The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (17b), Petitioner1 has proved that Respondent's recovery, under section 409.910(11)(f) (11f), of $685,615 in medical assistance expenditures2 from $10.4 million in proceeds from the settlement of a personal injury action must be reduced to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti-Lien Statute)3 ; and, if so, what is the maximum allowable amount of Respondent's recovery.
Findings Of Fact Shortly before midnight, on January 20, 2015, Petitioner, then 11 years old, suffered catastrophic injuries when she was ejected from a vehicle that rolled over on Interstate 75 near Micanopy. Petitioner has been left in a persistent vegetative state after suffering a traumatic brain injury, malignant cerebral edema, a depressed skull fracture, a contrecoup subdural hematoma, bilateral pulmonary hemorrhage, and fractured ribs. The vehicle, a 2003 Ford Expedition, was driven by its owner, a 42-year-old woman who was a friend of a cousin of one of Petitioner's family members. The driver had transported Petitioner, her brother, and two other persons from Tampa to Gainesville. After attending a college basketball game, the driver discovered that the right rear tire was flat, so she called a national automobile service company to install the spare tire. Even though the spare tire was 11 years old, the person whom the company dispatched on the service call replaced the flat tire with the spare tire. While driving south on Interstate 75 in the left lane, the installed spare tire blew out. The driver lost control of the vehicle, which rolled over once, hurdled the guardrail, and came to rest, upright, in the emergency lane adjacent to the left lane of the northbound lanes. The primary liability for the accident was borne by the driver. Two of the tires on the vehicle were so worn as to reveal their steel belts. The driver had ignored a warning five months earlier to replace at least two of the vehicle's tires. Additionally, expert witnesses testified that the driver could have controlled the vehicle after the blowout, so as to avoid the rollover. Due to the age of the tire, it is difficult to find fault with the manufacturer of the vehicle or the manufacturer or vendors of the tire. The automobile service company and the technician bore more blame than the manufacturers, although there was a factual dispute about whether, prior to changing the tire, the technician had warned the driver that it was unsafe. Petitioner herself bore considerable responsibility for her injuries because she was not wearing a seat belt at the time of the blowout. The other passengers were belted, remained within the vehicle, and suffered no more than minor injuries. The roof over Petitioner's seat survived the wreck intact, so she likely would have suffered no more than minor injuries if she had been wearing her seatbelt. Petitioner filed a personal injury action against the manufacturers of the vehicle and the failed tire, vendors of the failed tire, companies responsible for changing the tire, and driver of the vehicle. In confidential settlements, Petitioner obtained $10.4 million, which was unallocated among the damages components. Claiming a true value of $40 million for the case, Petitioner accurately calculates a 74% settlement discount.5 The driver was unable to satisfy a large judgment. The driver carried liability insurance with a policy limit of $25,000, which the insurer immediately offered to avoid a bad-faith claim. The record is silent as to the creditworthiness of the other, less-liable parties. The parties agree that the past medical expenses component of the settlement proceeds was $685,614. This sum represents the total medical assistance expenditures made by Respondent and another agency. 5 From the settlement proceeds, Petitioner's attorneys collected $4 million in attorneys' fees and $400,000 in costs, leaving Petitioner with a net recovery of $6 million, but Petitioner has not sought to reduce Respondent's recovery by a proportional share of these fees and costs. A conservative estimate of the loss of future earning capacity was $1.3 million. These sums support about $2 million of the $40 million putative true value of the case. The question is thus whether another $38 million in damages was supported by other damages components--mostly future medical expenses and past and future noneconomic damages, such as pain and suffering. The 1st Update of the Life Care Plan, dated November 5, 2018 (Life Care Plan), includes all applicable treatments, except the cost of hyperbaric oxygen therapy, which is $7150 per set of 26 sessions. Treatments include periodic evaluations by a neuropsychologist, physiatrist, physical therapist, occupational therapist, speech therapist, pediatric pulmonary consultant, pulmonary consultant, pediatric ear, nose and throat consultant, pediatric gastroenterology consultant, pediatric neurologist, and multidisciplinary team. Other listed expenses include pharmaceuticals; periodic diagnostic services, such as imaging studies and lab work; the preparation and maintenance of orthiotics and durable medical equipment, such as wheelchairs, hospital and shower beds, lifts, suction machines, oxygenation equipment, a home generator, and an augmentive communication device; feeding and incontinence equipment and supplies; in-home skilled care on a continual basis; adaptive vans and medical transportation services; architectural modifications to the home; the installation of a special in-home ventilation system; annual hospitalizations of one-week duration each; and various surgeries. The components of the Life Care Plan, including the costs of the goods and services and the stated intervals on which they are to be provided, all appear to be reasonable and necessary. An important issue regarding the Life Care Plan is the number of years that these costs are reasonably expected to be incurred. The evidentiary record provides no basis to find that Petitioner will recover significant function, so the question is whether the Life Care Plan has incorporated a reasonable remaining life expectancy in light of the catastrophic injuries that Petitioner has suffered. Having progressed from a coma to a minimally conscious state, Petitioner exhibits some awareness of her surroundings and her mother and father, who report that she has verbalized once or twice in the past two years, although she is incapable of speech. Petitioner's youth at the time of the accident may have helped her avoid organic decline, at least over the first five years after the accident. She is now five feet, nine inches tall and weighs 163 pounds. Her height prior to the accident is unavailable, but she weighed 110 to 115 pounds. Petitioner cannot walk or assist with transfer, but she can stand without assistance and can move her limbs. Petitioner no longer is fed by a PEG tube and her ability to swallow is slowly improving. She can open her mouth in response to the sight of a spoon and is able to eat puréed food. Petitioner requires oxygenation and suffers from sleep apnea, but needed a ventilator only for the first six months after the accident. She has had only an occasional respiratory infection and has suffered no seizures. On these facts, the Life Care Plan reasonably projected Petitioner's remaining life expectancy to be slightly in excess of 30 years. Thus, the Life Care Plan conservatively estimates the present value of the future medical expenses at not less than $37 million. The pain and suffering that Petitioner has suffered are considerable, as are other noneconomic damages. Given the relatively short span between the accident and the settlement and the longer span between the settlement and the projected end of Petitioner's life, the greater amount of these noneconomic damages probably will relate to the future. Based on comparable jury verdicts, a reasonable estimate of past and future noneconomic damages is not less than $10 million. The presentation of damages to a jury would not have been impeded by extrinsic factors. Petitioner's family would have made excellent witnesses to support the damages claims. Petitioner's lead trial counsel is experienced in personal injury cases, has produced numerous large verdicts and settlements, and presented himself at hearing as a thoughtful, patient, and effective communicator with a firm grasp of the facts and law--in sum, an attorney who would have maximized Petitioner's chances for a good damages verdict. The settlement discount was partly explained by the family's need for funds to care for Petitioner. Medicaid has not paid for the hyperbaric oxygen treatments that have proven somewhat efficacious, nor for renovations to the family home necessitated by Petitioner's disabilities. Petitioner's family lacks the financial means to pay these expenses on their own. At the time of the accident, Petitioner's father was on full disability due to back injuries, her mother worked as an administrative assistant, and the family's home had been constructed by Habitat for Humanity. The sooner the family received the settlement proceeds, the sooner they could obtain additional goods and services for Petitioner. Petitioner has proved by any standard of proof that the true value of the case exceeds $40 million. Applying the settlement discount of 74% to the past medical expenses component of the settlement proceeds, Respondent's recovery is limited to 26% of $685,614, or $178,260, as Petitioner contends. For the benefit of Respondent, Petitioner has deposited into an interest-bearing account an amount equal to the Medicaid lien, pending a determination of Respondent's proper recovery amount.
The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (17b),1 Petitioner has proved that Respondent's recovery of $224,0002 in medical assistance expenditures3 from $1.4 million in proceeds from the settlement of a personal injury action must be reduced to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti Lien Statute)4; and, if so, the maximum allowable amount of Respondent's recovery.
Findings Of Fact On the evening of March 13, 2016, 28-year-old Petitioner presented at a regional hospital in eastern Kentucky, where she has lived all of her life, with a chief complaint of abdominal pain, as well as nausea and vomiting throughout the day. Petitioner reported that she had suffered intermittent 5 Most significantly, page 7 of the Prehearing Stipulation states: "Petitioner’s injuries will significantly shorten her life and will require a lifetime of medical care and will not allow her to work, likely for the remainder of her life." abdominal pain and nausea since undergoing a gastric bypass procedure seven years earlier. A physical exam revealed normal bowel sounds in all four quadrants and a nondistended abdomen. Petitioner underwent a CT scan, and the radiologist reported a normal gastrointestinal tract, other than "postoperative changes of [the] gastric bypass." Petitioner was admitted to the hospital for observation. After being released from the hospital and returning the next day,6 Petitioner complained of increased abdominal pain, although she did not have a fever, and her vital signs and white blood cell count were normal. Early on March 15, Petitioner began to vomit blood and was transferred to the intensive care unit. A second abdominal CT scan revealed a twisted bowel, which necessitated emergency surgery that resulted in the removal of her entire small intestine and part of her large intestine. The radiologist had misread the first CT scan or failed to communicate adequately the intestinal blockage from which Petitioner was suffering when she was admitted to the hospital. On March 16, Petitioner developed sepsis. She was intubated and transferred by helicopter to the University of Kentucky medical center, where she remained hospitalized until April 11. At the university medical center, Petitioner began total parenteral nutrition through a peripherally inserted central catheter (PICC) line. When discharged, Petitioner returned home, where a home health nurse visited her to provide care. A physician at the University of Kentucky medical center recommended that Petitioner consider transplant surgery at the intestinal-transplant program at Jackson Memorial Hospital in Miami (Program). An intestinal transplant is the rarest type of transplant and presents exceptional challenges in managing the potential for the rejection of the foreign organ by 6 Stipulation, p. 5. Actually, this stipulated finding is incorrect. The hospital medical records state that Petitioner was "released" from the emergency department, but to a medical-surgical bed, rather than from the hospital. In her deposition, Petitioner confirmed that her hospitalization was continuous. Petitioner Exhibit 15, p. 39. the host. The Program is one of the leading programs of its type in the United States. In July 2016, Petitioner and her mother flew to Miami to meet a Program surgeon and discuss whether she would be a good candidate for the procedure. At the time of this trip, Petitioner was so lacking in strength and stamina that she required the use of a wheelchair within the airport. The surgeon and Petitioner agreed that she would likely benefit from a transplant. Petitioner and her mother returned to Florida on September 1 to be placed on the organ-transplant waiting list and wait for a suitable organ to become available. Petitioner underwent successful intestinal-transplant surgery at Jackson Memorial on December 22 during a procedure that took five and one-half hours. At this time, the total parenteral nutrition was discontinued and PICC line removed. Petitioner was discharged from the hospital on January 9, 2017, with instructions to remain in the Miami area for at least six months so that any post-operative problems could be addressed by the Program physicians. Either by the time of discharge or one week later, a Program physician placed in Petitioner an ostomy bag for the elimination of waste. The ostomy bag typically remains in place for six months after an intestinal-transplant procedure, at which time a Program surgeon removes the bag, and the patient is released to return home. About three weeks after the transplant surgery, Petitioner became ill and exhibited abdominal discharge because she had developed a small leak in the colon, which required corrective surgery of two or three hours to trim the involved tissue. Due to post-surgical adhesions, three or four weeks after the transplant surgery is a bad time to reopen the patient, but there was no other option, and Petitioner remained hospitalized for a couple of weeks. Petitioner visited one of the Program surgeons for routine checks in early February and mid-March, and, on both occasions, the surgeon found that Petitioner was doing well and had no complaints. However, on March 28, Petitioner was readmitted to Jackson Memorial due to vomiting and dehydration. On April 21, a Program surgeon performed an exploratory laparotomy and partial gastrectomy after determining that Petitioner was experiencing gastritis from an alteration of her native stomach that had taken place during the gastric bypass. The procedure to rework this portion of the stomach took about two hours, and Petitioner remained hospitalized seven to ten days after this procedure. Finally, in late July, Petitioner underwent a two- or three-hour procedure for the removal of the ostomy bag. Petitioner remained hospitalized for a couple of weeks after this procedure. Except for the leak in the colon and the failure of the alteration of the native stomach, as well as, perhaps, the extra month that elapsed before the removal of the ostomy bag, Petitioner's post-transplant care and progress were normal for a patient who had just undergone an intestinal transplant. For the first year after a transplant, Program physicians and staff meet regularly with the transplant patient to perform lab work and educate the patient about dietary changes and medication regimes, as initially the patient is taking 20 to 40 pills daily. For the first few months, these office visits take place once or twice weekly. Eventually, the number of pills tapers off, but, based on the present state of medical science, for the rest of her life, Petitioner will have to take anti-rejection medication, which presently must be taken twice daily. Over time, the frequency of office visits is reduced. At the time of the deposition in August 2019 of the Program surgeon primarily responsible for Petitioner's care, Petitioner was having lab work done monthly, and the surgeon was seeing Petitioner every six months, which would later be reduced to every year. On March 1, 2017, Petitioner commenced a personal injury action in Kentucky against the radiologist and the regional hospital where the intestinal-removal surgery had taken place. Petitioner agreed to pay her trial counsel costs plus 33.3% of the gross recovery.7 In December 2019, prior to trial, the parties settled the case for $1.4 million, which represented the radiologist's policy limits of $1 million and $400,000 from the hospital. The liability of the radiologist was clear, but the liability of the hospital was doubtful; in fact, Petitioner's trial counsel never obtained an expert witnesses to testify that the hospital was liable. The trial court did not allocate the settlement proceeds among damages components. On April 9, 2020, Petitioner deposited in trust for the benefit of Respondent an amount equal to Respondent's lien of $224,000. According to the testimony of Petitioner's trial lawyer, paid past medical expenses totaled about $578,000, so one or more other payors paid $354,000 in addition to Respondent's Medicaid payments of $224,000.8 Future medical expenses following the settlement appear to be limited to the anti-rejection medication, which is expensive, but the record does not specify its cost. Petitioner claims a loss of earning capacity of about $1.6 million. Her trial counsel hired an economist who, in August 2019, issued a report projecting a loss in this amount. The economist's report notes that Petitioner completed high school and 45 credit hours at a local community college. She obtained a medical assistant certificate in 2012 and, as of March 13, 2016, Petitioner was working as a nursing service clerk at the regional hospital where she presented with a twisted intestine. The economist comprehensively analyzed Petitioner's earnings, including benefits, to project a loss of earnings and benefits through age 65 and pension benefits through age 82. Although the parties stipulated that 7 Stipulation, p. 7. 8 Total billed past medical expenses equaled about $1.383 million, consisting of the following items: the regional hospital--$66,000; the air ambulance--$53,000; the University of Kentucky medical center-- $206,000; miscellaneous Kentucky medical services--$29,000; and Jackson Memorial Hospital-- $1.029 million. Petitioner's life expectancy will be "significantly" shortened,9 as explained in the Conclusions of Law, the loss of future earnings or earning capacity is determined by using the life expectancy immediately prior to the actionable injury, so the terms of the economist's calculations were proper. Notwithstanding persuasive evidence to the contrary in the record, the findings are controlled by the parties' stipulation that Petitioner likely will never work again.10 The economist assumed as much based on the report of a "vocational expert," who issued an "employability evaluation" on February 12, 2019, determining that Petitioner was permanently totally disabled in terms of future employment. The employability evaluation consisted of an interview with Petitioner, vocational testing, and a review of background information, which did not include the deposition of Petitioner's Program surgeon, as it took place later in the same year. Although the stipulation renders the employability evaluation irrelevant as to the issue of Petitioner's ability to return to gainful employment, the employability evaluation is useful in assessing Petitioner's claim for pain and suffering damages. In the interview, which took place about one month prior to the issuance of the report or just over two years after the intestinal-transplant surgery, Petitioner reported that she could drive for one to two hours, but experienced pain and had to stop to use the restroom, which she invariably had to use while and after eating. Petitioner stated that, daily, she had to use the restroom six to ten times and experienced pain in her stomach and lower back. Petitioner also reported anxiety, depression, dehydration, chronic weakness, fatigue, and cognitive difficulties, including brain fog, difficulty concentrating and memory problems. Petitioner stated that she could not lift any weight, was unable to sit for more than three hours or stand for more than one hour, and could walk only short distances. Petitioner denied that a course of physical therapy had 9 See footnote 5. produced any relief. Believing that her condition was not improving, Petitioner opined that she could not perform any work due to pain and the need to use the restroom, although, later contradicting herself, she testified that she had thought about going into nursing. The evaluator interpreted a series of ability and aptitude tests to mean that, without regard to any physical disability, Petitioner could return to the "semi-skilled" work that she had performed since graduating from high school, but failed to address her suitability for a nursing program. After considering Petitioner's physical disability, the evaluator concluded that Petitioner was precluded from further employment, even though he lacked any apparent basis for inferring that Petitioner had reached maximum medical improvement. Petitioner filed portions of the transcript of her deposition, which was taken on October 26, 2018--ten months after the transplant surgery. Petitioner testified that she was receiving disability benefits from the Social Security Administration. She understandably did not recall much of March 2017, but she failed to describe her daily activities or her condition, such as her cognitive function, fatigue, and level of pain, prior to moving to south Florida for one year for the transplant surgery, during the year in south Florida, and after her return to Kentucky. She and her husband divorced sometime after the March 2017 surgery, but Petitioner had been dating someone for the three months preceding her deposition. As of the time of her deposition, Petitioner testified that she was always tired, never wanted to do anything, and would not go out due to fear that, in an immunocompromised state, she would contract a disease. Petitioner explained that she could not swim or go barefoot due to the possibility of infection, and she had to wear a mask wherever she went outside of her home during the flu season. However, Petitioner had 10 See footnote 5. undergone Botox treatments to her forehead, most recently about one month prior to her deposition. Petitioner stated that walking was difficult. The "few times" that she had gone to Disney World, Petitioner had had to use a wheelchair to navigate the park. Petitioner testified that her Program medications produced side effects, such as headaches, and admitted that she drank a lot of carbonated beverages rather than water, which made her nauseous. Toward the end of her deposition, Petitioner testified that her primary Program surgeon had advised her some time ago not to return to work, but she had not asked him lately "because I want to go back to work."11 At his deposition, the Program surgeon testified that presently there were no restrictions on Petitioner's activities. In response to a question based on Petitioner's reported fatigue, the surgeon stated that generally Program physicians expected full recoveries from their patients; patients obtained a good quality of life, even if they suffered from fatigue; and the one-year point after surgery was an important milestone in a patient's recovery, which underscored the fact that Petitioner's deposition likely took place too early for her testimony to serve as a good measure of where she was in her recovery by the time of the settlement, which took place just over one year after her deposition. The most prominent restriction recognized by the Program surgeon was pregnancy. He recommended that Petitioner not become pregnant for the "first few years" after the transplant surgery, until her immune system reestablishes itself. Additionally, the anti-rejection drugs are strong and can produce neurological side effects, so a transplant patient who became pregnant would need to be closely monitored. The Program surgeon emphasized the importance of proper hydration through the drinking of water. The surgeon explained that the large intestine absorbs fluids. Because Petitioner lacks much of her large intestine, it was even more important to overcome fatigue and preserve kidney function for Petitioner to remain hydrated--not just now, but for the next "10, 15, 20 years," according to the surgeon. The surgeon testified that Petitioner could eat whatever food she wished, although she would learn which foods caused diarrhea, which is a side effect of Petitioner's surgeries. At the time of the deposition, Program physicians were monitoring monthly lab work and seeing Petitioner every six months, which eventually would be reduced to every year. Petitioner's trial attorney referred to the testimony of a Dr. Gore, "the leading bariatric radiologist in the country," who reportedly testified that he did not share the Program surgeon's optimism, and Petitioner could never bear children, work, or lead the active life of a young person. Petitioner did not explain why she did not file in this proceeding the original testimony of Dr. Gore, so the administrative law judge could assess, among other things, the bases for such testimony by a radiologist, whose involvement with transplant patients would seem not to be as comprehensive or extended as the involvement of a Program surgeon. The reported testimony of Dr. Gore is disregarded. The trial attorney broke down the true value of the damages as follows: the loss of future earnings--$1.6 million; paid past medical expenses-- $578,000; and $8 million in noneconomic damages. In support of a true value of $10 million, the trial attorney testified that his law firm had obtained $11 million from a surgeon in a bariatric case brought by the estate of a deceased patient, who had resided in a nearby city. But the trial attorney provided no other details about that case to allow its use as a comparator. The putative true value is properly based on the loss of future earnings and paid past medical expenses, but not the $8 million in noneconomic damages, nearly all of which is pain and suffering. The stipulation to a "significantly" shortened life expectancy provides no basis for 11 Petitioner Exhibit 15, p. 99. calculating a reasonable term of future pain and suffering. The record is not especially detailed as to pain and suffering at and before the time of the settlement. Petitioner's description of the limitations upon her life pertained to a point relatively early in the recovery process, only ten months following the transplant surgery, and a little over one year prior to the relevant point, which is the time of the settlement. The deposition of the Program surgeon, which took place only four months prior to the settlement, is entitled to greater weight in terms of its closer proximity to the settlement date. Addressing a typical patient, the Program surgeon portrayed a life of relatively few restrictions--provided the transplant patient takes care of her crucial need for hydration, which Petitioner had not. The Program surgeon did not detail any setbacks experienced by Petitioner, which her trial attorney who took the deposition would have developed, if they had existed. Doubtlessly, Petitioner has suffered a considerable diminution in the quality of her life, extensive inconvenience, and periods of intense pain, but, balancing Petitioner's somewhat generalized description of these elements and the Program surgeon's more upbeat description of the typical transplant patient, as well as Petitioner, the relationship of Petitioner's pain and suffering to money supports an award of no more than $2 million.12 12 This finding of $2 million in pain and suffering is supported by the facts of the administrative law judge’s two Medicaid recovery cases immediately preceding the present case. These cases involved personal injury actions in south and central Florida, not eastern Kentucky, where jury verdicts may run higher or lower. But these cases include $5-$10 million of pain and suffering, and Petitioner's case does not. In DOAH Case 20-2038MTR, the recipient's attorney sought noneconomic damages of only $5 million for catastrophic brain injuries to a five-year-old child, which left her cognitively intact, but unable to express herself in any fashion and subject to contracture of the limbs, painful spasms, and a shortened lifetime of inability to self-ambulate, feed, bathe, or clothe herself--with a major impact on her parents and siblings, who were caring for her at home. The true value of the noneconomic damages was closer to $10 million for reasons unique to that case, in which a summary jury trial had returned this damages component in a highly abbreviated proceeding designed to facilitate settlement by addressing primarily liability. Adding noneconomic damages of $2 million to the paid past medical expenses of $578,000 and loss of future earnings of $1.6 million yields a true value of $4.2 million. A settlement of $1.4 million represents a recovery of 33.3% of the true value. Applying this settlement recovery percentage to the total paid past medical expenses, the proportional reduction method would allocate about $193,000 of the settlement proceeds to total paid past medical expenses. Applying this settlement recovery percentage to the past medical expenses paid by Respondent, the proportional reduction method would allocate about $75,000 of the settlement proceeds to Respondent's Medicaid payments. As explained in the Conclusions of Law, Respondent's tentative recovery is $193,000 because Petitioner has failed to prove the extent to which, if any, that the $354,000 of past medical expenses paid by a payor other than Respondent is subject to a Medicaid recovery claim. Petitioner agreed to pay costs, which were $41,000, and one-third of any recovery, which is $466,000, so her total obligation to the law firm is $507,000. The record provides no basis for finding that this obligation is unreasonable in amount or was not reasonably expended to produce the settlement. On these facts, a failure to require Respondent's recovery to bear its pro rata share of this obligation would allow Respondent's recovery to reach a portion of the settlement proceeds not allocable to paid past medical expenses. Without regard to the fees and costs, the gross settlement proceeds are tentatively allocated as follows: $193,000 to Respondent and $1.207 million to Petitioner. Applying to 13.8% of the gross settlement proceeds, Respondent's In DOAH Case 19-5547MTR, the recipient's attorney sought noneconomic damages of $10 million for catastrophic injuries to an 11-year-old child that left her in a vegetative state, incapable of speech or other expression, incapable of walking or assisting with the transfer into a wheelchair, and incapable of assisting with feeding, except to open her mouth at the sight of a spoon, for the remainder of her injury-shortened life, during which time she too was cared for by her parents at home. If the administrative law judge lacks the authority to find pain and suffering damages, the administrative law judge rejects the proof of noneconomic damages in its entirety. lien must bear 13.8%, or $70,000, of the $507,000 in fees and costs that produced the settlement. Respondent's net recovery is thus $123,000.
The Issue The issues for determination are, first, whether a lesser portion of Petitioner’s total recovery from a third-party tortfeasor should be designated as recovered medical expenses than the share presumed by statute; if so, then the amount of Petitioner’s recovery to which Respondent’s Medicaid lien may attach must be determined.
Findings Of Fact On June 17, 2018, Cruz, then age 28, went boating in Biscayne Bay, near Elliott Key. The boat belonged to Cruz’s cousin, Victor Fonseca (“Fonseca”), who operated the vessel at all relevant times. Others were with them. At some point during this outing, Fonseca’s boat became stuck on a sandbar. Cruz, who was in the water, got close to the boat’s engines, apparently intending to attempt to free the boat. As he did so, Fonseca, who knew or should have known of Cruz’s whereabouts, engaged the engines. Cruz’s clothes became caught in a moving propeller, which dragged him in. The result, predictably, was catastrophic, as the fast-spinning propeller chopped into Cruz’s lower body, causing severe injuries. The medical records describe Cruz’s injuries as including extensive trauma to all muscles of the right thigh and left gluteal muscles, multiple significant fractures of bones in the right leg, a right thigh degloving injury, and a severe rectal injury, which required the surgical removal of his anal sphincter. Post injury, Cruz developed RLE compartment syndrome and underwent a fasciotomy. He suffered an acute pulmonary embolism for which an IVC filter was placed. He underwent multiple surgical debridements and closure procedures. An end-colostomy was also laced. He underwent eternal fixation of his femur fracture. Cruz remained in the hospital for more than one year. The foregoing clinical description is amplified by emergency room photographs, which vividly depict the bodily destruction that the propeller caused. The words “gruesome” and “horrific,” or others to that effect, come to mind when viewing these pictures. It is undisputed that Cruz’s devastating injuries are disfiguring, permanently disabling, and chronically painful. As a result of this accident, Cruz will require medical treatment for the rest of his life. He must use a wheelchair or walker to move about and has been fitted with orthotic devices. Cruz is unable to care for himself and depends upon others to assist him in all activities of daily living. Before his injury, Cruz was employed as a heating, ventilation, and air conditioning (“HVAC”) technician. He will not be able to resume working in this field, and, indeed, Cruz is unlikely ever to work again. As mentioned, Cruz experiences chronic pain from his injuries, and he is unable to sit normally for extended periods without discomfort, due to the absence of gluteal muscles. His right thigh now consists, essentially, of skin- wrapped bone, because the muscle and connective tissue are gone. Not surprisingly, Cruz has suffered, and continues to suffer, adverse emotional effects, including depression. Cruz’s family suffers as well. He and his wife have two children, twins, who were three years old at the time of the accident. As a husband and father of young children, Cruz is no longer able to provide the same level of support and companionship to his family as before becoming disabled. Cruz brought a personal injury lawsuit against Fonseca, the person whose negligence seems likely to have been the sole proximate cause of the accident. (There is no evidence of, nor any reason to infer, the involvement of a defective product or joint tortfeasor. Likewise, there is no persuasive evidence that Cruz’s own negligence contributed to causing the accident.) Unfortunately for Cruz, Fonseca was practically judgment proof. He had no assets upon which to levy and could discharge any judgment in bankruptcy. Fonseca’s homeowner’s policy, having limits of $300,000, was woefully inadequate to satisfy Cruz’s damages, and the insurer initially denied coverage and refused to pay even this relatively scanty sum (as compared to Cruz’s enormous loss) because Fonseca, allegedly, had failed properly to declare his ownership of the boat. Eventually, the insurer tendered its policy limits pursuant to a confidential and complete settlement of Cruz’s claims and the derivative claims of his wife and children for loss of consortium, which the parties entered into on October 17, 2019. Of the $300,000 in insurance proceeds, which were not differentiated between claims or items of damages, the sum of $220,210.98 (“Gross Recovery”) was allocated, by Cruz’s attorney, to the settlement of Cruz’s cause(s) of action. The balance was allocated to the derivative claims of Cruz’s wife and children. Cruz’s Gross Recovery will be further reduced by attorney’s fees in the amount of $44,934.20 and costs totaling $2,842.70, leaving him a Net Recovery of $172,434.08. As mentioned, the recovery was an undifferentiated lump sum. It would be reasonable to infer that the defendant (and his carrier) had little or no interest in negotiating the manner of the plaintiffs’ distribution, between themselves, of the $300,000 settlement. There is no evidence of such bargaining, in any event. Consequently, an allocation of the recovery needed to be made, on the plaintiffs’ side, between the four injured parties (Cruz, his wife, and two children), each of whom had discrete losses for which Fonseca was liable. This is how the Gross Recovery wound up being exactly equal to the amount of medical assistance expenditures made on Cruz’s behalf by Medicaid. Cruz’s attorney testified that he had divided the $300,000 this way to give Cruz’s family members some recovery, albeit a small one, on their consortium claims. Since any allocation of the very limited, and arbitrarily capped, recovery of $300,000 between Cruz, on the one hand, and his family members, on the other, would necessarily be, at best, only very loosely related to the intrinsic value of each injured person’s individual claims; and because the Agency presented no evidence supporting an allocation that would have been as or more reasonable, the undersigned finds, based on the uncontested testimony of Cruz’s attorney, that setting aside approximately three-quarters of the insurance proceeds for the Gross Recovery, to match the Medicaid payments, was a reasonable and rational decision under the circumstances. The Agency was properly notified of Cruz’s personal injury action, and it informed the parties that medical assistance expenditures totaling $220,210.98 had been paid by Medicaid on Cruz’s behalf. The Agency asserted a lien for the reduced amount of $111,078.65 against Cruz’s settlement proceeds, pursuant to the formula found in section 409.910(11)(f). In their Joint Pre-hearing Stipulation, the parties stipulated to certain facts “which are admitted and require no proof at hearing,” including that the “application of the formula in [section] 409.910(11)(f) requires Mr. Cruz to pay back Medicaid $111,078.65 on its $220,210.98 lien … .” Given that Cruz’s litigation costs totaled $2,842.70, it is mathematically indisputable, based on the section 409.910(11)(f) equation, that the parties used the sum of $300,000 as Cruz’s gross settlement recovery.1 Therefore, although the evidence shows that Cruz’s Gross Recovery was, in fact, $220,210.98, his gross “Stipulated Recovery” is $300,000.2 The Medicaid payments for Cruz’s immediate, post-injury care comprise the lion’s share of his past medical expenses, there being, in addition, only the negligible sum of approximately $2,000, which was paid to the University of Miami Medical Group (“UMMG”). Thus, it is reasonable to treat the Medicaid payments of $220,210.98 as Cruz’s past medical expense damages, as Cruz has done without the Agency’s objection, for simplicity’s sake.3 There is no dispute that, under the anti-lien provision in the federal 1 [(300,000 × 0.75) - 2,842.70)] ÷ 2 = 111,078.65. 2 Had the Gross Recovery, rather than the Stipulated Recovery, been used as the value of the settlement for purposes of computing the default allocation under section 409.910(11)(f), the Agency’s statutory lien would have been reduced further, to $81,157.77. 3 Any difference, mathematically, in the lien amount which would result from adding in the UMMG payment is de minimus, in any event. Medicaid statute, the Agency’s lien attaches only to the portion of Cruz’s recovery attributable to past medical expenses. The ultimate question presented is whether the Agency’s default distribution, in the stipulated amount of $111,078.65, reflects “the portion of the total recovery which should be allocated”4 to Cruz’s recovery of past medical damages, or whether a lesser sum, from the total settlement, “should be allocated” to the recovery of past medical damages. It is Cruz’s burden to prove that the statutory allocation is greater than the amount which “should be” distributed to the Agency, and that the Agency’s default lien amount “should be” adjusted to better reflect the portion of his total recovery attributable to past medical expenses. For purposes of determining the portion of the “total recovery” that “should be allocated” to past medical expense damages, the undersigned will use the Stipulated Recovery as the value of the “total recovery,” even though that figure is greater than Cruz’s actual Gross Recovery, because the parties stipulated to a “total recovery” value of $300,000. To meet his burden, Cruz presented evidence at hearing, as is now typically done in cases such as this, with the goal of establishing the “true value” of his damages. Usually, and again as here, this evidence comes in the form of opinion testimony, from a trial attorney who specializes in personal injury law and represents plaintiffs in negligence actions. Cruz called two experienced plaintiff’s personal injury lawyers, one of whom is also a medical doctor, to give opinions on the valuation of his damages. The undersigned finds their opinions in this regard to be credible and persuasive. Moreover, the Agency did not offer any evidence to challenge Cruz’s valuation; no expert testimony was given, for example, by an attorney specializing in personal injury defense, which might have provided a different perspective on the value of Cruz’s case. Having no evidential basis for discounting or 4 See § 409.910(17)(b), Fla. Stat. disregarding the opinions of Cruz’s expert witnesses, the undersigned bases the findings on valuation that follow upon their unchallenged testimony. Cruz is requesting—and his expert witnesses opined that—the Medicaid lien should be adjusted according to a method that will be referred to herein as a “proportional reduction.” A proportional reduction adjusts the lien so that the Agency’s recovery is discounted in the same measure as the plaintiff’s recovery. In other words, if the plaintiff recovered 25% of the “true value” of his damages, then, under a proportional reduction, the Medicaid lien is adjusted so that the Agency recovers 25% of the medical assistance expenditures. The mathematical operation behind a basic proportional reduction is simple and requires no expertise. Using “r” to signify the plaintiff’s recovery; “v” to represent the “value” of his damages; “m” for medical assistance expenditures; and “x” as the variable for the adjusted lien amount, the equation is: (r ÷ v) × m = x. In these cases, the only unknown number (usually) is v,” i.e., the “value” of the plaintiff’s total damages. “True value,” sometimes also called “full value” or “total value,” is an elusive concept, given that the true value of damages which have not been liquidated by a judgment is not, and cannot be, known in a case that settles before the entry of a judgment. For purposes of this discussion, the undersigned will hereafter use the term “true value” to mean liquidated damages, i.e., damages reduced to judgment. To be clear, this is not how Cruz’s expert witnesses used the term. They used the term to refer to the amount that, had the personal injury case been tried to conclusion, Cruz’s attorneys would have “boarded” for the jury at trial and argued, in closing, that the jury should award the plaintiff for his total damages. For purposes of this discussion, the undersigned will use the term “plaintiff’s best-case value,” or “PBCv” for short, instead of “true value,” to refer to the amount that the plaintiff would have requested at trial in closing argument. Naturally, where there is a PBCv, there is also a “defendant’s best- case value,” or “DBCv.” In a jury trial, DBCv might well be $0, if the defendant is contesting liability, and it will nearly always be, in any event, less than PBCv. As mentioned above, the Agency chose not to present expert witness testimony as to DBCv, or any value. There are other constructs that might be considered in regard to value, such as, for example, the “fair market value” of the plaintiff’s case, or “MKTv” for short. As the undersigned will use the term herein, MKTv means the theoretical amount upon which the plaintiff and a solvent defendant, negotiating at arm’s length and without the constraint of an arbitrary financial cap on the defendant’s ability to pay, such as insurance policy limits or sovereign immunity, would agree to settle the case. MKTv reflects the strengths and weakness of the plaintiff’s case, both legal and factual, the strengths and weaknesses of the defendant’s case, both legal and factual, and all of the other considerations and motives driving the parties to reach a settlement agreement, except the defendant’s ability to pay. Generally speaking, MKTv should be a number greater than DBCv and less than PBCv. A plaintiff who has settled for MKTv effectively has made a full recovery. As the undersigned is using the term, MKTv is similar, but not identical, to the term “settlement value” as described in Mojica v. State, Agency for Health Care Administration, 285 So. 3d 393, 395 (Fla. 1st DCA 2019), which is yet another value construct. “Settlement value,” in the Mojica sense, which is how the undersigned will use the term herein, takes into account, among other factors, the “defendant’s ability to pay.” Id. Because a personal injury plaintiff does not have the option of negotiating with someone other than the potentially liable defendant to get a better deal, however, the “defendant’s ability to pay” does not seem like an appropriate factor to consider in establishing the MKTv of the plaintiff’s case. Put differently, while a settlement for MKTv can fairly be considered a full recovery, a settlement for “settlement value” would arguably not be a full recovery, if the plaintiff were required to accept a settlement discount attributable, in part, to the defendant’s ability to pay. This distinction makes no difference in this case, because Cruz did not recover even the “settlement value” of his case; he had no alternative but to accept the defendant’s limited insurance coverage as payment in full. In other words, in Cruz’s situation, the defendant’s ability to pay was not merely a factor in determining settlement value, it was the only factor. Cruz’s recovery, thus, was arbitrarily capped at $300,000, the coverage limit of the defendant’s only available insurance policy. For purposes of this discussion, the undersigned will refer to a settlement such as Cruz’s as an “arbitrary discount settlement.” An arbitrary discount settlement is “arbitrary” in the sense that the amount of the settlement bears no relationship to MKTv; the plaintiff is simply forced to accept what is, for him, a random haircut owing to a hard limit on the defendant’s ability to pay, which has nothing to do with the plaintiff’s damages or the defendant’s liability therefor.5 The uncontested and unimpeached expert testimony in this case establishes, by any standard of proof, that Cruz’s PBCv is no less than $6 million, which is the conservative figure presented by Cruz’s witnesses. The undersigned, frankly, would not have hesitated to find that Cruz’s noneconomic damages for past and future pain and suffering, alone, should be valued at $6 million, at a minimum, given the severity of the bodily destruction involved here. With respect to the economic damages of lost earning capacity and future medical expenses, Cruz’s evidence persuasively established significant losses, albeit without exactitude. Before his accident, Cruz had been earning 5 The amount of an arbitrary discount settlement should ordinarily be less than the settlement value of the plaintiff’s case, because the defendant’s limited ability to pay is the only relevant factor in determining the amount of an arbitrary discount settlement, whereas settlement value takes other factors into account, including but not limited to the defendant’s ability to pay. approximately $20 per hour as an HVAC technician. Assuming he were able to work full time at the same rate, without a raise, for the next 35 years, his wages would total $1.4 million, more or less. A sophisticated economic analysis would take into account wage growth over time, and it would discount future earnings to present value. As Cruz’s lawyers testified at hearing, however, money was simply not available, given Fonseca’s extremely limited insurance for Cruz’s substantial losses, to justify the expense of hiring an economist to perform such an analysis. The undersigned finds that the evidence is sufficient to prove that the present value of Cruz’s lost wages is at least $1 million, conservatively calculated, in view of the relatively young age (28) at which this previously fit working man became permanently disabled. Specificity in this regard is unnecessary in any event, because Cruz’s pain and suffering damages are easily $6 million. Similarly, Cruz’s evidence proves that he will incur future medical expenses “over six figures.” There is no genuine dispute about this, the Agency having offered no evidence to the contrary. It is undisputed that Cruz will require ongoing medical care, for the rest of his life, to treat complications arising from his severe injuries. To take just one example, the evidence shows that Cruz has yet to undergo a final surgical repair of his rectum. To be sure, in an ideal case, Cruz would have presented a life care plan developed by a suitable expert, cataloguing his future medical needs and estimated expenses, aggregated to a specific dollar amount, reduced to present value, and calculated to a reasonable degree of economic certainty. Unfortunately, paying such an expert for this kind of analysis would further have reduced Cruz’s already limited Net Recovery. The undersigned cannot fault Cruz’s attorneys for electing to forego such an expense, especially since, again, specificity in regard to future medical damages is unnecessary because Cruz’s noneconomic losses, without more, meet or exceed $6 million. Once Cruz made a prima facie showing of PBCv by adducing competent substantial evidence thereof, the Agency, if it wanted to prove that the PBCv in question, $6 million, is an inflated figure, needed to adduce some evidence that would have given the fact-finder an evidentiary basis for discounting or rejecting this value.6 Here, the Agency elected not to present evidence of value, but instead it chose to argue that Cruz has failed to prove that the particular medical-expense allocation he advocates should be made, and that, as a result, the default, statutory allocation should be made. As far as the evidence goes, therefore, the undersigned has no reasonable basis for rejecting the value of $6 million that Cruz’s witnesses testified was a conservative appraisal of Cruz’s total damages. Fonseca’s negligence was likely the sole proximate cause of the accident; there are, accordingly, no obvious weaknesses in Cruz’s case from the standpoint of establishing liability. Cruz testified ably in this proceeding and likely would have proved an excellent witness in the personal injury action, had it gone to trial. The ghastly nature of Cruz’s injuries, and Fonseca’s rather obvious liability for those injuries, likely would have resulted in a substantial plaintiff’s verdict, likely not less than $6 million, as the evidence persuasively shows. The undersigned finds, based on the unrebutted and unimpeached expert testimony adduced, that a proportional reduction methodology identifies the “portion of the total recovery which should be allocated” in this 6 To be clear, the undersigned is not shifting the burden of proof to the Agency. A petitioner, however, does not have the initial burden of putting on the personal injury defense case, in order to prove DBCv, nor does the petitioner have the initial burden of establishing matters, such as comparative negligence, which the defense might have relied upon in an arms-length negotiation to settle the case for value. Defense arguments are matters that the Agency may address in its case, if it wants to show that PBCv is inflated. But the Agency is not required to put on any such evidence. The Agency is free to present no evidence, rely solely on cross- examination of the petitioner’s witnesses to undermine the testimony elicited by the petitioner on direct, and then argue that the petitioner has failed to meet his burden of proof—as the Agency has done in this case. If the Agency takes this approach, however, it loses the opportunity affirmatively to prove that PBCv is too high, and it risks a finding that the unrebutted evidence of PBCv is a fair reflection of value. If, however, the Agency presents evidence of DBCv, MKTv, settlement value, or some alternative value, then the petitioner must rebut the evidence and try to overcome it, for the petitioner bears the ultimate burden of persuasion with regard to establishing the value of the petitioner’s damages. case as past medical expense damages. The undersigned considers Cruz’s unchallenged proof of PBCv sufficient to establish the probable “value” of his case, i.e., v in the proportional reduction formula, where, as here, such evidence, in addition to being unchallenged and unimpeached, is otherwise persuasive to the fact-finder. Although the use of a proportional reduction to determine the portion of the total recovery that “should be allocated” to past medical expenses is justified by the competent substantial evidence presented in this case, it is found that Cruz has advocated using an incorrect value in the proportional reduction formula. Cruz would apply the following values to the variables in the equation: r = $300,000; v = $6 million; and m = $111,078.65. Using these numbers results in a value of $5,553.93 for x, which is the amount of his recovery Cruz would allocate to past medical expense damages and thereby expose to the Medicaid lien. It is incorrect, however, to use the sum of $111,078.65 as the value for m, as Cruz urges. This figure is the amount produced by the statutory formula, which reduces the Agency’s recovery of actual Medicaid expenditures, by default. To use this figure in the proportional reduction formula would impose a double reduction on the Agency—an obvious injustice. The correct number for m is $220,210.98, the amount that Medicaid actually expended on Cruz’s behalf, without reduction. The undersigned finds, based on the evidence presented, including the stipulation as to Cruz’s total settlement recovery, that the correct values for the variables in the proportional reduction equation are: r = $300,000; v = $6 million; and m = $220,210.98. Using these numbers, the value of x is $11,010.55—or, 5% of $220,210.98.7 7 The ratio of 300,000 to 6,000,000 is 0.05. Because the unchallenged expert testimony persuasively shows that a proportional reduction is the appropriate method of adjusting the lien in this case; and because Cruz’s mistaken use of $111,078.65 as the value of m does not undermine the validity of the methodology, which is merely the mathematical expression of an analytical framework whose existence and underlying logic are independent of any specific values for r, v, m, and x, the undersigned does not believe that he must “throw out the baby with the bathwater” and make no lien adjustment simply because Cruz used the wrong value for m. This mistake may easily be corrected based on the evidence of record; and, ordinarily, evidence-based adjustments of a factual nature would be within the province of the fact-finder to make.8 The undersigned determines as a matter of ultimate fact, therefore, that the portion of the Stipulated Recovery that “should be allocated” to past medical expense damages is $11,010.55.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or AHCA), from settlement proceeds received from third parties by Petitioners, Ray A. Siewert and Rose E. Siewert, for medical expenses paid on behalf of Petitioner, Mr. Siewert.
Findings Of Fact Stipulated Findings of Fact On October 15, 2017, the Siewerts were involved in a motorcycle versus automobile crash, which required extensive hospital, skilled nursing, therapy, and other medical treatment including, but not limited to, a four- level spinal fusion procedure and rehabilitative care and services for Mr. Siewert and multiple leg surgeries for Mrs. Siewert, that ultimately led to an above-the-knee amputation (hereinafter referred to as the “auto claims”). On January 3, 2018, Mr. Siewert was discharged from a rehabilitation facility to his home, where he began receiving home health nursing, physician, and therapy services. On January 22, 2018, Mr. Siewert was diagnosed with an abscess near his surgical site, which was allegedly not properly addressed in the days that followed. On January 31, 2018, Mr. Siewert was hospitalized due to worsening neurological deficits, namely in his lower body, and he was transferred to the hospital that had performed his prior spinal surgery. On February 1, 2018, Mr. Siewert had another spinal surgery to address an abscess compressing on his spinal cord, leading to the decreased neurological function. The damage done to his spinal cord preoperatively was significant enough that he has been unable to walk since January 31, 2018, and remains bedbound to present. Mr. Siewert has a neurogenic bladder/bowel, wears diapers, has to be catheterized multiple times per day,1 and is unable to ambulate. To date, he is living with his wife in a single room residence at a skilled nursing facility in the Orlando area, where he is expected to remain.2 The Siewerts brought the following claims: negligence claims relating to the auto claims; nursing home neglect claims under chapter 400, Florida Statutes; and medical malpractice claims under chapter 766, Florida Statutes, each of which were pursued against several companies/entities, individuals, and healthcare providers, seeking, in part, compensable damages to the Siewerts for past bills and future economic needs as well as noneconomic mental pain and suffering and consortium claims for their injuries and losses. In April 2021, the Siewerts settled one of the medical malpractice claims for a limited confidential amount. The Siewerts have had a health plan with Aetna Better Health of Florida, which is a Medicaid plan through AHCA, that has retained the services of Equain relating to the settlement of part of the Siewerts’ medical malpractice claims (referred to below as “Aetna”). Aetna was properly notified of the Siewert’s medical malpractice claims against those defendants and indicated it had paid benefits related to the injuries from the incident in the amount of $75,923.82, as it relates to the settlement at issue. Through their counsel, the Siewerts have asked Aetna to accept a reduced lien amount given the other claims still pending and large 1 The evidence adduced at hearing indicates that Mr. Siewert has now been fitted with a permanent abdominal suprapubic catheter. 2 Though Mrs. Siewert could manage in an assisted living facility, Mr. Siewert could not. Thus, Mrs. Siewert has chosen to stay in the skilled nursing facility to be with her husband. total case value. Nonetheless, Aetna has continued to assert a lien, for the amount of $75,923.82, against the Siewerts’ settlement proceeds relating to the single settlement. Aetna has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory reduction formula to this particular settlement would result in no reduction of this lien given the amount of the settlement. The Siewerts also have been covered by AHCA’s fee-for-service Medicaid program. AHCA has contracted with Health Management Systems and Conduent to run its recovery program. AHCA was properly notified of the Siewerts’ medical malpractice claims against those defendants. AHCA provided medical assistance benefits related to the injuries from the incident in the amount of $33,836.09. Through their counsel, the Siewerts have asked AHCA to accept a reduced lien amount. AHCA has continued to assert a lien for the amount of $33,836.09, against the Siewerts’ settlement proceeds relating to the single settlement. AHCA has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory reduction formula to this particular settlement would result in no reduction of this lien given the amount of the settlement. AHCA’s $33,836.09 payment and Aetna’s $75,923.82 payment total $109,759.91, and this amount constitutes Mr. Siewert’s claim for past medical expense damages. There remain claims against numerous other defendants which also relate to the AHCA and Aetna liens at issue, including all remaining defendants in the auto and medical malpractice claims. Repayment to AHCA’s Medicaid program is prioritized by law and contract over Medicaid-managed care plans Facts Adduced at Hearing During the pendency of the medical malpractice action, AHCA was notified of the action. AHCA did not commence a civil action to enforce its rights under section 409.910, nor did it intervene or join in the medical malpractice action against the Defendants. AHCA has not filed a motion to set aside, void, or otherwise dispute the settlement. The Medicaid program, through AHCA, spent $33,836.09 on behalf of Mr. Siewert, all of which represents expenditures paid for past medical expenses. No portion of the $33,836.09 paid by AHCA through the Medicaid program on behalf of Mr. Siewert represented expenditures for future medical expenses. The $33,836.09 in Medicaid funds paid by AHCA is the maximum amount that may be recovered by AHCA. There was no evidence of the taxable costs incurred in securing the settlement. Application of the formula at section 409.910(11)(f) to the settlement requires payment to AHCA of the full $33,836.09 Medicaid lien asserted by AHCA, and the full $75,923.82 Medicaid lien asserted by Aetna. Petitioners have deposited the full Medicaid lien amount in an interest-bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). There was no suggestion that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. The evidence firmly established that Mr. Siewert incurred economic damages, consisting of lost future earnings, past medical expenses, and future medical expenses. Mr. Gilbert and Mr. Marx testified that those economic damages totaled roughly $2,000,000. However, the economic loss analysis upon which their testimony was based showed a total of $1,770,775 in future life care needs for Mr. Siewert, reduced to present value.3 The only direct evidence of past medical expenses was the $109,759.91 in Medicaid expenditures. There was no evidence of other economic damages. Thus, the evidence established that economic damages total $1,880,534.90. The total amount of damages for Mr. Siewert was calculated to be $10,000,000, which was described as a conservative figure based on the knowledge and experience of Mr. Gilbert and Mr. Marx, and based on an analysis of representative jury verdicts involving comparable facts and damages. However, Mr. Gilbert engaged in a more detailed analysis of Mr. Siewert’s non-economic damages, which requires review. Although comparable jury verdicts suggest that it could be considerably more, Mr. Gilbert testified that his calculation, though subjective, would include $3,000,000 in non-economic damages in the past three years, and an additional $4,000,000 in non-economic damages into the future based upon a projected 12-year life expectancy, for a total amount of non-economic damages of $7,000,000. That figure was accepted by both of the testifying experts. As part of Petitioners’ calculation of the total value of the claim was $1,000,000 in loss-of-consortium damages incurred by Mrs. Siewert. Although the loss of consortium technically applies to the loss of the full marital relationship previously enjoyed by Mrs. Siewert, who is not the Medicaid recipient, that value was included as an element of the claim and settlement. Based on the forgoing, the evidence supports, and it is found that $9,880,534.90, as a full measure of Petitioners’ combined damages, is a conservative and appropriate figure against which to calculate any lesser 3 Respondent objected to the life care plan on the basis of hearsay. However, the plan was not being offered for the truth of the matter asserted, i.e., that Mr. Siewert would be expected to incur $1,770,775 for future care, but was offered as evidence of the more general value of a claim in litigation. Furthermore, the life care plan, even if inadmissible, could be used as support of an expert opinion as to claim valuation “when those underlying facts are of a type relied upon by experts in the subject to support the opinions expressed.” Charles W. Ehrhardt, Florida Evidence, § 704.1 (2020 Edition). A life care plan is evidence that, for that purpose, would “be sufficiently trustworthy to make the reliance reasonable.” Id. portion of the total recovery that should be allocated as reimbursement for the Medicaid lien for past medical expenses. The full value of the settlement is 5.06 percent of the $9,880,534.90 value of the claim.
The Issue What amount is payable to Respondent, Agency for Health Care Administration (“AHCA”), as reimbursement for medical expenses paid on behalf of Petitioners, Carla Barrientos, a minor, by and through her parents and natural guardians, Asuncion Gutierrez and Carlos Barrientos, pursuant to section 409.910, Florida Statutes, from settlement proceeds they received from third parties?
Findings Of Fact Based on the weight of the credible and undisputed evidence, the total value of Petitioners’ medical malpractice damages was $17.5 million and, thus, the $1.75 million undifferentiated settlement resulted in Petitioners recovering ten percent of Carla’s past medical expenses. Based on the weight of the credible and undisputed evidence, $25,108.19—representing ten percent of total amount of past medical expenses of $251,081.89—is a fair and reasonable determination of the past medical expenses actually recovered by Petitioners and payable to AHCA.
The Issue The issue is whether, pursuant to section 409.910(17)(b), Florida Statutes (2015), Respondent's recovery of medical assistance expenditures from Petitioner's settlement proceeds must be reduced from the amount calculated by the statutory formula contained in section 409.910(11)(f) (Statutory Formula).
Findings Of Fact On March 14, 2015, Petitioner lost control of his motorcycle while on the premises of a Chevron station in Cutler Bay, Florida. Skidding on a greasy or oily surface, the motorcycle fell onto Petitioner, badly injuring a lower extremity. Petitioner was transported to a hospital where he was diagnosed with fractures of the ankle, tibia, and fibula. He underwent surgery to repair the fractures. Released from the hospital after several days, Petitioner was seen by his surgeon on an outpatient basis during numerous office visits from March 19 through September 17, 2015. In July 2015, Petitioner commenced a tort action against the operator of the gas station. In February 2016, Petitioner settled the case for $192,500. The settlement agreement makes no allocation among various items of damages. Applying the Statutory Formula to the $192,500 settlement, 25 percent is reserved for attorneys' fees, leaving a net of $144,375, which is divided equally between Respondent and Petitioner. This would allow Respondent to lien a maximum of $72,187 or, in this case, the actual medical assistance expenditures of $12,643. Petitioner's expert witness, a personal injury attorney, established that a jury likely would have found Petitioner about 50-70 percent liable, ultimately projecting a halving of the damages due to comparative negligence. The witness also established that there was a "high likelihood" that a jury might have returned a zero verdict due to the resistance of some juries to award damages in any motorcycle case. The expert witness established that the past medical expenses totaled $25,822. This figure consists of $13,179 billed by the surgeon's orthopedic group, which did not accept Medicaid, and Respondent's medical assistance payments of $12,643, which equals the amount of the Medicaid lien. The expert witness testified to a loss of earning capacity of $80,000 to $140,000. The $80,000 figure is credited due to the lack of evidence of the effect of Petitioner's injuries on his ability to perform the duties of his job as an air-conditioning technician, as well as the absence of future medical expenses in this case. The expert witness testified to $23,000 in lost wages, which is credited. Petitioner's economic damages thus totaled about $138,000. The expert testified that noneconomic damages would amount to double or triple the amount of economic damages. Again, absent affirmative evidence of pain and suffering, Petitioner has established pain and suffering damages in an amount no greater than double the amount of economic damages, or about $276,000 in noneconomic damages. The total of economic and noneconomic damages would thus approximate $414,000. Discounting this projection to $192,500 was reasonable. For example, a finding of 50 percent comparative negligence would reduce the award to $207,000, and the risk of a zero verdict could be valued at another reduction of about $25,000. Alternatively, a finding of 70 percent comparative negligence would reduce the award to about $124,000. Petitioner's attorney was entitled to a contingent attorneys' fee. Under Florida Rules of Professional Conduct Rule 4-1.5(4)(B)(i)b.1., maximum reasonable attorneys' fees under these circumstances would be 40 percent, leaving a net recovery of $115,500. There would be no settlement proceeds whatsoever without the prosecution of the case by Petitioner's counsel, so the settlement proceeds must first be reduced by the 40-percent contingency fee, leaving a remainder of $115,500, in determining Respondent's recovery amount. The fraction of $115,500 divided by $414,000 is the ratio of the settlement to the full value of the case (Full Value Ratio). The portion of the settlement proceeds representing a specific item of damages may be determined by multiplying the item of damages by this ratio: for the portion of the net settlement proceeds allocable to past medical expenses, $25,000 is multiplied by 115,500 and divided by 414,000 to yield $6975. But Respondent's lien does not extend to all of the past medical expenses. Respondent expended medical assistance for a little less than half of these medical expenses. The rest were not paid by Respondent, and Respondent has no more interest in this portion of this damages item than it has in Petitioner's pain and suffering, lost wages, or loss of future earning capacity. This necessitates a further reduction of the $6975 by multiplying it by a second ratio consisting of Respondent's medical assistance expenditures of $12,643 divided by the total medical expenses of about $25,822. This yields $3415, which, as discussed in the Conclusions of Law, represents the maximum amount of the settlement proceeds subject to Respondent's Medicaid lien without violating the Anti-Lien Statute.
The Issue The amount to be reimbursed to Respondent, Agency for Health Care Administration (“Respondent” or “AHCA”), for medical expenses paid on behalf of Petitioner, Mitchell Fowler, from settlement proceeds received by Petitioner from third parties.
Findings Of Fact On September 4, 2016, Mr. Fowler suffered a catastrophic and permanent spinal cord injury when he fell at a boat ramp. Mr. Fowler is now a paraplegic unable to walk, stand, or ambulate without assistance. Mr. Fowler’s medical care related to his injury was paid by Medicaid. Medicaid, through AHCA, provided $74,693.24 in benefits and Medicaid, through a Medicaid Managed Care Plan known as Humana, provided $7,941.28 in benefits. The sum of these Medicaid benefits, $82,634.52, constituted Mr. Fowler’s entire claim for past medical expenses. Mr. Fowler pursued a personal injury action against the owner/operator of the boat ramp where the accident occurred (“Defendants”) to recover all his damages. The personal injury action settled through a series of confidential settlements in a lump-sum unallocated amount of $800,000. As a condition of Mr. Fowler’s eligibility for Medicaid, Mr. Fowler assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See § 409.910(6)(b), Fla. Stat. During the pendency of the medical malpractice action, AHCA was notified of the action and AHCA asserted a $74,693.24 Medicaid lien associated with Mr. Fowler’s cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910, nor did it intervene or join in the medical malpractice action against the Defendants. By letter, AHCA was notified of the settlements. AHCA has not filed a motion to set aside, void, or otherwise dispute the settlements. The Medicaid program through AHCA spent $74,693.24 on behalf of Mr. Fowler, all of which represents expenditures paid for past medical expenses. No portion of the $74,693.24 paid by AHCA through the Medicaid program on behalf of Mr. Fowler represented expenditures for future medical expenses. The $74,693.24 in Medicaid funds paid towards the care of Mr. Fowler by AHCA is the maximum amount that may be recovered by AHCA. In addition to the foregoing, Humana spent $7,941.28 on Mr. Fowler’s medical expenses. Thus, the total amount of past medical expenses incurred by Mr. Fowler is $82,634.52. The taxable costs incurred in securing the settlements totaled $45,995.89. Application of the formula at section 409.910(11)(f) to the $800,000 settlement requires payment to AHCA of the full $74,693.24 Medicaid lien. Petitioner deposited the full Medicaid lien amount in an interest- bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). There was no suggestion that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. The evidence firmly established that the total of Mr. Fowler’s economic damages, including future medical expenses, were $5,652,761.00 which, added to the $82,634.52 in past medical expenses, results in a sum of $5,735,395.52 in economic damages. Based on the experience of the testifying experts, and taking into account jury verdicts in comparable cases, Petitioner established, by clear and convincing evidence that was unrebutted by AHCA, that non-economic damages alone could reasonably be up to $26,000,000. When added to the economic damages, a value of Mr. Fowler’s total damages well in excess of $30,000,000 would not be unreasonable. However, in order to establish a very conservative figure against which to measure Mr. Fowler’s damages, both experts agreed that $15,000,000 would be a reasonable measure of Mr. Fowler’s damages for purposes of this proceeding. Based on the forgoing, it is found that $15,000,000, as a full measure of Mr. Fowler’s damages, is very conservative, and is a fair and appropriate figure against which to calculate any lesser portion of the total recovery that should be allocated as reimbursement for the Medicaid lien for past medical expenses. The $800,000 settlement is 5.33 percent of the $15,000,000 conservative value of the claim.
The Issue What is the proper amount of Petitioners' personal injury settlement payable to Respondent, Agency for Health Care Administration ("AHCA"), to satisfy AHCA's $51,130.05 Medicaid lien under section 409.910(17)(b), Florida Statutes.
Findings Of Fact Based on the stipulations of the parties, the evidence presented at the hearing, and the record as a whole, the following findings of fact are made: On January 31, 2007, Rickey D. ("Rickey"), who was then four years old, was struck by a car outside an apartment complex. Rickey suffered severe life-threatening injuries, including a fractured femur, fractured skull, and a closed head injury with traumatic brain damage. JPHS, pp. 9 and 10, ¶ 1. Rickey's medical care related to the injury was paid by Medicaid. Medicaid provided $51,130.05 in benefits associated with Rickey's injury. The $51,130.05 constituted Rickey's entire claim for past medical expenses. JPHS, p. 10, ¶ 2. Rickey's parents and natural guardians, Lolita D. and Rickey O.D., brought a personal injury claim against the driver/owner of the car that caused the accident and the apartment complex where the accident occurred ("Defendants"). They sought recovery of all of Rickey's damages associated with his injuries, as well as their own individual damages associated with their son's injuries. JPHS, p. 10, ¶ 3; Pet. Ex. 4. The personal injury action was settled for a lump sum, unallocated amount of $285,000.00, which consisted of $275,000.00 paid by the apartment complex and $10,000.00 in bodily injury/uninsured motorist ("BI/UM") insurance policy limits paid by the driver.1/ The circuit court in Miami-Dade County approved the minor's settlement by entry of an Order Approving Settlement, dated February 2, 2014. 2/ JPHS, p. 10, ¶ 4 and ¶ 5; Pet. Ex. 5. As a condition of Rickey's eligibility for Medicaid, Petitioners' assigned to AHCA their right to recover from liable third parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) and § 409.910(6)(b), Fla. Stat. During the pendency of Petitioners' lawsuit, AHCA was notified of the court action. JPHS, p. 10, ¶ 6. AHCA did not commence a civil action to enforce its rights under section 409.910, or intervene or join in Petitioners' court action against the Defendants.3/ JPHS, p. 10, ¶ 7. Instead, AHCA asserted a $51,130.05 Medicaid lien against Petitioners' cause of action and settlement of that action. JPHS, p. 10, ¶ 6. AHCA did not file a motion to set aside, void, or otherwise dispute Petitioners' settlement with the Defendants. JPHS, p. 10, ¶ 8. The Medicaid program spent $51,130.05 on behalf of Rickey, all of which represents expenditures paid for Rickey's past medical expenses. JPHS, p. 10, ¶ 9. Application of the formula at section 409.910(11)(f) to Rickey's $285,000.00 settlement requires payment to AHCA of the full $51,130.05 Medicaid lien. JPHS, p. 10, ¶ 10. As ordered by the circuit court, Petitioners deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights. This constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). JPHS, p. 11, ¶ 11. Testimony of Jorge C. Borron, Esquire The only witness called during the hearing was Borron. He has been a trial attorney for 32 years and is a sole practitioner at his Coral Gables law office, Jorge C. Borron, LLC. The majority of Borron's practice is personal injury litigation with a focus on car accidents. He has handled cases involving injuries to children. He routinely handles jury trials, and depending on the year, will have two to four jury trials each year. Borron stays current regarding personal injury verdicts by reviewing jury verdict reporters and discussing personal injury verdicts and valuations with other attorneys in his geographical area. After taking a case, Borron regularly reviews and studies his client's medical records and deposes/interviews doctors and other experts concerning his client's injuries. Borron testified that as a routine part of his practice he makes assessments concerning the value of personal injury damages suffered by his clients. Petitioners proffered Borron as an expert in the valuation of damages. It is worth noting that AHCA did not voir dire Borron and did not object to his tender as an expert in the valuation of personal injury damages.4/ The undersigned ruled that he would consider Borron's opinion testimony on the subject of the valuation of damages.5/ Borron represented Rickey and his family in the underlying personal injury lawsuit. Originally, Attorney Knecht represented Rickey and his family, but Knecht brought Borron into the case in 2013 to handle the jury trial due to Knecht's advanced age. As a part of his representation, Borron reviewed and familiarized himself with the accident report and Rickey's medical records, deposed/interviewed experts and fact witnesses, and met with Rickey and his family numerous times. Rickey's Accident, Injuries, and Prognosis On January 31, 2007, young Rickey followed his older sister out of the apartment where they lived with their parents. He walked between two cars in the parking lot and darted out in front of a car, which struck him. In the accident, Rickey suffered a compound fracture of his femur, a skull fracture, a traumatic brain injury, and lost consciousness. Rickey was transported to Jackson Memorial Hospital where he received medical treatment until he was discharged on February 22, 2007. At the hospital, his discharge papers diagnosed him with a left comminuted femur fracture and a nondisplaced skull fracture. Pet. Ex. 2. Rickey's injury had a tremendous impact on his life. Besides the adverse physical effects from his femur fracture, Rickey suffers from the effects of a traumatic brain injury with cognitive deficits, abnormal behavior issues, and an attention deficit disorder. During his representation of Rickey, Borron sent his client to two neurologists. They both separately diagnosed Rickey with problems associated with the executive function in the frontal lobe of his brain. Dr. Jorge A. Herrara issued a detailed report and concluded, among other things, that Rickey's condition points "to the presence of impairments in the executive functions mediated by the frontal lobes (referring to Rickey's brain)." Pet. Ex. 2, p. 14. The other neurologist, Dr. Ross, conducted an electrocardiograph with abnormal results. The uncontroverted evidence revealed that Rickey's traumatic brain injury is permanent and he will suffer its adverse effects and certain health and emotional-related issues for the remainder of his life. Based on his training, experience, and knowledge of the case, it was Borron's opinion that Rickey's personal injury damages had a value of between $1,500,000.00 to $2,500,000.00. In preparation for settlement mediation in the underlying personal injury case, Borron undertook to estimate the value of Petitioners' claim for future medical expenses as well. He consulted with Rickey's neurologists concerning his prognosis to determine what kind of medical treatment he would need in the future. Based on these discussions, Borron estimated that Rickey would need $815,000.00 in medical care from age nine (his age at the time of mediation) until age 22. In Borron's opinion, adding the $815,000.00 for future medical expenses to Rickey's $51,130.05 claim for past medical expenses would constitute Rickey's total economic damages. Borron opined that the claim for economic damages added to Petitioners' claim for noneconomic damages would push the full value of Rickey's personal injury damages to the range of $1,500,000.00 to $2,500,000.00. Had the case not settled and a trial taken place, Borron testified that he would have expected a jury to determine the value of Rickey's damages to be at, or between, $1,500,000.00 to $2,500,000.00. Borron discussed Petitioners' case with Attorney Knecht and consulted with several other attorneys. They concurred that Rickey's personal injury damages had a value of between $1,500,000.00 to $2,500,000.00. Borron testified that using $1,250,000.00 as the estimated value of all Rickey's personal injury damages would be a conservative value. Due to defenses raised and issues of disputed liability with the apartment complex, the case against the apartment complex settled just prior to trial for $275,000.00, plus a $10,000.00 settlement with the insurance company for uninsured motorist coverage, for a total settlement of $285,000.00. The uncontroverted evidence revealed that the combined settlement of $285,000.00 received by Petitioners did not fully compensate Rickey for the value of his damages. Borron opined that in using the value of all Rickey's damages of $1,250,000.00 compared to the $285,000.00 settlement, that the total settlement amount recovered represented a proportional recovery of 22.8 percent of the true value of all Rickey's personal injury damages. Borron testified that because Rickey only recovered 22.8 percent of the true value of his damages in the global settlement, that Petitioners had likewise recovered only 22.8 percent of Rickey's claim for past medical expenses in the settlement agreement, or $11,657.66. Borron testified that an allocation of $11,657.66 of the $285,000.00 settlement as recovery for Rickey's past medical expenses would be a reasonable and fair allocation. Of particular consequence to this case, AHCA did not call any expert witnesses nor did it present any evidence to rebut Petitioners' presentation, proof, or proposed allocation of $11,657.66 to past medical expenses. AHCA did not dispute or present any persuasive evidence or arguments that Rickey's injuries were overstated or incorrectly described by Borron. On AHCA's cross-examination of Borron, the methodology used by Borron to arrive at his opinion concerning a fair allocation of past medical expenses was not challenged or persuasively overcome by AHCA. Simply put, the amount of $11,657.66 proposed by Petitioners as a fair allocation of past medical expenses from the settlement agreement was unrefuted and unchallenged by AHCA. Petitioners proved by a preponderance of the evidence that $11,657.66 was a fair allocation of the total settlement amount to past medical expenses. There was no basis or evidence in the record to reject Borron's opinion or reach any other conclusion concerning a fair allocation other than the amount of $11,657.66 proposed by Petitioners.
The Issue The issue in this proceeding is how much of Petitioner’s settlement proceeds should be reimbursed to Respondent, Agency for Health Care Administration (“AHCA”), to satisfy AHCA's Medicaid lien under section 409.910, Florida Statutes, from settlement proceeds he received from a third party.
Findings Of Fact The following findings are based on testimony, exhibits accepted into evidence, and admitted facts stated in the Joint Pre-Hearing Stipulation. Facts Concerning Underlying Personal Injury Matter and Giving Rise to Medicaid Lien On January 6, 2012, Arnie Solheim, a then 15-year-old boy, ran away from his group home and was struck by a vehicle while walking up an interstate ramp. Mr. Solheim had a history of running away from his group home residence. As a result of the incident, Mr. Solheim suffered permanent and severe injuries including brain damage, blindness in one eye, and paralysis. Due to his injuries, Mr. Solheim will require 24 hours-a-day supervision for the remainder of his life. Mr. Solheim’s medical care related to the injury was paid by Medicaid, and Medicaid through AHCA provided $187,302.46 in benefits. Accordingly, $187,302.46 constituted Mr. Solheim’s full claim for past medical expenses. Mr. Solheim’s mother, Rosepatrice Solheim, was appointed Mr. Solheim’s Plenary Guardian. Rosepatrice Solheim, as Mr. Solheim’s Guardian, filed a personal injury action against the parties allegedly liable for Mr. Solheim’s injuries (“Defendants”) to recover all of Mr. Solheim’s damages, as well as her and her husband’s individual damages associated with their son’s injuries. Mr. Solheim’s personal injury action was settled through a series of confidential settlements in a lump-sum unallocated amount. This settlement was approved by the circuit court. During the pendency of Mr. Solheim’s personal injury action, AHCA was notified of the action and AHCA asserted a Medicaid lien of $187,302.46 against Mr. Solheim’s cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Mr. Solheim’s action against the Defendants. By letter dated October 9, 2019, AHCA was notified of Mr. Solheim’s settlement. To date, AHCA has not filed a motion to set-aside, void, or otherwise dispute Mr. Solheim’s settlement. The Medicaid program through AHCA spent $187,302.46 on behalf of Mr. Solheim, all of which represents expenditures paid for Mr. Solheim’s past medical expenses. Mr. Solheim’s taxable costs incurred in securing the settlement totaled $76,229.38. Application of the formula at section 409.910(11)(f) to Mr. Solheim’s settlement requires payment to AHCA of the full $187,302.46 Medicaid lien. Expert Testimony Petitioner called two experts to testify on his behalf pertaining to valuation of Petitioner’s damages, Richard Filson and Karen Gievers. Mr. Filson, an attorney practicing law at Filson and Fenge law firm in Sarasota, Florida, has been practicing law for 36 years. He represented Mr. Solheim in the underlying case. In addition to Petitioner’s case, he has represented clients in personal injury matters representing children and childrens’ rights cases, including cases involving brain injury and paralysis. Mr. Filson evaluated Petitioner’s case and opined that $10 million was a conservative valuation of the case. The valuation of the case encompasses past medical expenses, future medical expenses, economic damages, and pain and suffering. Mr. Filson pursued the action against three defendants. He testified that there would be no admission of liability. The group home was alleged to have failed to appropriately evaluate the risk and placement of Mr. Solheim, including placing Mr. Solheim in a locked unit to maintain his safety. However, there were issues with recovering from the facility. There was a dispute regarding the director’s degree of responsibility for Mr. Solheim’s elopement. As a result, Mr. Filson opined that Petitioner settled the case for a lower amount because of liability and collectability issues with the group home. Mr. Filson opined that Mr. Solheim’s $1,150,00.00 settlement represented 11.5 percent of the full $10 million value of his claim, including past medical expenses. He relied upon the comprehensive plan and the extent of Mr. Solheim’s catastrophic injuries to assess the value of the case. Mr. Filson opined that the allocation formula is 11.5 percent. The past medical expenses totaled $187,302.46. That figure multiplied by 11.5 percent would result in recovery of $21,539.78 of the settlement proceeds allocated to past medical expenses. Karen Gievers also testified as an expert regarding valuation of Mr. Solheim’s claim. Ms. Gievers, a licensed attorney for 42 years and a former circuit court judge, focuses her practice on civil litigation. In her practice as an attorney, she has handled personal injury cases involving catastrophic injuries similar to Mr. Solheim’s injuries. Like Mr. Filson, she has also represented children in her practice. Ms. Gievers opined that the value of Mr. Solheim’s case was conservatively estimated at $10 million. She opined that Mr. Solheim’s settlement amount of $1,150,000.00 resulted in a recovery of 11.5 percent of the full value of his claim. She opined that applying the 11.5 percent to each damage category is the appropriate way to allocate the amount of damages across all categories. Thus, applying the allocation formula of 11.5 percent to the $187,302.46 claim for past medical expenses would be $21,539.78. Ms. Gievers looked at Mr. Solheim’s economic and noneconomic damages in her valuation of the case. She reviewed the comprehensive care plan and noted that all costs were not included, which would add to the value of the case being greater than Mr. Solheim’s actual recovery. Petitioner asserted that the $1,150,000.00 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Mr. Solheim for his full value of damages. Therefore, a lesser portion of the settlement should be allocated to reimburse AHCA, instead of the full amount of the lien. Ultimate Findings of Fact Mr. Filson and Ms. Gievers credibly opined that a ratio should be applied based on the full value of Petitioner’s damages, $10,000,000.00, compared to the amount that Petitioner actually recovered, $1,150,000.00. Based on this formula, Petitioner’s settlement represents an 11.5 percent recovery of Petitioner’s full value of damages. Similarly, the AHCA lien should be reduced and the amount of reimbursement to AHCA should be 11.5 percent of the Medicaid lien. Therefore, $21,539.78 is the portion of the third- party settlement that represents the amount AHCA should recover for its payments for Mr. Solheim’s past medical care. The expert witnesses’ testimony was supported by their extensive experience in valuing damages and their knowledge of Mr. Solheim’s injuries. AHCA, on the other hand, did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Filson or Ms. Gievers. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Filson or Ms. Gievers as to valuation or the reduction ratio. AHCA did not offer alternative opinions on the damage valuation method suggested by either Mr. Filson or Ms. Gievers. Based on the record, the testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Based on the evidence in the record, the undersigned finds that, Petitioner proved by a preponderance of the evidence that a lesser portion of Mr. Solheim’s settlement should be allocated as reimbursement for past medical expenses than the amount AHCA calculated. Accordingly, AHCA is entitled to recover $21,539.78 from Petitioner’s recovery of $1,150,000.00 to satisfy the Medicaid lien.
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or Agency), for medical expenses paid on behalf of Petitioner, Tyra Pierre, from a medical-malpractice settlement received by Petitioner from a third party.
Findings Of Fact On November 4, 2011, Petitioner, Tyra Pierre (Petitioner), fell from the window of the fourth floor apartment where she lived with her mother, Yanique Benjamin, in North Miami Beach, Florida. The apartment was owned by Harvard House, LLC (Harvard House). Petitioner was airlifted to, and treated at, Jackson Memorial Hospital Trauma Center. Petitioner suffered a spinal cord injury at cervical level C7-C8, and is paralyzed from the waist down, rendering her a permanent paraplegic. Medicaid paid for Petitioner’s medical expenses in the amount of $530,258.86. Petitioner was three years old at the time of her injury and has a normal life expectancy of 72.9 years. Petitioner is wheel-chair bound. She has no control of her bladder or bowels. Paraplegics suffer from a number of attendant complications, such as erosion of skin integrity, pressure ulcers, and kidney, bladder, and digestive system disorders. Paraplegics require care from neurologists, neurosurgeons, orthopedic surgeons, and gastroenterologists, among other physicians, throughout their normal life expectancy. Ms. Benjamin retained Scott Leeds, an attorney specializing in personal and catastrophic injury claims, to represent Petitioner in a personal injury claim against Harvard House. Mr. Leeds served Harvard House with a Notice of Intent to Initiate Litigation on December 29, 2011. The insurance liability of Harvard House was limited to $1 million. During discovery, Mr. Leeds determined Harvard House had no other collectible assets. Petitioner settled with Harvard House pre-suit for $750,000.1/ Mr. Leeds has practiced law in the area of catastrophic personal injury for 31 years. He has represented children in cases seeking damages for catastrophic injury. As part of his practice, Mr. Leeds routinely estimates the value of damages suffered by his clients. The components of damages in catastrophic personal injury cases generally follow the elements set out in a jury verdict form, including economic damages, such as past medical expenses (date of injury to date of trial), future medical expenses, loss of past earnings, loss of future earning capacity, past attendant care and rehabilitation, future attendant care and rehabilitation; as well as non-economic damages, such as past and future pain and suffering, and loss of enjoyment of life. Petitioner’s claim for past medical expenses is valued at $530,258.86, the amount paid by Medicaid for her past treatment. Mr. Leeds estimated Petitioner’s future medical care expenses at $8 million, based on statistics from the Christopher and Dana Reeves Foundation. Mr. Leeds testified that Petitioner’s attendant care costs for her expected lifetime are an additional $9 million. Mr. Leeds’ estimate of Petitioner’s economic damages is $17.5 million before valuing Petitioner’s loss of future earning capacity. Mr. Leeds’ opinion on the value of Petitioner’s damages is informed by his experience representing children in two separate catastrophic injury cases. In both cases, the children were under five years old and their injuries resulted in paraplegia. In both cases, Mr. Leeds negotiated structured settlements for the children in excess of $20 million in future benefits over the children’s lifetime. Mr. Leeds testified, convincingly, that a jury would likely award Petitioner a substantial sum to compensate Petitioner for her non-economic damages, given her life expectancy of over 70 years to endure the consequences of her injury. Mr. Leeds’ valuation of Petitioner’s combined economic and non-economic damages in excess of $20 million is accepted as credible and reliable, as well as persuasive. Petitioner also presented the testimony of a second expert in valuing damages in catastrophic personal injury cases, R. Vinson Barrett, Jr. Mr. Barrett is a civil trial lawyer who has practiced exclusively in the area of personal injury for the past 30 years. He is a senior partner in the law firm of Barrett, Fasig & Brooks in Tallahassee, Florida. In preparing for his testimony, Mr. Barrett reviewed Petitioner’s medical records, the police report filed on the date of Petitioner’s injury, Mr. Leeds' demand letter to Harvard House, some discovery documents, the settlement, and the court order approving the settlement. In formulating his opinion as to the value of Petitioner’s damages, Mr. Barrett also consulted with colleagues practicing personal injury law in South Florida. According to Mr. Barrett, jury awards vary by region in the state of Florida, with South Florida juries returning high jury verdicts in personal injury cases. Mr. Barrett emphatically agreed that the value of Petitioner’s damages are in excess of $20 million. In formulating his opinion, Mr. Barrett reviewed jury verdicts in cases which he considered comparable, or otherwise instructive. In one case, a four-year-old boy rendered a paraplegic in an automobile accident was awarded $19.9 million in damages in 2010. That verdict was rendered in Osceola County. Mr. Barrett testified that a jury verdict in Dade County would be expected to be higher than in Osceola County. In a second case, a jury in Pinellas County awarded over $10 million to a 57-year-old woman who was rendered paraplegic as a result of medical malpractice. The jury award allocated $3 million for future medical expenses and $7 million for future pain and suffering. Mr. Barrett testified that future pain and suffering awards are generally lower for older plaintiffs, such as this 57-year-old woman, than for younger plaintiffs, like Petitioner, with a much longer life expectancy. Another case to which Mr. Barrett referred involved an adult male construction worker rendered paraplegic in a fall from a steel beam which resulted in a spinal injury similar to Petitioner’s. The Hillsborough County jury awarded over $16 million to the plaintiff in that case. The construction worker’s life expectancy was shorter than Petitioner’s, thus Mr. Barrett believes an award greater than $16 million would be made in Petitioner’s case. Mr. Barrett would also expect a higher award in a present-day civil jury trial than this $16-million award which was made in 1995. Mr. Barrett’s opinion on the value of Petitioner’s damages was both credible and persuasive. Medicaid is to be reimbursed for medical assistance provided if resources of a liable third party become available. Thus, Respondent asserted a Medicaid lien in the amount of $530,258.86 against any proceeds Petitioner received from a third party. Respondent’s position is that it should be reimbursed for its Medicaid expenditures on behalf of Petitioner pursuant to the formula set forth in section 409.910(11)(f). Under the statutory formula, the lien amount is computed by deducting a 25 percent attorney’s fee and taxable costs (in this case, $8,704.50) from the $750,000.00 recovery, which yields a sum of $553,795.50, then dividing that amount by two, which yields $276,897.75. That figure establishes the maximum amount that could be reimbursed from the third-party recovery in satisfaction of the Medicaid lien. Petitioner’s position is that Respondent should be reimbursed $19,884.71 in satisfaction of its Medicaid lien. On August 27, 2014, Petitioner and Harvard House executed a Release of Claims (Release) based upon the settlement of $750,000. In the Release, the parties acknowledge that the settlement “only compensat[es] Tyra Pierre for a fraction of the total monetary value of her alleged damages.” The Release does not differentiate or allocate the total recovery among the components of damages, such as economic or non-economic. However, the Release allocates $19,884.71 to Petitioner’s claim for past medical expenses, and allocates the “remainder of the settlement towards the satisfaction of claims other than past medical expenses.” The Release provides that said “allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Tyra Pierre’s damages.” The settlement amount of $750,000 is 3.75% of the total value of Petitioner’s damages. The figure of $19,884.71 is 3.75% of the value of past medical expenses paid by Medicaid on Petitioner’s behalf. Respondent was not a party to the settlement. Respondent did not participate in litigation of the claim or in settlement negotiations, and no one represented Respondent’s interests in the negotiations. Respondent has not otherwise executed a release of the lien. Petitioner did not introduce the settlement in evidence. However, Petitioner did introduce the circuit court order authorizing the settlement. The order reads, in pertinent part, as follows: Given the facts, circumstances, and nature of Tyra’s injuries and this settlement, the parties have agree[d] to allocate $19,884.71 of this settlement to Tyra’s claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio the settlement bears to the total monetary value of all Tyra’s damages. * * * 5. The allocation of damages recited in the previous paragraph and made a material term of the settlement, is fair and accurate, and is expressly adopted by this Court. (emphasis added). Mr. Leeds testified that allocation of $19,884.71 of the settlement proceeds to Petitioner’s past medical expenses was fair and accurate, “based upon the analysis of this catastrophic injury and the future 73 years that Tyra Pierre will have and the value of this case[.]” Mr. Barrett testified that allocation of $19,884.71 for past medical expenses was reasonable and rational. 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).
