portion of the HLA funds that should be allocated to past and future medical expenses is, at a minimum, 30% of the recovery.4/
The Issue The issue is the amount payable to Respondent, Agency for Health Care Administration ("Respondent" or "ACHA"), in satisfaction of Respondent's Medicaid lien from a settlement received by Petitioner, Jonathan Velez ("Petitioner" or "Velez"), from a third party, pursuant to section 409.910, Florida Statutes (2015).
Findings Of Fact On September 3, 2008, Velez, then a 14-year-old adolescent child was injured while playing football in Clewiston, Florida. On the date of the accident, Petitioner had a helmet to helmet (face to face) collision with another football participant. The collision caused a hyper-extended injury and Velez immediately fell to the ground and lost consciousness. Velez suffered a C5 burst fracture, a spinal cord injury, anterior cord syndrome and subsequent injuries originating from this accident, initially rendering him paralyzed. As a result of the injuries, and subsequent ramifications from said injuries, Velez suffered extensive permanent injuries and required extensive medical treatment in Miami, Florida, from September 3, 2008, through October 28, 2013. Petitioner sued numerous defendants for his injuries, but because of waiver and release forms signed by his guardian, the parties settled the case to avoid the possibility of summary judgment against Petitioner. Petitioner recovered $430,000.00 from a settlement against defendants. The settlement's allocation included: attorney's fees (40 percent) in the amount of $172,000.00; costs in the amount of $4,789.72; past medicals in the amount of $60,000.00; and future medicals in the amount of $20,000.00.1/ ACHA, through the Medicaid program, paid $142,855.89 on behalf of Petitioner for medical benefits related to the injuries sustained by Petitioner. Xerox Recovery Services, Respondent's collection's contractor, notified Petitioner that he owed $142,855.89 to satisfy a Medicaid lien claim from the medical benefits paid to him from the proceeds received from the third-party settlement. Petitioner contested the lien amount. At the final hearing, Petitioner presented, without objection, the expert valuation of damages testimony of Donna Waters-Romero ("Waters-Romero"). Waters-Romero has 30 years' experience in both state and federal courts and has solely practiced in the area of personal injury defense, including cases with similar injuries specific to this type of case. Waters-Romero's experience also encompasses evaluation of personal injury cases based on the review of medical records, case law, and injuries. In preparation for her testimony, Waters-Romero reviewed the pleadings, depositions, answers to interrogatories, evaluations, medical records, and defendant's motion for summary judgment along with the attached documents. She also met with Petitioner's attorneys and reviewed the mediation summary, exhibits, case law on Medicaid liens, letter of discharge, and release and settlement agreement. Waters-Romero also specifically researched three circuit court orders that were entered regarding allocation regarding Medicaid liens. To determine how to value Petitioner's claim, Waters-Romero relied on Wos v. E.M.A., 133 S. Ct. 1391(2013), a United States Supreme Court case, and on the circuit court cases as guidance. She determined that every category of the settlement should be reduced based on the ultimate settlement. During her evaluation, Waters-Romero also acknowledged the litigation risk in Velez's case due to the issues with the liability and the waiver and release. Based on her review, Waters-Romero opined that the overall value of Petitioner's claim was valued conservatively at $2,000,000.00, which was unrebutted. Waters-Romero's testimony was credible, persuasive, and is accepted. The evidence was clear and convincing that the total value of the damages related to Petitioner's injury was $2,000,000.00 and that the settlement amount, $430,000.00 was 21.5 percent of the total value. The settlement does not fully compensate Petitioner for the total value of his damages. ACHA's position is that it should be reimbursed for its Medicaid expenditures pursuant to the statutory formula in section 409.910(11)(f). Under the statutory formula, the lien amount is computed by deducting 25 percent attorney's fee of $107,500.00 from the $430,000.00 recovery, which yields a sum of $322,500.00. In this matter, ACHA then deducted zero in taxable costs, which left a sum of $322,500.00, then divided that amount by two, which yields $161,250.00. Under the statute, Respondent is limited to recovery of the amount derived from the statutory formula or the amount of its lien, whichever is less. Petitioner's position is that reimbursement for past medical expenses should be limited to the same ratio as Petitioner's recovery amount to the total value of damages. Petitioner has established that the settlement amount of $430,000.00 is 21.5 percent of the total value ($2,000,000.00) of Petitioner's damages. Using the same calculation, Petitioner advances that 21.5 percent of $60,000.00 (Petitioner's amount allocated in the settlement for past medical expenses), $12,900.00, should be the portion of the Medicaid lien paid. Petitioner proved by clear and convincing evidence that Respondent should be reimbursed for its Medicaid lien in a lesser amount than the amount calculated by Respondent pursuant to the formula set forth in section 409.910(11)(f).
The Issue The issue for consideration in this case is whether the Agency for Health Care Administration is required by law and rule of the Agency to include the gain or loss on the sale of depreciable assets as the result of a sale or disposal, in the calculation of Medicaid allowable costs.
Findings Of Fact Prior to the hearing, the parties submitted a Joint Stipulation which is incorporated in part herein as follows: Petitioner purchased Orlando General Hospital ("OGH"), Medicaid provider number 120065, on December 31, 1990. Upon its sale, OGH merged into and became part of Adventist Health System/Sunbelt, Inc., wherein after it was known as Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital East ("Florida Hospital East"). Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital East is a wholly owned subsidiary of Adventist Health System Sunbelt Healthcare Corporation. Florida Hospital East assumed all of the assets and liabilities of OGH. OGH filed a terminating cost report for the fiscal period ending December 31, 1990. On December 31, 1990, the date of sale of OGH to Petitioner, OGH incurred a loss on the sale of the hospital, a depreciable asset. The loss on the sale of OGH was included on both OGH's Medicaid and Medicare terminating cost reports. A loss on the sale of a depreciable asset is the amount that the net book value of the asset sold exceeds the purchase price. A gain or loss on the sale of a depreciable asset is a capital cost. Due to the mechanism of the cost report, a loss on the sale of a depreciable asset is divided into "periods" based upon the time period to which the loss relates. The portion of the loss related to the fiscal year in which the asset is sold is referred to as a "current period" loss. The portion of the loss that relates to all fiscal years prior to the year in which the asset is sold is referred to as a "prior period" loss. Gains and losses related to the current period are included on Worksheet A of the Medicare and Medicaid cost report. Current period capital costs flow to Worksheet B-II Part and B Part III [sic] of the Medicaid cost report. Gains and losses related to the prior period are included on Worksheet E of the Medicare and Medicaid cost reports. OGH's current period is the fiscal year ending 12/31/90. OGH's prior periods in which it participated in the Medicaid Program are 10/24/84 through 12/31/89. OGH's audited Medicaid cost report included in allowable Medicaid costs a loss on the sale of OGH related to the current period. OGH's audited Medicaid cost report did not include in allowable Medicaid costs a loss on the sale of OGH related to the prior periods. The loss on the sale of OGH related to the current period was included in Worksheet A of OGH's audited Medicaid cost report. These costs, including the loss on the sale of OGH, flowed to Worksheet B Part II. OGH's audited Medicare cost report included as allowable Medicare costs the loss on the sale of OGH related to both the current and prior periods in the amount of $9,874,047. The loss from the sale of OGH related to the current period was included on Worksheet A of OGH's audited Medicare cost report. The costs from Worksheet A of OGH's audited Medicare cost report flowed to Worksheet B Part II of OGH's audited Medicare cost report. The loss related to the prior period was included on Worksheet E Part B of OGH's audited Medicaid cost report. The Agency utilizes costs included on Worksheet A of the Medicaid cost report to calculate Medicaid allowable costs. The Agency utilizes the capital costs included on Worksheet B Part II and/or B Part III to calculate allowable Medicaid fixed costs. The Agency does not utilize costs included on Worksheet E Part III to calculate Medicaid allowable costs. The Agency reimburses providers based upon Medicaid allowable costs. aa. The Agency did not include the portion of the loss on the sale of OGH related to the prior periods in the calculation of the OGH's Medicaid allowable costs. bb. Blue Cross and Blue Shield of Florida, Inc. (Intermediary), contracted with the Agency to perform all audits of Medicaid cost reports. Agency reimbursement to Medicaid providers is governed by Florida's Title XIX Inpatient Hospital Reimbursement Plan (Plan), which has been incorporated in Rule 59G-6.020, Florida Administrative Code. The Plan provides that Medicaid reimbursement for inpatient services shall be based upon a prospectively determined per diem. The payment is based upon the facility's allowable Medicaid costs which include both variable costs and fixed costs. Fixed costs include capital costs and allowable depreciation costs. The per diem payment is calculated by the Agency based upon each facility's allowable Medicaid costs which must be taken by the agency from the facility's cost report. Capital costs, such as depreciation, are found on Worksheet B, Part II and Part III. The Plan requires all facilities participating in the Medicaid program to submit an annual cost report to the Agency. The report is to be in detail, listing their "costs for their entire reporting year making appropriate adjustment as required by the plan for the determination of allowable costs." The cost report must be prepared in accordance with the Medicare method of reimbursement and cost finding, except as modified by the Plan. The cost reports relied upon by the Agency to set rates are audited by Blue Cross/Blue Shield of Florida, Inc. which has been directed by the Agency to follow Medicare principles of reimbursement in its audit of cost reports. Prior to January 11, 1995, the Plan did not expressly state whether capital gains or losses relating to a change of facility ownership were allowable costs. The 1995 amendment to the Plan contained language expressly providing "[f]or the purposes of this plan, gains or losses resulting from a change of ownership will not be included in the determination of allowable cost for Medicaid reimbursement." No change was made by the amendment to the Medicare principles of reimbursement regarding the treatment of gains and losses on the sale of depreciable assets. The Medicare principles of reimbursement provides that gains and losses from the disposition of depreciable assets are includable in computing allowable costs. The Provider Reimbursement Manual (HIM-15)(PRM), identifies the methods of disposal for assets that are recognized. They include a bona fide sale of depreciable assets, but do not mention a change of ownership. PRM Section 132 treats a loss on a sale of a depreciable asset as an adjustment to depreciation for both the current and periods. Depreciable assets with an expected life of more than two years may not be expensed in the year in which they are put into service. They must be capitalized and a proportionate share of the cost expensed as depreciation over the life of the property. To do so, the provider must estimate the useful life of the property based upon the guidelines of the American Hospital Association, and divide the cost by the number of years of estimated life. It is this yearly depreciation figure which is claimed on the cost report and which is reimbursed. When a depreciable asset is sold for less than book value (net undepreciated value), the provider suffers a loss. Petitioner claims that Medicare holds that in such a case it must be concluded that the estimated depreciation was erroneous and the provider did not receive adequate reimbursement during the years the asset was in service. Medicare accounting procedures do not distinguish between the treatment of a loss on the sale of depreciable assets as related to current and prior periods. PIM Section 132 requires that Medicare recognize the entire loss as an allowable cost for both the current and prior periods, and Medicare treated Petitioner's loss from the sale of its facility as an allowable cost for Medicare reimbursement under both current and prior periods. With the adoption of the January 1995 amendment, however, the wording of the state plan was changed to specifically prohibit gains or losses from a change of ownership from being included in allowable costs for Medicaid reimbursement. This was the first time the state plan addressed gains and losses on the disposal of depreciable assets resulting from a change of ownership. The Agency contends, however, that it has never reimbursed for losses on disposal of property due to a change of ownership, and that the inclusion of the new language was to clarify a pre-existing policy which was being followed at the time of the 1995 amendment, and which goes back to the late 1970s. It would appear, however, that the policy was never written down; was never conveyed to Blue Cross/Blue shield; was never formally conveyed to Medicaid providers; and was never conveyed to the community at large. When pressed, the Agency could not identify any specific case where the policy was followed by the Agency. While admitting that it is Agency practice not to treat losses from the sale of depreciable assets in prior periods as an allowable cost, Petitioner contends that it has been the Agency's practice to treat the loss on the sale of depreciable assets relating to the current period as an allowable cost, and cited several instances where this appears to have been done. The Agency contends that any current period losses paid were paid without knowledge of the Agency, in error, and in violation of the plan. On October 25, 1996, the Agency entered a Final Order in a case involving Florida Hospital/Waterman, Inc., as Petitioner, and the Agency as Respondent. This case was filed by the Petitioner to challenge the Agency's treatment of the loss on the sale of Waterman Medical Center, Inc., another of Adventist Health Systems/Sunbelt Healthcare Corporation, and the Final Order in issue incorporated a stipulation into which the parties had entered and which addressed the issue in question here. The stipulation included certain position statements including: A loss on the sale of depreciable assets is an allowable cost under the Medicare Principles of Reimbursement. The State Plan does not specify that the loss on the sale of a depreciable asset is to be treated in a manner different than under the Medicare Principles of Reimbursement. Thus the loss on the sale of a depreciable asset is an allowable cost under the State Plan. The Agency agrees, in accordance with the Medicare Principles of Reimbursement, that under the terms of the State Plan, prior period losses for Waterman will be allocated to prior periods and included in the calculation of the per diem and per visit rates. According to William G. Nutt, Petitioner's director of reimbursement, the only difference between the facts of the Waterman case and the instant case is that they relate to the sale of different facilities. The treatment of loss on the sale of depreciable assets as outlined in the Waterman stipulation is in conflict with the amended Plan and with the unwritten and unuttered Agency policy as urged by the Agency in this case. The Agency agreed in one case to a treatment of loss which it now rejects in the instant case. Petitioner urges that subsequent to the settlement of the Waterman case, but before the instant case was set for hearing, the parties engaged in settlement negotiations during which, according to counsel for the Agency, they made "significant" progress toward applying the settlement in the Waterman case to the current case. In a motion filed to delay the setting of this case for hearing, counsel for the Agency indicated the parties were "finalizing" settlement to resolve the case without resorting to a final hearing, and in a follow-up agreed motion for continuance, advised that the "parties [had] finalized a settlement document [which they were] in the process of executing. The settlement agreement reached by the parties was signed by a representative of the Petitioner and then forwarded to the Agency for signature. The document was not signed by the Agency, and when Petitioner sought enforcement of the "settlement" by an Administrative Law Judge of the Division of Administrative Hearings, the request was denied as being outside the jurisdiction of the judge, and the matter was set for hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a Final Order including the loss on the sale of Orlando General Hospital as an allowable cost for determining Petitioner's entitlement to Medicaid reimbursement for both current and prior years. DONE AND ENTERED this 30th day of June, 1999, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 1999. COPIES FURNISHED: Joanne B. Erde, Esquire Broad and Cassel Miami Center Suite 3000 201 South Biscayne Boulevard Miami, Florida 33131 Jonathan E. Sjostrom, Esquire Steel Hector & Davis LLP 215 South Monroe Street Suite 601 Tallahassee, Florida 32301-1804 Mark S. Thomas, Esquire Madeline McGuckin, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308 Julie Gallagher General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3 Tallahassee, Florida 32308
The Issue The issue to be decided is the amount payable to Respondent in satisfaction of the Agency’s Medicaid lien from a settlement, judgment, or award received by Petitioner from a third-party under section 409.910(17), Florida Statutes.
Findings Of Fact On June 7, 2005, 14-year-old Michael Mobley attended a beach party. The party occurred on, near, or about the beach premises of a hotel. Michael became intoxicated through consumption of alcohol, and drowned in the Gulf of Mexico. He was revived but suffered brain damage, leaving him unable to communicate, ambulate, eat, toilet, or care for himself in any manner. Michael is now dependent on his father for all aspects of his daily life. As a result of this incident, Michael suffered both economic and noneconomic damages. These damages included, at least, physical and mental pain and suffering, past and future medical expenses, disability, impairment in earning capacity, and loss of quality and enjoyment of life. Michael’s parents also suffered damages. Michael’s father’s employer maintained a self-funded Employee Benefit Plan governed by the Employee Retirement Income Security Act (ERISA Plan). The Florida Statutes provide that Respondent, Agency for Health Care Administration (AHCA), is the Florida state agency authorized to administer Florida’s Medicaid program. § 409.902, Fla. Stat.1/ Michael’s past medical care related to his injury was provided through health benefits from the ERISA Plan administered through CIGNA HealthCare and Horizon Blue Cross Blue Shield of New Jersey, and the Florida Medicaid program. The health benefits extended to Michael through his father’s employer totaled $515,860.29. The Florida Medicaid program provided $111,943.89 in benefits. The combined amount of medical benefits Michael received as a result of his injury is $627,804.18. The ERISA Plan provided the employer (through its administrators CIGNA and Horizon Blue Cross Blue Shield), with subrogation and reimbursement rights which provided entitlement to reimbursement from any settlement of 100 percent of what the plan had paid. ACS Recovery Services represented CIGNA and Horizon Blue Cross Blue Shield, the administrators of the Employee Benefit Plan, and on behalf of these clients ACS Recovery Services asserted a $515,860.29 claim against any settlement Michael received. The Florida Statutes provide that Medicaid shall also be reimbursed for medical assistance that it has provided if resources of a liable third party become available. § 409.910(1), Fla. Stat. In 2006, Michael’s parents, David Mobley and Brenda Allerheiligen, brought a lawsuit in Okaloosa County Circuit Court to recover all of Michael’s damages. By letter dated May 24, 2011, Petitioner’s attorney sent AHCA a Letter of Representation requesting the amount of any Medicaid lien and the itemization of charges. The letter also invited AHCA to participate in litigation of the claim or in settlement negotiations. AHCA through ACS Recovery Services by letter of June 9, 2011, asserted a Medicaid lien against any settlement in the amount of $111,943.89. Testimony at hearing established that a conservative “pure value” of Michael’s economic damage claims in the case, before consideration of such factors as comparative fault, application of the alcohol statute, a defendant’s bankruptcy, and the novel theories of legal liability, was $15 million. A Joint Petition for Approval of Settlement was filed in the Circuit Court in and for Okaloosa County, Florida, on or about June 14, 2012. It stated that although the damages Michael received far exceeded the sum of $500,000, the parties had agreed to fully resolve the action for that amount in light of the parties’ respective assessments of the strengths and weaknesses of their cases. The Petition specifically alluded to pending bankruptcy proceedings, summary judgment dismissal of claims premised upon a duty to provide lifeguarding services, Plaintiff’s remaining theories of liability, available defenses, specifically including the statutory “alcohol defense” as interpreted by the Florida courts, and anticipated costs of trial and appeal. The Petition also stated: “Plaintiff’s claim for past medical expenses related to the incident total $627,804.18. This claim consists of $515,860.29 paid by a self-funded ERISA plan and $111,943.89 paid by Medicaid.” As an attached exhibit, the Petition incorporated a Distribution Sheet/Closing Statement which allocated the $500,000 total recovery among the categories of attorneys’ fees, costs, outside attorneys’ fees, lien/subrogation/medical expenses, and net proceeds to client. The Distribution Sheet allocated $140,717.54 to “lien/subrogation/medical expenses,” subdivided into $120,000.00 to Blue Cross Blue Shield of Florida/CIGNA and $20,717.54 to Medicaid Lien. The proposed settlement did not further describe the $331,365.65 amount identified as “net proceeds to client,” or allocate that amount among distinct claims or categories of damages, such as physical or mental pain and suffering, future medical costs discounted to present value, disability, impairment in earning capacity, or loss of quality and enjoyment of life. Under the Joint Petition for Approval of Settlement, most of the total recovery thus remains uncategorized as to the type of damages it represents. The Joint Petition for Approval of Settlement was submitted on behalf of the Defendants and Plaintiffs in the lawsuit, including Michael Mobley, Petitioner here. Respondent did not participate in settlement negotiations or join in the Release, and no one represented its interests in the negotiations. The Agency has not otherwise executed a release of the lien. A Release was signed by the Plaintiffs contingent upon court approval of the Petition for Approval of Settlement. The court approved the settlement, with the exception of the Medicaid lien, pending an administrative determination of the amount of the lien to be paid. This $500,000 settlement is the only settlement received and is the subject of AHCA’s claim lien. In regard to the $500,000 settlement: Michael’s parents, Brenda Allerheiligen and David Mobley waived any claim to the settlement funds in compensation for their individual claims associated with their son’s injuries; The law firm of Levin, Papantonio, Mitchell, Rafferty & Proctor, P.A., agreed to waive its fees associated with its representation of Michael and his parents; The law firm of Levin, Papantonio, Mitchell, Rafferty & Proctor, P.A., agreed to reduce its reimbursement of the $60,541.22 in costs it advanced in the litigation of the case by 75% and accept $15,135.31 in full payment of its advanced costs; and ACS Recovery Services on behalf of CIGNA and Horizon Blue Cross Blue Shield agreed to reduce its $515,860.29 ERISA reimbursement claim asserted against the settlement and accept $120,000 in satisfaction of its $515,860.29 claim. AHCA is seeking reimbursement of $111,943.89 from the $500,000 settlement in satisfaction of its $111,943.89 Medicaid lien. AHCA correctly computed the lien amount pursuant to statutory formula. Deducting 25 percent for attorney’s fees and $60,541.22 taxable costs from the $500,000.00 recovery leaves a sum of $314,458.78, half of which is $157,229.39. In this case, application of the formula therefore results in a statutory lien amount of $111.943.89, the amount actually paid. § 409.910(17), Fla. Stat. The settlement agreement allocated $120,000.00 to be paid to the ERISA plan in partial reimbursement of the $515,860.29 it had paid for medical expenses. This amount must be added to the amount of $20,717.54 allocated for other medical expenses paid by Medicaid, to reflect a total amount of $140,717.54 allocated for past medical expenses in the settlement. The $500,000 total recovery represents approximately 3.3 percent of the $15 million total economic damages. The $20,717.54 allocated to “Medicaid Lien” in the distribution sheet of the settlement represents approximately 3.3 percent of the $627,804.18 of total past medical expenses. The sum of $3,694.15 represents approximately 3.3 percent of the $111,943.89 in medical costs paid by Medicaid. The Petitioner has deposited the full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’S rights. The parties have stipulated that this constitutes “final agency action” for purposes of chapter 120, pursuant to section 409.910(17). Petitioner filed his Petition on December 13, 2013, within 21 days after the Medicaid lien amount was deposited in an interest-bearing account for the benefit of AHCA. While the evidence presented as to the settlement agreement was not sufficient to show the full amount allocated to medical expenses, the evidence does show that the total recovery includes at least $140,717.54 allocated as reimbursement for past medical expenses, which was to be divided unevenly between the ERISA plan and Medicaid. Petitioner failed to prove by clear and convincing evidence that the statutory lien amount of $111,943.89 exceeds the amount actually recovered in the settlement for medical expenses.
The Issue The matter concerns the amount of the money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Mark Crain, a Medicaid recipient, following a settlement recovered from a third party.
Findings Of Fact This proceeding determines the amount the Agency should be paid to satisfy a Medicaid lien following Petitioner’s recovery of a $100,000 settlement from a third party. The Agency asserts that it is entitled to recover $35,700, which is the amount it calculated using the formula set forth in section 409.410(11)(f). The facts that gave rise to this matter are found pursuant to a stipulation of the parties.3/ On June 23, 2016, Petitioner was working for a tree pruning company. Petitioner’s employer assigned him to remove several branches from a tree. As directed, Petitioner climbed to the top of the tree and secured himself with one rope lanyard. Unfortunately, after he began pruning, Petitioner cut through the rope lanyard, lost his balance, and plummeted 30 feet to the ground. As a result of the fall, Petitioner suffered significant physical and neurological injuries. Petitioner underwent multiple surgeries. His medical procedures included an open reduction with internal fixation on his right wrist, lumbar fusion surgery, and a lumbar laminectomy. At the final hearing, Petitioner’s counsel represented that Petitioner’s medical prognosis is not fully known at this time. However, what is known is that Petitioner will continue to experience serious neurologic deficits. Petitioner’s injuries have left him with overall mobility issues and have affected his ability to walk normally. He suffers from a right foot drop and has limited feeling below his waist. The parties also stipulated that Petitioner has completed all medical treatment and therapy related to his accident. However, Petitioner is uncertain whether or not he will be able to return to normal activities in the future. Petitioner incurred sizable medical expenses due to his injuries. The charges for Petitioner’s medical procedures totaled approximately $375,000. However, only $62,067.28 has actually been paid for his medical care. Of this amount, the Florida Medicaid program paid $41,992.33. (In addition to the $41,992.22 paid by Medicaid, other health insurance covered $20,075.06.) Petitioner did not present evidence of monetary damages other than his past medical expenses. Petitioner subsequently initiated a civil cause of action for negligence against his (former) employer. Petitioner alleged that he was not properly trained how to safely secure himself to the tree. According to Petitioner’s counsel, Petitioner’s employer should have instructed him to use two lanyards instead of one. After two years of litigation, Petitioner settled his negligence action for $100,000. The settlement did not allocate Petitioner’s award between past medical expenses and other damage categories. The Agency, through the Florida Medicaid program, paid a total of $41,992.33 for Petitioner’s medical treatment resulting from the accident.4/ All of the expenditures that Florida Medicaid spent on Petitioner’s behalf are attributed to past medical expenses. Under section 409.910, the Agency is to be repaid for its Medicaid expenditures out of any recovery from liable third parties. Accordingly, when the Agency was notified of the settlement of Petitioner’s lawsuit, it asserted a Medicaid lien against the amount Petitioner recovered. The Agency claims that, pursuant to the formula set forth in section 409.910(11)(f), it should collect $37,500 to satisfy the medical costs it paid on Petitioner’s behalf. (As discussed in endnote 7, the “default” formula in section 409.910(11)(f) allows the Agency to collect $37,500 to satisfy its Medicaid lien.) The Agency maintains that it should receive the full amount of its lien regardless of whether Petitioner settled for less than what Petitioner believes is the full value of his damages. Petitioner, on the other hand, asserts that the Agency should be reimbursed a lesser portion of the settlement than the amount calculated using the section 409.910(11)(f) formula. Exercising its right to challenge the Medicaid lien pursuant to section 409.910(17)(b), Petitioner specifically argues that, taking into account the full value of Petitioner’s damages, the Agency’s Medicaid lien should be reduced proportionately. Otherwise, the application of the statutory formula would permit the Agency to collect more than that portion of the settlement that fairly represents Petitioner’s compensation for past medical expenses. Petitioner requests the Agency’s allocation from Petitioner’s third-party recovery be reduced to $4,199.23. To establish the value of his damages, Petitioner submitted the medical bills from his accident, as well as relied upon the stipulated facts. Petitioner’s medical bills show that he sustained the injuries identified above, as well as underwent surgery on his spine and wrist. To place a monetary value on Petitioner’s injuries, Petitioner’s counsel represented that his law firm appraised Petitioner’s injuries at no less than $1 to 2 million. However, Petitioner did not introduce any evidence or testimony corroborating this injury valuation or substantiating an amount Petitioner might have recovered at trial in his personal injury cause of action.5/ Neither did Petitioner offer evidence of additional damages Petitioner might be facing from his accident, such as future medical expenses, loss of quality of life, loss of employment or wages, or pain and suffering. Based on his estimate, Petitioner’s counsel asserted that the $100,000 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Petitioner for his damages. Therefore, a lesser portion of the settlement should be allocated to reimburse Medicaid, instead of the full amount of the lien. Petitioner proposes that a ratio should be applied based on the full value of Petitioner’s damages (conservatively estimated at $1,000,000) compared to the amount that Petitioner actually recovered ($100,000). Using these numbers, Petitioner’s settlement represents a 10 percent recovery of Petitioner’s damages. In like manner, the Medicaid lien should be reduced to 10 percent or $4,199.23 ($41,992.33 times .10). Therefore, Petitioner asserts that $4,199.23 is the portion of his third- party settlement that represents the equitable and fair amount the Florida Medicaid program should recoup for its payments for Petitioner’s medical care. The Agency was not a party to Petitioner’s negligence action or Petitioner’s $100,000 settlement. No portion of the $100,000 settlement represents reimbursement for future medical expenses. The undersigned finds that, based on the evidence in the record, Petitioner failed to prove, by a preponderance of the evidence, that a lesser portion of Petitioner’s settlement should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Accordingly, the Agency is entitled to recover $37,500 from Petitioner’s recovery of $100,000 from a third party to satisfy its Medicaid lien.
The Issue The issue to be decided in this proceeding is the amount to be paid to Respondent, the Agency for Health Care Administration (Agency or AHCA), from the proceeds of a personal injury settlement received by Sergio Museguez to reimburse Medicaid for expenditures made on his behalf.
Findings Of Fact Sergio Museguez was catastrophically injured as a result of being struck by lightning on June 15, 2012. Mr. Museguez has been diagnosed with a traumatic brain injury and suffers from cognitive dysfunction, including, but not limited to, significant problems with memory, orientation, initiating and executive functions. Mr. Museguez is also incontinent as to bowel and bladder. The above-described conditions are permanent and will never resolve. Mr. Museguez’s employer, MG3 Developer Group (MG3), failed to carry workers’ compensation insurance or any other effective insurance coverage that would cover the injuries he sustained on June 2012, or that would cover his wife Leidi Hernandez’s loss of consortium suffered as a result of the accident. An action was filed in Miami-Dade County Circuit Court, Case No. 14-025861 CA 06, against MG3 for damages related to Mr. Museguez’s injuries and for Ms. Hernandez’s loss of consortium. MG3’s insurance carrier denied coverage and refused to defend the company because its insurance policy excluded coverage for employees. The Museguezes and MG3 entered into a settlement agreement in which they agreed to a judgment against MG3 in the amount of $5,000,000, but which included a payment schedule through which $1,000,000 would actually be paid to Petitioner by MG3. Only that $1,000,000 of the judgment has been or will be recovered by Mr. Museguez against MG3, because of MG3’s lack of available insurance coverage, and the lack of anticipated avenues of recovery pursuant to the terms of the settlement, dated June 16, 2016. The settlement agreement provided that the parties “acknowledge and agree that the One Million ($1,000,000) Dollar payment set forth above only represents twenty percent of the total injury/damage value of Museguez’s claim, and this fails to fully compensate Museguez for the injuries sustained in the incident at issue. Therefore, Museguez is specifically recovering only twenty percent (20%) of their damages for past medical expenses.” Ms. Hernandez waived her right to an apportionment of the recovery for her consortium claim in light of her husband’s condition and his need for extensive medical care and treatment for the rest of his life. She opted for any amount that would have been apportioned to her claim instead be apportioned directly to her husband. Mr. Museguez’s condition and need for continuing care is not in dispute. A life care plan identifying the goods and services necessary for Mr. Museguez was prepared by Lawrence S. Forman, an expert in rehabilitation life care planning. Mr. Forman has concluded that Mr. Museguez will require 24-hour attendant medical care for the rest of his life, in addition to a significant amount of future costs associated with his medical condition as a result of his injury. Mr. Forman’s opinions are outlined in his report dated April 8, 2016. Frederick A. Raffa, an economist, reviewed the life care plan for Mr. Museguez and determined that the present value of the anticipated medical expenses for Mr. Museguez is $7,943,963. He testified, unrebutted, that Mr. Museguez’s total losses were $8,424,028. In short, Mr. Museguez’s needs far outweigh the recovery received in this case. According to the United States Life Tables, 2012, Mr. Museguez is expected to live another 24.8 years. Todd Michaels is an attorney who was appointed as guardian ad litem for Mr. Museguez in the personal injury case. Mr. Michaels testified that he was appointed for the purpose of determining whether the settlement of Mr. Museguez’s claim was fair to him. Mr. Michaels concluded that the settlement was the product of an arm’s-length transaction and was a fair settlement of the claim. Mr. Michaels also was asked to provide an opinion regarding the value of Mr. Museguez’s claim. Mr. Michaels has practiced personal injury law for 15 years, and is generally familiar with the awards related to claims involving catastrophic injuries and, specifically, traumatic brain injuries. With respect to Mr. Museguez’s claim, Mr. Michaels described it as conservative but necessary given the lack of insurance coverage and significant possibility of insolvency should the case go to verdict. He noted that “without a settlement there was almost zero likelihood of recovery in that the issues of both the fact and law were hotly contested.” He acknowledged that the settlement was less than Mr. Museguez’s future medical needs, and ignored any claim for pain and suffering, as well as the consortium claim. He stated, “I understand what the situation was and they could have pushed forward and gotten a verdict of 30 million dollars and it would have been worth the paper it was printed on because of the circumstances.” Without the very real limitations provided in this case, where there was no insurance coverage, Mr. Michaels believed that the fair settlement value would be about $13 to $15 million. However, his explanation as to how he reached that range was conclusory at best. Mr. Michaels testified that he did not “physically parse it out.” He started with the number $8,424,000 and went from there. He did not consult other attorneys, or do specific jury verdict research, but simply relied on his knowledge from practicing in this area and reviewing jury verdicts on a regular basis. It seems that the “fair value” of a claim must by necessity consider not only the level of a plaintiff’s damages, but the likelihood of success and any issues of liability, comparative fault, collectability, and the like. Here, while Petitioner’s damages are unfortunately much higher than the settlement amount, Petitioner’s witness testified that under the circumstances of this case, the settlement was fair. The undersigned finds that the fair settlement value of this case, given all of the circumstances, is the amount reflected in the settlement, i.e., $5,000,000. The undersigned also finds, consistent with the language in the settlement agreement, that Petitioner recovered only 20 percent of his past medical expenses. The taxable costs associated with the action at law were $27,812.46. While the parties in this proceeding stipulated to the amount of these costs, they did not stipulate to the amount of the attorney’s fees related to the claim, and it does not appear that any evidence to substantiate the amount of attorney’s fees actually paid was included in this record. Mr. Museguez received medical services from Medicaid. On December 1, 2016, the Agency notified counsel for Mr. Museguez that Medicaid’s lien for medical expenses paid on his behalf was $116,032.84. There was no evidence presented to indicate that the Agency was a party to the settlement negotiations between Petitioner and MG3, or whether the Agency was notified of the litigation prior to the execution of the settlement. Petitioner deposited the amount of the Medicaid lien into an interest-bearing account for the benefit of the Agency in accordance with the requirements of section 409.910, and in compliance with the requirements of bringing an action to contest the amount of the lien before the Division of Administrative Hearings. Petitioner’s actions constitute “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17)(b). Application of the formula contained in section 409.910(11)(f) to Petitioner’s $1,000,000 settlement would require payment to the Agency in the amount of $116,032.84, the actual amount of the funds expended by Medicaid.
The Issue Whether the Agency for Health Care Administration's ("AHCA" or "the agency") Medicaid lien of $267,072.91 should be reimbursed in full from the $1 million settlement recovered by Petitioner or whether Petitioner proved that a lesser amount should be paid under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulation between the parties (paragraphs 1 through 13 below), the evidence presented, and the record as a whole, the undersigned makes the following Findings of Fact: On January 13, 2016, Mr. Jay Hosek was operating his 1999 Chevy Trailblazer northbound on U.S. Highway 1, near mile marker 56, in Monroe County. At that same time and place, his vehicle was struck by a southbound tractor trailer. Hosek suffered catastrophic physical injuries, including permanent brain damage. Hosek is now unable to walk, stand, eat, toilet, or care for himself in any manner. Hosek's medical care related to the injury was paid by Medicaid, Medicare, and United Healthcare ("UHC"). Medicaid provided $267,072.91 in benefits, Medicare provided $93,952.97 in benefits and UHC provided $65,778.54 in benefits. Accordingly, Hosek's entire claim for past medical expenses was in the amount of $426,804.42. Jirina Hosek was appointed Hosek's legal guardian. As legal guardian, Jirina Hosek brought a personal injury lawsuit against the driver and owner of the tractor trailer that struck Hosek ("defendants") to recover all of Hosek's damages associated with his injuries. The defendants maintained only a $1 million insurance policy and had no other collectable assets. Hosek's personal injury action against the defendants was settled for the available insurance policy limits, resulting in a lump sum unallocated settlement of $1 million. Due to Hosek's incompetence, court approval of the settlement was required and the court approved the settlement by Order of October 5, 2018. During the pendency of Hosek's personal injury action, AHCA was notified of the action and AHCA asserted a $267,072.91 Medicaid lien against Hosek's cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Hosek's action against the defendants. By letter, AHCA was notified of Hosek's settlement. AHCA has not filed a motion to set aside, void, or otherwise dispute Hosek's settlement. The Medicaid program through AHCA spent $267,072.91 on behalf of Hosek, all of which represents expenditures paid for Hosek's past medical expenses. Application of the formula at section 409.910(11)(f) to Hosek's $1 million settlement requires payment to AHCA of the full $267,072.91 Medicaid lien. Petitioner has deposited AHCA's 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). While driving his vehicle northbound, Hosek drifted into oncoming traffic, crossed over the center line, and struck a southbound vehicle in its lane head on. Petitioner had an indisputable and extremely high degree of comparative negligence in causing this tragic vehicle accident. Petitioner presented the testimony of Brett Rosen ("Rosen"), Esquire, a Florida attorney with 12 years' experience in personal injury law. His practice includes catastrophic and wrongful death cases. Rosen is board-certified in civil trial by the Florida Bar. He is a member of several trial attorney associations. Rosen represented Hosek and his family in the personal injury case. As a routine part of his practice, Rosen makes assessments regarding the value of damages his injured client(s) suffered. He stays abreast of personal injury jury verdicts by reviewing jury verdict reports and searching verdicts on Westlaw. Rosen regularly reads the Daily Business Review containing local verdicts and subscribes to the "Law 360," which allows him to review verdicts throughout the country. Rosen was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency. Rosen testified that Hosek's case was a difficult case for his client from a liability perspective, since all the witnesses blamed Hosek for the crash and the police report was not favorable to him. In his professional opinion, had Hosek gone to trial, the jury could have attributed a substantial amount of comparative negligence to him based upon the facts of the case. There was also a high possibility that Hosek might not receive any money at all, since Hosek's comparative negligence in the accident was very high. Rosen explained the seriousness of Hosek's injuries, stating that Hosek may have fallen asleep while driving and his car veered over and crossed the centerline. It hit an oncoming commercial truck, which caused his vehicle to flip resulting in severe injuries to him. Rosen testified that Hosek is unable to communicate since he received catastrophic brain injury from the accident and is unable to care for himself. Rosen provided an opinion concerning the value of Hosek's damages. He testified that the case was worth $10 million, and that this amount is a very conservative valuation of Hosek's personal injuries. He also generalized that based on his training and experience, Hosek's damages could range anywhere from $10 to $30 million at trial. He testified that Hosek would need future medical care for the rest of his life. This future medical care has a significant value ranging from $15 to $25 million.1/ Rosen testified that he reviewed other cases and talked to experts in similar cases involving catastrophic injuries. After addressing various ranges of damages, Rosen clarified that the present value of Hosek's damages in this case was more than $10 million dollars. Although he did not state specific amounts, he felt that Hosek's noneconomic damages would have a significant value in addition to his economic damages.2/ Rosen believed that a jury would have returned or assigned a value to the damages of over $10 million. He testified that his valuation of the case only included the potential damages. He did not take into account Hosek's "substantial amount" of comparative negligence and liability.3/ Despite doing so in other personal injury cases, Rosen did not conduct a mock trial in an effort to better assess or determine the damages in Hosek's case. Rosen testified that Hosek sued the truck driver, Alonzo, and Alonzo's employer. He further testified that Hosek was compensated for his damages under the insurance policy carried by the truck driver and his company and settled for the policy limits of $1 million dollars representing 10 percent of the potential total value of his claim. Rosen did not obtain or use a life care plan for Hosek, nor did he consider one in determining his valuation of damages for Hosek's case. Rosen did not provide any specific numbers or valuation concerning Hosek's noneconomic damages. Instead, he provided a broad damage range that he said he "would give the jury" or "be giving them a range of $50 Million for past and future."4/ Rosen testified that he relied on several specific factors in making the valuation of Hosek's case. The most important factor for him was to determine what his client was "going through" and experience his client's "living conditions."5/ Secondly, he considers the client's medical treatment and analyzes the client's medical records. Based on these main factors, he can determine or figure out what the client's future medical care will "look like."6/ Petitioner also presented the testimony of R. Vinson Barrett ("Barrett"), Esquire, a Tallahassee trial attorney. Barrett has more than 40 years' experience in civil litigation. His practice is dedicated to plaintiff's personal injury, as well as medical malpractice and medical products liability. Barrett was previously qualified as an expert in federal court concerning the value of the wrongful death of an elderly person. This testimony was used primarily for tax purposes at that trial. Barrett has been accepted as an expert at DOAH in Medicaid lien cases in excess of 15 times and has provided testimony regarding the value of damages and the allocation of past medical expenses. Barrett has handled cases involving catastrophic brain injuries. He stays abreast of local and state jury verdicts. Barrett has also reviewed several life care plans and economic reports in catastrophic personal injury cases. He routinely makes assessments concerning the value of damages suffered by parties who have received personal injuries. Barrett determines the value of these damages based primarily on his experience and frequent review of jury verdicts. Barrett was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency.7/ Barrett testified that Hosek had a catastrophic brain injury with broken facial bones and pneumothoraxes, all sustained during an extremely violent head-on collision with a commercial truck. This assessment was based on the case exhibits and the "fairly limited medical records" he reviewed. He believed that Hosek would need extensive and expensive medical care for the rest of his life. However, no details were offered by Barrett.8/ Barrett provided an opinion concerning the value of Hosek's damages. This was based on his training and experience. Barrett did not provide a firm number for Hosek's damages. Instead, he offered a nonspecific and broad range of damages. Barrett testified that Hosek's damages "probably" have a value in the range of $25 to $50 million, and the range of Hosek's future medical care would be $10 to $20 million. However, he felt that $10 million was a "very, very, very conservative" estimate of damages, primarily because he felt that future medical expenses would be so high. Barrett stated that Hosek's economic damages would have a significant value exceeding $10 million and that Hosek's noneconomic damages would have an additional value exceeding $10 million. Barrett acknowledged that he did not consider or take into account Hosek's "huge comparative negligence" in estimating the total value of the case. Instead, he only considered the amount(s) that would be awarded for damages. He testified that Petitioner's degree of comparative negligence would reduce each element of damages he was awarded. As a result of Hosek's very significant comparative negligence, Barrett testified that a trial would have likely resulted in a "complete defense verdict" against Hosek or with only minor negligence attributed to the truck driver or his company. Barrett felt that a jury in Hosek's case would not have awarded Hosek "more than one million dollars or so." Barrett explained that in a trial for personal injuries that each element of damages awarded by the jury to the plaintiff on the verdict form is reduced by the percentage of the plaintiff's comparative negligence. Barrett also explained that when the jury verdict assigns ten percent of the negligence to the defendant and 90 percent of the negligence to the plaintiff, then the defendant is liable for paying only ten percent of each element of the damages awarded to the plaintiff. Barrett testified that he does not believe that the $1 million settlement fully compensated Hosek for his injuries and that a potential award of $10 million would be a conservative value of Hosek's claim. While both experts provided broad and nonspecific ranges for the value of Hosek's claims, they both summed up their testimony by concluding that $10 million was a very conservative estimate of Hosek's total claim. AHCA did not call any witnesses. The agency presented Exhibit 1, entitled "Provider Processing System Report." This report outlined all the hospital and medical payments that AHCA made on Hosek's behalf, totaling $267,072.91. On the issue of damages, the experts did not provide any details concerning several of Petitioner's claims, including the amount of past medical expenses, loss of earning capacity, or damages for pain and suffering. The burden was on Petitioner to provide persuasive evidence to prove that the "proportionality test" it relied on to present its challenge to the agency's lien under section 409.910(17)(b) was a reliable and competent method to establish what amount of his tort settlement recovery was fairly allocable to past medical expenses. In this case, the undersigned finds that Petitioner failed to carry this burden.9/ There was no credible evidence presented by Petitioner to prove or persuasively explain a logical correlation between the proposed total value of Petitioner's personal injury claim and the amount of the settlement agreement fairly allocable to past medical expenses. Without this proof the proportionality test was not proven to be credible or accurate in this case, and Petitioner did not carry his burden. There was a reasonable basis in the record to reject or question the evidence presented by Petitioner's experts. Their testimony was sufficiently contradicted and impeached during cross-examination and other questioning. Even if the experts' testimony had not been contradicted, the "proportionality test" proposed by Petitioner was not proven to be a reliable or accurate method to carry Petitioner's burden under section 409.910(17)(b). To reiterate, there was no persuasive evidence presented by Petitioner to prove that (1) a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by the agency, or (2) that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
Findings Of Fact The Home The Miami Jewish Home and Hospital for the Aged is a multi-faceted operation located on an entire city block in Miami. It provides a variety of services including an adult congregate living facility, an auditorium, a nursing home and a 32-bed hospital. Residents may come to the Home bringing with them their cash, and property and other possessions, to be sold. An account is opened for the resident from which charges made by the Home may be deducted. This fund is the Resident Asset Fund. Earings on the Resident Asset Fund are applied to reduce the Home's operating deficit. The Home provides Medicare and Medicaid services. Medicaid provides for long-term care for the indigent. About 60% of the Home's patient days were devoted to Medicaid patients in 1985. By participating in the Medicaid program, the Home is required to file cost reports each year to determine its allowable costs under Medicaid rules. The fiscal year for the nursing home runs from July 1 to June 30. The Medicaid Program Medicaid costs are shared between the federal government and the State of Florida. The Medicaid program is administered at the federal level by the Department of Health and Human Services (HHS), and at the state level by the Department of Health and Rehabilitative Services (HRS). The Health Care Financing Administration (HCFA) of HHS establishes the Medicaid costs the federal government will pay for. HCFA's Provider Reimbursement Manual, also referred to as HIM-15, contains reimbursement guidelines. Medicaid reimbursement is calculated as a rate per Medicaid patient per day. Reimbursement is provided prospctively and is based on prior cost reports, inflated forward to the period of reimbursement. The Home's unaudited cost report data is used for that purpose. In order to insure the accuracy of the Medicaid cost reports, HRS performs either test reviews or full field audits of the reports. Full audits are done either by HRS auditors or by outside auditors on contract with HRS. Here the Home's cost report was audited for HRS by Peat Marwick Mitchell & Co. HRS reviews the preliminary audit reports of its contract auditors, which can result in changes before the final audit report is issued. The 1985 Medicaid Cost Report A Medicaid cost report for the fiscal year ending June 30, 985 was filed by the Home in mid-October 1985. David Farkas, the Director of Financial Operations for the nursing home prepared that Medicaid cost report; he also had it reviewed by the accounting firm of Deloitte Haskins & Sells before it was submitted to the Department. In the Medicaid cost report, a nursing home's costs are broken down into four components: (a) those from operations; (b) those from patient care, (c) return on equity and (d) property. Costs within each of those four categories are determined and then divided by the number of patient days at the nursing home to determine a cost per patient day. The cost per patient day for the categories of operating costs and patient care are compared to a ceiling or cap that is generated through surveys performed by the Department of Health and Rehabilitative Services. Caps are adjusted for the geographical location and size of the facility. Assuming that the nursing home is at or below the cap for operations and patient care determined from the survey, the cost per patient day in each of the four components are added to form a composite reimbursement rate. Costs incurred in excess of the caps for operations and patient care are not reimbursed. An inflation factor is then added to a provider's costs because the State of Florida operates on prospective reimbursement system. Patient Trust Fund A nursing home which holds residents' funds is required by Section 400.162, Florida Statutes (1987) to provide a bond equal to twice the average monthly balance of the funds it held during the preceding year in order to ensure that the funds will be available to residents. The nursing home also has the option, in lieu of a bond, to provide a self-insurance fund protecting the monies it holds in trust. By letter dated May 31, 1985, the nursing home received approval from the Department to establish a self-insurance fund under Section 400.162 Florida Statutes. Its account was opened with Sun Bank of Miami. When the account was established the Home was required to deposit in it twice the average monthly balance of its Resident Asset Fund for the preceding year. As of June 30, 1985, the Patient Trust Fund contained $2,750,000, representing twice the $1,375,000 in resident assets held in the Resident Asset Fund. The money the Home placed in the Patient Trust Fund came from donations and from the building fund for the Home. Those funds are held in the form of treasury notes and certificates of deposit. The nursing home treated the Patient Trust Fund as part of the building fund in its 1985 Medicaid cost report. When the funds which comprise the Patient Trust Fund are placed with a trustee, they are restricted. The trustee holds the securities, and the State has the right to draw against those securities when a default occurs in the nursing home's handling of residents' funds. Only the principal amount of the Home's self-insurance fund is restricted, however. The Home itself receives the benefit of interest or dividends which accrue on the monies deposited in the self-insurance fund. Those earnings accrue to the benefit of the Home's building fund. The premium for a surety bond of the type required by Section 400.162(5)(b)1. Florida Statutes in 1985 would have cost the Home 2 percent of the amount bonded; based on 2 percent of $2,750,000, the premium would have been $55,000. This bond premium would have been treated as an allowable operating cost. The Home's operating costs exceeded the cap, however, so it actually would have received no additional reimbursement for the $55,000 bond premium if a bond had been purchased. The Audit After the nursing home submitted its 1985 Medicaid cost report, Barry Scutillo of Peat Marwick contacted the Home on behalf of HRS to audit the Home's records supporting its 1985 report. The audit resulted in a number of adjustments which were discussed with representatives of the nursing home at an exit conference. The issue of the proper treatment of the nursing home's funds deposited in the Patient Trust Fund at Sun Bank was discussed during the audit. The auditor for Peat Marwick, Mr. Scutillo, thought that the Home had accounted for the use of those funds correctly by seeking a return on equity from Medicaid for the securities in the Patient Trust Fund. The Audit Report Ultimately, Mr. Scutillo's field work was reviewed by more senior members of Peat Marwick and by HRS. An audit report was issued by Peat Marwick Mitchell & Company dated November 18, 1986 which did propose adjustments to the Home's cost report arising from the treatment of the funds which had been deposited in the Patient Trust Fund in Sun Bank. The audit report proposed to reduce nursing home's equity by $2,734,270 and to adjust the return on equity before apportionment by $108,515. The other adjustments proposed are of no consequence, because the nursing home is already at or exceeds the Medicaid cost caps, and federal regulations would prevent the Home from receiving additional reimbursement on the other adjustments even if they were made in the nursing home's favor. After the nursing home filed a request for an administrative hearing on the adjustments made in the Peat Marwick audit, representatives of the nursing home and HRS met to discuss the issues, and agreed to present a joint position paper to HCFA for a non-binding determination on the issue whether the Home was entitled to a return on equity for the funds in the Patient Trust Fund at Sun Bank. The parties agreed that each would prepare a position paper which would be forwarded to the appropriate federal officials for review. The Home's position paper was submitted to HRS but HRS failed to submit it to the federal government. Instead, HRS submitted only its own position paper. After the Home discovered this, it sent its position paper directly to the HCFA. HCFA's Response The HCFA responded, after reviewing the position of both parties, that the self-insurance fund should be excludedfrom the Home's equity capital. 1/ The HCFA believed that the fund was segregated and not used to provide patient care. 2/ The manual which HCFA relied upon, (HIM-15), contains in Section 1202.1 a definition of equity capital which includes the health care provider's investment in property, plant and equipment related to patient care, and that working capital necessary for the proper operation of patient care activities. A proprietary provider is entitled to a rate of return on its equity capital which is "a percentage equal to 1 and 1/2 times the average of the rates of interest on special issues of public debt obligations issued to the Federal Hospital Insurance Trust Fund for each of the months during the provider's reporting period." (HIM-15, Section 1206). The manual also describes items which are to be excluded from the computation of equity capital, and in Section 1218.9 states: Where a provider maintains a self- insurance program in lieu of purchasing conventional insurance, the funds in the self-insurance reserve fund must be set aside in a segregated account to cover possible losses and not used to provide patient care. Therefore, the amount deposited in the fund and the earnings on the self-insurance reserve remaining in the fund are not included in equity capital. The nursing home argues that Section 1218.9 focuses on self-insurance funds which a health care provider maintains to protect itself, and that the section is inapplicable here, because the funds deposited with Sun Bank were deposited for the protection of patients, not of the nursing home. This is unpersuasive. The nursing home itself is responsible for any defalcations in the handling of residents' assets placed with it as trustee. The Patient Trust Fund which serves as self-insurance for claims against the Home for mismanagement of the Resident Trust Funds is similar to conventional insurance.
The Issue The issue to determine in this matter is the amount of the money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Petitioner, a Medicaid recipient, following Petitioner’s recovery from a third party.
Findings Of Fact This administrative matter centers on the amount the Agency is entitled to be paid to satisfy its Medicaid lien following Petitioner’s recovery of a $700,000 settlement from a third party. On November 7, 2010, Petitioner was involved in a devastating automobile accident. While stopped awaiting for oncoming traffic to pass, another vehicle, driven by Nahun Garcia, struck Petitioner from behind at a high rate of speed. Mr. Garcia was cited for careless driving. No evidence indicates that any negligence on the part of Petitioner caused or contributed to the accident or his injury. Petitioner suffered catastrophic injuries from the collision. Immediately following the accident, Petitioner was transported to St. Joseph’s Hospital in Tampa, Florida. There, Petitioner was diagnosed with fractures of his C4-C5 vertebra. Petitioner is now quadriplegic. Petitioner was 26 years old on the date of the incident. Because of the automobile accident, Petitioner is severely disabled and totally dependent on others for his care and well-being. Petitioner’s injuries are continuing and permanent. In addition, Petitioner is no longer able to care for his minor daughter. Petitioner’s medical expenses from the accident equal $264,541.69. Of this amount, the Agency, through the Medicaid program, paid a total of $249,197.80 for Petitioner’s past medical care. Petitioner pursued a personal injury claim against Mr. Garcia. Weldon (“Web”) E. Brennan, Esquire, represented Petitioner in the lawsuit. According to Mr. Brennan’s testimony at the final hearing, initially, Petitioner recovered $10,000 from Mr. Garcia’s automobile insurance company, Progressive Insurance, which was the limit of the property damage liability insurance policy. However, Mr. Brennan was not able to identify any other source of insurance to cover Petitioner’s injuries. Mr. Garcia had no collectible assets. Because the only available insurance was the property damage liability policy, Mr. Brennan evaluated the possibility of pursuing a bad faith claim against Progressive. Mr. Brennan concluded that, based on the circumstances of Petitioner’s initial coverage demand to Progressive, a bad faith claim was a viable option. Therefore, Mr. Brennan’s litigation strategy shifted. First, he would obtain a judgment against the tortfeasor (Mr. Garcia) in trial court. Then, he would seek to impose responsibility for the verdict on Progressive, including an assessment of punitive damages. In May 2017, following six years of litigation, Mr. Brennan was able to negotiate a $700,000 settlement with Progressive. Mr. Brennan represented that Progressive tendered the amount to avoid the risk of a successful bad faith claim.2/ Mr. Brennan explained that in finalizing the settlement with Progressive, he recognized that obtaining additional funds, by fully litigating the bad faith claim, would involve lengthy and intensive litigation. Consequently, Mr. Brennan believed that it was in his client’s best interests to timely settle his lawsuit. On May 9, 2017, Petitioner and Progressive executed a Release of All Claims (the “Release”) formalizing the settlement. In the course of the settlement negotiations, Petitioner and Progressive agreed that the true value for Petitioner’s injuries equaled at least $15 million. The Release specifically stated: The parties were both willing to agree to a consent judgment for $15,000,000 prior to settlement and so they therefore agree that [Petitioner’s] alleged damages have a value in excess of $15,000,000, of which $264,541.69 represents [Petitioner’s] claim for past medical expenses. Given the facts, circumstances, and nature of [Petitioner’s] alleged injuries and this settlement, the parties have agreed to allocate $12,354.10 of this settlement to [Petitioner’s] claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. Under section 409.910, the Agency is to be repaid for its Medicaid expenditures from any recovery from liable third parties. Accordingly, when the Agency was notified of Petitioner’s personal injury settlement, it asserted a Medicaid lien against the amount Petitioner recovered. The Agency claims that, pursuant to the formula set forth in section 409.910(11)(f), it should collect the full amount of the medical costs it paid on Petitioner’s behalf ($249,197.80). The Agency maintains that it should receive the full amount of its lien regardless of the fact that Petitioner settled for less than what he represents is the full value of his damages. (As discussed below, the formula in section 409.910(11)(f) allows the Agency to collect the full Medicaid lien.) Petitioner asserts that pursuant to section 409.910(17)(b), the Agency should be reimbursed a lesser portion of Petitioner’s settlement than the amount it calculated using the section 409.910(11)(f) formula. Petitioner specifically argues that the Agency’s Medicaid lien should be reduced proportionately, taking into account the full value of Petitioner’s likely recovery in the underlying negligence and bad faith lawsuits. Otherwise, the application of the default statutory formula would permit the Agency to collect more than that portion of the settlement that fairly represents compensation for past medical expenses. Petitioner maintains that such reimbursement violates the federal Medicaid law’s anti-lien provision (42 U.S.C. § 1396p(a)(1)) and Florida common law. Petitioner contends that the Agency’s allocation from Petitioner’s recovery should be reduced to the amount of $11,637.54. To establish the full value of Petitioner’s injuries, Petitioner presented the testimony of Mr. Brennan, as well as Vinson Barrett, Esquire. Mr. Brennan opined on what he considered to be the “true” value of Petitioner’s damages. Mr. Brennan heads a plaintiff’s injury firm and has represented plaintiffs in personal injury cases for over 28 years. Mr. Brennan has extensive experience handling cases involving automobile accidents, including catastrophic injury claims and spinal cord injuries. Mr. Brennan expressed that he routinely evaluates damages suffered by injured parties as part of his practice. He stays current on jury verdicts and settlements throughout Florida and the United States. Mr. Brennan was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Brennan valued Petitioner’s damages conservatively at $15 million, and possibly as high as $45 million. In deriving this figure, Mr. Brennan considered Petitioner’s medical expenses, his lost wage capacity, his past and future pain and suffering, and his life expectancy. Finally, Mr. Brennan testified that, in placing a dollar value on Petitioner’s injuries, he reviewed a number of jury verdicts involving catastrophic injuries similar to Petitioner’s. Mr. Brennan commented that Petitioner faces a meager future. Other than slight movement in his left arm, he is paralyzed from the neck down. Mr. Brennan relayed how the injuries have caused Petitioner to experience depression. He cannot eat independently, nor can he control his bodily functions. Neither is Petitioner able to care for or support his daughter. Mr. Brennan testified that the $700,000 settlement did not fully or fairly compensate Petitioner for his injuries. Therefore, he urged that a lesser portion of Petitioner’s settlement be allocated to reimburse Medicaid instead of the full amount of the lien ($249,197.80). Mr. Brennan proposed applying a ratio based on the true value of Petitioner’s injuries ($15 million) compared to the amount Petitioner actually recovered ($700,000). Using his estimate of $15 million, the settlement represents a 4.67 percent recovery of the total value of all Petitioner’s damages. In like manner, the amount of medical expenses should also be reduced to 4.67 percent or approximately $11,637.54. Therefore, in Mr. Brennan’s professional judgment, $11,637.54 is the portion of Petitioner’s settlement that represents his compensation for past medical expenses. Mr. Brennan expressed that allocating $11,637.54 for Petitioner’s past medical expenses is “logical,” “rational,” and “reasonable” under the circumstances. Mr. Barrett also testified on Petitioner’s behalf. Mr. Barrett is a trial attorney with over 40 years’ experience and works exclusively in the area of plaintiff’s personal injury, medical malpractice, and medical products liability cases. Mr. Barrett has handled a number of catastrophic injury matters involving traumatic spinal cord injuries. Mr. Barrett commented that, as a routine part of his practice, he makes assessments concerning the value of damages suffered by injured parties. Mr. Barrett was accepted as an expert in the valuation of damages suffered by injured persons. Prior to the final hearing, Mr. Barrett reviewed Petitioner’s exhibits, including Petitioner’s medical records, the accident report, and Petitioner’s Release of All Claims executed with Progressive. He also reviewed the sample jury verdicts Petitioner presented at the final hearing as Exhibit 13. Based on his valuation of Petitioner’s injuries and his professional training and experience, Mr. Barrett expressed that injuries similar to Petitioner’s would result in jury awards averaging between $15 and $30 million dollars. In light of Petitioner’s horrific injuries, Mr. Barrett conservatively valued Petitioner’s injuries at $15 million. Mr. Barrett opined that Mr. Brennan’s valuation of $15 million was appropriate, if not undervalued. Mr. Barrett supported Mr. Brennan’s pro rata methodology of calculating a reduced portion of Petitioner’s $700,000 settlement to equitably and fairly represent past medical expenses. With injuries valued at $15 million, the $700,000 settlement only compensated Petitioner for 4.67 percent of the total value of his damages. Therefore, because Petitioner only recovered 4.67 percent of his damages, the most “reasonable” and “rational” manner to apportion the $700,000 settlement is to apply that same percentage to determine Petitioner’s recovery for past medical expenses. Petitioner asserts that applying the same ratio to the total amount of medical costs produces the definitive value of that portion of Petitioner’s $700,000 settlement that represents compensation for past medical expenses, i.e., $11,637.54 ($249,197.80 times 4.67 percent). The Agency was not a party to Petitioner’s negligence lawsuit or Petitioner’s Release with Progressive. All of the expenditures Medicaid spent on Petitioner’s behalf is attributed to past medical expenses. No portion of the $249,197.80 Medicaid lien represents future medical expenses. The undersigned finds that the competent substantial evidence establishes the value of Petitioner’s injuries from his auto accident at $15 million. However, based on the evidence in the record, Petitioner failed to prove, by a preponderance of the evidence, that a lesser portion of Petitioner’s total recovery should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Accordingly, the Agency is entitled to recover $249,197.80 from Petitioner’s recovery of $700,000 from a third party to satisfy its Medicaid lien.
