The Issue The issue to be determined is the amount payable to the Agency for Health Care Administration (AHCA or Respondent) in satisfaction of its $157,983.63 Medicaid lien asserted against medical malpractice settlement proceeds received by Hunter Lamendola (Hunter), a minor, by and through his mother and natural guardian, Ashley Lamendola (Petitioner).
Findings Of Fact On June 26, 2012, Petitioner presented to the hospital with a history of contractions for six hours prior to her arrival at the hospital. She had been placed on bed rest for gestational hypertension five days prior to arriving at the hospital. When she arrived, she had hypertension. Petitioner was admitted to the labor and delivery unit at 8:33 p.m. Petitioner was placed on a fetal monitor and progressed through her course of labor. Her initial fetal monitoring showed the baby was healthy and well-oxygenated, however, throughout the course of labor, the fetal monitor exhibited signs that the baby was in significant distress. At 4:01 a.m. on June 27, 2012, Petitioner was given an epidural, and after a course of labor, Hunter was delivered at 3:47 p.m. through an operative vaginal delivery. Hunter suffered permanent and catastrophic brain damage during his birth. As a result, Hunter is unable to eat, speak, toilet, ambulate, or care for himself in any manner. Hunter’s medical care related to the delivery was paid by Medicaid. The Medicaid program through AHCA provided $157,983.63 in benefits. The Medicaid program through the Department of Health Children’s Medical Services Title XIX MMA – Pedicare (DOH), provided $26,189.66 in benefits; the Medicaid program through a Medicaid-managed care organization, known as Amerigroup Community Care (Amerigroup), provided $51,696.99 in benefits; and the Medicaid program through a Medicaid-managed care organization, known as WellCare of Florida (WellCare), provided $13,239.19 in benefits. Accordingly, the sum of these Medicaid benefits, $249,109.47, constituted Hunter’s entire claim for past medical expenses. Petitioner brought a medical malpractice action against the medical providers and staff responsible for Hunter’s care (Defendant medical providers) to recover all of Hunter’s damages, as well as her own individual damages associated with Hunter’s injuries. The medical malpractice lawsuit was settled through a series of confidential settlements totaling $10,000,000 and this settlement was approved by the Court. During the pendency of Hunter’s medical malpractice action, AHCA was notified of the action, and AHCA asserted a $157,983.63 Medicaid lien against Hunter’s cause of action and settlement of that action. AHCA, through the Medicaid program, spent $157,983.63 on behalf of Hunter, all of which represents expenditures paid for Hunter’s past medical expenses. No portion of the $157,983.63 paid through the Medicaid program on behalf of Hunter represent expenditures for future medical expenses, and Medicaid did not make payments in advance for medical care. Application of the formula set forth in section 409.910(11)(f), Florida Statutes, to Hunter’s settlement requires payment to AHCA of the full $157,983.63 Medicaid lien. Petitioner has deposited the full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). At the final hearing, Mr. Harwin, who represented Hunter and his family in the underlying medical malpractice action, testified, and was accepted, without objection, as an expert in the valuation of damages suffered by injured parties. Mr. Harwin is a member of several trial attorney associations, stays abreast of jury verdicts relative to birth injuries, and ascertains the value of damages suffered by injured parties as a routine part of his practice. Mr. Harwin was familiar with and explained Hunter’s catastrophic brain injury giving rise to Petitioner’s claim. He also explained that, as a result of Hunter’s injury, Hunter is blind, fed through a feeding tube, unable to control his arms, legs or head, and suffers between six to eight seizures per day. Mr. Harwin testified that Hunter’s injury has also had a devastating impact on Hunter’s mother, Ashley Lamendola. According Mr. Harwin, considering Hunter’s past medical expenses, a life care plan for Hunter’s care prepared by an economist, and the extent of non-economic damages, and in light of determinations of mock juries and a jury consultant in this case, as well as Mr. Harwin’s familiarity with jury verdicts reached in similar cases, Hunter and his mother’s damages have a value in excess of $35,000,000. Mr. Harwin’s testimony as to the value of Petitioner’s claim 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 41 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 Hunter’s injuries through review of pertinent medical records and Petitioner’s exhibits, Mr. Barrett offered his opinion, based upon his professional training and experience, as well as review of comparable jury verdicts, that a conservative value of the damages suffered would be “$35,000,000 to $50,000,000.” Mr. Barrett’s testimony as to the value of Petitioner’s claim was credible and is accepted. AHCA did not call any witnesses, present any evidence as to the value of Petitioner’s claim, or propose a differing valuation of the damages. Based upon the unrebutted evidence presented by Petitioner’s experts, it is found that a conservative value of Petitioner’s claim is $35,000,000. Attorney’s fees for the underlying medical malpractice case leading to Petitioner’s $10,000,000.00 settlement totaled $4,500,000.00, with costs of $490,486.33. While the formula under section 409.910(11)(f) determines amounts distributable to Medicaid after attorney’s fees and taxable costs, there is no language in section 409.910(17)(b) suggesting that attorney’s fees or costs should be subtracted from settlement proceeds in determining whether a lesser portion of the total recovery should be allocated to reimburse Medicaid. Costs and attorney’s fees are not an element of Petitioner’s damages and were not subtracted from the settlement proceeds in determining whether a lesser portion of the total recovery should be allocated to AHCA’s Medicaid lien. Considering the valuation of Petitioner’s claim at $35,000,000.00, Petitioner’s $10,000,000.00 settlement represents only a 10/35ths recovery of Petitioner’s damages. Multiplying that same 10/35 fraction to the $157,983.63 paid by AHCA through the Medicaid program for past medical expenses results in the proportional sum of $45,138.18 from the settlement proceeds available to satisfy AHCA’s Medicaid lien.
The Issue The matter concerns the amount of the money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Mark Crain, a Medicaid recipient, following a settlement recovered from a third party.
Findings Of Fact This proceeding determines the amount the Agency should be paid to satisfy a Medicaid lien following Petitioner’s recovery of a $100,000 settlement from a third party. The Agency asserts that it is entitled to recover $35,700, which is the amount it calculated using the formula set forth in section 409.410(11)(f). The facts that gave rise to this matter are found pursuant to a stipulation of the parties.3/ On June 23, 2016, Petitioner was working for a tree pruning company. Petitioner’s employer assigned him to remove several branches from a tree. As directed, Petitioner climbed to the top of the tree and secured himself with one rope lanyard. Unfortunately, after he began pruning, Petitioner cut through the rope lanyard, lost his balance, and plummeted 30 feet to the ground. As a result of the fall, Petitioner suffered significant physical and neurological injuries. Petitioner underwent multiple surgeries. His medical procedures included an open reduction with internal fixation on his right wrist, lumbar fusion surgery, and a lumbar laminectomy. At the final hearing, Petitioner’s counsel represented that Petitioner’s medical prognosis is not fully known at this time. However, what is known is that Petitioner will continue to experience serious neurologic deficits. Petitioner’s injuries have left him with overall mobility issues and have affected his ability to walk normally. He suffers from a right foot drop and has limited feeling below his waist. The parties also stipulated that Petitioner has completed all medical treatment and therapy related to his accident. However, Petitioner is uncertain whether or not he will be able to return to normal activities in the future. Petitioner incurred sizable medical expenses due to his injuries. The charges for Petitioner’s medical procedures totaled approximately $375,000. However, only $62,067.28 has actually been paid for his medical care. Of this amount, the Florida Medicaid program paid $41,992.33. (In addition to the $41,992.22 paid by Medicaid, other health insurance covered $20,075.06.) Petitioner did not present evidence of monetary damages other than his past medical expenses. Petitioner subsequently initiated a civil cause of action for negligence against his (former) employer. Petitioner alleged that he was not properly trained how to safely secure himself to the tree. According to Petitioner’s counsel, Petitioner’s employer should have instructed him to use two lanyards instead of one. After two years of litigation, Petitioner settled his negligence action for $100,000. The settlement did not allocate Petitioner’s award between past medical expenses and other damage categories. The Agency, through the Florida Medicaid program, paid a total of $41,992.33 for Petitioner’s medical treatment resulting from the accident.4/ All of the expenditures that Florida Medicaid spent on Petitioner’s behalf are attributed to past medical expenses. Under section 409.910, the Agency is to be repaid for its Medicaid expenditures out of any recovery from liable third parties. Accordingly, when the Agency was notified of the settlement of Petitioner’s lawsuit, it asserted a Medicaid lien against the amount Petitioner recovered. The Agency claims that, pursuant to the formula set forth in section 409.910(11)(f), it should collect $37,500 to satisfy the medical costs it paid on Petitioner’s behalf. (As discussed in endnote 7, the “default” formula in section 409.910(11)(f) allows the Agency to collect $37,500 to satisfy its Medicaid lien.) The Agency maintains that it should receive the full amount of its lien regardless of whether Petitioner settled for less than what Petitioner believes is the full value of his damages. Petitioner, on the other hand, asserts that the Agency should be reimbursed a lesser portion of the settlement than the amount calculated using the section 409.910(11)(f) formula. Exercising its right to challenge the Medicaid lien pursuant to section 409.910(17)(b), Petitioner specifically argues that, taking into account the full value of Petitioner’s damages, the Agency’s Medicaid lien should be reduced proportionately. Otherwise, the application of the statutory formula would permit the Agency to collect more than that portion of the settlement that fairly represents Petitioner’s compensation for past medical expenses. Petitioner requests the Agency’s allocation from Petitioner’s third-party recovery be reduced to $4,199.23. To establish the value of his damages, Petitioner submitted the medical bills from his accident, as well as relied upon the stipulated facts. Petitioner’s medical bills show that he sustained the injuries identified above, as well as underwent surgery on his spine and wrist. To place a monetary value on Petitioner’s injuries, Petitioner’s counsel represented that his law firm appraised Petitioner’s injuries at no less than $1 to 2 million. However, Petitioner did not introduce any evidence or testimony corroborating this injury valuation or substantiating an amount Petitioner might have recovered at trial in his personal injury cause of action.5/ Neither did Petitioner offer evidence of additional damages Petitioner might be facing from his accident, such as future medical expenses, loss of quality of life, loss of employment or wages, or pain and suffering. Based on his estimate, Petitioner’s counsel asserted that the $100,000 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Petitioner for his damages. Therefore, a lesser portion of the settlement should be allocated to reimburse Medicaid, instead of the full amount of the lien. Petitioner proposes that a ratio should be applied based on the full value of Petitioner’s damages (conservatively estimated at $1,000,000) compared to the amount that Petitioner actually recovered ($100,000). Using these numbers, Petitioner’s settlement represents a 10 percent recovery of Petitioner’s damages. In like manner, the Medicaid lien should be reduced to 10 percent or $4,199.23 ($41,992.33 times .10). Therefore, Petitioner asserts that $4,199.23 is the portion of his third- party settlement that represents the equitable and fair amount the Florida Medicaid program should recoup for its payments for Petitioner’s medical care. The Agency was not a party to Petitioner’s negligence action or Petitioner’s $100,000 settlement. No portion of the $100,000 settlement represents reimbursement for future medical expenses. The undersigned finds that, based on the evidence in the record, Petitioner failed to prove, by a preponderance of the evidence, that a lesser portion of Petitioner’s settlement should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Accordingly, the Agency is entitled to recover $37,500 from Petitioner’s recovery of $100,000 from a third party to satisfy its Medicaid lien.
The Issue The issue to be decided in this proceeding is the amount to be paid to Respondent, Agency for Health Care Administration (“AHCA” or the “Agency”), from the proceeds of a personal injury settlement received by Petitioner, Amanda Soto (referred to herein as either “Petitioner” or “Soto”), to reimburse Medicaid for expenditures made on her behalf.
Findings Of Fact The following findings of fact are derived from the exhibits and oral testimony at final hearing, as well as the stipulated facts between the parties. When Soto was 11-years old, she suffered extensive physical harm as a result of negligent medical care. She has bi-lateral, no-light blindness, a severe seizure disorder, hemiparesis/right-side weakness, and significant loss of cognitive abilities. Now 19-years old, Soto requires daily one- on-one care at home and school. She will never regain her sight and suffers from depression because of her physical condition. This tragedy commenced when Soto, a normally developing adolescent, suffered a blow to her eye while swimming. She was taken to a hospital emergency room where she was diagnosed with sinusitis and prescribed oral antibiotics. Despite complying with her doctors’ orders, Soto continued to experience ever- progressing problems. About nine weeks after her first visit, Soto was again taken to the emergency room for treatment. Her condition was so severe at that time that she was transported to a specialty hospital for further evaluation and treatment. It was ultimately determined that two large abscesses had formed in Soto’s brain, which caused her to experience a stroke-like episode. Actions were then taken by her physicians in an attempt to drain the abscesses. The additional medical treatment failed to alleviate Soto’s problems, and her condition today is as described above. Soto sued several healthcare providers for her injuries. Her mother also joined in the lawsuit, seeking loss of consortium. Ultimately, negotiations between Soto’s attorneys and the defendants resulted in two settlements. One occurred while Soto was still a minor and had to be approved by the Court; the second occurred after Soto reached the age of majority. The value of Soto’s economic damages was established at $12,738,125, exclusive of pain and suffering. Her damages for pain and suffering was estimated at more than $20 million. After extensive litigation, Soto eventually settled with the defendants for $2,650,000. After deduction of attorneys’ fees in the sum of $1,060,000 and costs of litigation totaling $215,864.37, Soto received a lump sum settlement in the amount of $1,374,135.63 (the “Net Settlement Amount”). There was no allocation of the Net Settlement Amount between Soto’s injuries and her mother’s loss of consortium claim. The Net Settlement Amount constituted approximately 11.5 percent of the estimated value of Soto’s claims. Meanwhile, AHCA’s Medicaid program expended $231,666.01 towards Soto’s medical treatments. ACHA asserted a Medicaid lien for the amount it had expended for Soto’s care and treatment. The lien was in the amount of $231,666.01 (the “Lien Amount”). By law, Medicaid is allowed to recover the full amount it expends for care that could be paid by another source, whether the source is insurance coverage, litigation settlements, or other funds. Persons against whom AHCA asserts a Medicaid lien have the right to challenge the amount of the lien. Soto took advantage of that right, resulting in the instant proceeding. In accordance with prescribed laws and rules, Soto placed an amount equal to the Lien Amount into an interest-bearing account before she filed her challenge. Soto asserts that as she received only 11.5 percent of the value of her claim, she only needs to pay AHCA 11.5 percent of the Lien Amount, i.e., $26,641.59 ($231,666.01 times 11.5 percent). By the terms of her settlement agreement with the various defendants, Soto is not able to recover any additional money for her injuries. The statute of limitations has passed even if Soto wished to pursue other potential defendants. Thus, the Net Settlement Amount is all that she can ever expect to receive for her injuries. There is no dispute as to the severity or permanent nature of Soto’s injuries. A life care plan was created to identify and help deal with the various services that would be necessary to sustain Soto for the rest of her life.
The Issue The issue for determination in this case is whether Respondent’s application of a fair rental value system of property cost reimbursement to Petitioner under the Florida Title XIX Long-Term Care Medicaid Reimbursement Plan is appropriate.
Findings Of Fact Petitioner, CONSULTING MANAGEMENT AND EDUCATION, INC., d/b/a GULF COAST NURSING AND REHABILITATION CENTER (CME), is the licensed operator of a 103-bed nursing home in Clearwater, Florida, which is presently known as GULF COAST NURSING AND REHABILITATION CENTER (GULF COAST). CME participates in the Florida Medicaid Program as an enrolled provider. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida authorized to implement and administer the Florida Medicaid Program, and is the successor agency to the former Department of Health and Rehabilitative Services, pursuant to Chapter 93-129, Laws of Florida. Stipulated Facts Prior to 1993, the GULF COAST nursing home facility was known as COUNTRY PLACE OF CLEARWATER (COUNTRY PLACE), and was owned and operated by the Clearwater Limited Partnership, a limited partnership which is not related to CME. In 1993 CME agreed to purchase, and did in fact purchase, COUNTRY PLACE from the Clearwater Limited Partnership. Simultaneous with the purchase of COUNTRY PLACE, CME entered into a Sale/Leaseback Agreement with LTC Properties, Inc., a Maryland real estate investment trust which engages in the financing of nursing homes. The Purchase and Sale Agreement between Clearwater Limited Partnership and CME was contingent upon the Sale/Leaseback Agreement and the proposed Lease between CME and LTC Properties, Inc. On September 1, 1993, CME simultaneously as a part of the same transaction purchased COUNTRY PLACE, conveyed the facility to LTC Properties, Inc., and leased the facility back from LTC Properties, Inc. As required, CME had notified AHCA of the proposed transaction. AHCA determined that the transaction included a change of ownership and, by lease, a change of provider. CME complied with AHCA's requirements and became the licensed operator and Medicaid provider for COUNTRY PLACE. Thereafter, CME changed the name of the facility to GULF COAST. After CME acquired the facility and became the licensed operator and Medicaid provider, AHCA continued to reimburse CME the same per diem reimbursement which had been paid to the previous provider (plus certain inflation factors) until CME filed its initial cost report, as required for new rate setting. In the normal course of business, CME in 1995 filed its initial Medicaid cost report after an initial period of actual operation by CME. Upon review of the cost report, AHCA contended that the cost report was inaccurate and engaged in certain "cost settlement" adjustments. During this review, AHCA took the position that CME's property reimbursement should be based on FRVS methodologies rather than "cost" due to the lease. In November of 1995, CME received from AHCA various documents which recalculated all components of Petitioner's Medicaid reimbursement rates for all periods subsequent to CME's acquisition of the facility. In effect, AHCA placed CME on FRVS property reimbursement. The practical effect of AHCA's action was to reduce CME's property reimbursement both retroactively and prospectively. The retroactive application would result in a liability of CME to AHCA, due to a claimed overpayment by AHCA. The prospective application would (and has) resulted in a reduction of revenues. CME is substantially affected by AHCA's proposed action and by Sections I.B., III.G.2.d.(1), V.E.1.h., and V.E.4. of the Florida Medicaid Plan. Additional Findings of Fact The Florida Medicaid Plan establishes methodologies for reimbursement of a nursing home's operating costs and patient care costs, as well as property costs. The dispute in this matter relates only to reimbursement of property costs. CME as the operator of the GULF COAST nursing home facility is entitled to reimbursement of property costs in accordance with the Florida Medicaid Plan. CME as the operator of the GULF COAST facility entered into a Florida Medicaid Program Provider Agreement, agreeing to abide by the provisions of the Florida Medicaid Plan. The Sale/Leaseback Agreement entered into by CME and LTC Properties Inc. (LTC) specifically provides for a distinct sale of the nursing home facility to LTC. LTC holds record fee title to GULF COAST. LTC, a Maryland corporation, is not related to CME, a Colorado corporation. The Florida Medicaid Plan is intended to provide reimbursement for reasonable costs incurred by economically and efficiently operated facilities. The Florida Medicaid Plan pays a single per diem rate for all levels of nursing care. After a nursing home facility's first year of operation, a cost settling process is conducted with AHCA which results in a final cost report. The final cost report serves as a baseline for reimbursement over the following years. Subsequent to the first year of operation, a facility files its cost report annually. AHCA normally adjusts a facility's reimbursement rate twice a year based upon the factors provided for in the Florida Medicaid Plan. The rate-setting process takes a provider through Section II of the Plan relating to cost finding and audits resulting in cost adjustments. CME submitted the appropriate cost reports after its first year of operation of the GULF COAST facility. Section III of the Florida Medicaid Plan specifies the areas of allowable costs. Under the Allowable Costs Section III.G.2.d.(1) in the Florida Title XIX Plan, a facility with a lease executed on or after October 1, 1985, shall be reimbursed for lease costs and other property costs under the Fair Rental Value System (FRVS). AHCA has treated all leases the same under FRVS since that time. AHCA does not distinguish between types of leases under the FRVS method. The method for the FRVS calculation is provided in Section V.E.1.a-g of the Florida Medicaid Plan. A “hold harmless” exception to application of the FRVS method is provided for at Section V.E.1.h of the Florida Medicaid Plan, and Section V.E.4 of the Plan provides that new owners shall receive the prior owner’s cost-based method when the prior owner was not on FRVS under the hold harmless provision. As a lessee and not the holder of record fee title to the facility, neither of those provisions apply to CME. At the time CME acquired the facility, there was an indication that the Sale/Leaseback transaction with LTC was between related parties, so that until the 1995 cost settlement, CME was receiving the prior owner’s cost-based property method of reimbursement. When AHCA determined that the Sale/Leaseback transaction between CME and LTC was not between related parties, AHCA set CME’s property reimbursement component under FRVS as a lessee. Property reimbursement based on the FRVS methodology does not depend on actual period property costs. Under the FRVS methodology, all leases after October 1985 are treated the same. For purposes of reimbursement, AHCA does not recognize any distinction between various types of leases. For accounting reporting purposes, the Sale/Leaseback transaction between CME and LTD is treated as a capital lease, or “virtual purchase” of the facility. This accounting treatment, however, is limited to a reporting function, with the underlying theory being merely that of providing a financing mechanism. Record fee ownership remains with LTC. CME, as the lease holder, may not encumber title. The Florida Medicaid Plan does not distinguish between a sale/leaseback transaction and other types of lease arrangements. Sections IV.D., V.E.1.h., and V.E.4., the “hold harmless” and “change of ownership” provisions which allow a new owner to receive the prior owner’s method of reimbursement if FRVS would produce a loss for the new owner, are limited within the Plan’s organizational context, and within the context of the Plan, to owner/operators of facilities, and grandfathered lessee/operators. These provisions do not apply to leases executed after October 1, 1985. Capital leases are an accounting construct for reporting purposes, which is inapplicable when the Florida Medicaid Plan specifically addresses this issue. The Florida Medicaid Plan specifically addresses the treatment of leases entered into after October 1985 and provides that reimbursement will be made pursuant to the FRVS method.
The Issue The issue to be determined is what amount of the $10,652.23 Medicaid lien held by Respondent, Agency for Health Care Administration ("Respondent" or "Agency"), is recoverable by Respondent from the $65,000.00 settlement reached by Petitioner, Tya-Marie Savain ("Petitioner" or "Savain"), in her related personal injury action.
Findings Of Fact Based on the stipulation between the parties, the evidence presented and the record as a whole, the undersigned makes the following findings of fact: On the afternoon of May 27, 2015, Petitioner, who was 19 years of age, was a pedestrian walking northbound across Forrest Hill Boulevard in West Palm Beach, Florida. As she was crossing the road in daylight, she was hit by a vehicle operated by Kenneth Knowles. (JPHS p. 5, ¶ 1). As a result of the collision, Petitioner suffered a fractured femur requiring open reduction internal fixation to repair her leg and a second surgery to remove the medical hardware. Petitioner suffered additional injuries (during the accident), including a left eye laceration, and road rash with scarring on her hands, elbows, chin, ears, forehead, mouth, and other body parts. (JPHS p. 5, ¶ 2). Respondent expended $10,652.23 in medical assistance through its Medicaid program for the benefit of Petitioner related to her fractured femur and the two resulting surgeries caused in the accident. (JPHS p. 5, ¶ 4). Petitioner’s extensive injuries necessitated surgery and resulted in significant medical treatment and related medical expenses (see, e.g., Pet. Exs. 2-12, 23). Petitioner brought a personal injury action for negligence against the liable third party and driver, Kenneth Knowles, in Palm Beach County, Florida. Kenneth Knowles had bodily injury coverage with Allstate Insurance Company in the amount of $15,000.00. Knowles paid an additional $50,000.00 out of his pocket resulting in a gross settlement of $65,000.00 for the personal injury claim brought by Savain.4/ (JPHS p. 5, ¶ 3). Following resolution of Petitioner’s personal injury action, her counsel advised the Agency of the settlement through correspondence dated April 10, 2017. Counsel explained to the Agency that Savain would not be recovering the full value of her damages and requested that Respondent accept a reduced amount in full satisfaction of its Medicaid lien. (JPHS p. 5, ¶ 6). Respondent replied to Petitioner’s counsel in writing on June 22, 2017, and stated that Medicaid would not accept any reduction from the full lien amount of $10,652.23. (JPHS p. 6, ¶ 8). There was no evidence that the Agency participated in, approved of, or was consulted concerning Petitioner’s settlement with Kenneth Knowles. In addition to the Medicaid lien, Petitioner had total medical bills of $182,660.42, and has outstanding bills and liens (excluding Respondent’s Medicaid lien) totaling $38,899.51. Accordingly, Petitioner’s total outstanding past medical expenses, including the Agency’s Medicaid lien is $49,551.74. (JPHS p. 6, ¶ 7). Both parties stipulated that the application of the formula at section 409.910(11)(f) to Petitioner’s $65,000.00 settlement requires payment to the Agency in the amount of $10,652.23 in satisfaction of its Medicaid lien. (JPHS p. 5, ¶ 5). There was no evidence presented to prove or suggest that the Agency provided a lesser amount of medical assistance than the $10,652.23 it asserted it had expended. Further, there was no evidence presented to prove what portion of the $65,000.00 settlement was allocated by Petitioner and Kenneth Knowles to her past medical expenses.5/ The affidavit of Attorney Eric Morales, proffered by Petitioner, opined that the "value" of Petitioner’s claim was between $550,000.00 and $750,000.00. (Pet. Ex. 24). These figures supposedly represent the total sum of Petitioner’s range of damages. Morales was of the opinion that the settlement reached by Petitioner represented five percent, on the high end, and 3.6 percent, on the low end, of the actual value of her claim.6/ The undersigned finds and concludes that the affidavit is an out-of-court statement used to prove the truth of the matters asserted in it. It does not supplement or explain other admissible evidence, and Petitioner has advanced no case authority or exception to the hearsay rule which would permit its use or consideration by the undersigned. Morales’s affidavit is classic hearsay. See Fortune v. Fortune, 61 So. 3d 441 (Fla. 2d DCA 2011); and B.C.S., S.R.L. v. Wise, 910 So. 2d 871, 874 (Fla. 5th DCA 2005). As such, it cannot be considered or used by the undersigned to establish or support any findings of fact in this case and is stricken from consideration or use by the undersigned. Petitioner, therefore, did not present any admissible evidence to support a finding of the actual value of her personal injury claim or to support the "pro-rata" or "proportionality" formula she advanced through her counsel’s arguments.7/ To reiterate, there was no evidence presented by Petitioner to prove that (1) a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by the Agency, or (2) that Medicaid provided a lesser amount of medical assistance than the $10,652.23 asserted by the Agency.
The Issue Whether the Agency for Health Care Administration's ("AHCA" or "the agency") Medicaid lien of $267,072.91 should be reimbursed in full from the $1 million settlement recovered by Petitioner or whether Petitioner proved that a lesser amount should be paid under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulation between the parties (paragraphs 1 through 13 below), the evidence presented, and the record as a whole, the undersigned makes the following Findings of Fact: On January 13, 2016, Mr. Jay Hosek was operating his 1999 Chevy Trailblazer northbound on U.S. Highway 1, near mile marker 56, in Monroe County. At that same time and place, his vehicle was struck by a southbound tractor trailer. Hosek suffered catastrophic physical injuries, including permanent brain damage. Hosek is now unable to walk, stand, eat, toilet, or care for himself in any manner. Hosek's medical care related to the injury was paid by Medicaid, Medicare, and United Healthcare ("UHC"). Medicaid provided $267,072.91 in benefits, Medicare provided $93,952.97 in benefits and UHC provided $65,778.54 in benefits. Accordingly, Hosek's entire claim for past medical expenses was in the amount of $426,804.42. Jirina Hosek was appointed Hosek's legal guardian. As legal guardian, Jirina Hosek brought a personal injury lawsuit against the driver and owner of the tractor trailer that struck Hosek ("defendants") to recover all of Hosek's damages associated with his injuries. The defendants maintained only a $1 million insurance policy and had no other collectable assets. Hosek's personal injury action against the defendants was settled for the available insurance policy limits, resulting in a lump sum unallocated settlement of $1 million. Due to Hosek's incompetence, court approval of the settlement was required and the court approved the settlement by Order of October 5, 2018. During the pendency of Hosek's personal injury action, AHCA was notified of the action and AHCA asserted a $267,072.91 Medicaid lien against Hosek's cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Hosek's action against the defendants. By letter, AHCA was notified of Hosek's settlement. AHCA has not filed a motion to set aside, void, or otherwise dispute Hosek's settlement. The Medicaid program through AHCA spent $267,072.91 on behalf of Hosek, all of which represents expenditures paid for Hosek's past medical expenses. Application of the formula at section 409.910(11)(f) to Hosek's $1 million settlement requires payment to AHCA of the full $267,072.91 Medicaid lien. Petitioner has deposited AHCA's full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, and this constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). While driving his vehicle northbound, Hosek drifted into oncoming traffic, crossed over the center line, and struck a southbound vehicle in its lane head on. Petitioner had an indisputable and extremely high degree of comparative negligence in causing this tragic vehicle accident. Petitioner presented the testimony of Brett Rosen ("Rosen"), Esquire, a Florida attorney with 12 years' experience in personal injury law. His practice includes catastrophic and wrongful death cases. Rosen is board-certified in civil trial by the Florida Bar. He is a member of several trial attorney associations. Rosen represented Hosek and his family in the personal injury case. As a routine part of his practice, Rosen makes assessments regarding the value of damages his injured client(s) suffered. He stays abreast of personal injury jury verdicts by reviewing jury verdict reports and searching verdicts on Westlaw. Rosen regularly reads the Daily Business Review containing local verdicts and subscribes to the "Law 360," which allows him to review verdicts throughout the country. Rosen was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency. Rosen testified that Hosek's case was a difficult case for his client from a liability perspective, since all the witnesses blamed Hosek for the crash and the police report was not favorable to him. In his professional opinion, had Hosek gone to trial, the jury could have attributed a substantial amount of comparative negligence to him based upon the facts of the case. There was also a high possibility that Hosek might not receive any money at all, since Hosek's comparative negligence in the accident was very high. Rosen explained the seriousness of Hosek's injuries, stating that Hosek may have fallen asleep while driving and his car veered over and crossed the centerline. It hit an oncoming commercial truck, which caused his vehicle to flip resulting in severe injuries to him. Rosen testified that Hosek is unable to communicate since he received catastrophic brain injury from the accident and is unable to care for himself. Rosen provided an opinion concerning the value of Hosek's damages. He testified that the case was worth $10 million, and that this amount is a very conservative valuation of Hosek's personal injuries. He also generalized that based on his training and experience, Hosek's damages could range anywhere from $10 to $30 million at trial. He testified that Hosek would need future medical care for the rest of his life. This future medical care has a significant value ranging from $15 to $25 million.1/ Rosen testified that he reviewed other cases and talked to experts in similar cases involving catastrophic injuries. After addressing various ranges of damages, Rosen clarified that the present value of Hosek's damages in this case was more than $10 million dollars. Although he did not state specific amounts, he felt that Hosek's noneconomic damages would have a significant value in addition to his economic damages.2/ Rosen believed that a jury would have returned or assigned a value to the damages of over $10 million. He testified that his valuation of the case only included the potential damages. He did not take into account Hosek's "substantial amount" of comparative negligence and liability.3/ Despite doing so in other personal injury cases, Rosen did not conduct a mock trial in an effort to better assess or determine the damages in Hosek's case. Rosen testified that Hosek sued the truck driver, Alonzo, and Alonzo's employer. He further testified that Hosek was compensated for his damages under the insurance policy carried by the truck driver and his company and settled for the policy limits of $1 million dollars representing 10 percent of the potential total value of his claim. Rosen did not obtain or use a life care plan for Hosek, nor did he consider one in determining his valuation of damages for Hosek's case. Rosen did not provide any specific numbers or valuation concerning Hosek's noneconomic damages. Instead, he provided a broad damage range that he said he "would give the jury" or "be giving them a range of $50 Million for past and future."4/ Rosen testified that he relied on several specific factors in making the valuation of Hosek's case. The most important factor for him was to determine what his client was "going through" and experience his client's "living conditions."5/ Secondly, he considers the client's medical treatment and analyzes the client's medical records. Based on these main factors, he can determine or figure out what the client's future medical care will "look like."6/ Petitioner also presented the testimony of R. Vinson Barrett ("Barrett"), Esquire, a Tallahassee trial attorney. Barrett has more than 40 years' experience in civil litigation. His practice is dedicated to plaintiff's personal injury, as well as medical malpractice and medical products liability. Barrett was previously qualified as an expert in federal court concerning the value of the wrongful death of an elderly person. This testimony was used primarily for tax purposes at that trial. Barrett has been accepted as an expert at DOAH in Medicaid lien cases in excess of 15 times and has provided testimony regarding the value of damages and the allocation of past medical expenses. Barrett has handled cases involving catastrophic brain injuries. He stays abreast of local and state jury verdicts. Barrett has also reviewed several life care plans and economic reports in catastrophic personal injury cases. He routinely makes assessments concerning the value of damages suffered by parties who have received personal injuries. Barrett determines the value of these damages based primarily on his experience and frequent review of jury verdicts. Barrett was accepted by the undersigned as an expert in the valuation of damages in personal injury cases, without objection by the agency.7/ Barrett testified that Hosek had a catastrophic brain injury with broken facial bones and pneumothoraxes, all sustained during an extremely violent head-on collision with a commercial truck. This assessment was based on the case exhibits and the "fairly limited medical records" he reviewed. He believed that Hosek would need extensive and expensive medical care for the rest of his life. However, no details were offered by Barrett.8/ Barrett provided an opinion concerning the value of Hosek's damages. This was based on his training and experience. Barrett did not provide a firm number for Hosek's damages. Instead, he offered a nonspecific and broad range of damages. Barrett testified that Hosek's damages "probably" have a value in the range of $25 to $50 million, and the range of Hosek's future medical care would be $10 to $20 million. However, he felt that $10 million was a "very, very, very conservative" estimate of damages, primarily because he felt that future medical expenses would be so high. Barrett stated that Hosek's economic damages would have a significant value exceeding $10 million and that Hosek's noneconomic damages would have an additional value exceeding $10 million. Barrett acknowledged that he did not consider or take into account Hosek's "huge comparative negligence" in estimating the total value of the case. Instead, he only considered the amount(s) that would be awarded for damages. He testified that Petitioner's degree of comparative negligence would reduce each element of damages he was awarded. As a result of Hosek's very significant comparative negligence, Barrett testified that a trial would have likely resulted in a "complete defense verdict" against Hosek or with only minor negligence attributed to the truck driver or his company. Barrett felt that a jury in Hosek's case would not have awarded Hosek "more than one million dollars or so." Barrett explained that in a trial for personal injuries that each element of damages awarded by the jury to the plaintiff on the verdict form is reduced by the percentage of the plaintiff's comparative negligence. Barrett also explained that when the jury verdict assigns ten percent of the negligence to the defendant and 90 percent of the negligence to the plaintiff, then the defendant is liable for paying only ten percent of each element of the damages awarded to the plaintiff. Barrett testified that he does not believe that the $1 million settlement fully compensated Hosek for his injuries and that a potential award of $10 million would be a conservative value of Hosek's claim. While both experts provided broad and nonspecific ranges for the value of Hosek's claims, they both summed up their testimony by concluding that $10 million was a very conservative estimate of Hosek's total claim. AHCA did not call any witnesses. The agency presented Exhibit 1, entitled "Provider Processing System Report." This report outlined all the hospital and medical payments that AHCA made on Hosek's behalf, totaling $267,072.91. On the issue of damages, the experts did not provide any details concerning several of Petitioner's claims, including the amount of past medical expenses, loss of earning capacity, or damages for pain and suffering. The burden was on Petitioner to provide persuasive evidence to prove that the "proportionality test" it relied on to present its challenge to the agency's lien under section 409.910(17)(b) was a reliable and competent method to establish what amount of his tort settlement recovery was fairly allocable to past medical expenses. In this case, the undersigned finds that Petitioner failed to carry this burden.9/ There was no credible evidence presented by Petitioner to prove or persuasively explain a logical correlation between the proposed total value of Petitioner's personal injury claim and the amount of the settlement agreement fairly allocable to past medical expenses. Without this proof the proportionality test was not proven to be credible or accurate in this case, and Petitioner did not carry his burden. There was a reasonable basis in the record to reject or question the evidence presented by Petitioner's experts. Their testimony was sufficiently contradicted and impeached during cross-examination and other questioning. Even if the experts' testimony had not been contradicted, the "proportionality test" proposed by Petitioner was not proven to be a reliable or accurate method to carry Petitioner's burden under section 409.910(17)(b). To reiterate, there was no persuasive evidence presented by Petitioner to prove that (1) a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the amount calculated by the agency, or (2) that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.
The Issue The issue to be decided in this proceeding is the amount to be paid to Respondent, the Agency for Health Care Administration (Agency or AHCA), from the proceeds of a personal injury settlement received by Sergio Museguez to reimburse Medicaid for expenditures made on his behalf.
Findings Of Fact Sergio Museguez was catastrophically injured as a result of being struck by lightning on June 15, 2012. Mr. Museguez has been diagnosed with a traumatic brain injury and suffers from cognitive dysfunction, including, but not limited to, significant problems with memory, orientation, initiating and executive functions. Mr. Museguez is also incontinent as to bowel and bladder. The above-described conditions are permanent and will never resolve. Mr. Museguez’s employer, MG3 Developer Group (MG3), failed to carry workers’ compensation insurance or any other effective insurance coverage that would cover the injuries he sustained on June 2012, or that would cover his wife Leidi Hernandez’s loss of consortium suffered as a result of the accident. An action was filed in Miami-Dade County Circuit Court, Case No. 14-025861 CA 06, against MG3 for damages related to Mr. Museguez’s injuries and for Ms. Hernandez’s loss of consortium. MG3’s insurance carrier denied coverage and refused to defend the company because its insurance policy excluded coverage for employees. The Museguezes and MG3 entered into a settlement agreement in which they agreed to a judgment against MG3 in the amount of $5,000,000, but which included a payment schedule through which $1,000,000 would actually be paid to Petitioner by MG3. Only that $1,000,000 of the judgment has been or will be recovered by Mr. Museguez against MG3, because of MG3’s lack of available insurance coverage, and the lack of anticipated avenues of recovery pursuant to the terms of the settlement, dated June 16, 2016. The settlement agreement provided that the parties “acknowledge and agree that the One Million ($1,000,000) Dollar payment set forth above only represents twenty percent of the total injury/damage value of Museguez’s claim, and this fails to fully compensate Museguez for the injuries sustained in the incident at issue. Therefore, Museguez is specifically recovering only twenty percent (20%) of their damages for past medical expenses.” Ms. Hernandez waived her right to an apportionment of the recovery for her consortium claim in light of her husband’s condition and his need for extensive medical care and treatment for the rest of his life. She opted for any amount that would have been apportioned to her claim instead be apportioned directly to her husband. Mr. Museguez’s condition and need for continuing care is not in dispute. A life care plan identifying the goods and services necessary for Mr. Museguez was prepared by Lawrence S. Forman, an expert in rehabilitation life care planning. Mr. Forman has concluded that Mr. Museguez will require 24-hour attendant medical care for the rest of his life, in addition to a significant amount of future costs associated with his medical condition as a result of his injury. Mr. Forman’s opinions are outlined in his report dated April 8, 2016. Frederick A. Raffa, an economist, reviewed the life care plan for Mr. Museguez and determined that the present value of the anticipated medical expenses for Mr. Museguez is $7,943,963. He testified, unrebutted, that Mr. Museguez’s total losses were $8,424,028. In short, Mr. Museguez’s needs far outweigh the recovery received in this case. According to the United States Life Tables, 2012, Mr. Museguez is expected to live another 24.8 years. Todd Michaels is an attorney who was appointed as guardian ad litem for Mr. Museguez in the personal injury case. Mr. Michaels testified that he was appointed for the purpose of determining whether the settlement of Mr. Museguez’s claim was fair to him. Mr. Michaels concluded that the settlement was the product of an arm’s-length transaction and was a fair settlement of the claim. Mr. Michaels also was asked to provide an opinion regarding the value of Mr. Museguez’s claim. Mr. Michaels has practiced personal injury law for 15 years, and is generally familiar with the awards related to claims involving catastrophic injuries and, specifically, traumatic brain injuries. With respect to Mr. Museguez’s claim, Mr. Michaels described it as conservative but necessary given the lack of insurance coverage and significant possibility of insolvency should the case go to verdict. He noted that “without a settlement there was almost zero likelihood of recovery in that the issues of both the fact and law were hotly contested.” He acknowledged that the settlement was less than Mr. Museguez’s future medical needs, and ignored any claim for pain and suffering, as well as the consortium claim. He stated, “I understand what the situation was and they could have pushed forward and gotten a verdict of 30 million dollars and it would have been worth the paper it was printed on because of the circumstances.” Without the very real limitations provided in this case, where there was no insurance coverage, Mr. Michaels believed that the fair settlement value would be about $13 to $15 million. However, his explanation as to how he reached that range was conclusory at best. Mr. Michaels testified that he did not “physically parse it out.” He started with the number $8,424,000 and went from there. He did not consult other attorneys, or do specific jury verdict research, but simply relied on his knowledge from practicing in this area and reviewing jury verdicts on a regular basis. It seems that the “fair value” of a claim must by necessity consider not only the level of a plaintiff’s damages, but the likelihood of success and any issues of liability, comparative fault, collectability, and the like. Here, while Petitioner’s damages are unfortunately much higher than the settlement amount, Petitioner’s witness testified that under the circumstances of this case, the settlement was fair. The undersigned finds that the fair settlement value of this case, given all of the circumstances, is the amount reflected in the settlement, i.e., $5,000,000. The undersigned also finds, consistent with the language in the settlement agreement, that Petitioner recovered only 20 percent of his past medical expenses. The taxable costs associated with the action at law were $27,812.46. While the parties in this proceeding stipulated to the amount of these costs, they did not stipulate to the amount of the attorney’s fees related to the claim, and it does not appear that any evidence to substantiate the amount of attorney’s fees actually paid was included in this record. Mr. Museguez received medical services from Medicaid. On December 1, 2016, the Agency notified counsel for Mr. Museguez that Medicaid’s lien for medical expenses paid on his behalf was $116,032.84. There was no evidence presented to indicate that the Agency was a party to the settlement negotiations between Petitioner and MG3, or whether the Agency was notified of the litigation prior to the execution of the settlement. Petitioner deposited the amount of the Medicaid lien into an interest-bearing account for the benefit of the Agency in accordance with the requirements of section 409.910, and in compliance with the requirements of bringing an action to contest the amount of the lien before the Division of Administrative Hearings. Petitioner’s actions constitute “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17)(b). Application of the formula contained in section 409.910(11)(f) to Petitioner’s $1,000,000 settlement would require payment to the Agency in the amount of $116,032.84, the actual amount of the funds expended by Medicaid.
The Issue The issue to determine in this matter is the amount of the money to be reimbursed to the Agency for Health Care Administration for medical expenses paid on behalf of Petitioner, a Medicaid recipient, following Petitioner’s recovery from a third party.
Findings Of Fact This administrative matter centers on the amount the Agency is entitled to be paid to satisfy its Medicaid lien following Petitioner’s recovery of a $700,000 settlement from a third party. On November 7, 2010, Petitioner was involved in a devastating automobile accident. While stopped awaiting for oncoming traffic to pass, another vehicle, driven by Nahun Garcia, struck Petitioner from behind at a high rate of speed. Mr. Garcia was cited for careless driving. No evidence indicates that any negligence on the part of Petitioner caused or contributed to the accident or his injury. Petitioner suffered catastrophic injuries from the collision. Immediately following the accident, Petitioner was transported to St. Joseph’s Hospital in Tampa, Florida. There, Petitioner was diagnosed with fractures of his C4-C5 vertebra. Petitioner is now quadriplegic. Petitioner was 26 years old on the date of the incident. Because of the automobile accident, Petitioner is severely disabled and totally dependent on others for his care and well-being. Petitioner’s injuries are continuing and permanent. In addition, Petitioner is no longer able to care for his minor daughter. Petitioner’s medical expenses from the accident equal $264,541.69. Of this amount, the Agency, through the Medicaid program, paid a total of $249,197.80 for Petitioner’s past medical care. Petitioner pursued a personal injury claim against Mr. Garcia. Weldon (“Web”) E. Brennan, Esquire, represented Petitioner in the lawsuit. According to Mr. Brennan’s testimony at the final hearing, initially, Petitioner recovered $10,000 from Mr. Garcia’s automobile insurance company, Progressive Insurance, which was the limit of the property damage liability insurance policy. However, Mr. Brennan was not able to identify any other source of insurance to cover Petitioner’s injuries. Mr. Garcia had no collectible assets. Because the only available insurance was the property damage liability policy, Mr. Brennan evaluated the possibility of pursuing a bad faith claim against Progressive. Mr. Brennan concluded that, based on the circumstances of Petitioner’s initial coverage demand to Progressive, a bad faith claim was a viable option. Therefore, Mr. Brennan’s litigation strategy shifted. First, he would obtain a judgment against the tortfeasor (Mr. Garcia) in trial court. Then, he would seek to impose responsibility for the verdict on Progressive, including an assessment of punitive damages. In May 2017, following six years of litigation, Mr. Brennan was able to negotiate a $700,000 settlement with Progressive. Mr. Brennan represented that Progressive tendered the amount to avoid the risk of a successful bad faith claim.2/ Mr. Brennan explained that in finalizing the settlement with Progressive, he recognized that obtaining additional funds, by fully litigating the bad faith claim, would involve lengthy and intensive litigation. Consequently, Mr. Brennan believed that it was in his client’s best interests to timely settle his lawsuit. On May 9, 2017, Petitioner and Progressive executed a Release of All Claims (the “Release”) formalizing the settlement. In the course of the settlement negotiations, Petitioner and Progressive agreed that the true value for Petitioner’s injuries equaled at least $15 million. The Release specifically stated: The parties were both willing to agree to a consent judgment for $15,000,000 prior to settlement and so they therefore agree that [Petitioner’s] alleged damages have a value in excess of $15,000,000, of which $264,541.69 represents [Petitioner’s] claim for past medical expenses. Given the facts, circumstances, and nature of [Petitioner’s] alleged injuries and this settlement, the parties have agreed to allocate $12,354.10 of this settlement to [Petitioner’s] claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. Under section 409.910, the Agency is to be repaid for its Medicaid expenditures from any recovery from liable third parties. Accordingly, when the Agency was notified of Petitioner’s personal injury settlement, it asserted a Medicaid lien against the amount Petitioner recovered. The Agency claims that, pursuant to the formula set forth in section 409.910(11)(f), it should collect the full amount of the medical costs it paid on Petitioner’s behalf ($249,197.80). The Agency maintains that it should receive the full amount of its lien regardless of the fact that Petitioner settled for less than what he represents is the full value of his damages. (As discussed below, the formula in section 409.910(11)(f) allows the Agency to collect the full Medicaid lien.) Petitioner asserts that pursuant to section 409.910(17)(b), the Agency should be reimbursed a lesser portion of Petitioner’s settlement than the amount it calculated using the section 409.910(11)(f) formula. Petitioner specifically argues that the Agency’s Medicaid lien should be reduced proportionately, taking into account the full value of Petitioner’s likely recovery in the underlying negligence and bad faith lawsuits. Otherwise, the application of the default statutory formula would permit the Agency to collect more than that portion of the settlement that fairly represents compensation for past medical expenses. Petitioner maintains that such reimbursement violates the federal Medicaid law’s anti-lien provision (42 U.S.C. § 1396p(a)(1)) and Florida common law. Petitioner contends that the Agency’s allocation from Petitioner’s recovery should be reduced to the amount of $11,637.54. To establish the full value of Petitioner’s injuries, Petitioner presented the testimony of Mr. Brennan, as well as Vinson Barrett, Esquire. Mr. Brennan opined on what he considered to be the “true” value of Petitioner’s damages. Mr. Brennan heads a plaintiff’s injury firm and has represented plaintiffs in personal injury cases for over 28 years. Mr. Brennan has extensive experience handling cases involving automobile accidents, including catastrophic injury claims and spinal cord injuries. Mr. Brennan expressed that he routinely evaluates damages suffered by injured parties as part of his practice. He stays current on jury verdicts and settlements throughout Florida and the United States. Mr. Brennan was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Brennan valued Petitioner’s damages conservatively at $15 million, and possibly as high as $45 million. In deriving this figure, Mr. Brennan considered Petitioner’s medical expenses, his lost wage capacity, his past and future pain and suffering, and his life expectancy. Finally, Mr. Brennan testified that, in placing a dollar value on Petitioner’s injuries, he reviewed a number of jury verdicts involving catastrophic injuries similar to Petitioner’s. Mr. Brennan commented that Petitioner faces a meager future. Other than slight movement in his left arm, he is paralyzed from the neck down. Mr. Brennan relayed how the injuries have caused Petitioner to experience depression. He cannot eat independently, nor can he control his bodily functions. Neither is Petitioner able to care for or support his daughter. Mr. Brennan testified that the $700,000 settlement did not fully or fairly compensate Petitioner for his injuries. Therefore, he urged that a lesser portion of Petitioner’s settlement be allocated to reimburse Medicaid instead of the full amount of the lien ($249,197.80). Mr. Brennan proposed applying a ratio based on the true value of Petitioner’s injuries ($15 million) compared to the amount Petitioner actually recovered ($700,000). Using his estimate of $15 million, the settlement represents a 4.67 percent recovery of the total value of all Petitioner’s damages. In like manner, the amount of medical expenses should also be reduced to 4.67 percent or approximately $11,637.54. Therefore, in Mr. Brennan’s professional judgment, $11,637.54 is the portion of Petitioner’s settlement that represents his compensation for past medical expenses. Mr. Brennan expressed that allocating $11,637.54 for Petitioner’s past medical expenses is “logical,” “rational,” and “reasonable” under the circumstances. Mr. Barrett also testified on Petitioner’s behalf. Mr. Barrett is a trial attorney with over 40 years’ experience and works exclusively in the area of plaintiff’s personal injury, medical malpractice, and medical products liability cases. Mr. Barrett has handled a number of catastrophic injury matters involving traumatic spinal cord injuries. Mr. Barrett commented that, as a routine part of his practice, he makes assessments concerning the value of damages suffered by injured parties. Mr. Barrett was accepted as an expert in the valuation of damages suffered by injured persons. Prior to the final hearing, Mr. Barrett reviewed Petitioner’s exhibits, including Petitioner’s medical records, the accident report, and Petitioner’s Release of All Claims executed with Progressive. He also reviewed the sample jury verdicts Petitioner presented at the final hearing as Exhibit 13. Based on his valuation of Petitioner’s injuries and his professional training and experience, Mr. Barrett expressed that injuries similar to Petitioner’s would result in jury awards averaging between $15 and $30 million dollars. In light of Petitioner’s horrific injuries, Mr. Barrett conservatively valued Petitioner’s injuries at $15 million. Mr. Barrett opined that Mr. Brennan’s valuation of $15 million was appropriate, if not undervalued. Mr. Barrett supported Mr. Brennan’s pro rata methodology of calculating a reduced portion of Petitioner’s $700,000 settlement to equitably and fairly represent past medical expenses. With injuries valued at $15 million, the $700,000 settlement only compensated Petitioner for 4.67 percent of the total value of his damages. Therefore, because Petitioner only recovered 4.67 percent of his damages, the most “reasonable” and “rational” manner to apportion the $700,000 settlement is to apply that same percentage to determine Petitioner’s recovery for past medical expenses. Petitioner asserts that applying the same ratio to the total amount of medical costs produces the definitive value of that portion of Petitioner’s $700,000 settlement that represents compensation for past medical expenses, i.e., $11,637.54 ($249,197.80 times 4.67 percent). The Agency was not a party to Petitioner’s negligence lawsuit or Petitioner’s Release with Progressive. All of the expenditures Medicaid spent on Petitioner’s behalf is attributed to past medical expenses. No portion of the $249,197.80 Medicaid lien represents future medical expenses. The undersigned finds that the competent substantial evidence establishes the value of Petitioner’s injuries from his auto accident at $15 million. However, based on the evidence in the record, Petitioner failed to prove, by a preponderance of the evidence, that a lesser portion of Petitioner’s total recovery should be allocated as reimbursement for medical expenses than the amount the Agency calculated pursuant to the formula set forth in section 409.910(11)(f). Accordingly, the Agency is entitled to recover $249,197.80 from Petitioner’s recovery of $700,000 from a third party to satisfy its Medicaid lien.
The Issue What amount from Petitioners’ settlement proceeds should be paid to satisfy Respondent’s Medicaid lien under section 409.910, Florida Statutes (2018)?1/
Findings Of Fact Stipulated Facts (near-verbatim) On February 13, 2017, Grace Provvedi (Mrs. Provvedi) underwent an outpatient surgical procedure. Post-surgery, a Fentanyl patch was applied to Mrs. Provvedi’s body for the management of pain. Additionally, she was discharged home with a prescription for the oral pain medicines, Lorazepam and Robaxin. Mrs. Provvedi returned for a follow-up doctor’s visit on February 15, 2017. That same day, February 15, 2017, Mrs. Provvedi went into cardiopulmonary arrest at home. She was transported to the hospital where she was ultimately diagnosed with anoxic brain injury due to pain medicine overdose. Mrs. Provvedi remained in a vegetative state until her death on March 24, 2017. Mrs. Provvedi was survived by her husband Timothy Provvedi, their four-year-old child, B.P. and an adult child, Kyle Lima. Mrs. Provvedi’s medical care related to her injury was paid by Medicaid, and AHCA through the Medicaid program provided $54,071.79 in benefits associated with Mrs. Provvedi’s injury. This $54,071.79 represented the entire claim for past medical expenses. Mrs. Provvedi’s funeral bill totaled $11,422.97 and was paid by her surviving husband. Timothy Provvedi was appointed the personal representative of the Estate of Grace Provvedi. Timothy Provvedi, as the personal representative of the Estate of Grace Provvedi, brought a wrongful death claim to recover both the individual statutory damages of Mrs. Provvedi’s surviving spouse and two surviving children, as well as the individual statutory damages of the Estate of Grace Provvedi against the doctor and physician’s group (Defendants) who prescribed the deadly combination of the Fentanyl patch and oral pain medication. Timothy Provvedi, as the personal representative of the Estate of Grace Provvedi, on behalf of Mrs. Provvedi’s surviving husband and two children, as well as on behalf of the Estate of Grace Provvedi, compromised and settled the wrongful death claim with the Defendants for the unallocated lump sum amount of $225,000. During the pendency of the wrongful death claim, AHCA was notified of the action and AHCA asserted a $54,071.79 Medicaid lien against the Estate of Grace Provvedi’s cause of action and settlement of that action. By letter, the attorney handling the wrongful death claim notified AHCA of the settlement. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $54,071.79 Medicaid lien. AHCA has not filed an action to set aside, void, or otherwise dispute the wrongful death settlement. AHCA has not commenced a civil action to enforce its rights under section 409.910. AHCA, through the Medicaid program, spent $54,071.79 on behalf of Mrs. Provvedi, all of which represents expenditures paid for Mrs. Provvedi’s past medical expenses. No portion of the $225,000 settlement represents reimbursement for future medical expenses. The formula at section 409.910(11)(f), as applied to the entire $225,000 settlement, requires payment of the full $54,071.79 Medicaid lien and AHCA is demanding payment of $54,071.79 from the $225,000 settlement. The 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 Statutues, pursuant to section 409.910(17). Additional Findings of Fact Mr. Provvedi, as surviving husband, and the two children of Mrs. Provvedi, suffered economic and non-economic damages. The Estate of Mrs. Provvedi suffered economic damages in the form of medical expenses resulting from the Defendant’s alleged negligence. Mrs. Provvedi’s funeral bill was paid by Mr. Provvedi. Pursuant to the Florida Wrongful Death Act, burial expenses are generally charged to the estate, unless, as in the present case, such expenses are paid by a surviving spouse and reimbursement of the same is not sought from the estate. Mrs. Provvedi, as a condition of eligibility for Medicaid, assigned to AHCA her right to recover medical expenses paid by Medicaid from liable third parties. Petitioners presented the testimony of Mr. John W. Pate, a trial attorney with the law firm of Haygood, Orr & Pearson in Irving, Texas. Mr. Pate has been a trial attorney for 14 years and he specializes in representing individuals in personal injury, medical malpractice, and wrongful death cases. Mr. Pate testified that during the last several years, his practice has focused extensively on litigating medical malpractice cases involving the wrongful administration of prescription medications, including opioids like Fentanyl, Oxycodone, Hydrocodone, and other drugs which impact an individual’s central nervous system (CNS). Such drugs are often referred to as CNS depressant drugs. Mr. Pate routinely conducts civil jury trials, and as a consequence thereof, he stays abreast of jury verdicts by reviewing jury verdict reporters and discussing cases with other trial attorneys. Although Mr. Pate is not a member of the Florida Bar, he represents injured parties in Florida which necessitates that he stays up-to-date with civil jury verdicts from the State of Florida. Mr. Pate testified that as a routine part of his practice, he makes assessments concerning the value of damages suffered by injured parties and credibly explained his process for making such assessments. Without objection, Mr. Pate was recognized as an expert in the valuation of damages suffered by injured parties. Mr. Pate served as lead attorney in the litigation against the medical providers who treated Mrs. Provvedi. In his capacity as lead attorney, Mr. Pate reviewed Mrs. Provvedi’s medical records, consulted with an anesthesiology and pain management expert in North Carolina, consulted with a plastic surgery expert in Miami, met personally with Mr. Provvedi, and spoke with Mrs. Provvedi’s children. Mr. Pate, in explaining the circumstances that allegedly led to the death of Mrs. Provvedi, testified that on February 13, 2017, Mrs. Provvedi underwent an outpatient surgical procedure at a plastic surgery center. Soon after the surgery, a Fentanyl patch was applied to Mrs. Provvedi’s body for the treatment of pain. Ms. Provvedi was then discharged home with a prescription for Lorazepam and Robaxin, each of which is an oral pain medication. Mr. Pate testified that the federal Food and Drug Administration (FDA) warns against the use of Fentanyl patches post-surgery, and also warns against the combination of a Fentanyl patch with other CNS depressant drugs, such as Lorazepam and Robaxin. Mr. Pate explained, as to his theory of legal liability against Mrs. Provvedi’s medical providers, that over time the prescribed CNS depressants accumulated in Mrs. Provvedi’s body which resulted in her being found unresponsive two days after surgery. Mrs. Provvedi was transported by EMS to the hospital, where, upon arrival, the Fentanyl patch was removed. Mrs. Provvedi was diagnosed as having suffered from an acute anoxic brain injury and respiratory failure due to a pain medication overdose. Mrs. Provvedi never regained consciousness, and one month later was discharged from the hospital to hospice care where she died on March 24, 2017. Mr. Pate’s undisputed testimony was that his investigation revealed that Mr. and Mrs. Provvedi had a loving and devoted marriage, and that it was emotionally devastating to Mr. Provvedi to watch his wife die over the course of five weeks. Mr. Pate also testified that his investigation revealed that the Provvedi’s minor son, B.P., who was five at the time of Mrs. Provvedi’s death, was profoundly affected by the loss of his mother and that Ms. Provvedi’s adult son, who lived with the Provvedis prior to and at the time of his mother’s passing, was similarly devastated by the death of his mother. Mr. Pate credibly testified that based on his training and experience, the wrongful death damages recoverable in Mrs. Provvedi’s case had a conservative value of between $3,054,071.79 to $5,054,071.79. According to Mr. Pate’s undisputed testimony, Mrs. Provvedi’s estate had a claim for damages in the amount of $54,071.79, which is the amount of medical expenses that were paid, and resulted from Mrs. Provvedi’s injury and death. Mr. Pate excluded the funeral bill from the estate’s damages because the same bill was paid by Mr. Provvedi, as surviving husband. Mr. Pate also testified that the estate likely did not have a viable claim for net accumulations because Mrs. Provvedi did not work outside of the marital home. Mr. Pate testified that a wrongful death claim was brought against the plastic surgeon that operated on Mrs. Provvedi and the surgical facility where the procedure was performed. The basis of the claim was that the doctor violated the standard of care by prescribing the Fentanyl patch to Mrs. Provvedi in clear contravention of the FDA warnings, and it was error to prescribe the other oral pain medicines in conjunction with the Fentanyl patch. Mr. Pate testified that he expected the at-fault parties to dispute causation, but ultimately the main issue was that the alleged at-fault parties had only $250,000 in insurance coverage. Mr. Pate credibly testified that expenses associated with litigating the wrongful death case would be considerable and would significantly erode any likely net recovery. Given these concerns, the decision was made to settle the case pre-suit for $225,000. Utilizing the conservative value of $3,054,071.79, the $225,000 settlement represents a recovery of only 7.367214 percent of the value of all damages. Thus, only 7.367214 percent of the $54,071.79 claim for past medical expenses was recovered in the settlement, or $3,983.58. Based on the methodology of applying the same ratio the settlement bore to the total monetary value of all the damages to the estate, $3,983.58 of the settlement represents the estate’s compensation for past medical expenses. The allocation of $3,983.58 of the settlement to the estate’s claim for past medical expenses is reasonable and rational. Petitioners have proven by a preponderance of the evidence that $3,983.58 represents the portion of the $225,000 settlement recovered to compensate the estate for medical expenses necessitated by the alleged negligence of the tortfeasors.
The Issue The issue is the amount of the Petitioner’s personal injury settlement proceeds that should be paid to the Agency for Health Care Administration (AHCA) to satisfy its Medicaid lien under section 409.910, Florida Statutes (2016).1/
Findings Of Fact The Petitioner’s right hand and wrist were cut by glass in the bathroom of her apartment in March 2012. Her injuries included damage to the tendons and nerves. She was hospitalized and received medical care and treatment, which Medicaid paid in the amount of $4,348.45. The Petitioner also personally owes $123 for physical therapy she received. The Petitioner sued the owner of the apartment, who vigorously contested liability and raised several affirmative defenses alleging that the Petitioner’s negligence or recklessness was wholly or partially responsible for her injuries and that she assumed the risk. The Petitioner’s damages were substantial because she lost the effective use of her right hand. She applied and was approved for Social Security supplemental security income benefits, subject to periodic reviews of her disability status. She presented evidence in the form of her and her attorney’s testimony and a report prepared by a vocational evaluation expert that she will suffer lost wages in the amount of approximately a million dollars, calculated by assuming she would have worked full-time earning $12-15 an hour until age 70, but for her accident, and assuming she cannot be gainfully employed in any capacity as a result of her injury. While that amount of lost wages might be overstated, the Petitioner presented evidence in the form of her attorney’s testimony and a supporting affidavit of another attorney with experience in personal injury case valuations that the monetary value of her damages was no less than approximately $550,000.2/ AHCA’s cross-examination did not reduce the persuasiveness of the Petitioner’s evidence, and AHCA presented no contrary evidence. In March 2017, the Petitioner settled her lawsuit for a mere $55,000 because of her concern that a jury would find for the defendant or reduce the recoverable damages due to comparative negligence. The Petitioner knew at the time of her settlement that AHCA was claiming a $4,348.45 Medicaid lien on the settlement proceeds. The Petitioner offered AHCA $434.85 in full satisfaction of the Medicaid lien claim. AHCA declined and asserts its entitlement to the full amount of the lien claim. The Petitioner’s settlement agreement included an allocation of $434.85 to AHCA’s Medicaid lien, $123 to the other past medical expenses, and the rest to other components of damages (which did not include any future medical expenses). AHCA was not a party to the settlement and did not agree to that allocation. The Petitioner’s attorney testified that the Petitioner’s proposed allocation is fair and reasonable and introduced the concurring affidavit of another attorney. AHCA did not present any evidence but argued that the Petitioner did not prove that AHCA’s Medicaid lien should be reduced and that, as a matter of law, AHCA was entitled to the claimed lien.
