The Issue This matter concerns the amount of money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Gregory McElveen, a Medicaid recipient, following a settlement recovered from a third party.
Findings Of Fact This proceeding determines the amount the Agency should be paid to satisfy a Medicaid lien following Petitioner’s recovery of a $240,000.00 settlement from a third party. The Agency asserts that it is entitled to recover the full amount of its $72,907.93 lien. The incident that gave rise to this matter resulted from alleged medical malpractice. In 2016, Mr. McElveen saw his primary care physician complaining of pain and redness in his hand. The pain was ultimately traced to a metal shaving that had lodged in his finger. Despite repeated visits complaining of pain and swelling, however, Mr. McElveen’s physician failed to locate and remove the foreign object. In the meantime, his health worsened. On July 17, 2017, Mr. McElveen was admitted to the hospital, and was found to be critically ill with septic emboli. On August 15, 2017, Mr. McElveen died as a result of a systemic infection. He was survived by his wife and three daughters.3 2 By requesting a deadline for filing post-hearing submissions beyond ten days after receipt of the Transcript at DOAH, the 30-day time period for filing the Final Order was waived. See Fla. Admin. Code R. 28-106.216(2). 3 Although Mr. McElveen’s three daughters survived his death, in his subsequent wrongful death lawsuit, only one of his daughters was considered a “minor child” under the Florida Wrongful Death Act, because the other two were over the age of 25. § 768.18, Fla. Stat. The Agency, through the Medicaid program, paid a total of $72,907.93 for Mr. McElveen’s medical care, which was the full amount of his past medical expenses. In 2019, Mr. McElveen’s estate brought a wrongful death action against his treating physician.4 Charles T. Moore, Esquire, represented Petitioner’s estate and was the primary attorney handling the litigation. Ultimately, Mr. Moore was able to settle the wrongful death action for $240,000. The Agency was not a party to, nor did it intervene in, Petitioner’s wrongful death lawsuit. Under section 409.910, the Agency is to be repaid for its Medicaid expenditures out of any recovery from liable third parties. Accordingly, when the Agency was notified of the settlement of Petitioner’s lawsuit, it asserted a Medicaid lien against the amount Petitioner recovered. The Agency asserts that, pursuant to the formula set forth in section 409.910(11)(f), it should collect $72,907.93 to satisfy the medical costs it paid on Petitioner’s behalf. The Agency maintains that it should receive the full amount of its lien regardless of the fact that Petitioner settled for less than what Petitioner believes is the full value of his damages. Petitioner, on the other hand, argues that, pursuant to section 409.910(17)(b), the Agency should be reimbursed a lesser portion of the settlement than the amount the Agency calculated pursuant to the section 409.910(11)(f) formula. Petitioner specifically asserts that the Medicaid lien should be reduced proportionately, taking into account the full value of Petitioner’s damages. Otherwise, the application of the statutory formula would permit the Agency to collect more than that portion of the settlement that fairly represents Petitioner’s compensation for medical expenses. Petitioner insists that reimbursement of the full lien amount violates the federal Medicaid law’s anti-lien provision (42 U.S.C. § 1396p(a)(1)) and 4 Petitioner Daniel Hallup was appointed Personal Representative of Mr. McElveen’s estate. Florida common law. Petitioner requests that the Agency’s allocation from Petitioner’s recovery be reduced to $5,832.63. To establish the value of Mr. McElveen’s damages, Petitioner offered the testimony of Mr. Moore. Mr. Moore has practiced law for 24 years and is a partner with the law firm of Morgan & Morgan in Tampa, Florida. In his practice, Mr. Moore focuses exclusively on medical malpractice causes of action. Mr. Moore represented that he has taken a number of his cases to jury. As part of his practice, Mr. Moore routinely evaluates damages similar to those Petitioner suffered. This activity includes analyzing jury verdicts to keep current on case values, as well as discussing cases with other attorneys. In calculating the value of Mr. McElveen’s wrongful death claim, Mr. Moore reviewed Mr. McElveen’s medical records. Mr. Moore stated that, based on his professional assessment and experience, Mr. McElveen’s damages equaled between three to five million dollars which is the total monetary value of the survivors’ and estate’s wrongful death damages. Therefore, Mr. Moore opined that a conservative value of Mr. McElveen’s damages is $3,000,000. Based on his evaluation, Mr. Moore asserted that the $240,000 settlement was far less than the value of the actual damages Mr. McElveen suffered. Mr. Moore explained that Petitioner settled for a much lower amount because his potential recovery was limited due to the fact that the one potential defendant (Mr. McElveen’s physician) was retiring and carried minimal insurance coverage ($250,000). Mr. Moore also felt that the other possible liable parties (including the hospital) had met the appropriate standard of medical care when treating Mr. McElveen. Therefore, Mr. Moore believed that he had settled for the best deal he could under the circumstances, and Mr. McElveen’s estate was not likely to recover more. Finally, to support the Petition to reduce the amount of the Medicaid lien, Mr. Moore explained that Petitioner’s estate received only eight percent of the true value of Mr. McElveen’s damages ($3,000,000 divided by $240,000). Because only eight percent of the damages were recovered, in like manner, the $72,907.93 Medicaid lien should be reduced to eight percent, or $5,832.63, as a fair and reasonable allocation of the amount of Petitioner’s past medical expenses recovered the $240,000 settlement. The Agency did not present evidence or testimony disputing Mr. Moore’s valuation of the “true” value of Petitioner’s damages or his calculation of the amount of the settlement that should be allocated as Petitioner’s past medical expenses. Petitioner also offered the testimony of R. Vinson Barrett, Esquire, to established the value of Mr. McElveen’s damages. Mr. Barrett is a trial attorney with over 40 years’ experience. Mr. Barrett works exclusively in the area of plaintiff’s personal injury, medical malpractice, and medical products liability cases. He has also handled wrongful death cases. Mr. Barrett expressed that, as a routine part of his practice, he makes assessments concerning the value of damages suffered by injured parties. In addition, not only does he have personal experience with jury trials, but he stays current in recent jury verdicts and regularly discusses jury results with other attorneys. Mr. Barrett was accepted as an expert in the valuation of damages suffered by injured persons. Prior to testifying, Mr. Barrett familiarized himself with the facts and circumstances of Mr. McElveen’s injuries and death. He reviewed Petitioner’s exhibits, including Petitioner’s medical records. He also reviewed the sample jury verdicts Petitioner introduced as Petitioner’s Exhibit 8. Based on his valuation of Petitioner’s injuries, as well as his professional training and experience, Mr. Barrett placed a “very conservative value” on Petitioner’s injuries at $3,000,000. Mr. Barrett explained that injuries similar to Petitioner’s would result in jury awards averaging approximately $3.5 million dollars. Mr. Barrett supported Mr. Moore’s pro rata methodology of calculating a reduced portion of Petitioner’s $240,000 settlement to equitably and fairly represent past medical expenses. With injuries valued at $3,000,000, the $240,000 settlement only compensated Petitioner for eight percent of the total value of his damages. Therefore, the most “fair” and “reasonable” manner to apportion the $240,000 settlement is to apply that same percentage to determine Petitioner’s recovery of medical expenses. Petitioner asserts that applying the same ratio to the total amount of medical costs produces the definitive value of that portion of Petitioner’s $240,000 settlement that represents compensation for past medical expenses, i.e., $5,823.63 ($72,907.93 times eight percent). Similar to Mr. Moore’s testimony, Mr. Barrett’s expert testimony was unrebutted. Further, the Agency did not offer evidence or testimony proposing a more appropriate or different valuation of Mr. McElveen’s total damages, or contesting the methodology Petitioner used to calculate the portion of the $240,000 settlement fairly allocable to Petitioner’s past medical expenses. Based on the testimony from Mr. Moore and Mr. Barrett that the $240,000 settlement does not fully compensate Petitioner for Mr. McElveen’s damages, Petitioner argues that a lesser portion of the medical costs should be calculated to reimburse Medicaid, instead of the full amount of the lien. Petitioner proposes that a ratio be applied based on the true value of Petitioner’s damages ($3,000,000) compared to the amount that Petitioner actually recovered ($240,000). Using these numbers, Petitioner’s settlement represents approximately an eight percent recovery of the full value of Petitioner’s damages. In similar fashion, the Medicaid lien should be reduced to eight percent or approximately $5,832.63 ($72,907.93 times .08). Therefore, Petitioner asserts that $5,832.63 is the portion of his third-party settlement that represents the equitable, fair, and reasonable amount the Florida Medicaid program should recoup for its payments for Petitioner’s medical care. All of the expenditures Medicaid spent on Petitioner’s behalf are attributed to past medical expenses. No portion of the $72,907.93 Medicaid lien represents future medical expenses. The undersigned finds that the unrebutted testimony at the final hearing demonstrates that the full value of Petitioner’s damages from this incident equals $3,000,000. Further, based on the evidence in the record, Petitioner met his burden of proving, by clear and convincing evidence, that a lesser portion of Petitioner’s settlement should be allocated as reimbursement for medical expenses than the amount the Agency calculated using the formula set forth in section 409.910(11)(f).5 Accordingly, the undersigned finds that the competent substantial evidence adduced at the final hearing establishes that the Agency should be reimbursed in the amount of $5,832.63 from Petitioner’s recovery of $240,000 from a third party to satisfy the Medicaid lien.
The Issue The issue in this proceeding is how much of Petitioner’s settlement proceeds should be paid to Respondent, the Agency for Health Care Administration (“AHCA”) to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes.1/
Findings Of Fact In mid-October 2012, Petitioner, a trial lawyer, woke up on a Friday morning with a pain in the big toe of his left foot. He called his family practice physician2/ and was able to obtain an appointment for the following Tuesday. At the appointment, Petitioner saw a nurse practitioner who examined him and pronounced that he had gout. The nurse practitioner prescribed a gout medication. Over the course of the next week, Petitioner’s condition worsened, with pain radiating all the way to his hip. On the following Tuesday, he saw the physician. Despite blood testing that showed an elevated white blood cell count, the physician concurred with the nurse practitioner that Petitioner was suffering from an extreme case of gout. The physician prescribed a regimen of steroids for the gout. By the next Saturday, November 3, 2012, Petitioner was so sick that a neighbor drove him to Tampa General Hospital. His blood pressure was extremely low and his kidneys had ceased functioning. Petitioner was on the verge of death. At the hospital, he learned that the physician and his nurse practitioner had misdiagnosed Petitioner’s condition. He in fact had a raging staphylococcus aureus infection. Over the course of the next several days, Petitioner underwent several surgeries to save his life. First, the toes on his left foot were amputated. Then, his left foot was amputated. Next, his left leg was amputated below the knee. Finally, the left leg was amputated above the knee. Still, the infection was not controlled. Petitioner was in and out of a coma for a month. He testified that his infectious disease doctor told him that the infection was so bad that the treatment team was at a loss on how to proceed. However, the infection ultimately was brought under control. Once he was stabilized, Petitioner was transferred to Tampa General’s rehabilitation facility and finally released to return to his home. Petitioner was sixty-one years old at the time his leg was amputated. He testified that he practiced as a trial lawyer in Florida from 1977 until his illness. Petitioner stated that he does not find it possible to be a trial lawyer with a prosthetic leg and a walker, but that he does some mediation work. His basic income is $1,653 per month in Social Security benefits. Petitioner testified that this amount is never enough to cover his expenses and that he is required to dip into the proceeds of his settlement with the medical providers in order to make ends meet. He stated that it is “terrifying” to watch the money going out and to wonder what he will do when it is gone. Petitioner lost his Tampa home to foreclosure and was forced to move 40 miles away to find a house that he could afford. Moving away from his longtime home further isolated Petitioner and necessitated paying money for things that he could previously rely on friends and neighbors to help with, such as grocery shopping. Petitioner testified that prior to the amputation he had led an active lifestyle. He ran, rode a bike, and played golf twice a week. He was an instructor pilot. Petitioner is now incapable of engaging in any of those activities. Petitioner testified that if he falls and is not near a piece of furniture or other object that allows him to use his upper body strength to lift himself, he is helpless until someone comes along to assist him. Merely going to the bathroom involves a complicated transfer from his wheelchair using specially installed bars. Petitioner testified that prior to his settlement he had not, and to his knowledge others had not, made payments in the past or in advance for his future medical care. Civil trial attorney William E. Hahn testified on behalf of Petitioner. Mr. Hahn has practiced since 1972, is a board certified civil trial lawyer, and is a past president of the Florida chapter of the American Board of Trial Advocates, a group that named Mr. Hahn “trial lawyer of the year” in 2012. Mr. Hahn testified that he generally represents plaintiffs in medical malpractice cases and has tried over 100 complex jury trials. He has won verdicts as high as $22.5 million, as low as zero, and “all in between.” Mr. Hahn takes cases involving “devastating, catastrophic” injuries such as that suffered by Petitioner. A routine part of his practice is to make a determination of the value of a client’s damages. Mr. Hahn was accepted without objection as an expert in assessing the value of damages suffered by injured parties. Mr. Hahn testified that his evaluation process begins with acquainting himself with the nature of the injury. He then calculates the expenses that have been incurred in the past for the client’s treatment and predicts the costs of future treatment. He looks at the medical records and performs his own medical research. He speaks with the treating physicians as well as the client. Mr. Hahn bases his assessments on his experience and training and the experience of other lawyers in handling similar cases throughout Florida and the United States. Mr. Hahn testified that he has known Petitioner since they were both young lawyers practicing in Tampa. When Petitioner called him and explained his situation, Mr. Hahn agreed to represent Petitioner in his medical malpractice action. Mr. Hahn noted that with proper medical treatment Petitioner would have been spared multiple surgeries and the amputation of his leg. He would likely have recovered and returned to law practice. Mr. Hahn opined that the value of Petitioner’s case was “well in excess of $2 million,” based on Petitioner’s background, his training and experience, and the devastating injury and its long term effects. Given Petitioner’s status in Tampa and the legal community, and the outrageousness of what happened, Mr. Hahn believed the verdict would have “exceeded two, four or many more millions of dollars.” Mr. Hahn explained that in order to proceed with a medical malpractice claim in Florida, the plaintiff must go through a number of administrative steps called the “notice of intent” process. Mr. Hahn secured the services of a board certified internal medicine physician as his expert. The surgeon confirmed what Mr. Hahn had surmised from the medical records, that this was a case of gross malpractice. Mr. Hahn obtained an affidavit from the surgeon and notified the potential defendants that he was about to make a claim on Petitioner’s behalf. Mr. Hahn was aware that Petitioner had received services from Medicaid and initiated a correspondence with AHCA.3/ The correspondence indicated that Medicaid had paid $135,047.86 in medical expenses for Petitioner. Mr. Hahn stated that this amount would have been part of Petitioner’s claim had the matter been fully litigated. Mr. Hahn testified that, despite the clear liability, the recoverable assets complicated any potential award of damages from the medical providers. The total insurance available was $500,000. The insurance company was acting in good faith in trying to settle the case, which ruled out a bad faith case against the insurer. The only other potential sources of funds were the personal assets of the nurse practitioner and the physician. The defense attorney informed Mr. Hahn that any assets possessed by these individuals were protected from judgment. The defendants recognized that this was a “terrible” case and wanted to settle. Mr. Hahn stated that it became apparent to him that the best business decision for Petitioner was to get the case resolved within the limits of the insurance coverage. He was able to reduce his fee, keep the litigation costs down, and get the matter resolved quickly. Mr. Hahn secured a settlement of $492,500. Mr. Hahn testified that no amount of money could ever make Petitioner whole, but that the amount of the settlement did not come close to fully compensating him for his damages and would not come close to taking care of him for the rest of his life. Mr. Hahn pointed out that in the document memorializing the settlement agreement, the defendants acknowledged that the settlement would not come close to making Petitioner whole. The portion of the settlement agreement referenced by Mr. Hahn was the “Allocation of Settlement” language, which read as follows: Although it is acknowledged that this settlement does not fully compensate the Releasor for the damages he has allegedly suffered, this settlement shall operate as a full and complete release as to all claims against the Releasees, without regard to this settlement only compensating the Releasor for a fraction of the total monetary value of his alleged damages. These damages have a value in excess of $2,000,000, of which $135,047.86 represents Releasor’s claim for past medical expenses. Given the facts, circumstances, and nature of the Releasor’s alleged injuries and this settlement, $33,255.54 of this settlement has been allocated to the Releasor’s claim for past medical expenses and the remainder of the settlement has been allocated toward the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all of the Releasor’s alleged damages. Further, the parties acknowledge that the Releasor may need future medical care related to his alleged injuries, and some portion of this settlement may represent compensation for these future medical expenses that the Releasor may incur in the future. However, the parties acknowledge that the Releasor, or others on his behalf, have not made payments in the past or in advance for the Releasor’s future medical care and the Releasor has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for payments made to secure future medical care. Mr. Hahn testified that the allocation of settlement paragraphs were the product of a negotiation with the defendants’ lawyer. The language was acknowledged and agreed to by all parties. The defendants agreed with the valuation of damages “in excess of $2 million.” The allocation of $33,255.54 to past medical expenses was “simple math,” its relation to the $492,500 settlement amount being proportional to the relation of $135,047.86 to the $2 million value of the claim. Petitioner was settling for 24.625% of his claim’s value, and therefore the Medicaid lien should be reduced proportionately. Mr. Hahn testified that all the parties believed this settlement to be reasonable. Mr. Hahn stated that in his professional judgment, the allocation of $33,255.54 was not only reasonable, it was overly generous. The real value of the case was well in excess of $2 million. Mr. Hahn believed that it would have been reasonable to value the claim at $4 million, in which case the Medicaid allocation would have been cut in half. Mr. Hahn testified that the parties were trying to recognize that Medicaid did “wonderfully” by Petitioner. They valued the case conservatively at $2 million. Many lawyers would have valued it much higher, and could have supported their valuation with documentation. Mr. Hahn stated that the parties’ concern was to be appropriate, conservative, and provide a fair recovery to Medicaid. AHCA called no witness to contest the valuation of damages made by Mr. Hahn or to offer an alternative methodology to calculate the allocation to past medical expenses. No evidence was presented indicating the settlement agreement was not reasonable given all the circumstances of the case. It does not appear that the parties colluded to minimize the share of the settlement proceeds attributable to Medicaid’s payment of costs for Petitioner’s medical care. In fact, the evidence established that the settlement was extremely conservative in its valuation of Petitioner’s claim and that the settling parties could have reasonably apportioned far less to Medicaid than they actually did. AHCA was not a party to the settlement of Petitioner’s claim. AHCA correctly computed the lien amount pursuant to the statutory formula in section 409.910(11)(f). Deducting the 25 percent attorney’s fee, or $123,125, from the $492,500 recovery leaves $371,375, half of which is $185,687.50. That figure exceeds the actual amount expended by Medicaid on Petitioner’s medical care. Application of the formula would provide sufficient funds to satisfy the Medicaid lien of $135,047.86. Petitioner proved by clear and convincing evidence that the $2 million total value of the claim was a reasonable, if not unduly conservative, amount. Petitioner proved by clear and convincing evidence, based on the clear strength of his case and on the fact that it was limited only by the inability to collect the full amount of the likely judgment, that the amount agreed upon in settlement of Petitioner’s claims constituted a fair settlement, including the portion attributed to the Medicaid lien for medical expenses.
The Issue The issue to be decided is the amount payable to Respondent in satisfaction of Respondent's Medicaid lien from a settlement, judgment, or award received by Petitioner from a third party under section 409.910(17), Florida Statutes.1/
Findings Of Fact It was stipulated that Petitioner, Mr. Nelson Puente, sustained gunshot injuries on or about February 4, 2010, for which he received medical treatment. Mr. Puente had Medicaid at that time, and Medicaid paid the amount of $112,397.79 to treat Mr. Puente for his injuries. As a result of his injuries, Mr. Puente has permanent scars on his abdomen and thigh. Mr. Mario Quintero, Jr., Esquire, represented Mr. Puente in a personal injury case alleging negligent security. Mr. Quintero has been practicing law in Florida for over 30 years, specializing in personal injury litigation. He has tried well over 150 cases and has handled catastrophic injury cases that were similar to Mr. Puente's case. Mr. Quintero is an expert on the valuation of personal injury cases. Mr. Quintero interviewed Mr. Puente regarding the scope of his injuries, reviewed extensive medical records, considered the prognosis for improvement, and examined jury verdict reports and facts from similar cases to reach an opinion as to the value of Mr. Puente's damages. Mr. Quintero testified that if he had presented the case to a jury that he would have asked for damages for past medical expenses, future medical expenses, future loss of earning capacity, pain and suffering, permanent scarring, and inability to lead a normal life. Mr. Quintero testified that, in addition to the $112,397.79 paid by Medicaid, the Florida Patients' Compensation Fund2/ or another fund paid for some of Mr. Puente's medical care. There was no evidence presented as to the specific amount that this fund paid. Mr. Quintero testified: I don't have the figures in front of me right now. But it was probably significantly less than Medicaid. * * * I do know, I just don't remember. I am--my file is three boxes large. And for purposes of my testimony here today, I don't believe it was necessary for me to bring in those three boxes and go through everything. So I mentioned it would be less than Medicaid, but I don't remember the exact amount. The exact amount for which the fund's claim was settled was similarly not in evidence, but Mr. Quintero characterized it as a "few thousand dollars." He testified, "They understood the severity of Mr. Puente's injuries and damages, they knew the amount of the settlement, and they took-—they factored in everything and significantly reduced the amount that we had to repay them." Mr. Quintero said that he would have asked a jury for significant damages for future lost earning capacity. He noted that Mr. Puente was 35 years old at the time of the settlement, had a long life expectancy, and the "potential to earn 35 to 40 thousand dollars per year." Mr. Quintero did not offer a dollar estimate of lost future earnings. There was no evidence as to Mr. Puente's occupation. Mr. Quintero admitted on cross- examination that he was "pretty sure" that Mr. Puente was unemployed at the time of his injuries. Mr. Quintero testified that future medical expenses would "probably not" be very large, based upon his understanding that "other than maybe palliative issues with therapy and things like that," there wasn't that much more that could be done for Mr. Puente. Mr. Quintero noted that "there probably would be some rehabilitation that he could benefit from in the future, but nothing major." On cross examination, he admitted that there was nothing in evidence to indicate that there would not be significant future medical expenses for Mr. Puente. No life care plan or testimony from health care personnel, vocational specialists, or economists was introduced. Mr. Quintero stated that it is expensive to have life care plans and economist reports prepared. He stated that they are prepared only when there is adequate insurance coverage, and it is worth the expenditure. Mr. Quintero testified that he believed that 80 to 85 percent of a jury verdict in Mr. Puente's personal injury case would have been based upon pain and suffering and the inability to lead a normal life. He did not elaborate on how he arrived at this conclusion. Mr. Quintero testified that, although the value that a particular jury might put on a case can never be absolutely determined, in his opinion, a reasonable estimate of the value of Mr. Puente's damages was $2.5 million. He testified that, in his opinion, the range of damages would be from $2 million to $5 million and that $2.5 million was a conservative estimate. Mr. Quintero's testimony on this point was credible, Respondent offered no contrary testimony, and the value of Mr. Puente's damages is found to be $2.5 million. The settlement in the personal injury case was for the sum of $100,000. There was no direct evidence as to what portion of the $100,000 total settlement was designated by the parties as compensation to Petitioner for medical expenses, or conversely, for the various other types of damages he may have suffered, such as pain and suffering, scarring and other permanent physical injury, or loss of future earnings. Neither the settlement agreement itself nor any other documents prepared in connection with the settlement were introduced. Mr. Quintero offered no testimony on this issue. Based upon the evidence presented at hearing, all of the settlement might have been for medical care, or none of it might have been. It is possible that there was no discussion or understanding among the parties as to what portions of the settlement were to be allocated to Mr. Puente's various categories of damages, but such a conclusion would be pure speculation, for there was no testimony or other evidence to that effect. Mr. Puente did not show by clear and convincing evidence that the settlement was "unallocated" by the parties. The Florida Statutes provide that Respondent, Agency for Health Care Administration (AHCA), is the Florida state agency authorized to administer Florida's Medicaid program. § 409.902, Fla. Stat. The Florida Statutes provide that Medicaid shall be reimbursed for medical assistance that it has provided if resources of a liable third party become available. § 409.910(1), Fla. Stat. AHCA did not participate in settlement negotiations or sign any of the settlement documents. There was no evidence to suggest that AHCA otherwise released its lien. Application of the formula found in section 409.910(11)(f) to the $100,000 settlement in the personal injury case yields a Medicaid lien in the amount of $33,319.66. The $100,000 total recovery represents four percent of the $2.5 million total economic damages. Mr. Puente failed to prove by clear and convincing evidence that the settlement was unallocated as to categories of damages. Mr. Puente failed to prove by clear and convincing evidence that all categories of damages sought in the personal injury case were, or should be, compromised pro rata in the settlement. Mr. Puente failed to prove the amount of the settlement that should be allocated to medical expenses by clear and convincing evidence. Mr. Puente failed to prove by clear and convincing evidence that the statutory lien amount of $33,319.66 exceeds the amount actually recovered in the settlement for medical expenses.
The Issue The issue to be determined in this matter is the amount of money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Petitioner, John Gray, a Medicaid recipient, following Petitioner’s recovery from a third-party.
Findings Of Fact On January 18, 2007, Petitioner was involved in a devastating automobile accident. Another vehicle, driven by Damil Belizaire, crossed a median and collided head-on into the car Petitioner was driving. No evidence indicates that any negligence on the part of Petitioner caused or contributed to the accident or his injury. Petitioner suffered catastrophic injuries from the collision, including a spinal cord injury resulting in paraplegia. Following the accident, Petitioner was transported to UF Health Shands Hospital (“Shands”) in Jacksonville, Florida. Petitioner remained in Shands receiving medical treatment for 77 days. Once Petitioner became medically stable, he was transferred to the Brooks Rehabilitation Center (“Brooks”) in Jacksonville, Florida. There, Petitioner received intensive physical and occupational therapy care. Petitioner remained at Brooks until June 1, 2007, when he was discharged. Petitioner is permanently paraplegic. On April 7, 2008, Petitioner sued Mr. Belizaire seeking to recover his damages from the automobile accident. Petitioner’s lawsuit was filed in the Circuit Court of the Fourth Judicial Circuit, in Duval County, Case No. 16-2008-CA-004366. On April 1, 2013, Petitioner received a jury verdict in his favor and was awarded a Final Judgment against Mr. Belizaire in the amount of $2,859,120.56, including statutory interest. The damages award was allocated as follows: $128,760.56 for past medical expenses; $1,301,268.00 for future medical expenses; $202,670.00 for the loss of earnings in the past; $916,422.00 for loss of earning capacity in the future; $50,000.00 for pain and suffering, disability, physical impairment, disfigurement, mental anguish, inconvenience, and loss of capacity for the enjoyment of life in the past; and $260,000.00 for pain and suffering, disability, physical impairment, disfigurement, mental anguish, inconvenience, and loss of capacity for the enjoyment of life in the future. Despite his verdict awarding damages, Petitioner has only been able to recover $10,000.00 from Mr. Belizaire. Mr. Belizaire’s automobile liability insurance company paid Petitioner $10,000, which was the limit of his bodily injury liability insurance policy. The Agency, through its Medicaid program, paid a total of $65,615.05 for Petitioner’s medical care resulting from the 2007 automobile accident.2/ This administrative matter centers on the amount the Agency is entitled to be paid to satisfy its Medicaid lien following Petitioner’s recovery of $10,000 from a third-party. Under section 409.910, the Agency may be repaid for its Medicaid expenditures from any recovery from liable third-parties. The Agency claims that, pursuant to the formula set forth in section 409.910(11)(f), it should collect $3,750 regardless of the full value of Petitioner’s damages. (The Agency subtracted a statutorily recognized attorney fee of $2,500 from $10,000 leaving $7,500. One-half of $7,500 is $3,750.) Petitioner asserts that pursuant to section 409.910(17)(b), the Agency should be reimbursed a lesser portion of Petitioner’s recovery than the amount it calculated using the section 409.910(11)(f) formula. Petitioner specifically argues that the Agency’s Medicaid lien must be reduced pro rata, taking into account the full value of Petitioner’s personal injury claim as determined by the Final Judgment entered in the underlying negligence lawsuit. Otherwise, application of the default statutory formula under section 409.910(11)(f) would permit the Agency to collect more than that portion of the settlement representing compensation for medical expenses. Petitioner maintains that such reimbursement violates the federal Medicaid law’s anti-lien provision, 42 U.S.C. § 1396p(a)(1), and Florida common law. Petitioner contends that the Agency’s allocation from Petitioner’s recovery should be reduced to the amount of $230.00. Based on the evidence in the record, Petitioner failed to prove, by clear and convincing evidence, that a lesser portion of Petitioner’s total recovery should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Accordingly, the Agency is entitled to recover $3,750.00 from Petitioner’s recovery of $10,000 from a third- party to satisfy its Medicaid lien.
The Issue The issue in this proceeding is the amount to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner, Joni M. Doheny, from a settlement received by Petitioner from a third party.
Findings Of Fact On July 7, 2014, Ms. Doheny, who was then 57 years old, was a passenger on a motorcycle whose drunk driver veered into oncoming traffic and was struck by a sports utility vehicle (SUV), ejecting her from the point of impact approximately 100 feet through the air and over pavement. As a result of the accident, Ms. Doheny suffered severe, catastrophic and horrible injuries with wounds to her head, wounds to her arms, wounds to her hands and her left leg almost ripped from her body at the knee. Ms. Doheny was intubated at the scene and airlifted to Tampa General Hospital. She was diagnosed with compound fractures of her left tibia and fibula, puncture wound of her right knee, severe injury to her left arm and hand resulting in amputation of her left ring finger, a laceration to her forehead, and a traumatic brain injury. Amputation of her leg was recommended, but Petitioner elected to save her leg. She underwent numerous surgeries associated with her leg and other extensive injuries and was in the hospital until September 12, 2014. Ms. Doheny was again admitted to the hospital for treatment of her injuries on December 2 through 9, 2014, and January 21 through February 5, 2015. Throughout the process, she was in extreme pain and remains in pain to date. Currently, Petitioner cannot walk and requires a wheelchair for mobility. She has no significant function of her left hand and no significant function in her left leg. She is dependent on others for activities of daily living. She also has severe impacts to her emotional well-being and suffers from depression, anxiety and pain. Her condition is permanent and she most likely will not be able to obtain employment sufficient to support herself or replace the income/earning capacity she had as a realtor prior to her injuries. She is no longer a Medicaid recipient. Petitioner’s past medical expenses related to her injuries were paid by both personal funds and Medicaid. Medicaid paid for Petitioner’s medical expenses in the amount of $257,640.53. Unpaid out-of-pocket expenses totaled $119,926.41. Thus, total past healthcare expenses incurred for Petitioner’s injuries was $377,566.94. Ms. Doheny brought a personal injury claim to recover all her damages against the driver of the SUV (Driver) who struck the motorcycle Ms. Doheny was riding, her Uninsured/Underinsured Motorist Policy (UM Policy), and the restaurant which had served alcohol to the driver of the motorcycle (Restaurant). Towards that end, Petitioner retained James D. Gordon, III, an attorney specializing in personal and catastrophic injury claims for over 30 years, to represent Petitioner in her negligence action against the Defendants. The Driver maintained a $10,000 insurance policy. On November 10, 2014, prior to suit being filed, Ms. Doheny settled her claim against the Driver for an unallocated $10,000. Ms. Doheny’s UM Policy had a policy limit of $300,000. Likewise, on November 10, 2014, Ms. Doheny settled her claim against her UM Policy for an unallocated $300,000. The Restaurant maintained a $1,000,000 liquor liability insurance policy. On September 2, 2015, and again prior to suit being filed, Ms. Doheny settled her claim against the Restaurant for $1,000,000. The settlements totaled $1,310,000.00 and do not fully compensate Petitioner for the total value of her damages. As indicated, $310,000.00 of the settlements was not apportioned to specific types of damages, such as economic or non-economic, past or future. One million dollars of the settlements was apportioned with 20 percent of those funds allocated to past medical expenses. No dollar amount was assigned to Ms. Doheny’s future medical care needs, and there remains uncertainty as to what those needs will be. Additionally, neither Petitioner nor others on her behalf made payments in the past or in advance for her future medical care, and no claim for reimbursement, restitution or indemnification was made for such damages or included in the settlement. However, given the loss of earning capacity and the past and present level of pain and suffering, the bulk of the settlement was clearly intended to provide future support for Ms. Doheny. Respondent was notified of Petitioner’s negligence action, around September 3, 2015. Thereafter, Respondent asserted a Medicaid lien in the amount of $257,640.53 against the proceeds of any award or settlement arising out of that action. Respondent was not a party to the 2015 settlements and did not execute any of the applicable releases. Mr. Gordon’s expert very conservative valuation of the total damages suffered by Petitioner is at least $5 million. In arriving at this valuation, Mr. Gordon reviewed the facts of Petitioner’s personal injury claim, vetted the claim with experienced members in his law firm and examined jury verdicts in similar cases involving catastrophic injury. The reviewed cases had an average award of $6,779,214 for total damages and $4,725,000 for non-economic damages (past and future pain and suffering). Mr. Gordon’s valuation of total damages was supported by the testimony of one additional personal injury attorney, R. Vinson Barrett, who has practiced personal injury law for more than 30 years. In formulating his opinion on the value of Petitioner’s damages, Mr. Barrett reviewed the discharge summaries from Petitioner’s hospitalizations. Mr. Barrett also reviewed the jury trial verdicts and awards relied upon by Mr. Gordon. Mr. Barrett agreed with the $5 million valuation of Petitioner’s total damages and thought it could likely have been higher. The settlement amount of $1,310,000 is 26.2 percent of the total value ($5 million) of Petitioner’s damages. By the same token, 26.2 percent of $377,566.54 (Petitioner’s past medical expenses paid in part by Medicaid) is $98,922.54. Both experts testified that $98,922.54 is a reasonable and rational reimbursement for past medical expenses. Their testimony is accepted as persuasive. Further, the unrebutted evidence demonstrated that $98,922.54 is a reasonable and rational reimbursement for past medical expenses since Petitioner recovered only 26.2 percent of her damages thereby reducing all of the categories of damages associated with her claim. Given these facts, Petitioner proved by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by Respondent pursuant to the formula set forth in section 409.910(11)(f). Therefore, the amount of the Medicaid lien should be $98,922.54.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or AHCA), for medical expenses paid on behalf of Petitioner, Patrick Osmond (Petitioner), from settlement proceeds received by Petitioner from third parties.
Findings Of Fact Petitioner was injured in a single-vehicle collision after he and several underage friends were served alcoholic beverages at an Applebee’s restaurant, owned by Neighborhood Restaurant Partners, LLC (Applebee’s). As a result of his injuries, Petitioner brought suit against Applebee’s, for dram shop liability, and against Joseph Raub, the driver of the vehicle in which Petitioner was a passenger, for negligence. The Complaint also included a claim against the bartender from Applebee’s, however, she was eventually dropped from the lawsuit. After a two-week jury trial, the jury returned a verdict in favor of Petitioner, awarding a total of $41,956,473.73 in damages, allocated as follows: Past Medical Expenses: $436,473.73 Future Medical Expenses: $15,000,000.00 Past Lost Wages: $20,000.00 Future Loss of Earning Capacity: $1,500,000.00 Past Non-Economic Damages: $5,000,000.00 Future Non-Economic Damages: $20,000,000.00 The past medical expenses included $303,757.77 for payments made by Medicaid through AHCA, $13,985.96 for payments administered through the Rawlings Company, and $118,730.00 which represented an outstanding bill from Petitioner’s neurosurgeon. After the verdict, Petitioner reached a settlement agreement with Applebee’s, whereby Applebee’s agreed to pay the sum of $4,300,000.00 to Petitioner. As a condition of the settlement with Applebee’s, the parties executed a Release that included the following language: 1.6 The parties agree that Patrick Osmond’s damages have a total value of $41,956,473.73 (Forty-One Million, Nine Hundred Fifty-Six Thousand, Four Hundred Seventy-Three Dollars and Seventy-Three Cents), of which $317,743.73 (Three Hundred Seventeen Thousand, Seven Hundred Forty-Three Dollars and Seventy-Three Cents)[1/] represents the past medical expenses paid for by Medicaid. Given the facts, circumstances and nature of Patrick Osmond’s injuries and this settlement, $35,568.73 (Thirty-Five Thousand, Five Hundred Sixty-Eight Dollars and Seventy-Three Cents) of this settlement has been allocated to Patrick Osmond’s claim for past medical expenses paid by Medicaid and the remainder of the settlement has been allocated toward the satisfaction of claims other than past medical expenses paid by Medicaid. After the jury verdict was rendered, Petitioner recovered $25,000.00 in settlement from Joseph Raub and his insurers. As a condition of the settlement with Mr. Raub, the parties executed a Release that included the following language: The parties agree that Patrick Osmond’s damages have a total value of $41,956,473.73 (Forty-One million, Nine Hundred Fifty-Six Thousand, Four Hundred Seventy-Three Dollars and Seventy-Three Cents), of which $317,743.73 (Three Hundred Seventeen Thousand, Seven Hundred Forty-Three Dollars and Seventy-Three Cents) represents the past medical expenses paid for by Medicaid. Given the facts, circumstances and nature of Patrick Osmond’s injuries and this settlement, $190.43 (One Hundred ninety Dollars and Forty-Three Cents) of this settlement has been allocated to Patrick Osmond’s claim for past medical expenses paid by Medicaid and the remainder of the settlement has been allocated toward the satisfaction of claims other than past medical expenses paid by Medicaid. After the verdict, Petitioner’s insurer, Geico General Insurance Company (“Geico”), paid its policy limits of $10,000.00 to Petitioner under his Uninsured and/or Underinsured Motorist Coverage. The documentary evidence did not reflect that payment, but its existence was acknowledged by both parties during the argument, and is accepted as a stipulation. The purpose for the payment was not disclosed. The burden in this case is on Petitioner to prove “that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses.” There is no proof that the Geico settlement should be excluded from the amount available to satisfy the Medicaid lien. The $303,757.77 in Medicaid funds paid by AHCA is the maximum amount that may be recovered by AHCA. There was no evidence to suggest that statutory conditions precedent to AHCA asserting its claim or Petitioner bringing this action were not met. The Pre-hearing Stipulation, Respondent’s statement, the stipulation of facts, and the statement of issues of fact that remained to be litigated, indicate clearly that the issue of allocation of the settlement proceeds under sections 409.910(11)(f) and 409.910(17)(b) were the only issues in dispute remaining for disposition. There was no evidence that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. There was no evidence of any manipulation or collusion by the parties to minimize the share of the settlement proceeds attributable to past medical expenses for Petitioner’s medical care. However, an issue remains as to the correct amount of “past medical expenses” to be used in establishing the proportional amount of those expenses vís-a-vís the total settlement. No portion of the $303,757.77 paid by AHCA through the Medicaid program on behalf of Petitioner represented expenditures for future medical expenses, with all amounts reflected in its Provider Processing System Report being for past medical expenses incurred.
The Issue The issue to be determined is the amount payable under section 409.910, Florida Statutes,1/ in satisfaction of Respondent's Medicaid lien on settlement proceeds received by Petitioner, Victor Hugo Herrera, Sr., from a third party.
Findings Of Fact On July 29, 2014, unbeknownst to Mr. Herrera, an individual (hereinafter Assailant) entered the common area where Mr. Herrera rented an office. The Assailant stalked Mr. Herrera and forced his way into Mr. Herrera’s office. The Assailant attacked Mr. Herrera in his office and shot Mr. Herrera in the leg. As a result of being shot in the leg, Mr. Herrera had his leg medically amputated above the knee, suffered a collapsed lung, and was comatose for nearly two months. As a result of his severe injuries, Mr. Herrera is now permanently disabled, disfigured, and wheelchair-bound, unable to walk. Mr. Herrera’s medical expenses related to his injuries were paid by Medicaid, which provided $271,344.06 in benefits. Mr. Herrera brought a personal injury lawsuit to recover all of his damages associated with his injuries against the owner of the office and security company responsible for providing security (Defendants). The $271,344.06 paid by Medicaid constituted Mr. Herrera’s entire claim for past medical expenses. On December 11, 2015, Mr. Herrera compromised and settled his personal injury action against the Defendants for $925,000. The General Release of Claims memorializing the settlement with the Defendants stated, inter alia: The First Party, the Second Party and their respective counsel acknowledge that this settlement does not fully compensate the First Party for the damages he has allegedly suffered, but as provided herein this settlement shall operate as a full and complete release as to all claims against Second Party, without regard to this settlement only compensating the First Party for a fraction of the total monetary value of his alleged damages. These parties agree that the damages suffered by the First Party have a value in excess of $5,000,000.00, of which $271,344.06 represents First Party’s claim for past medical expenses. Given the facts, circumstances, and nature of the First Party’s alleged injuries and this settlement, $50,198.65 of this settlement has been allocated to the First Party’s claim for past medical expenses and the remainder of the settlement has been allocated toward the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all of the First Party’s alleged damages. Further, the parties acknowledge that the First Party may need future medical care related to his alleged injuries, and some portion of this settlement may represent compensation for those future medical expenses the First Party may incur in the future. However, the parties acknowledge that the First Party, or others on his behalf, have not made payments in the past or in advance for the First Party’s future medical care and the First Party has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for payments made to secure future medical care. During the pendency of Mr. Herrera’s personal injury lawsuit, the Agency for Health Care Administration (AHCA) was notified of the lawsuit and AHCA, through its collections contractor Xerox Recovery Services, asserted a $271,344.06 Medicaid lien against Mr. Herrera’s cause of action and settlement of that action. By letter of January 22, 2016, AHCA was notified by Mr. Herrera’s personal injury attorney of the settlement and provided a copy of the executed release and itemization of Mr. Herrera’s $10,114.38 in litigation costs. This letter explained that Mr. Herrera’s damages had a value in excess of $5,000,000, and the $925,000 settlement represented only an 18.5 percent recovery of Mr. Herrera’s damages. Accordingly, he had recovered only 18.5 percent of his $271,344.06 claim for past medical expenses, or $50,198.65. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $271,344.06 Medicaid lien. AHCA did not respond to Mr. Herrera’s attorney’s letter of January 22, 2016. AHCA has not filed an action to set aside, void, or otherwise dispute Mr. Herrera’s settlement. AHCA has not commenced a civil action to enforce its rights under section 409.910. The Medicaid program spent $271,344.06 on behalf of Mr. Herrera, all of which represents expenditures paid for Mr. Herrera’s past medical expenses. No portion of the $271,344.06 paid by the Medicaid program on behalf of Mr. Herrera represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. Mr. Herrera and AHCA agree that application of the formula at section 409.910(11)(f) to Mr. Herrera’s $925,000 settlement would require payment to AHCA of the full $271,344.06 Medicaid lien. Petitioner has deposited the full Medicaid lien amount into an interest-bearing account pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). At the final hearing, Mr. Zebersky, who represented Mr. Herrera in his underlying personal injury action, testified and was accepted, without objection, as an expert in the valuation of damages suffered by injured parties. Mr. Zebersky has been an attorney for 27 years and has demonstrated considerable experience in handling plaintiffs’ personal injury and insurance class action claims in South Florida. In rendering his opinion as to the value of Mr. Herrera’s claim, Mr. Zebersky explained that, as a routine and daily part of his practice, he makes assessments concerning the value of damages suffered by injured parties and he explained his process for making these determinations. Mr. Zebersky was familiar with and gave a detailed explanation of the circumstances giving rise to Mr. Herrera’s claim. In making his valuation determination, Mr. Zebersky reviewed the police report, the State Attorney’s file on the shooting, all of Mr. Herrera’s medical records, and met numerous times with Mr. Herrera and his family. Mr. Zebersky testified that through his representation of Mr. Herrera, review of Mr. Herrera’s file, and based on his training and experience, he had developed the opinion that the value of Mr. Herrera’s damages was $5,000,000. Mr. Zebersky suggested that the $5,000,000 amount was conservative, by testifying that “five million dollars, you know, is probably what the pain and suffering value is especially in Broward County.” In addition to his first-hand experience with Mr. Herrera’s claim, Mr. Zebersky further supported his valuation opinion by explaining that he had “round-tabled” the case with other experienced attorneys and they agreed that the value of Mr. Herrera’s damages was $5,000,000. Further, Mr. Zebersky testified that he had reviewed jury verdicts in developing his opinion and the jury verdicts in Petitioner’s Exhibit 12 were comparable to Mr. Herrera’s case and support the valuation of Mr. Herrera’s damages at $5,000,000. Mr. Zebersky’s testimony was credible and is accepted. Petitioner also presented the testimony of Mr. Barrett, who was accepted as an expert in the valuation of damages. Mr. Barrett has been accepted as an expert in valuation of damages in a number of other Medicaid lien cases before DOAH. Mr. Barrett has been a trial attorney for 40 years, with a primary focus on plaintiff personal injury cases, including medical malpractice, medical products liability, and pharmaceutical products liability. Mr. Barrett stays abreast of jury verdicts and often makes assessments concerning the value of damages suffered by injured parties. After familiarizing himself with Mr. Herrera’s injuries through review of pertinent medical records and Petitioner’s Exhibits, including the police report, pictures of Mr. Herrera, Mr. Herrera’s complaint and Mr. Herrera’s General Release of Claims, Mr. Barrett offered his opinion, based upon his professional training and experience, that “five million was a conservative estimate” for the value of Mr. Herrera’s damages and that Mr. Herrera’s damages were “undoubtedly at least five million dollars.” Mr. Barrett also reviewed the jury verdicts in Petitioner’s Exhibit 12 and opined that those verdicts were comparable and supported his valuation of Mr. Herrera’s damages. Mr. Barrett’s testimony was credible and is accepted. AHCA’s designated expert, Mr. Bruner, was not available for testimony at the final hearing. Instead of asking for a continuance, the parties agreed to take Mr. Bruner’s deposition after the final hearing and then file the transcript with DOAH. Further, during the final hearing, AHCA agreed that Mr. Bruner would not be testifying as to the value of Mr. Herrera’s damages. In accordance with that agreement, Mr. Brunner’s deposition was subsequently taken and his deposition transcript was filed on August 3, 2016. At Mr. Bruner’s deposition, AHCA proffered Mr. Bruner as an expert in evaluation of cases and settlements. Petitioner objected on the grounds that Mr. Bruner lacked experience or expertise in personal injury cases and should not be allowed to testify as an expert. Further, Petitioner objected to the relevance of Mr. Bruner’s testimony based on AHCA’s earlier agreement that he would not be testifying concerning the value of the damages suffered. Counsel for AHCA responded to Petitioner’s objection to the relevance of Mr. Bruner’s testimony by agreeing that AHCA would not be seeking any “expert testimony as to evaluation of damages,” but would only be using Mr. Bruner’s testimony to “evaluate” the jury verdicts in Petitioner’s Exhibit 12. While Mr. Bruner does not have the same level of experience in personal injury claims as the experts offered by Petitioner, Mr. Bruner has sufficient experience to offer an opinion on the jury verdicts set forth in Petitioner’s Exhibit 12, and to that extent, his expertise in the evaluation of cases is accepted. However, because of his lack of recent experience in settling personal injury claims, Mr. Brunner is not accepted as an expert in personal injury settlements.2/ In his deposition testimony, Mr. Bruner criticized the relevance of the 12 verdicts in Petitioner’s Exhibit 12 on the grounds that, while the verdicts involved amputations of legs, there were factual differences in the mechanism of injury. Mr. Bruner further asserted that, to the extent the verdicts in Petitioner’s Exhibit 12 included awards for future medical expenses, they should not be considered because, according to Mr. Bruner’s understanding, Mr. Herrera did not recover any future medical expenses in the settlement. Finally, while the juries in the 12 jury verdicts had determined the value of the damages, Mr. Bruner criticized the verdicts because he asserted that it was possible that the cases may have settled post-verdict for less, or that the injured parties may have received less, due to reductions for comparative negligence. On this last point, it appears that Mr. Bruner confused the issue of the value of the damages with the settlement value of the case. The value of the damages is the estimation of the monetary value a jury would assign to the damages. On the other hand, the settlement value of the case is the amount it settled for with the considerations of liability, causation, the Defendant’s ability to pay, risk of trial, and other limiting factors, which are a calculus in every settlement. Despite Mr. Bruner’s criticisms of the jury verdicts in Petitioner’s Exhibit 12, the undersigned finds those verdicts supportive of the valuation opinions offered by Petitioner’s experts. Further, Petitioner’s experts’ opinions were not primarily reliant on those 12 verdicts, but were rather based upon their knowledge of Mr. Herrera’s injury and their extensive experience in handling cases involving catastrophic injury, including jury trial experience. Mr. Bruner’s testimony did not provide an alternative value of the damages suffered by Petitioner. The value of $5,000,000 for Mr. Herrera’s claim opined by Petitioner’s experts is unrebutted. Considering the valuation of Mr. Herrera’s claim in the amount of $5,000,000, his $925,000 settlement represents only an 18.5 percent recovery of Mr. Herrera’s damages. Applying that same 18.5 percent to the $271,344.06 paid by Medicaid for past medical expenses results in the sum $50,198.65 from the settlement proceeds available to satisfy AHCA’s Medicaid lien.
The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (sometimes referred to as "17b"), Respondent's recovery of medical assistance expenditures from $500,000 in proceeds from the settlement of a products liability action must be reduced from its allocation under section 409.910(11)(f) (sometimes referred to as "11f")1 to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti-Lien Statute)2; and, if so, the amount of Respondent's recovery.
Findings Of Fact As a result of a motor vehicle accident that took place on May 27, 2012, Petitioner sustained grave personal injuries, including damage to his spinal cord that has left him a paraplegic incapable of self-ambulation of more than a few steps, except by means of a wheelchair or rolling walker. Petitioner was a passenger in a 2003 extended-cab Ford F-150 pickup truck that was driven at a high rate of speed by his brother, who lost control of the vehicle in a curve, over-corrected, and caused the vehicle to rollover three times, ejecting Petitioner with such force that he traveled a distance of 150 feet in the air. The force of the rollovers crushed the vehicle's roof, which caused Petitioner's door latch to fail, allowing Petitioner's door to open and Petitioner to be expelled from the relative safety of the passenger compartment. In settlement negotiations, Petitioner's trial counsel claimed that Ford F-150s of the relevant vintage suffered from deficient door latches, but the forces to which the latch were subjected were overwhelming and well beyond reasonable design limits: the truck's door could not have resisted these forces unless it had been welded to the frame. The one-vehicle accident was substantially, if not entirely, caused by Petitioner's brother, who was intoxicated and is now serving a five-year sentence in prison for his role in the crash. Petitioner shared some responsibility because he likely was not wearing a seatbelt when the truck rolled over. Petitioner's brother and another passenger who were not ejected from the vehicle sustained minor injuries. Petitioner commenced a products liability action against Ford Motor Company and the manufacturer of the door latch. Ford Motor Company defended the case vigorously. Expert witnesses were unable to find any federal safety standards that had been violated in connection with the vehicle, the door latch, or the performance of the vehicle and door latch during the rollovers. The manufacturer of the door latch raised a substantial defense of a lack of personal jurisdiction. At the time of the incident, Petitioner was a 25-year-old plumber and construction worker. He was the sole means of support for his three young children. He has undergone an arduous course of rehabilitation to gain wheelchair-dependent self-autonomy. At the time of the settlement, which appears to have resolved the products liability action, the putative true value of Petitioner's case was $6 million, consisting of $154,219 of past medical expenses, $2.1 million of future medical expenses, $800,000 of lost wages and loss of future earning capacity, and about $2.95 million of noneconomic damages, including pain and suffering and loss of consortium. Petitioner has proved each of these damages components, so the putative true value is the true value (sometimes referred to as the "actual true value"). Petitioner settled the case for $500,000, representing a settlement discount of 91.7% from the true value of $6 million (Settlement Discount). Petitioner has paid or incurred $147,000 in attorneys' fees and about $123,000 in recoverable costs in prosecuting the products liability action. Respondent has expended $154,219 of medical assistance. Under the 11f formula, which is described in the Conclusions of Law, Respondent would recover approximately $126,000 from the $500,000 settlement. This provisional 11f allocation provides the point of reference for determining whether Petitioner has proved in this 17b proceeding a reduced recovery amount for Respondent. Having proved the Settlement Discount of 91.7% from the actual, not putative, true value to the settled value, Petitioner has proved that each damages component of the true value, including past medical expenses, must be proportionately reduced by 91.7% to identify the portion of the settlement proceeds representing past medical expenses, which, as discussed in the Conclusions of Law, is the only portion of the proceeds subject to the Medicaid lien. Reducing the past medical expenses of $154,219 by 91.7% yields about $12,800, which is Respondent's tentative 17b recovery. As mentioned in the Conclusions of Law, Respondent's recovery must bear its pro rata share of the attorneys' fees and costs paid or incurred to produce the settlement. The total fees and costs of $270,000 represent 54% of the settlement. The record provides no reason to find that these fees and costs are unreasonable in amount or were not reasonably expended to produce the $500,000 settlement. Reducing Respondent's recovery of $12,800 by 54% yields $5888, which is Respondent's 17b recovery.
The Issue The issue for consideration in this case is whether the Agency for Health Care Administration is required by law and rule of the Agency to include the gain or loss on the sale of depreciable assets as the result of a sale or disposal, in the calculation of Medicaid allowable costs.
Findings Of Fact Prior to the hearing, the parties submitted a Joint Stipulation which is incorporated in part herein as follows: Petitioner purchased Orlando General Hospital ("OGH"), Medicaid provider number 120065, on December 31, 1990. Upon its sale, OGH merged into and became part of Adventist Health System/Sunbelt, Inc., wherein after it was known as Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital East ("Florida Hospital East"). Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital East is a wholly owned subsidiary of Adventist Health System Sunbelt Healthcare Corporation. Florida Hospital East assumed all of the assets and liabilities of OGH. OGH filed a terminating cost report for the fiscal period ending December 31, 1990. On December 31, 1990, the date of sale of OGH to Petitioner, OGH incurred a loss on the sale of the hospital, a depreciable asset. The loss on the sale of OGH was included on both OGH's Medicaid and Medicare terminating cost reports. A loss on the sale of a depreciable asset is the amount that the net book value of the asset sold exceeds the purchase price. A gain or loss on the sale of a depreciable asset is a capital cost. Due to the mechanism of the cost report, a loss on the sale of a depreciable asset is divided into "periods" based upon the time period to which the loss relates. The portion of the loss related to the fiscal year in which the asset is sold is referred to as a "current period" loss. The portion of the loss that relates to all fiscal years prior to the year in which the asset is sold is referred to as a "prior period" loss. Gains and losses related to the current period are included on Worksheet A of the Medicare and Medicaid cost report. Current period capital costs flow to Worksheet B-II Part and B Part III [sic] of the Medicaid cost report. Gains and losses related to the prior period are included on Worksheet E of the Medicare and Medicaid cost reports. OGH's current period is the fiscal year ending 12/31/90. OGH's prior periods in which it participated in the Medicaid Program are 10/24/84 through 12/31/89. OGH's audited Medicaid cost report included in allowable Medicaid costs a loss on the sale of OGH related to the current period. OGH's audited Medicaid cost report did not include in allowable Medicaid costs a loss on the sale of OGH related to the prior periods. The loss on the sale of OGH related to the current period was included in Worksheet A of OGH's audited Medicaid cost report. These costs, including the loss on the sale of OGH, flowed to Worksheet B Part II. OGH's audited Medicare cost report included as allowable Medicare costs the loss on the sale of OGH related to both the current and prior periods in the amount of $9,874,047. The loss from the sale of OGH related to the current period was included on Worksheet A of OGH's audited Medicare cost report. The costs from Worksheet A of OGH's audited Medicare cost report flowed to Worksheet B Part II of OGH's audited Medicare cost report. The loss related to the prior period was included on Worksheet E Part B of OGH's audited Medicaid cost report. The Agency utilizes costs included on Worksheet A of the Medicaid cost report to calculate Medicaid allowable costs. The Agency utilizes the capital costs included on Worksheet B Part II and/or B Part III to calculate allowable Medicaid fixed costs. The Agency does not utilize costs included on Worksheet E Part III to calculate Medicaid allowable costs. The Agency reimburses providers based upon Medicaid allowable costs. aa. The Agency did not include the portion of the loss on the sale of OGH related to the prior periods in the calculation of the OGH's Medicaid allowable costs. bb. Blue Cross and Blue Shield of Florida, Inc. (Intermediary), contracted with the Agency to perform all audits of Medicaid cost reports. Agency reimbursement to Medicaid providers is governed by Florida's Title XIX Inpatient Hospital Reimbursement Plan (Plan), which has been incorporated in Rule 59G-6.020, Florida Administrative Code. The Plan provides that Medicaid reimbursement for inpatient services shall be based upon a prospectively determined per diem. The payment is based upon the facility's allowable Medicaid costs which include both variable costs and fixed costs. Fixed costs include capital costs and allowable depreciation costs. The per diem payment is calculated by the Agency based upon each facility's allowable Medicaid costs which must be taken by the agency from the facility's cost report. Capital costs, such as depreciation, are found on Worksheet B, Part II and Part III. The Plan requires all facilities participating in the Medicaid program to submit an annual cost report to the Agency. The report is to be in detail, listing their "costs for their entire reporting year making appropriate adjustment as required by the plan for the determination of allowable costs." The cost report must be prepared in accordance with the Medicare method of reimbursement and cost finding, except as modified by the Plan. The cost reports relied upon by the Agency to set rates are audited by Blue Cross/Blue Shield of Florida, Inc. which has been directed by the Agency to follow Medicare principles of reimbursement in its audit of cost reports. Prior to January 11, 1995, the Plan did not expressly state whether capital gains or losses relating to a change of facility ownership were allowable costs. The 1995 amendment to the Plan contained language expressly providing "[f]or the purposes of this plan, gains or losses resulting from a change of ownership will not be included in the determination of allowable cost for Medicaid reimbursement." No change was made by the amendment to the Medicare principles of reimbursement regarding the treatment of gains and losses on the sale of depreciable assets. The Medicare principles of reimbursement provides that gains and losses from the disposition of depreciable assets are includable in computing allowable costs. The Provider Reimbursement Manual (HIM-15)(PRM), identifies the methods of disposal for assets that are recognized. They include a bona fide sale of depreciable assets, but do not mention a change of ownership. PRM Section 132 treats a loss on a sale of a depreciable asset as an adjustment to depreciation for both the current and periods. Depreciable assets with an expected life of more than two years may not be expensed in the year in which they are put into service. They must be capitalized and a proportionate share of the cost expensed as depreciation over the life of the property. To do so, the provider must estimate the useful life of the property based upon the guidelines of the American Hospital Association, and divide the cost by the number of years of estimated life. It is this yearly depreciation figure which is claimed on the cost report and which is reimbursed. When a depreciable asset is sold for less than book value (net undepreciated value), the provider suffers a loss. Petitioner claims that Medicare holds that in such a case it must be concluded that the estimated depreciation was erroneous and the provider did not receive adequate reimbursement during the years the asset was in service. Medicare accounting procedures do not distinguish between the treatment of a loss on the sale of depreciable assets as related to current and prior periods. PIM Section 132 requires that Medicare recognize the entire loss as an allowable cost for both the current and prior periods, and Medicare treated Petitioner's loss from the sale of its facility as an allowable cost for Medicare reimbursement under both current and prior periods. With the adoption of the January 1995 amendment, however, the wording of the state plan was changed to specifically prohibit gains or losses from a change of ownership from being included in allowable costs for Medicaid reimbursement. This was the first time the state plan addressed gains and losses on the disposal of depreciable assets resulting from a change of ownership. The Agency contends, however, that it has never reimbursed for losses on disposal of property due to a change of ownership, and that the inclusion of the new language was to clarify a pre-existing policy which was being followed at the time of the 1995 amendment, and which goes back to the late 1970s. It would appear, however, that the policy was never written down; was never conveyed to Blue Cross/Blue shield; was never formally conveyed to Medicaid providers; and was never conveyed to the community at large. When pressed, the Agency could not identify any specific case where the policy was followed by the Agency. While admitting that it is Agency practice not to treat losses from the sale of depreciable assets in prior periods as an allowable cost, Petitioner contends that it has been the Agency's practice to treat the loss on the sale of depreciable assets relating to the current period as an allowable cost, and cited several instances where this appears to have been done. The Agency contends that any current period losses paid were paid without knowledge of the Agency, in error, and in violation of the plan. On October 25, 1996, the Agency entered a Final Order in a case involving Florida Hospital/Waterman, Inc., as Petitioner, and the Agency as Respondent. This case was filed by the Petitioner to challenge the Agency's treatment of the loss on the sale of Waterman Medical Center, Inc., another of Adventist Health Systems/Sunbelt Healthcare Corporation, and the Final Order in issue incorporated a stipulation into which the parties had entered and which addressed the issue in question here. The stipulation included certain position statements including: A loss on the sale of depreciable assets is an allowable cost under the Medicare Principles of Reimbursement. The State Plan does not specify that the loss on the sale of a depreciable asset is to be treated in a manner different than under the Medicare Principles of Reimbursement. Thus the loss on the sale of a depreciable asset is an allowable cost under the State Plan. The Agency agrees, in accordance with the Medicare Principles of Reimbursement, that under the terms of the State Plan, prior period losses for Waterman will be allocated to prior periods and included in the calculation of the per diem and per visit rates. According to William G. Nutt, Petitioner's director of reimbursement, the only difference between the facts of the Waterman case and the instant case is that they relate to the sale of different facilities. The treatment of loss on the sale of depreciable assets as outlined in the Waterman stipulation is in conflict with the amended Plan and with the unwritten and unuttered Agency policy as urged by the Agency in this case. The Agency agreed in one case to a treatment of loss which it now rejects in the instant case. Petitioner urges that subsequent to the settlement of the Waterman case, but before the instant case was set for hearing, the parties engaged in settlement negotiations during which, according to counsel for the Agency, they made "significant" progress toward applying the settlement in the Waterman case to the current case. In a motion filed to delay the setting of this case for hearing, counsel for the Agency indicated the parties were "finalizing" settlement to resolve the case without resorting to a final hearing, and in a follow-up agreed motion for continuance, advised that the "parties [had] finalized a settlement document [which they were] in the process of executing. The settlement agreement reached by the parties was signed by a representative of the Petitioner and then forwarded to the Agency for signature. The document was not signed by the Agency, and when Petitioner sought enforcement of the "settlement" by an Administrative Law Judge of the Division of Administrative Hearings, the request was denied as being outside the jurisdiction of the judge, and the matter was set for hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a Final Order including the loss on the sale of Orlando General Hospital as an allowable cost for determining Petitioner's entitlement to Medicaid reimbursement for both current and prior years. DONE AND ENTERED this 30th day of June, 1999, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 1999. COPIES FURNISHED: Joanne B. Erde, Esquire Broad and Cassel Miami Center Suite 3000 201 South Biscayne Boulevard Miami, Florida 33131 Jonathan E. Sjostrom, Esquire Steel Hector & Davis LLP 215 South Monroe Street Suite 601 Tallahassee, Florida 32301-1804 Mark S. Thomas, Esquire Madeline McGuckin, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308 Julie Gallagher General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3 Tallahassee, Florida 32308
The Issue The 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.
