The Issue The issue in this proceeding is how much of Petitioner’s settlement proceeds should be reimbursed to Respondent, Agency for Health Care Administration (“AHCA”), to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes, from settlement proceeds he received from a third party.
Findings Of Fact The following findings are based on testimony, exhibits accepted into evidence, and admitted facts stated in the Joint Pre-Hearing Stipulation. Facts Concerning Underlying Personal Injury Matter and Giving Rise to Medicaid Lien On January 6, 2012, Arnie Solheim, a then 15-year-old boy, ran away from his group home and was struck by a vehicle while walking up an interstate ramp. Mr. Solheim had a history of running away from his group home residence. As a result of the incident, Mr. Solheim suffered permanent and severe injuries including brain damage, blindness in one eye, and paralysis. Due to his injuries, Mr. Solheim will require 24 hours-a-day supervision for the remainder of his life. Mr. Solheim’s medical care related to the injury was paid by Medicaid, and Medicaid through AHCA provided $187,302.46 in benefits. Accordingly, $187,302.46 constituted Mr. Solheim’s full claim for past medical expenses. Mr. Solheim’s mother, Rosepatrice Solheim, was appointed Mr. Solheim’s Plenary Guardian. Rosepatrice Solheim, as Mr. Solheim’s Guardian, filed a personal injury action against the parties allegedly liable for Mr. Solheim’s injuries (“Defendants”) to recover all of Mr. Solheim’s damages, as well as her and her husband’s individual damages associated with their son’s injuries. Mr. Solheim’s personal injury action was settled through a series of confidential settlements in a lump-sum unallocated amount. This settlement was approved by the circuit court. During the pendency of Mr. Solheim’s personal injury action, AHCA was notified of the action and AHCA asserted a Medicaid lien of $187,302.46 against Mr. Solheim’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 Mr. Solheim’s action against the Defendants. By letter dated October 9, 2019, AHCA was notified of Mr. Solheim’s settlement. To date, AHCA has not filed a motion to set-aside, void, or otherwise dispute Mr. Solheim’s settlement. The Medicaid program through AHCA spent $187,302.46 on behalf of Mr. Solheim, all of which represents expenditures paid for Mr. Solheim’s past medical expenses. Mr. Solheim’s taxable costs incurred in securing the settlement totaled $76,229.38. Application of the formula at section 409.910(11)(f) to Mr. Solheim’s settlement requires payment to AHCA of the full $187,302.46 Medicaid lien. Expert Testimony Petitioner called two experts to testify on his behalf pertaining to valuation of Petitioner’s damages, Richard Filson and Karen Gievers. Mr. Filson, an attorney practicing law at Filson and Fenge law firm in Sarasota, Florida, has been practicing law for 36 years. He represented Mr. Solheim in the underlying case. In addition to Petitioner’s case, he has represented clients in personal injury matters representing children and childrens’ rights cases, including cases involving brain injury and paralysis. Mr. Filson evaluated Petitioner’s case and opined that $10 million was a conservative valuation of the case. The valuation of the case encompasses past medical expenses, future medical expenses, economic damages, and pain and suffering. Mr. Filson pursued the action against three defendants. He testified that there would be no admission of liability. The group home was alleged to have failed to appropriately evaluate the risk and placement of Mr. Solheim, including placing Mr. Solheim in a locked unit to maintain his safety. However, there were issues with recovering from the facility. There was a dispute regarding the director’s degree of responsibility for Mr. Solheim’s elopement. As a result, Mr. Filson opined that Petitioner settled the case for a lower amount because of liability and collectability issues with the group home. Mr. Filson opined that Mr. Solheim’s $1,150,00.00 settlement represented 11.5 percent of the full $10 million value of his claim, including past medical expenses. He relied upon the comprehensive plan and the extent of Mr. Solheim’s catastrophic injuries to assess the value of the case. Mr. Filson opined that the allocation formula is 11.5 percent. The past medical expenses totaled $187,302.46. That figure multiplied by 11.5 percent would result in recovery of $21,539.78 of the settlement proceeds allocated to past medical expenses. Karen Gievers also testified as an expert regarding valuation of Mr. Solheim’s claim. Ms. Gievers, a licensed attorney for 42 years and a former circuit court judge, focuses her practice on civil litigation. In her practice as an attorney, she has handled personal injury cases involving catastrophic injuries similar to Mr. Solheim’s injuries. Like Mr. Filson, she has also represented children in her practice. Ms. Gievers opined that the value of Mr. Solheim’s case was conservatively estimated at $10 million. She opined that Mr. Solheim’s settlement amount of $1,150,000.00 resulted in a recovery of 11.5 percent of the full value of his claim. She opined that applying the 11.5 percent to each damage category is the appropriate way to allocate the amount of damages across all categories. Thus, applying the allocation formula of 11.5 percent to the $187,302.46 claim for past medical expenses would be $21,539.78. Ms. Gievers looked at Mr. Solheim’s economic and noneconomic damages in her valuation of the case. She reviewed the comprehensive care plan and noted that all costs were not included, which would add to the value of the case being greater than Mr. Solheim’s actual recovery. Petitioner asserted that the $1,150,000.00 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Mr. Solheim for his full value of damages. Therefore, a lesser portion of the settlement should be allocated to reimburse AHCA, instead of the full amount of the lien. Ultimate Findings of Fact Mr. Filson and Ms. Gievers credibly opined that a ratio should be applied based on the full value of Petitioner’s damages, $10,000,000.00, compared to the amount that Petitioner actually recovered, $1,150,000.00. Based on this formula, Petitioner’s settlement represents an 11.5 percent recovery of Petitioner’s full value of damages. Similarly, the AHCA lien should be reduced and the amount of reimbursement to AHCA should be 11.5 percent of the Medicaid lien. Therefore, $21,539.78 is the portion of the third- party settlement that represents the amount AHCA should recover for its payments for Mr. Solheim’s past medical care. The expert witnesses’ testimony was supported by their extensive experience in valuing damages and their knowledge of Mr. Solheim’s injuries. AHCA, on the other hand, did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Filson or Ms. Gievers. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Filson or Ms. Gievers as to valuation or the reduction ratio. AHCA did not offer alternative opinions on the damage valuation method suggested by either Mr. Filson or Ms. Gievers. Based on the record, the testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Based on the evidence in the record, the undersigned finds that, Petitioner proved by a preponderance of the evidence that a lesser portion of Mr. Solheim’s settlement should be allocated as reimbursement for past medical expenses than the amount AHCA calculated. Accordingly, AHCA is entitled to recover $21,539.78 from Petitioner’s recovery of $1,150,000.00 to satisfy the Medicaid lien.
The Issue The issue in this case is the amount that must be paid to Respondent, Agency for Health Care Administration (AHCA or Respondent) from the proceeds of Petitioner’s confidential settlement to satisfy Respondent’s Medicaid lien against the proceeds pursuant to section 409.910, Florida Statutes (2019).1
Findings Of Fact Paragraphs 1 through 9 are the facts admitted8 and agreed upon by the parties, and required no proof at hearing. On December 7, 2012, A.F., an eight-year-old female, underwent an initial psychiatric evaluation. Following this assessment, A.F. was started on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD). A.F. was 4 Respondent’s Proposed Final Order provided that “Petitioner presented two witnesses: Andrew Needle, Esq., and Kenneth Bush, Esq.” The undersigned did not hear any testimony from Mr. Needle or Mr. Bush. 5 Respondent’s Exhibit 1, a “Provider Processing System Report,” contained a different “Total Claims” amount than the amount of A.F.’s medical expenses paid by AHCA to which the parties stipulated. Without testimony this exhibit is hearsay, and cannot support a finding of fact. As discussed at hearing, the parties agreed to use the stipulated amount: $261,334.61. 6 Although Petitioner’s PFO recites that Petitioner “did not order a transcript of the proceedings,” a review of the filed transcript shows otherwise. See Hearing Tran, pg. 10, lines 4–7. 7 The Hearing Transcript was electronically filed with DOAH on August 3, 2020; the hard– copy original Transcript was filed with DOAH on August 14, 2020. 8 Statement 3 has been reworded for clarity purposes. prescribed 18mg of the ADHD drug9 that was the subject of the personal injury litigation. On March 30, 2013, at the age of nine, and shortly after her ADHD medication was uptitrated from 18mg to 27mg daily, A.F. attempted suicide by way of hanging with a scarf fastened to her bunk bed. That action detrimentally impeded oxygen flow to A.F.’s brain for a dangerously prolonged period of time, resulting in extensive neurological damage and substantial motor impairment; ultimately leaving A.F. in a permanent vegetative state. Ms. Lopez, on behalf of A.F., brought a product liability and medical malpractice action to recover all of A.F.’s damages related to her prescription of the ADHD drug. This action was brought against various pharmaceutical and medical malpractice defendants. As a result of the alleged medical malpractice and pharmaceutical product liability claims, A.F. suffered a massive hypoxic brain injury. Since this incident and the resulting hypoxic brain injury, A.F. has been in a permanent vegetative state requiring 24/7 skilled nursing care. In 2020, Ms. Lopez, on behalf of A.F., settled her tort action for a limited confidential amount, due to significant liability challenges with her claims; even though she believed that A.F.’s injuries were tens of millions of dollars in excess of the recovery. AHCA was properly notified of A.F.’s lawsuit against the defendants and indicated it had paid benefits related to the injuries from the incident in the amount of $261,334.61. AHCA has asserted a lien for the full amount it paid, $261,334.61, against A.F.’s settlement proceeds. AHCA has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory 9 The name of the drug is not being used based on the terms in the confidential settlement. reduction formula to this particular settlement would result in no reduction of the lien given the amount of the settlement. AHCA paid $261,334.61 on behalf of A.F., related to her claim against the liable third parties. The parties stipulated that AHCA is limited by section 409.910(17)(b) to the past medical expense portion of the recovery and that a preponderance of the evidence standard should be used in rendering this Final Order. There were two settlements regarding A.F.’s care and treatment: one with the doctor(s) who allegedly committed medical malpractice; and the second involving the pharmaceutical maker of the ADHD drug prescribed to A.F. Although AHCA was notified when the medical malpractice case was settled, AHCA did not file a lien on any of the recovery from the medical malpractice settlement. Limited information about the medical malpractice settlement was discussed, but the medical malpractice settlement is not considered in this Final Order. Petitioner’s Exhibit 1 is a February 16, 2019, letter (lien letter) from Conduent Payment Integrity Solutions, a subcontractor to Health Management Systems which is an authorized agent of AHCA “to operate the Florida Medicaid Casualty Recover Program.” In addition to directing A.F.’s counsel to review section 409.910, to determine the “responsibilities to Florida Medicaid,” Mark Lyles, Conduent’s case manager and author of this letter also posted the amount of the lien asserted by AHCA: $261,334.61. A.F. lives with her mother, sister, grandmother, and Ms. Lopez’s significant other. Everyone in the household can and does provide care and assistance to A.F. when necessary. Ms. Lopez rarely leaves A.F. in someone else’s care. A.F. is unable to speak and requires total care. Ms. Lopez described the injuries sustained by A.F. Ms. Lopez also detailed the care she has provided and is continuing to provide to A.F. since the event. A.F.’s activities of daily living (ADLs) must be met with assistance in every aspect of her being. When A.F. wakes up each morning: she is given all her medications; her diaper is changed; she is fed via a feeding tube; she is given lung treatments each morning; her trachea tube is cleaned and changed at times; and she is turned or moved every two hours to prevent sores forming on her skin. A.F. is on a ventilator at night and every four hours she is catheterized because she stopped urinating. In October 2019, A.F. started having seizures. Ms. Lopez testified that A.F.’s care is mentally and emotionally draining, and very tiring. She further added A.F.’s care is very repetitive and the “best way to describe it [each day] is the movie GROUNDHOG DAY,” (Columbia Pictures 1993); the same thing, every day. A.F. is confined to her hospital bed, a wheelchair, or a chair to which she can be secured. Although Ms. Lopez testified that A.F. is “entitled” to skilled nursing care 24/7, Ms. Lopez has learned how to care for A.F. because “they can’t staff me” with a skilled nurse (presumably referring to a Medicaid standard for care). Mr. Rafferty is a Florida board-certified civil trial lawyer with 26 years’ experience in personal injury law. He concentrates and specializes in pharmaceutical cases, including defective drug cases involving catastrophic injury, throughout Florida and the United States. As part of his ongoing practice, he routinely evaluates the damages suffered by injured clients, and relies on his own experience and his review of other jury verdicts to gauge any likely recovery for non-economic damages. Mr. Rafferty continues to handle cases involving similar injuries suffered by A.F. Mr. Rafferty was tendered and without objection was accepted as an expert regarding valuation of personal injury damages. Mr. Rafferty, along with Nathan Carter as co-counsel, represented A.F. and her mother in the civil litigation. He testified to the difficulties associated with pharmaceutical litigation in general, and then focused on the problematic causation and liability issues related to A.F. and her injuries. Mr. Rafferty met with the family; observed A.F. can no longer perform her ADLs; reviewed all of A.F.’s medical information; evaluated how the medication was uptitrated causing A.F.’s injury; analyzed the causation, liability issues, and fault; developed economic damages figures; and valued non-economic damages. Mr. Rafferty credibly testified regarding the evaluations he made regarding A.F.’s injuries and the pharmaceutical product prescribed. The non-economic damages included A.F.’s pain and suffering, both future and past, her loss of capacity to enjoy life, and her mental anguish. Mr. Rafferty explained the importance of assessing all of the elements of damages A.F. suffered as a result of her catastrophic injuries. Mr. Rafferty’s unrefuted testimony placed the total full value of A.F.’s damages conservatively in excess of $100,000,000.00.10 Mr. Rafferty included A.F.’s pain and suffering, mental anguish, and loss of quality of life, plus the economic damages. Further, using the $100,000,000.00 valuation amount and the confidential settlement proceeds, Mr. Rafferty opined that A.F. recovered only 4.75% of the full measure of all her damages. Mr. Rafferty reviewed Petitioner’s Exhibit 1, and as an experienced trial attorney understood the letter to contain the “lien for past medical” expenses of $261,334.61. Mr. Rafferty added that he routinely uses this type of approach with lien holders in his practice. Mr. Rafferty’s testimony was uncontradicted and persuasive on this point. Mr. Carter is an AV-rated Florida civil trial lawyer with 25 years’ experience in personal injury law, with an active civil trial practice. He has always handled plaintiff’s medical malpractice, product liability, and car accident-type litigation. As a routine part of his practice, he makes assessments concerning the value of damages suffered by injured clients, including the liability, causation, and possible damages. Mr. Carter 10 For ease of discussion, the conservative total amount, $100,000,000.00 will be used. All the witnesses agreed that the economic value of the case was above $70 million and the non- economic damages were at least $30 million. confirmed that it is essential to have every element (liability, causation, and damages) evaluated because these types of cases are expensive in both time and money. Mr. Carter specifically looks at the injuries sustained, who the plaintiff is, how the injuries have affected their life, and the permanency of those injuries. He continues to handles cases with catastrophic injuries. Mr. Carter testified that the injuries suffered by A.F. were “worse than almost, almost any case … handled.” He added that A.F.’s damages were “catastrophic” and “one of the worst damage cases [he had] ever seen.” Mr. Carter was tendered and without objection was accepted as an expert regarding valuation of medical malpractice damages.11 Mr. Carter testified that “as a matter of course, [we] put every lienholder on notice as soon as we learn about them” and “then throughout the case.” Mr. Carter was in regular contact with Mr. Lyles. The medical malpractice case was settled before the pharmaceutical action. After the medical malpractice case was settled, Mr. Carter understood that AHCA would not negotiate on the medical malpractice settlement. When the “entire case” was completed, Mr. Carter notified Mr. Lyles, and then received the lien letter. As an experienced trial attorney he understood the letter to contain the “final lien figure:” $261,334.61. Mr. Carter also met with the family, reviewed all of A.F.’s medical information and records, and evaluated the medication that was uptitrated. Mr. Carter utilized a similar detailed analysis of A.F.’s injuries and her current condition. Mr. Carter also described the severity of A.F.’s injuries that entered into his decision to pursue the civil case and to testify in this proceeding. Mr. Carter analyzed the causation, liability issues, and fault. He evaluated the economic damages figures and valued non-economic damages 11 Mr. Carter was offered as an expert in medical malpractice damages. His insight in the combined totality of the medical malpractice and pharmaceutical product litigation warranted consideration, but AHCA’s failure to include the medical malpractice settlement precluded any consideration of that settlement. Without a more decisive understanding of what “pretty significant” means, ACHA’s attempt to question Mr. Carter’s knowledge of A.F.’s past medical expenses is unpersuasive. such as pain and suffering, both future and past, loss of capacity to enjoy life, scarring and disfigurement, and mental anguish. Mr. Carter opined A.F.’s damages could have easily been in excess of $100,000,000.00. Mr. Carter further opined that A.F.’s non-economic damages were “very significant” and “could have driven the total value of damages in excess of the $100,000,000.00.” However, Mr. Carter testified he used $100,000,000.00 in order to resolve the Medicaid lien. Mr. Carter used the same mathematical approach he has used in other lien issues: he divided the confidential settlement amount by the conservative full value of damages ($100,000,000.00) and arrived at a recovery of 4.75% of the full measure of her damages. Mr. Carter’s testimony was uncontradicted and persuasive on this point. Mr. McKenna is a board-certified, AV-rated Florida civil trial lawyer with 25 years’ experience in personal injury law, who maintains an active civil trial practice. He has always practiced plaintiff’s work, and has tried between 40 and 50 cases to verdict. In the last 15 years, Mr. McKenna testified that “at least half … focused on … catastrophic cases either from the medical malpractice arena or from general liability trucking arena.” Mr. McKenna has reviewed thousands of personal injury cases relative to damages, and provided a detailed explanation of how he evaluates damages of catastrophic injury cases. He further provided that half of his cases were wrongful death cases and the other half were physical or brain injury cases. Mr. McKenna also provided the various resources he uses to keep abreast of personal injury verdicts and settlements. Mr. McKenna was tendered as “an independent expert attorney as to valuation of damages.” Mr. McKenna was not involved in the underlying civil litigation, but became A.F.’s guardian ad litem, appointed by the trial judge, to offer his “opinions regarding the reasonableness of the potential medical malpractice settlement, and ... the pharmaceutical settlement” which is the subject of this Final Order. Respondent did not object to Mr. McKenna’s tender and he was accepted as an expert in the valuation of damages. Mr. McKenna testified that he reviewed the facts and circumstances of both the medical malpractice and the pharmaceutical sides and the chronologies of A.F.’s medical records. He acquired an “intimate understanding” of A.F’s on going care and treatment in light of the injuries she sustained. Mr. McKenna agreed with Messrs. Rafferty and Carter that the non-economic damages in this case were very significant, and he agreed with their conservative $100,000,000.00 valuation of her total damages. Further, Mr. McKenna testified that the normal course for resolving liens in Florida was to look at the total value of damages in relation to the recovery to get a ratio by which to reduce the lien amount. Based on his past experiences in resolving Medicaid liens, other courts have resolved such liens using the formula from the Arkansas Department of Health & Human Services. v. Ahlborn, 547 U.S. 268 (2006), with the only other alternative formula found in section 409.910. The testimony of Petitioner’s three experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the confidential settlement does not fully compensate A.F. for the full value of her damages. As testified to by the experts, A.F.’s recovery represents only 4.75% of the total value of her claim. AHCA did not call any witnesses, present any evidence as to the value of damages, or propose a different valuation of the damages. In short, Petitioner’s evidence was unrebutted. AHCA did, however, contest the methodology used to calculate the allocation of past medical expenses, but was unpersuasive. The parties stipulated to the value of the services provided by Florida Medicaid as $261,334.61. It is logical and rational to conclude that this figure is the amount expended for A.F.’s past medical expenses. Applying the 4.75% pro rata ratio to $261,334.61 equals $12,413.39, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien. Petitioner proved by a preponderance of the evidence as set forth in section 409.910(11)(f) that AHCA should be reimbursed at the lesser amount: $12,413.39.
The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (sometimes referred to as "17b"), Respondent's recovery of medical assistance expenditures from $500,000 in proceeds from the settlement of a products liability action must be reduced from its allocation under section 409.910(11)(f) (sometimes referred to as "11f")1 to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti-Lien Statute)2; and, if so, the amount of Respondent's recovery.
Findings Of Fact As a result of a motor vehicle accident that took place on May 27, 2012, Petitioner sustained grave personal injuries, including damage to his spinal cord that has left him a paraplegic incapable of self-ambulation of more than a few steps, except by means of a wheelchair or rolling walker. Petitioner was a passenger in a 2003 extended-cab Ford F-150 pickup truck that was driven at a high rate of speed by his brother, who lost control of the vehicle in a curve, over-corrected, and caused the vehicle to rollover three times, ejecting Petitioner with such force that he traveled a distance of 150 feet in the air. The force of the rollovers crushed the vehicle's roof, which caused Petitioner's door latch to fail, allowing Petitioner's door to open and Petitioner to be expelled from the relative safety of the passenger compartment. In settlement negotiations, Petitioner's trial counsel claimed that Ford F-150s of the relevant vintage suffered from deficient door latches, but the forces to which the latch were subjected were overwhelming and well beyond reasonable design limits: the truck's door could not have resisted these forces unless it had been welded to the frame. The one-vehicle accident was substantially, if not entirely, caused by Petitioner's brother, who was intoxicated and is now serving a five-year sentence in prison for his role in the crash. Petitioner shared some responsibility because he likely was not wearing a seatbelt when the truck rolled over. Petitioner's brother and another passenger who were not ejected from the vehicle sustained minor injuries. Petitioner commenced a products liability action against Ford Motor Company and the manufacturer of the door latch. Ford Motor Company defended the case vigorously. Expert witnesses were unable to find any federal safety standards that had been violated in connection with the vehicle, the door latch, or the performance of the vehicle and door latch during the rollovers. The manufacturer of the door latch raised a substantial defense of a lack of personal jurisdiction. At the time of the incident, Petitioner was a 25-year-old plumber and construction worker. He was the sole means of support for his three young children. He has undergone an arduous course of rehabilitation to gain wheelchair-dependent self-autonomy. At the time of the settlement, which appears to have resolved the products liability action, the putative true value of Petitioner's case was $6 million, consisting of $154,219 of past medical expenses, $2.1 million of future medical expenses, $800,000 of lost wages and loss of future earning capacity, and about $2.95 million of noneconomic damages, including pain and suffering and loss of consortium. Petitioner has proved each of these damages components, so the putative true value is the true value (sometimes referred to as the "actual true value"). Petitioner settled the case for $500,000, representing a settlement discount of 91.7% from the true value of $6 million (Settlement Discount). Petitioner has paid or incurred $147,000 in attorneys' fees and about $123,000 in recoverable costs in prosecuting the products liability action. Respondent has expended $154,219 of medical assistance. Under the 11f formula, which is described in the Conclusions of Law, Respondent would recover approximately $126,000 from the $500,000 settlement. This provisional 11f allocation provides the point of reference for determining whether Petitioner has proved in this 17b proceeding a reduced recovery amount for Respondent. Having proved the Settlement Discount of 91.7% from the actual, not putative, true value to the settled value, Petitioner has proved that each damages component of the true value, including past medical expenses, must be proportionately reduced by 91.7% to identify the portion of the settlement proceeds representing past medical expenses, which, as discussed in the Conclusions of Law, is the only portion of the proceeds subject to the Medicaid lien. Reducing the past medical expenses of $154,219 by 91.7% yields about $12,800, which is Respondent's tentative 17b recovery. As mentioned in the Conclusions of Law, Respondent's recovery must bear its pro rata share of the attorneys' fees and costs paid or incurred to produce the settlement. The total fees and costs of $270,000 represent 54% of the settlement. The record provides no reason to find that these fees and costs are unreasonable in amount or were not reasonably expended to produce the $500,000 settlement. Reducing Respondent's recovery of $12,800 by 54% yields $5888, which is Respondent's 17b recovery.
The Issue The issues for determination are, first, whether a lesser portion of Petitioner’s total recovery from a third-party tortfeasor should be designated as recovered medical expenses than the share presumed by statute; if so, then the amount of Petitioner’s recovery to which Respondent’s Medicaid lien may attach must be determined.
Findings Of Fact On June 17, 2018, Cruz, then age 28, went boating in Biscayne Bay, near Elliott Key. The boat belonged to Cruz’s cousin, Victor Fonseca (“Fonseca”), who operated the vessel at all relevant times. Others were with them. At some point during this outing, Fonseca’s boat became stuck on a sandbar. Cruz, who was in the water, got close to the boat’s engines, apparently intending to attempt to free the boat. As he did so, Fonseca, who knew or should have known of Cruz’s whereabouts, engaged the engines. Cruz’s clothes became caught in a moving propeller, which dragged him in. The result, predictably, was catastrophic, as the fast-spinning propeller chopped into Cruz’s lower body, causing severe injuries. The medical records describe Cruz’s injuries as including extensive trauma to all muscles of the right thigh and left gluteal muscles, multiple significant fractures of bones in the right leg, a right thigh degloving injury, and a severe rectal injury, which required the surgical removal of his anal sphincter. Post injury, Cruz developed RLE compartment syndrome and underwent a fasciotomy. He suffered an acute pulmonary embolism for which an IVC filter was placed. He underwent multiple surgical debridements and closure procedures. An end-colostomy was also laced. He underwent eternal fixation of his femur fracture. Cruz remained in the hospital for more than one year. The foregoing clinical description is amplified by emergency room photographs, which vividly depict the bodily destruction that the propeller caused. The words “gruesome” and “horrific,” or others to that effect, come to mind when viewing these pictures. It is undisputed that Cruz’s devastating injuries are disfiguring, permanently disabling, and chronically painful. As a result of this accident, Cruz will require medical treatment for the rest of his life. He must use a wheelchair or walker to move about and has been fitted with orthotic devices. Cruz is unable to care for himself and depends upon others to assist him in all activities of daily living. Before his injury, Cruz was employed as a heating, ventilation, and air conditioning (“HVAC”) technician. He will not be able to resume working in this field, and, indeed, Cruz is unlikely ever to work again. As mentioned, Cruz experiences chronic pain from his injuries, and he is unable to sit normally for extended periods without discomfort, due to the absence of gluteal muscles. His right thigh now consists, essentially, of skin- wrapped bone, because the muscle and connective tissue are gone. Not surprisingly, Cruz has suffered, and continues to suffer, adverse emotional effects, including depression. Cruz’s family suffers as well. He and his wife have two children, twins, who were three years old at the time of the accident. As a husband and father of young children, Cruz is no longer able to provide the same level of support and companionship to his family as before becoming disabled. Cruz brought a personal injury lawsuit against Fonseca, the person whose negligence seems likely to have been the sole proximate cause of the accident. (There is no evidence of, nor any reason to infer, the involvement of a defective product or joint tortfeasor. Likewise, there is no persuasive evidence that Cruz’s own negligence contributed to causing the accident.) Unfortunately for Cruz, Fonseca was practically judgment proof. He had no assets upon which to levy and could discharge any judgment in bankruptcy. Fonseca’s homeowner’s policy, having limits of $300,000, was woefully inadequate to satisfy Cruz’s damages, and the insurer initially denied coverage and refused to pay even this relatively scanty sum (as compared to Cruz’s enormous loss) because Fonseca, allegedly, had failed properly to declare his ownership of the boat. Eventually, the insurer tendered its policy limits pursuant to a confidential and complete settlement of Cruz’s claims and the derivative claims of his wife and children for loss of consortium, which the parties entered into on October 17, 2019. Of the $300,000 in insurance proceeds, which were not differentiated between claims or items of damages, the sum of $220,210.98 (“Gross Recovery”) was allocated, by Cruz’s attorney, to the settlement of Cruz’s cause(s) of action. The balance was allocated to the derivative claims of Cruz’s wife and children. Cruz’s Gross Recovery will be further reduced by attorney’s fees in the amount of $44,934.20 and costs totaling $2,842.70, leaving him a Net Recovery of $172,434.08. As mentioned, the recovery was an undifferentiated lump sum. It would be reasonable to infer that the defendant (and his carrier) had little or no interest in negotiating the manner of the plaintiffs’ distribution, between themselves, of the $300,000 settlement. There is no evidence of such bargaining, in any event. Consequently, an allocation of the recovery needed to be made, on the plaintiffs’ side, between the four injured parties (Cruz, his wife, and two children), each of whom had discrete losses for which Fonseca was liable. This is how the Gross Recovery wound up being exactly equal to the amount of medical assistance expenditures made on Cruz’s behalf by Medicaid. Cruz’s attorney testified that he had divided the $300,000 this way to give Cruz’s family members some recovery, albeit a small one, on their consortium claims. Since any allocation of the very limited, and arbitrarily capped, recovery of $300,000 between Cruz, on the one hand, and his family members, on the other, would necessarily be, at best, only very loosely related to the intrinsic value of each injured person’s individual claims; and because the Agency presented no evidence supporting an allocation that would have been as or more reasonable, the undersigned finds, based on the uncontested testimony of Cruz’s attorney, that setting aside approximately three-quarters of the insurance proceeds for the Gross Recovery, to match the Medicaid payments, was a reasonable and rational decision under the circumstances. The Agency was properly notified of Cruz’s personal injury action, and it informed the parties that medical assistance expenditures totaling $220,210.98 had been paid by Medicaid on Cruz’s behalf. The Agency asserted a lien for the reduced amount of $111,078.65 against Cruz’s settlement proceeds, pursuant to the formula found in section 409.910(11)(f). In their Joint Pre-hearing Stipulation, the parties stipulated to certain facts “which are admitted and require no proof at hearing,” including that the “application of the formula in [section] 409.910(11)(f) requires Mr. Cruz to pay back Medicaid $111,078.65 on its $220,210.98 lien … .” Given that Cruz’s litigation costs totaled $2,842.70, it is mathematically indisputable, based on the section 409.910(11)(f) equation, that the parties used the sum of $300,000 as Cruz’s gross settlement recovery.1 Therefore, although the evidence shows that Cruz’s Gross Recovery was, in fact, $220,210.98, his gross “Stipulated Recovery” is $300,000.2 The Medicaid payments for Cruz’s immediate, post-injury care comprise the lion’s share of his past medical expenses, there being, in addition, only the negligible sum of approximately $2,000, which was paid to the University of Miami Medical Group (“UMMG”). Thus, it is reasonable to treat the Medicaid payments of $220,210.98 as Cruz’s past medical expense damages, as Cruz has done without the Agency’s objection, for simplicity’s sake.3 There is no dispute that, under the anti-lien provision in the federal 1 [(300,000 × 0.75) - 2,842.70)] ÷ 2 = 111,078.65. 2 Had the Gross Recovery, rather than the Stipulated Recovery, been used as the value of the settlement for purposes of computing the default allocation under section 409.910(11)(f), the Agency’s statutory lien would have been reduced further, to $81,157.77. 3 Any difference, mathematically, in the lien amount which would result from adding in the UMMG payment is de minimus, in any event. Medicaid statute, the Agency’s lien attaches only to the portion of Cruz’s recovery attributable to past medical expenses. The ultimate question presented is whether the Agency’s default distribution, in the stipulated amount of $111,078.65, reflects “the portion of the total recovery which should be allocated”4 to Cruz’s recovery of past medical damages, or whether a lesser sum, from the total settlement, “should be allocated” to the recovery of past medical damages. It is Cruz’s burden to prove that the statutory allocation is greater than the amount which “should be” distributed to the Agency, and that the Agency’s default lien amount “should be” adjusted to better reflect the portion of his total recovery attributable to past medical expenses. For purposes of determining the portion of the “total recovery” that “should be allocated” to past medical expense damages, the undersigned will use the Stipulated Recovery as the value of the “total recovery,” even though that figure is greater than Cruz’s actual Gross Recovery, because the parties stipulated to a “total recovery” value of $300,000. To meet his burden, Cruz presented evidence at hearing, as is now typically done in cases such as this, with the goal of establishing the “true value” of his damages. Usually, and again as here, this evidence comes in the form of opinion testimony, from a trial attorney who specializes in personal injury law and represents plaintiffs in negligence actions. Cruz called two experienced plaintiff’s personal injury lawyers, one of whom is also a medical doctor, to give opinions on the valuation of his damages. The undersigned finds their opinions in this regard to be credible and persuasive. Moreover, the Agency did not offer any evidence to challenge Cruz’s valuation; no expert testimony was given, for example, by an attorney specializing in personal injury defense, which might have provided a different perspective on the value of Cruz’s case. Having no evidential basis for discounting or 4 See § 409.910(17)(b), Fla. Stat. disregarding the opinions of Cruz’s expert witnesses, the undersigned bases the findings on valuation that follow upon their unchallenged testimony. Cruz is requesting—and his expert witnesses opined that—the Medicaid lien should be adjusted according to a method that will be referred to herein as a “proportional reduction.” A proportional reduction adjusts the lien so that the Agency’s recovery is discounted in the same measure as the plaintiff’s recovery. In other words, if the plaintiff recovered 25% of the “true value” of his damages, then, under a proportional reduction, the Medicaid lien is adjusted so that the Agency recovers 25% of the medical assistance expenditures. The mathematical operation behind a basic proportional reduction is simple and requires no expertise. Using “r” to signify the plaintiff’s recovery; “v” to represent the “value” of his damages; “m” for medical assistance expenditures; and “x” as the variable for the adjusted lien amount, the equation is: (r ÷ v) × m = x. In these cases, the only unknown number (usually) is v,” i.e., the “value” of the plaintiff’s total damages. “True value,” sometimes also called “full value” or “total value,” is an elusive concept, given that the true value of damages which have not been liquidated by a judgment is not, and cannot be, known in a case that settles before the entry of a judgment. For purposes of this discussion, the undersigned will hereafter use the term “true value” to mean liquidated damages, i.e., damages reduced to judgment. To be clear, this is not how Cruz’s expert witnesses used the term. They used the term to refer to the amount that, had the personal injury case been tried to conclusion, Cruz’s attorneys would have “boarded” for the jury at trial and argued, in closing, that the jury should award the plaintiff for his total damages. For purposes of this discussion, the undersigned will use the term “plaintiff’s best-case value,” or “PBCv” for short, instead of “true value,” to refer to the amount that the plaintiff would have requested at trial in closing argument. Naturally, where there is a PBCv, there is also a “defendant’s best- case value,” or “DBCv.” In a jury trial, DBCv might well be $0, if the defendant is contesting liability, and it will nearly always be, in any event, less than PBCv. As mentioned above, the Agency chose not to present expert witness testimony as to DBCv, or any value. There are other constructs that might be considered in regard to value, such as, for example, the “fair market value” of the plaintiff’s case, or “MKTv” for short. As the undersigned will use the term herein, MKTv means the theoretical amount upon which the plaintiff and a solvent defendant, negotiating at arm’s length and without the constraint of an arbitrary financial cap on the defendant’s ability to pay, such as insurance policy limits or sovereign immunity, would agree to settle the case. MKTv reflects the strengths and weakness of the plaintiff’s case, both legal and factual, the strengths and weaknesses of the defendant’s case, both legal and factual, and all of the other considerations and motives driving the parties to reach a settlement agreement, except the defendant’s ability to pay. Generally speaking, MKTv should be a number greater than DBCv and less than PBCv. A plaintiff who has settled for MKTv effectively has made a full recovery. As the undersigned is using the term, MKTv is similar, but not identical, to the term “settlement value” as described in Mojica v. State, Agency for Health Care Administration, 285 So. 3d 393, 395 (Fla. 1st DCA 2019), which is yet another value construct. “Settlement value,” in the Mojica sense, which is how the undersigned will use the term herein, takes into account, among other factors, the “defendant’s ability to pay.” Id. Because a personal injury plaintiff does not have the option of negotiating with someone other than the potentially liable defendant to get a better deal, however, the “defendant’s ability to pay” does not seem like an appropriate factor to consider in establishing the MKTv of the plaintiff’s case. Put differently, while a settlement for MKTv can fairly be considered a full recovery, a settlement for “settlement value” would arguably not be a full recovery, if the plaintiff were required to accept a settlement discount attributable, in part, to the defendant’s ability to pay. This distinction makes no difference in this case, because Cruz did not recover even the “settlement value” of his case; he had no alternative but to accept the defendant’s limited insurance coverage as payment in full. In other words, in Cruz’s situation, the defendant’s ability to pay was not merely a factor in determining settlement value, it was the only factor. Cruz’s recovery, thus, was arbitrarily capped at $300,000, the coverage limit of the defendant’s only available insurance policy. For purposes of this discussion, the undersigned will refer to a settlement such as Cruz’s as an “arbitrary discount settlement.” An arbitrary discount settlement is “arbitrary” in the sense that the amount of the settlement bears no relationship to MKTv; the plaintiff is simply forced to accept what is, for him, a random haircut owing to a hard limit on the defendant’s ability to pay, which has nothing to do with the plaintiff’s damages or the defendant’s liability therefor.5 The uncontested and unimpeached expert testimony in this case establishes, by any standard of proof, that Cruz’s PBCv is no less than $6 million, which is the conservative figure presented by Cruz’s witnesses. The undersigned, frankly, would not have hesitated to find that Cruz’s noneconomic damages for past and future pain and suffering, alone, should be valued at $6 million, at a minimum, given the severity of the bodily destruction involved here. With respect to the economic damages of lost earning capacity and future medical expenses, Cruz’s evidence persuasively established significant losses, albeit without exactitude. Before his accident, Cruz had been earning 5 The amount of an arbitrary discount settlement should ordinarily be less than the settlement value of the plaintiff’s case, because the defendant’s limited ability to pay is the only relevant factor in determining the amount of an arbitrary discount settlement, whereas settlement value takes other factors into account, including but not limited to the defendant’s ability to pay. approximately $20 per hour as an HVAC technician. Assuming he were able to work full time at the same rate, without a raise, for the next 35 years, his wages would total $1.4 million, more or less. A sophisticated economic analysis would take into account wage growth over time, and it would discount future earnings to present value. As Cruz’s lawyers testified at hearing, however, money was simply not available, given Fonseca’s extremely limited insurance for Cruz’s substantial losses, to justify the expense of hiring an economist to perform such an analysis. The undersigned finds that the evidence is sufficient to prove that the present value of Cruz’s lost wages is at least $1 million, conservatively calculated, in view of the relatively young age (28) at which this previously fit working man became permanently disabled. Specificity in this regard is unnecessary in any event, because Cruz’s pain and suffering damages are easily $6 million. Similarly, Cruz’s evidence proves that he will incur future medical expenses “over six figures.” There is no genuine dispute about this, the Agency having offered no evidence to the contrary. It is undisputed that Cruz will require ongoing medical care, for the rest of his life, to treat complications arising from his severe injuries. To take just one example, the evidence shows that Cruz has yet to undergo a final surgical repair of his rectum. To be sure, in an ideal case, Cruz would have presented a life care plan developed by a suitable expert, cataloguing his future medical needs and estimated expenses, aggregated to a specific dollar amount, reduced to present value, and calculated to a reasonable degree of economic certainty. Unfortunately, paying such an expert for this kind of analysis would further have reduced Cruz’s already limited Net Recovery. The undersigned cannot fault Cruz’s attorneys for electing to forego such an expense, especially since, again, specificity in regard to future medical damages is unnecessary because Cruz’s noneconomic losses, without more, meet or exceed $6 million. Once Cruz made a prima facie showing of PBCv by adducing competent substantial evidence thereof, the Agency, if it wanted to prove that the PBCv in question, $6 million, is an inflated figure, needed to adduce some evidence that would have given the fact-finder an evidentiary basis for discounting or rejecting this value.6 Here, the Agency elected not to present evidence of value, but instead it chose to argue that Cruz has failed to prove that the particular medical-expense allocation he advocates should be made, and that, as a result, the default, statutory allocation should be made. As far as the evidence goes, therefore, the undersigned has no reasonable basis for rejecting the value of $6 million that Cruz’s witnesses testified was a conservative appraisal of Cruz’s total damages. Fonseca’s negligence was likely the sole proximate cause of the accident; there are, accordingly, no obvious weaknesses in Cruz’s case from the standpoint of establishing liability. Cruz testified ably in this proceeding and likely would have proved an excellent witness in the personal injury action, had it gone to trial. The ghastly nature of Cruz’s injuries, and Fonseca’s rather obvious liability for those injuries, likely would have resulted in a substantial plaintiff’s verdict, likely not less than $6 million, as the evidence persuasively shows. The undersigned finds, based on the unrebutted and unimpeached expert testimony adduced, that a proportional reduction methodology identifies the “portion of the total recovery which should be allocated” in this 6 To be clear, the undersigned is not shifting the burden of proof to the Agency. A petitioner, however, does not have the initial burden of putting on the personal injury defense case, in order to prove DBCv, nor does the petitioner have the initial burden of establishing matters, such as comparative negligence, which the defense might have relied upon in an arms-length negotiation to settle the case for value. Defense arguments are matters that the Agency may address in its case, if it wants to show that PBCv is inflated. But the Agency is not required to put on any such evidence. The Agency is free to present no evidence, rely solely on cross- examination of the petitioner’s witnesses to undermine the testimony elicited by the petitioner on direct, and then argue that the petitioner has failed to meet his burden of proof—as the Agency has done in this case. If the Agency takes this approach, however, it loses the opportunity affirmatively to prove that PBCv is too high, and it risks a finding that the unrebutted evidence of PBCv is a fair reflection of value. If, however, the Agency presents evidence of DBCv, MKTv, settlement value, or some alternative value, then the petitioner must rebut the evidence and try to overcome it, for the petitioner bears the ultimate burden of persuasion with regard to establishing the value of the petitioner’s damages. case as past medical expense damages. The undersigned considers Cruz’s unchallenged proof of PBCv sufficient to establish the probable “value” of his case, i.e., v in the proportional reduction formula, where, as here, such evidence, in addition to being unchallenged and unimpeached, is otherwise persuasive to the fact-finder. Although the use of a proportional reduction to determine the portion of the total recovery that “should be allocated” to past medical expenses is justified by the competent substantial evidence presented in this case, it is found that Cruz has advocated using an incorrect value in the proportional reduction formula. Cruz would apply the following values to the variables in the equation: r = $300,000; v = $6 million; and m = $111,078.65. Using these numbers results in a value of $5,553.93 for x, which is the amount of his recovery Cruz would allocate to past medical expense damages and thereby expose to the Medicaid lien. It is incorrect, however, to use the sum of $111,078.65 as the value for m, as Cruz urges. This figure is the amount produced by the statutory formula, which reduces the Agency’s recovery of actual Medicaid expenditures, by default. To use this figure in the proportional reduction formula would impose a double reduction on the Agency—an obvious injustice. The correct number for m is $220,210.98, the amount that Medicaid actually expended on Cruz’s behalf, without reduction. The undersigned finds, based on the evidence presented, including the stipulation as to Cruz’s total settlement recovery, that the correct values for the variables in the proportional reduction equation are: r = $300,000; v = $6 million; and m = $220,210.98. Using these numbers, the value of x is $11,010.55—or, 5% of $220,210.98.7 7 The ratio of 300,000 to 6,000,000 is 0.05. Because the unchallenged expert testimony persuasively shows that a proportional reduction is the appropriate method of adjusting the lien in this case; and because Cruz’s mistaken use of $111,078.65 as the value of m does not undermine the validity of the methodology, which is merely the mathematical expression of an analytical framework whose existence and underlying logic are independent of any specific values for r, v, m, and x, the undersigned does not believe that he must “throw out the baby with the bathwater” and make no lien adjustment simply because Cruz used the wrong value for m. This mistake may easily be corrected based on the evidence of record; and, ordinarily, evidence-based adjustments of a factual nature would be within the province of the fact-finder to make.8 The undersigned determines as a matter of ultimate fact, therefore, that the portion of the Stipulated Recovery that “should be allocated” to past medical expense damages is $11,010.55.
The Issue The amount to be reimbursed to Respondent, Agency for Health Care Administration (“Respondent” or “AHCA”), for medical expenses paid on behalf of Petitioner, Mitchell Fowler, from settlement proceeds received by Petitioner from third parties.
Findings Of Fact On September 4, 2016, Mr. Fowler suffered a catastrophic and permanent spinal cord injury when he fell at a boat ramp. Mr. Fowler is now a paraplegic unable to walk, stand, or ambulate without assistance. Mr. Fowler’s medical care related to his injury was paid by Medicaid. Medicaid, through AHCA, provided $74,693.24 in benefits and Medicaid, through a Medicaid Managed Care Plan known as Humana, provided $7,941.28 in benefits. The sum of these Medicaid benefits, $82,634.52, constituted Mr. Fowler’s entire claim for past medical expenses. Mr. Fowler pursued a personal injury action against the owner/operator of the boat ramp where the accident occurred (“Defendants”) to recover all his damages. The personal injury action settled through a series of confidential settlements in a lump-sum unallocated amount of $800,000. As a condition of Mr. Fowler’s eligibility for Medicaid, Mr. Fowler assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See § 409.910(6)(b), Fla. Stat. During the pendency of the medical malpractice action, AHCA was notified of the action and AHCA asserted a $74,693.24 Medicaid lien associated with Mr. Fowler’s cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910, nor did it intervene or join in the medical malpractice action against the Defendants. By letter, AHCA was notified of the settlements. AHCA has not filed a motion to set aside, void, or otherwise dispute the settlements. The Medicaid program through AHCA spent $74,693.24 on behalf of Mr. Fowler, all of which represents expenditures paid for past medical expenses. No portion of the $74,693.24 paid by AHCA through the Medicaid program on behalf of Mr. Fowler represented expenditures for future medical expenses. The $74,693.24 in Medicaid funds paid towards the care of Mr. Fowler by AHCA is the maximum amount that may be recovered by AHCA. In addition to the foregoing, Humana spent $7,941.28 on Mr. Fowler’s medical expenses. Thus, the total amount of past medical expenses incurred by Mr. Fowler is $82,634.52. The taxable costs incurred in securing the settlements totaled $45,995.89. Application of the formula at section 409.910(11)(f) to the $800,000 settlement requires payment to AHCA of the full $74,693.24 Medicaid lien. Petitioner deposited the full Medicaid lien amount in an interest- bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). There was no suggestion that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. The evidence firmly established that the total of Mr. Fowler’s economic damages, including future medical expenses, were $5,652,761.00 which, added to the $82,634.52 in past medical expenses, results in a sum of $5,735,395.52 in economic damages. Based on the experience of the testifying experts, and taking into account jury verdicts in comparable cases, Petitioner established, by clear and convincing evidence that was unrebutted by AHCA, that non-economic damages alone could reasonably be up to $26,000,000. When added to the economic damages, a value of Mr. Fowler’s total damages well in excess of $30,000,000 would not be unreasonable. However, in order to establish a very conservative figure against which to measure Mr. Fowler’s damages, both experts agreed that $15,000,000 would be a reasonable measure of Mr. Fowler’s damages for purposes of this proceeding. Based on the forgoing, it is found that $15,000,000, as a full measure of Mr. Fowler’s damages, is very conservative, and is a fair and appropriate figure against which to calculate any lesser portion of the total recovery that should be allocated as reimbursement for the Medicaid lien for past medical expenses. The $800,000 settlement is 5.33 percent of the $15,000,000 conservative value of the claim.
The Issue What is the proper amount of Petitioners' personal injury settlement payable to Respondent, Agency for Health Care Administration ("AHCA"), to satisfy AHCA's $51,130.05 Medicaid lien under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulations of the parties, the evidence presented at the hearing, and the record as a whole, the following findings of fact are made: On January 31, 2007, Rickey D. ("Rickey"), who was then four years old, was struck by a car outside an apartment complex. Rickey suffered severe life-threatening injuries, including a fractured femur, fractured skull, and a closed head injury with traumatic brain damage. JPHS, pp. 9 and 10, ¶ 1. Rickey's medical care related to the injury was paid by Medicaid. Medicaid provided $51,130.05 in benefits associated with Rickey's injury. The $51,130.05 constituted Rickey's entire claim for past medical expenses. JPHS, p. 10, ¶ 2. Rickey's parents and natural guardians, Lolita D. and Rickey O.D., brought a personal injury claim against the driver/owner of the car that caused the accident and the apartment complex where the accident occurred ("Defendants"). They sought recovery of all of Rickey's damages associated with his injuries, as well as their own individual damages associated with their son's injuries. JPHS, p. 10, ¶ 3; Pet. Ex. 4. The personal injury action was settled for a lump sum, unallocated amount of $285,000.00, which consisted of $275,000.00 paid by the apartment complex and $10,000.00 in bodily injury/uninsured motorist ("BI/UM") insurance policy limits paid by the driver.1/ The circuit court in Miami-Dade County approved the minor's settlement by entry of an Order Approving Settlement, dated February 2, 2014. 2/ JPHS, p. 10, ¶ 4 and ¶ 5; Pet. Ex. 5. As a condition of Rickey's eligibility for Medicaid, Petitioners' assigned to AHCA their right to recover from liable third parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) and § 409.910(6)(b), Fla. Stat. During the pendency of Petitioners' lawsuit, AHCA was notified of the court action. JPHS, p. 10, ¶ 6. AHCA did not commence a civil action to enforce its rights under section 409.910, or intervene or join in Petitioners' court action against the Defendants.3/ JPHS, p. 10, ¶ 7. Instead, AHCA asserted a $51,130.05 Medicaid lien against Petitioners' cause of action and settlement of that action. JPHS, p. 10, ¶ 6. AHCA did not file a motion to set aside, void, or otherwise dispute Petitioners' settlement with the Defendants. JPHS, p. 10, ¶ 8. The Medicaid program spent $51,130.05 on behalf of Rickey, all of which represents expenditures paid for Rickey's past medical expenses. JPHS, p. 10, ¶ 9. Application of the formula at section 409.910(11)(f) to Rickey's $285,000.00 settlement requires payment to AHCA of the full $51,130.05 Medicaid lien. JPHS, p. 10, ¶ 10. As ordered by the circuit court, Petitioners deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights. This constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). JPHS, p. 11, ¶ 11. Testimony of Jorge C. Borron, Esquire The only witness called during the hearing was Borron. He has been a trial attorney for 32 years and is a sole practitioner at his Coral Gables law office, Jorge C. Borron, LLC. The majority of Borron's practice is personal injury litigation with a focus on car accidents. He has handled cases involving injuries to children. He routinely handles jury trials, and depending on the year, will have two to four jury trials each year. Borron stays current regarding personal injury verdicts by reviewing jury verdict reporters and discussing personal injury verdicts and valuations with other attorneys in his geographical area. After taking a case, Borron regularly reviews and studies his client's medical records and deposes/interviews doctors and other experts concerning his client's injuries. Borron testified that as a routine part of his practice he makes assessments concerning the value of personal injury damages suffered by his clients. Petitioners proffered Borron as an expert in the valuation of damages. It is worth noting that AHCA did not voir dire Borron and did not object to his tender as an expert in the valuation of personal injury damages.4/ The undersigned ruled that he would consider Borron's opinion testimony on the subject of the valuation of damages.5/ Borron represented Rickey and his family in the underlying personal injury lawsuit. Originally, Attorney Knecht represented Rickey and his family, but Knecht brought Borron into the case in 2013 to handle the jury trial due to Knecht's advanced age. As a part of his representation, Borron reviewed and familiarized himself with the accident report and Rickey's medical records, deposed/interviewed experts and fact witnesses, and met with Rickey and his family numerous times. Rickey's Accident, Injuries, and Prognosis On January 31, 2007, young Rickey followed his older sister out of the apartment where they lived with their parents. He walked between two cars in the parking lot and darted out in front of a car, which struck him. In the accident, Rickey suffered a compound fracture of his femur, a skull fracture, a traumatic brain injury, and lost consciousness. Rickey was transported to Jackson Memorial Hospital where he received medical treatment until he was discharged on February 22, 2007. At the hospital, his discharge papers diagnosed him with a left comminuted femur fracture and a nondisplaced skull fracture. Pet. Ex. 2. Rickey's injury had a tremendous impact on his life. Besides the adverse physical effects from his femur fracture, Rickey suffers from the effects of a traumatic brain injury with cognitive deficits, abnormal behavior issues, and an attention deficit disorder. During his representation of Rickey, Borron sent his client to two neurologists. They both separately diagnosed Rickey with problems associated with the executive function in the frontal lobe of his brain. Dr. Jorge A. Herrara issued a detailed report and concluded, among other things, that Rickey's condition points "to the presence of impairments in the executive functions mediated by the frontal lobes (referring to Rickey's brain)." Pet. Ex. 2, p. 14. The other neurologist, Dr. Ross, conducted an electrocardiograph with abnormal results. The uncontroverted evidence revealed that Rickey's traumatic brain injury is permanent and he will suffer its adverse effects and certain health and emotional-related issues for the remainder of his life. Based on his training, experience, and knowledge of the case, it was Borron's opinion that Rickey's personal injury damages had a value of between $1,500,000.00 to $2,500,000.00. In preparation for settlement mediation in the underlying personal injury case, Borron undertook to estimate the value of Petitioners' claim for future medical expenses as well. He consulted with Rickey's neurologists concerning his prognosis to determine what kind of medical treatment he would need in the future. Based on these discussions, Borron estimated that Rickey would need $815,000.00 in medical care from age nine (his age at the time of mediation) until age 22. In Borron's opinion, adding the $815,000.00 for future medical expenses to Rickey's $51,130.05 claim for past medical expenses would constitute Rickey's total economic damages. Borron opined that the claim for economic damages added to Petitioners' claim for noneconomic damages would push the full value of Rickey's personal injury damages to the range of $1,500,000.00 to $2,500,000.00. Had the case not settled and a trial taken place, Borron testified that he would have expected a jury to determine the value of Rickey's damages to be at, or between, $1,500,000.00 to $2,500,000.00. Borron discussed Petitioners' case with Attorney Knecht and consulted with several other attorneys. They concurred that Rickey's personal injury damages had a value of between $1,500,000.00 to $2,500,000.00. Borron testified that using $1,250,000.00 as the estimated value of all Rickey's personal injury damages would be a conservative value. Due to defenses raised and issues of disputed liability with the apartment complex, the case against the apartment complex settled just prior to trial for $275,000.00, plus a $10,000.00 settlement with the insurance company for uninsured motorist coverage, for a total settlement of $285,000.00. The uncontroverted evidence revealed that the combined settlement of $285,000.00 received by Petitioners did not fully compensate Rickey for the value of his damages. Borron opined that in using the value of all Rickey's damages of $1,250,000.00 compared to the $285,000.00 settlement, that the total settlement amount recovered represented a proportional recovery of 22.8 percent of the true value of all Rickey's personal injury damages. Borron testified that because Rickey only recovered 22.8 percent of the true value of his damages in the global settlement, that Petitioners had likewise recovered only 22.8 percent of Rickey's claim for past medical expenses in the settlement agreement, or $11,657.66. Borron testified that an allocation of $11,657.66 of the $285,000.00 settlement as recovery for Rickey's past medical expenses would be a reasonable and fair allocation. Of particular consequence to this case, AHCA did not call any expert witnesses nor did it present any evidence to rebut Petitioners' presentation, proof, or proposed allocation of $11,657.66 to past medical expenses. AHCA did not dispute or present any persuasive evidence or arguments that Rickey's injuries were overstated or incorrectly described by Borron. On AHCA's cross-examination of Borron, the methodology used by Borron to arrive at his opinion concerning a fair allocation of past medical expenses was not challenged or persuasively overcome by AHCA. Simply put, the amount of $11,657.66 proposed by Petitioners as a fair allocation of past medical expenses from the settlement agreement was unrefuted and unchallenged by AHCA. Petitioners proved by a preponderance of the evidence that $11,657.66 was a fair allocation of the total settlement amount to past medical expenses. There was no basis or evidence in the record to reject Borron's opinion or reach any other conclusion concerning a fair allocation other than the amount of $11,657.66 proposed by Petitioners.
The Issue The issue in this case is the amount of money to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner, Larry J. Griffis, from a personal injury claim settlement received by Petitioner from a third party.
Findings Of Fact Griffis was severely injured in an accident occurring on April 29, 2012. The accident occurred generally as follows: Griffis owned and operated a large truck with a long aluminum dump trailer attached. He hauled hazardous waste and other materials for a living. At the end of each job, Griffis would raise the dump trailer for the purpose of cleaning out any residual material. On the date of the accident, Griffis did not clean his trailer in the usual because of some obstruction on that date. Instead, he drove out into a field next to his house to clean the trailer. When Griffis raised the trailer to clean it, he failed to notice electrical lines just above his trailer. He raised the trailer into the lines, resulting in an extremely high voltage of electricity running through his body. As a result of the accident, Griffis was transported to the burn unit at Shands hospital in Gainesville for treatment of his extensive injuries. He had over 50 medical procedures while at Shands, including debridement, skin grafts, tracheostomies, multiple chest tubes, etc. He had 19 different complications while in the hospital, including infections and kidney failure. Over 30 percent of his body surface area was burned; 23 percent of those burns were third degree. While undergoing treatment, Shands gave him only a 22 percent chance of surviving. Griffis remained in the hospital for three and one half months. The medical bills for Griffis’ treatment totaled Griffis cost $1,363,285.65. Medicaid paid $48,640.57 of that total amount. The Veterans Administration (VA) paid $275,911.87. Shands was eventually paid $324,552.44 of its charges and wrote off over $1 million. Griffis filed a lawsuit against Suwannee Valley Electric Cooperative, Inc. (“Suwannee”), seeking payment of economic and non-economic damages related to Suwannee’s alleged liability for the accident. After negotiations and mediation, a settlement was reached whereby Griffis was to receive the sum of $500,000 from Suwannee in full settlement of all his claims. After the settlement was reached between Griffis and Suwannee, the Agency attempted to enforce its lien, seeking repayment of the entire amount it had paid. Griffis, believing that less than the lien amount was actually owed, filed a Motion for Order Apportioning Damages as part of his pending lawsuit against Suwannee. The purpose of the motion was not to have the circuit court judge determine the amount of the Agency’s lien. The motion was filed to obtain an Order that would apportion the settlement among the lawful elements of damages to which Griffis was entitled. A hearing on the motion was set for April 14, 2015, before Circuit Court Judge Andrew J. Decker, III. The Agency was served a copy of the motion and the notice of hearing. The Agency filed an objection to the motion, seeking to relieve the circuit court of jurisdiction in favor of the Division of Administrative Hearings. See § 409.910 (17)(b), Fla. Stat. Griffis replied to the Agency’s objection, stating that “the purpose of the Motion is to differentiate or allocate the settlement among Mr. Griffis’ different elements of damages [rather than] asking this Court to resolve a Medicaid lien dispute.” At the Circuit Court hearing on Griffis’ motion, the Agency made an appearance and, in fact, cross-examined the expert witness who testified. The only testimony provided at that hearing was from retired District Court of Appeal Judge Edwin B. Browning, Jr. Judge Browning provided expert testimony as to the value of Griffis’ claim, which he set at $6 million. Mr. Smith also provided some argument in support of Griffis’ claim, but as an attorney, rather than a sworn witness. Judge Decker took the $6 million figure, plus economic damages in the sum of $211,518, plus past medical expenses of $324,552.44 for a total of $6,536,070.44. That was then divided into the $500,000 settlement figure amount. That resulted in a factor of 7.649 percent, which, applied to the “value of the case” amount, resulted in a figure of $458,919.49. Applying the factor to economic damages resulted in an amount of $16,179.01. The past medical expenses amount, once factored, resulted in a figure of $24,825.01.1/ After hearing the evidence presented at his motion hearing, Judge Decker entered an Order dated April 21, 2015, establishing the past medical expenses amount, i.e., the Agency’s lien, at $24,901.50. The Order did not address future medical expenses because they were not sought by Petitioner. Inasmuch as his future medical costs would be paid by VA, his attorneys did not add potential medical expenses to the claim.2/ A copy of Judge Decker’s Order was received into evidence in the instant proceeding (although, pursuant to section 90.202, Florida Statutes, it could have been officially recognized by the undersigned Administrative Law Judge). The Order, along with Griffis’ other exhibits and Mr. Smith’s testimony, constituted the evidence in this matter.
The Issue The issue for determination is the amount of money Petitioner, Jared Bruno Ramella, must pay to Respondent, Agency for Health Care Administration (“AHCA” or “the Agency”), out of his settlement proceeds as reimbursement for past Medicaid expenditures pursuant to section 409.910, Florida Statutes (2017).1/ More specifically, it must be determined whether Petitioner must pay the default amount of the Medicaid lien, $121,065, pursuant to section 409.910(11)(f); and, if not, what portion of his $775,000 settlement proceeds is due to AHCA.
Findings Of Fact Underlying Accident and Injuries Petitioner, at age 29, was involved in a catastrophic motorcycle accident leaving him paralyzed from his waist down, and with only limited use of his right arm. On the night of November 21, 2014, Petitioner’s motorcycle collided with an oncoming vehicle that had turned left in front of Petitioner. The driver of the oncoming vehicle (“Driver”) did not see Petitioner riding toward her in traffic and Petitioner was unable to stop. Upon impact Petitioner was thrown off his motorcycle and landed approximately 64 feet away. At the scene of the accident, Petitioner had no sensation from his mid-abdomen down. Later, it was determined he suffered a number of injuries including fractures of several of his cervical vertebrae, a broken right leg, severe nerve damage in his right arm, and a brain bleed. Petitioner is permanently paralyzed from the ribs down, has no control over his bowel and urinary functions, and suffers from chronic depression and an anxiety disorder. The injuries have impacted not only his physical abilities, but have also affected his ability to maintain normal family, social and work relationships. Petitioner received extensive medical care for his injuries. In total, as of September 2017, Petitioner’s unpaid past medical expenses (“PME”) related to his injuries totaled $159,818, of which $121,065 was provided by Medicaid.2/ No portion of the PME was incurred for future medical care. Petitioner’s Sources of Recovery As a result of the accident, Petitioner filed a claim for damages with his mother’s insurance policy and received the policy limits, $150,000. Petitioner filed a similar claim against the Driver’s personal insurance policy and received the policy limits, $25,000. Personally, the Driver had no collectable assets. She and her family business, however, maintained a number of insurance policies with Auto Owners Insurance Co. (“Auto Owners”), with a total coverage limit of $100,000. Petitioner made a claim against these policies, but Auto Owners declined to tender the policy limits to him. In 2015, Petitioner filed a lawsuit against the Driver in circuit court. Ultimately, Auto Owners settled with Petitioner for $600,000. In exchange for the settlement funds, Petitioner agreed to dismiss the lawsuit, and execute a full release of the Driver for the accident and Auto Owners for a potential bad faith claim. In total, Petitioner received $775,000 in gross settlement proceeds (“GSP”) from the following sources: 25,000 USAA (Driver’s personal policy) 150,000 Allstate (Petitioner’s mother’s policy) 100,000 Auto Owners (Driver’s self-employment policy) 500,000 Auto Owners (bad faith settlement) $775,000 Gross Settlement Proceeds Mr. Brennan testified that even though the Driver would have been found liable had the matter gone to trial, the $100,000 policy limit was the best Petitioner could hope to recover even with a favorable jury verdict because the Driver was “judgment proof.” Based on Auto Owner’s refusal to tender the policy limits, Petitioner was able to recover $500,000 in settlement proceeds above the policy limits. Had Petitioner not pursued litigation, the most Petitioner would be able to recover would be $275,000. On September 21, 2017, Petitioner notified AHCA of the Auto Owner’s settlement and asked AHCA what amount it would accept in satisfaction of its $121,065 Medicaid lien. AHCA did not reply to Petitioner’s inquiry. Petitioner deposited $121,065 in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights by DOAH. Allocation of Past Medical Expenditures The parties stipulated that under the default formula found in section 409.910(11)(f), Petitioner is required to pay the Agency the full amount of the $121,065 Medicaid lien from the $775,000 total settlement proceeds. The settlement agreement with Auto Owners contained a paragraph titled “Allocation of Settlement.” This paragraph stated Petitioner’s damages were valued as more than $12 million, and $7,973.71 of the $600,000 was allocated for past medical bills. Allocation of Settlement. Although it is acknowledged that this settlement does not fully compensate Plaintiff for all of the damages he has allegedly suffered, this settlement shall operate as a full and complete Release as to Releasees (as more fully described . . . below) without regard to this settlement only compensating Plaintiff for a fraction of the total monetary value of his alleged damages. The parties agree that Plaintiff’s alleged damages have a value in excess of $12,000,000, of which $159,474.11[3/] represents Plaintiff’s claim for past medical expenses. Given the facts, circumstances, and nature of Plaintiff’s alleged injuries and this settlement, the parties have agreed to allocate $7,973.71 of this settlement to Plaintiff’s claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Plaintiff’s alleged damages. The settlement agreement between Petitioner and Auto Owners was fully executed on September 22, 2017. AHCA was not a party to the settlement agreement or release. Although the parties stipulated to a number of facts and figures, they did not stipulate to the total provable damages (“TPD”). Regardless, Petitioner proved by the preponderance of the evidence that TPD was equivalent to $12 million. More precisely, Petitioner established through unrebutted evidence and testimony of his trial attorney and his expert witness that personal injury actions can be broken down into the following categories: past lost wages; future lost income; past medical amounts billed; future medical expenses; and noneconomic damages such as pain and suffering. This is consistent with terminology used in other administrative proceedings defining TPD as “all components of a plaintiff’s recoverable damages, such as medical expenses, lost wages, and noneconomic damages (e.g., pain and suffering).” See Smathers v. Ag. for Health Care Admin., Case No. 16-3590MTR, 2017 Fla. Div. Adm. Hear. LEXIS 540, at *7 (Fla. DOAH Sept. 13, 2017). According to the testimony, jury awards--which are one manifestation of a TPD determination--in similar personal injury cases can be estimated to be approximately 2.85 times the first four categories, or TPD = 2.85 x (A + B + C + D). Petitioner proved that his past economic damages (A + C)–-which include the total amount billed for medical services and lost income as of the date of the settlement--were approximately $1,058,159.4/ Petitioner also offered into evidence an economic report projecting future lost income assuming Petitioner’s loss of total earning capacity; and a “future life care plan” report that projected future medical expenses. Together, these reports established Petitioner’s future economic damages (B + D) would be conservatively estimated at $3,576,376. The present day value of these future damages would be $3,892,550. Based on these figures, Petitioner’s TPD can be calculated to be approximately $12 million: TPD = ($1,058,159 + $3,892,550) x 2.85 = $12,151,926. Mr. Brennan testified that based on his experience and the research he conducted in connection with filing Petitioner’s lawsuit, he believed the total value of the lawsuit was in a range between $12 and $16 million. Mr. Barrett testified that based on his familiarity with jury trials involving similar injuries, in his expert opinion, a jury verdict would have been between $12 and $18 million, noting “12 million is certainly a very conservative figure for his pure damages.” Both witnesses also testified the $775,000 settlement amount did not fully compensate Petitioner. There was no dispute at the hearing that the GSP is a fraction of the cost for future medical expenses, and does not begin to cover Petitioner’s future loss of earning potential or his noneconomic damages. The portion of Petitioner’s GSP that can be allocated as PME paid by the Agency remains to be determined. Under a “settlement-to-value” formula, AHCA would recover the same portion of its lien as the portion of GSP in relation to his TPD, or equal to GSP/TPD x (PME). See Smathers, 2017 Fla. Div. Adm. Hear. LEXIS 540, at *8. Here, the GSP represented approximately 6.46 percent of the TPD. Applying this percentage to the PME using the “settlement-to-value” formula, the Agency could only recover $10,324. In other words, the amount of settlement funds attributable to medical expenditures can be determined as: $775,000 (GSP) X $159,818 (PME) $12,000,000 (TPD) In support of this formula, Petitioner submitted--again without an objection from AHCA--orders from various Florida circuit courts reducing Medicaid liens by applying this formula. Mr. Barrett’s unrebutted testimony corroborated this evidence that the “settlement-to-value” formula should be applied to Petitioner’s PME, noting this method was “logical, and that is how it is done. That’s the trade practice.” Given that Petitioner’s witnesses were the only witnesses, these witnesses were knowledgeable and credible, and there was no contrary testimony or evidence, Petitioner has proved by a preponderance of the evidence that $10,324 constitutes the portion of the GSP that can fairly be allocated toward Petitioner’s PME.
The Issue What is the proper amount of Petitioner's personal injury settlement payable to Respondent, Agency for Health Care Administration ("AHCA"), to satisfy AHCA's $191,298.99 Medicaid lien under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulations of the parties, the evidence presented at the hearing, and the record as a whole, the following findings of fact are made: On August 9, 2018, Petitioner, Russell Wellington ("Wellington"), who was 59 years old, was driving a motorcycle in the inside northbound lane of U.S. Highway 1 at or near mile marker 99 in Monroe County, Florida. A vehicle driven by JI Young Chung ("Chung"), and owned by a car rental company, was northbound in the outside lane on U.S. Highway 1. Chung turned left into Wellington’s motorcycle causing him to be ejected from the motorcycle. As a result of the accident, Wellington sustained catastrophic injuries including a right leg amputation, a fractured pelvis, fractured humerus, fractured ribs, kidney failure, and a head injury. Wellington is now disabled and unable to work. JPHS p. 10, ¶1. Wellington’s medical care related to the injury was paid by Medicaid, and Medicaid, through AHCA, provided $191,298.99 in benefits. This $191,298.99 constituted Wellington’s entire claim for past medical expenses. JPHS p. 10, ¶2. Wellington pursued a personal injury claim against the driver and owner of the car that struck his motorcycle (“tortfeasors”) to recover all his damages. JPHS p. 10, ¶3. The other driver, Chung, maintained an insurance policy with only $100,000 in insurance limits, and had no other recoverable assets. The rental company that owned the vehicle maintained an insurance policy with only $10,000 in insurance limits. Wellington’s personal injury claim against the tortfeasors was settled for an unallocated lump sum amount of $110,000.00. JPHS p. 10, ¶4. As a condition of Wellington’s eligibility for Medicaid, Wellington assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) ; § 409.910(6)(b), Fla. Stat. During the pendency of Wellington’s personal injury claim, AHCA was notified of the claim and asserted a $191,298.99 Medicaid lien against Wellington’s cause of action and settlement of that action. JPHS p. 10, ¶5. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Wellington’s claim against the tortfeasors. JPHS p. 10, ¶6. By letter, AHCA was notified of Wellington’s settlement. JPHS p. 10, ¶7. AHCA has not filed a motion to set-aside, void, or otherwise dispute Wellington’s settlement. JPHS p. 10, ¶8. The Medicaid program, through AHCA, spent $191,298.99 on behalf of Wellington, all of which represents expenditures paid for Wellington’s past medical expenses. JPHS p. 10, ¶9. Wellington’s taxable costs incurred in securing the $110,000.00 settlement totaled $766.78. JPHS p. 10, ¶10. Application of the formula at section 409.910(11)(f) to Wellington’s $110,000.00 settlement requires payment to AHCA of $40,866.61. JPHS p. 11, ¶11. Petitioner has deposited the section 409.910(11)(f) formula amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). JPHS p.11, ¶12. Testimony of Steven G. Jugo, Esquire Steven G. Jugo, Esquire ("Jugo"), was called by Petitioner. He has been an attorney for 41 years and practices with the law firm of Jugo & Murphy in Miami, Florida. For the past 37 years, Jugo has practiced exclusively plaintiff’s personal injury, medical malpractice, and wrongful death law. He routinely handles jury trials and cases involving catastrophic injury. He is familiar with reviewing medical records, reviewing accident reports, and deposing fact and expert witnesses. He stays abreast of jury verdicts in his geographic area by reviewing jury verdict reporters and discussing cases with other trial attorneys. He is a member of several trial attorney organizations including the Florida Justice Association and the American Association for Justice. As a routine part of his practice, Jugo makes assessments concerning the value of damages suffered by injured clients. He briefly explained his process for making these determinations. Jugo is familiar with, and routinely participates in, processes involving the allocation of settlements in matters including health insurance liens, workers' compensation liens, and Medicare set-asides, as well as, allocations of judgments made by judges post-verdict. Jugo represented Wellington in his underlying personal injury claim. Jugo reviewed the accident report, reviewed Wellington’s medical records, met with Wellington numerous times, and deposed the driver of the vehicle that struck Wellington’s motorcycle. As a result of the accident, Wellington underwent many surgeries and extensive medical intervention. Jugo felt that Wellington’s injuries have tremendously impacted his life in a negative way. He explained that Wellington is no longer able to work and he is no longer able to adequately care for or play with the three young children he adopted. Without objection by AHCA, Jugo testified that based on his professional training and experience, it was his opinion that a very conservative value for Wellington’s damages would be $4 million. Jugo explained that his valuation of Wellington’s total projected damages was based on his experience, his comparison of Wellington’s case to similar jury verdicts, and discussions about the case with other attorneys. He explained that the jury verdicts outlined in Petitioner’s Exhibit 9 were comparable to Wellington’s case and supported his valuation of Wellington’s total and projected damages in this case. Jugo detailed that about 70 percent of the verdicts he reviewed which were similar in nature, were in the $5 million range. He opined that this demonstrated that Wellington’s total and projected damages would also have a minimum value of $4 million. Jugo discussed the value of Wellington’s damages with other attorneys, and they agreed with the valuation of Wellington’s total projected damages being in excess of $4 million. Wellington’s personal injury claim was brought against the driver and the rental car company that owned the vehicle which struck Wellington’s motorcycle. The vehicle driver, Chung, maintained an insurance policy with only $100,000.00 in coverage, and had no other recoverable assets. Jugo explained that because the vehicle was owned by a rental car company, the law shielded the rental car company from suit. Nonetheless, he explained that the rental car company had a $10,000.00 insurance policy it made available. As a result, the total settlement was $110,000.00. Jugo believed that the personal injury settlement did not fully compensate Wellington for all of his projected personal injury damages. Without objection by AHCA’s counsel, Jugo testified that based on a conservative value of all damages of $4 million, Wellington recovered in the settlement only 2.75 percent of the value of his total and projected damages. Again, without objection, he testified that because Wellington recovered only 2.75 percent of his total and projected damages, he recovered in the settlement only 2.75 percent of his $191,298.99 claim for past medical expenses, or $5,260.72. Jugo also testified that it would be reasonable to allocate $5,260.72 of the settlement to past medical expenses, stating “[t]hat’s the maximum amount I believe should be allocated to past medical expenses.” Testimony of R. Vinson Barrett, Esquire R. Vinson Barrett, Esquire ("Barrett"), has been a trial attorney for over 40 years. He is a partner with the law firm of Barrett, Nonni and Homola, P.A., in Tallahassee. His legal practice is dedicated to plaintiff’s personal injury and wrongful death cases. He has handled cases involving automobile accidents and catastrophic injuries. Barrett routinely handles jury trials. Barrett stays abreast of jury verdicts by periodically reviewing jury verdict reports and discussing cases with other trial attorneys. He is a member of the Florida Justice Association and the Capital City Justice Association. As a routine part of his practice, Barrett makes assessments concerning the value of damages suffered by injured parties. He briefly explained his process for making these assessments. It has been part of his law practice to gain familiarity with settlement allocation involving health insurance liens, Medicare set-asides, and workers’ compensation liens. He is also familiar with the process of allocating settlements in the context of Medicaid liens, and he described that process. Barrett has been accepted as an expert in the valuation of personal injury damages in federal court, as well as numerous Medicaid lien hearings at DOAH. Barrett addressed the instant case. He was familiar with Wellington’s injuries and the circumstances resulting in the injuries. Barrett detailed the extensive nature of Wellington’s injuries and the general impact of such injuries. Barrett testified, without objection, that based on his professional training and experience, he believed Wellington’s damages had a conservative value of $4 million. More specifically, he stated, “I felt that the damages were conservatively, very conservatively, $4 Million. I believe this case, if it had gone to a jury could well have gone up into the eight figures, probably would have, I think. If I was asking for damages in this case in front of a jury, it would probably be somewhere, between $8 and 12 million or even a little higher, if I was in South Florida jurisdiction.” Barrett has been accepted as an expert in the valuation of personal injury damages in other cases at DOAH. Barrett explained that the jury verdicts outlined in Petitioner’s Exhibit 9 involved injuries comparable to Wellington’s injuries and supported his valuation of Wellington’s total and projected damages at $4 million. Barrett went on to explain that the average trial verdict and award he reviewed from Exhibit 9 was $5.5 million and the average award for pain and suffering was $3,788,333.00. Barrett believed that the jury verdict in the Nummela case, from Exhibit 9, most closely tracked Wellington’s case. Barrett explained that the injuries suffered by Nummela compared most closely with Wellington’s injuries and he noted the similarities. Barrett also pointed out that the jury in Nummela had determined that the damages had a value of $9.5 million, which Barrett testified was in line with what he believed a jury would have awarded to Wellington, if this matter had proceeded to trial. Barrett was aware that Wellington’s case had settled for the insurance policy limits of $110,000.00. He testified that this settlement amount did not fully compensate Wellington for all the personal injury damages he had suffered. Barrett testified, without objection by AHCA’s counsel, that using a conservative value of $4 million for all projected damages, the $110,000.00 settlement represented a recovery of 2.75 percent of the total and projected damages. Barrett testified, again without objection, that because only 2.75 percent of his damages were recovered in the settlement, only 2.75 percent of the $191,298.99 claim for past medical expenses was recovered by Wellington in the settlement, namely $5,260.72. Barrett testified that it would be reasonable to allocate $5,260.72 of Wellington’s settlement to his past medical expenses. Inexplicably, AHCA did not call any witnesses, present any contradictory evidence as to a lower value of Wellington’s projected or total damages, or call any witnesses to contest the methodology used to calculate the $5,260.72 allocation to past medical expenses. The unrebutted evidence supports that Wellington’s total and projected damages had a value in excess of $4 million. By applying the same ratio to AHCA's lien that the settlement ($110,000.00) bears to the total projected monetary value of all the damages ($4,000,000.00), a finding is reached that $5,260.72 of the settlement is fairly allocable to past medical expenses. Under the proportionality methodology, the $110,000.00 settlement represents a 2.75 percent recovery of the expert’s total and projected damages of $4 million ($110,000.00 is 2.75 percent of $4 million). Applying this same 2.75 percent to the $191,298.99 claim for past medical expense, the experts opined that Wellington recovered $5,260.72 in past medical expenses in the settlement.2 Of particular consequence to this case, AHCA did not call any expert witnesses, nor did it present any evidence, to rebut or contradict Petitioner's experts or proposed allocation of $5,260.72 in the settlement to past medical expenses. Likewise, AHCA did not dispute or present any persuasive evidence or arguments that Wellington’s injuries were overstated or incorrectly described by Messrs. Jugo or Barrett. 2 This methodology is commonly referred to as the proportionality test or pro-rata formula. On AHCA's cross-examination of the attorney experts, the methodology used by them to arrive at their opinion concerning a fair allocation of past medical expenses in Wellington’s settlement was not persuasively challenged or overcome by AHCA. Simply put, the amount of $5,260.72 proposed by Petitioner as a fair allocation of past medical expenses from the settlement agreement was not successfully refuted or challenged by AHCA. Under the circumstances and proof presented in this case, Petitioner proved by a preponderance of the evidence that $5,260.72 was a fair allocation of the total settlement amount to past medical expenses. AHCA failed to develop any adequate basis or evidence in the record to reject Jugo’s or Barrett’s opinion, or to reach any other conclusion concerning a fair allocation, other than the amount of $5,260.72 presented by the evidence and proposed by Petitioner.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or AHCA), from settlement proceeds received from third parties by Petitioners, Ray A. Siewert and Rose E. Siewert, for medical expenses paid on behalf of Petitioner, Mr. Siewert.
Findings Of Fact Stipulated Findings of Fact On October 15, 2017, the Siewerts were involved in a motorcycle versus automobile crash, which required extensive hospital, skilled nursing, therapy, and other medical treatment including, but not limited to, a four- level spinal fusion procedure and rehabilitative care and services for Mr. Siewert and multiple leg surgeries for Mrs. Siewert, that ultimately led to an above-the-knee amputation (hereinafter referred to as the “auto claims”). On January 3, 2018, Mr. Siewert was discharged from a rehabilitation facility to his home, where he began receiving home health nursing, physician, and therapy services. On January 22, 2018, Mr. Siewert was diagnosed with an abscess near his surgical site, which was allegedly not properly addressed in the days that followed. On January 31, 2018, Mr. Siewert was hospitalized due to worsening neurological deficits, namely in his lower body, and he was transferred to the hospital that had performed his prior spinal surgery. On February 1, 2018, Mr. Siewert had another spinal surgery to address an abscess compressing on his spinal cord, leading to the decreased neurological function. The damage done to his spinal cord preoperatively was significant enough that he has been unable to walk since January 31, 2018, and remains bedbound to present. Mr. Siewert has a neurogenic bladder/bowel, wears diapers, has to be catheterized multiple times per day,1 and is unable to ambulate. To date, he is living with his wife in a single room residence at a skilled nursing facility in the Orlando area, where he is expected to remain.2 The Siewerts brought the following claims: negligence claims relating to the auto claims; nursing home neglect claims under chapter 400, Florida Statutes; and medical malpractice claims under chapter 766, Florida Statutes, each of which were pursued against several companies/entities, individuals, and healthcare providers, seeking, in part, compensable damages to the Siewerts for past bills and future economic needs as well as noneconomic mental pain and suffering and consortium claims for their injuries and losses. In April 2021, the Siewerts settled one of the medical malpractice claims for a limited confidential amount. The Siewerts have had a health plan with Aetna Better Health of Florida, which is a Medicaid plan through AHCA, that has retained the services of Equain relating to the settlement of part of the Siewerts’ medical malpractice claims (referred to below as “Aetna”). Aetna was properly notified of the Siewert’s medical malpractice claims against those defendants and indicated it had paid benefits related to the injuries from the incident in the amount of $75,923.82, as it relates to the settlement at issue. Through their counsel, the Siewerts have asked Aetna to accept a reduced lien amount given the other claims still pending and large 1 The evidence adduced at hearing indicates that Mr. Siewert has now been fitted with a permanent abdominal suprapubic catheter. 2 Though Mrs. Siewert could manage in an assisted living facility, Mr. Siewert could not. Thus, Mrs. Siewert has chosen to stay in the skilled nursing facility to be with her husband. total case value. Nonetheless, Aetna has continued to assert a lien, for the amount of $75,923.82, against the Siewerts’ settlement proceeds relating to the single settlement. Aetna has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory reduction formula to this particular settlement would result in no reduction of this lien given the amount of the settlement. The Siewerts also have been covered by AHCA’s fee-for-service Medicaid program. AHCA has contracted with Health Management Systems and Conduent to run its recovery program. AHCA was properly notified of the Siewerts’ medical malpractice claims against those defendants. AHCA provided medical assistance benefits related to the injuries from the incident in the amount of $33,836.09. Through their counsel, the Siewerts have asked AHCA to accept a reduced lien amount. AHCA has continued to assert a lien for the amount of $33,836.09, against the Siewerts’ settlement proceeds relating to the single settlement. AHCA has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory reduction formula to this particular settlement would result in no reduction of this lien given the amount of the settlement. AHCA’s $33,836.09 payment and Aetna’s $75,923.82 payment total $109,759.91, and this amount constitutes Mr. Siewert’s claim for past medical expense damages. There remain claims against numerous other defendants which also relate to the AHCA and Aetna liens at issue, including all remaining defendants in the auto and medical malpractice claims. Repayment to AHCA’s Medicaid program is prioritized by law and contract over Medicaid-managed care plans Facts Adduced at Hearing During the pendency of the medical malpractice action, AHCA was notified of the action. AHCA did not commence a civil action to enforce its rights under section 409.910, nor did it intervene or join in the medical malpractice action against the Defendants. AHCA has not filed a motion to set aside, void, or otherwise dispute the settlement. The Medicaid program, through AHCA, spent $33,836.09 on behalf of Mr. Siewert, all of which represents expenditures paid for past medical expenses. No portion of the $33,836.09 paid by AHCA through the Medicaid program on behalf of Mr. Siewert represented expenditures for future medical expenses. The $33,836.09 in Medicaid funds paid by AHCA is the maximum amount that may be recovered by AHCA. There was no evidence of the taxable costs incurred in securing the settlement. Application of the formula at section 409.910(11)(f) to the settlement requires payment to AHCA of the full $33,836.09 Medicaid lien asserted by AHCA, and the full $75,923.82 Medicaid lien asserted by Aetna. Petitioners have deposited the full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). There was no suggestion that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. The evidence firmly established that Mr. Siewert incurred economic damages, consisting of lost future earnings, past medical expenses, and future medical expenses. Mr. Gilbert and Mr. Marx testified that those economic damages totaled roughly $2,000,000. However, the economic loss analysis upon which their testimony was based showed a total of $1,770,775 in future life care needs for Mr. Siewert, reduced to present value.3 The only direct evidence of past medical expenses was the $109,759.91 in Medicaid expenditures. There was no evidence of other economic damages. Thus, the evidence established that economic damages total $1,880,534.90. The total amount of damages for Mr. Siewert was calculated to be $10,000,000, which was described as a conservative figure based on the knowledge and experience of Mr. Gilbert and Mr. Marx, and based on an analysis of representative jury verdicts involving comparable facts and damages. However, Mr. Gilbert engaged in a more detailed analysis of Mr. Siewert’s non-economic damages, which requires review. Although comparable jury verdicts suggest that it could be considerably more, Mr. Gilbert testified that his calculation, though subjective, would include $3,000,000 in non-economic damages in the past three years, and an additional $4,000,000 in non-economic damages into the future based upon a projected 12-year life expectancy, for a total amount of non-economic damages of $7,000,000. That figure was accepted by both of the testifying experts. As part of Petitioners’ calculation of the total value of the claim was $1,000,000 in loss-of-consortium damages incurred by Mrs. Siewert. Although the loss of consortium technically applies to the loss of the full marital relationship previously enjoyed by Mrs. Siewert, who is not the Medicaid recipient, that value was included as an element of the claim and settlement. Based on the forgoing, the evidence supports, and it is found that $9,880,534.90, as a full measure of Petitioners’ combined damages, is a conservative and appropriate figure against which to calculate any lesser 3 Respondent objected to the life care plan on the basis of hearsay. However, the plan was not being offered for the truth of the matter asserted, i.e., that Mr. Siewert would be expected to incur $1,770,775 for future care, but was offered as evidence of the more general value of a claim in litigation. Furthermore, the life care plan, even if inadmissible, could be used as support of an expert opinion as to claim valuation “when those underlying facts are of a type relied upon by experts in the subject to support the opinions expressed.” Charles W. Ehrhardt, Florida Evidence, § 704.1 (2020 Edition). A life care plan is evidence that, for that purpose, would “be sufficiently trustworthy to make the reliance reasonable.” Id. portion of the total recovery that should be allocated as reimbursement for the Medicaid lien for past medical expenses. The full value of the settlement is 5.06 percent of the $9,880,534.90 value of the claim.
