The Issue On the merits, 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. Before the merits may be addressed, however, it will be necessary to decide whether, in light of the recent judicial invalidation of portions of the Medicaid Third-Party Liability Act, an administrative remedy remains available to Petitioner.
Findings Of Fact On June 1, 2012, Petitioner Michael Lee Smathers, II ("Smathers"), was shot two times while sitting in a vehicle parked outside of Club Lexx, a nightclub in Miami-Dade County. The shooter was a security guard who worked for Force Security, LLC ("Force"), which provided security for Club Lexx as an independent contractor. The guard also shot Smathers's friend, the driver of the vehicle, who died as a result of his injuries. The record is silent as to the circumstances giving rise to this violence. One bullet struck Smathers in the arm, the other in the stomach, which caused life-threatening injuries. Smathers received aggressive emergency medical care and survived, but he is permanently and severely disabled. Bullet and bone fragments damaged his spinal cord, leaving Smathers paralyzed from the waist down. He is incontinent, has serious gastric difficulties, experiences constant pain, cannot have sex or reproduce, and suffers from chronic depression, among other conditions. Because it is undisputed that Smathers's injuries are severe, permanent, and indeed catastrophic, there is no need to catalogue them all here. Smathers requires round-the-clock care and will never return to the workforce due to his impairments and chronic pain. He will incur medical expenses stemming from the gunshot wounds for the rest of his life. At all relevant times, Smathers's health insurance was provided, at least in part, by Medicaid. Medicaid is a program "which provides for payments for medical items or services, or both, on behalf of any person who is determined by the Department of Children and Families . . . to be eligible on the date of service for Medicaid assistance." § 409.901(16), Fla. Stat. Medicaid is jointly funded by the federal government and the states that have elected to participate in the program, which include Florida. Respondent Agency for Health Care Administration ("AHCA") is the agency responsible for administering Medicaid in the state of Florida. It is undisputed that Medicaid provided $206,445.41 in medical assistance on Smathers's behalf as a result of the injuries he sustained in the attack at Club Lexx. Unfortunately for Smathers, the Club Lexx shooting gave him many causes of action but no deep-pocket defendants to sue for damages. He brought suit, nonetheless, against Force and others in the state circuit court (the "Smathers Lawsuit"). Force, it happened, was insured against general liability, but only up to $1 million per occurrence, which obviously would be woefully inadequate to compensate Smathers. Force's insurer ("Evanston") sought a judicial declaration in the U.S. district court that its policy did not provide coverage for the allegations made against Force in the Smathers Lawsuit. The federal court rejected Evanston's coverage position and held that the insurer had a duty to defend Force. Evanston appealed the decision. While this appeal was pending, Evanston, Force, and Smathers entered into a settlement agreement, pursuant to which Evanston paid the policy limit of $1 million to Smathers in exchange for the usual releases. (Smathers did not release the other defendants in the Smathers Lawsuit.) The settlement is undifferentiated——that is, no attempt was made therein to apportion the proceeds between the various elements of compensatory damages potentially available to Smathers. After deducting attorney's fees and costs, Smathers's net recovery from the settlement was $546,894.15. Upon learning of the settlement, AHCA asserted its rights under the Medicaid Third-Party Liability Act (the "Act"), section 409.910, which grants AHCA an automatic lien upon "collateral" such as settlements and settlement agreements for the full amount of medical assistance provided by Medicaid to a recipient for which a third party might be liable. There is, however, an important limitation on AHCA's right of repayment from liable third parties: Because federal law prohibits a state from attaching a Medicaid lien to any part of a recipient's tort recovery not designated as payments for medical care, the lien can encumber only the portion of a settlement or recovery that represents compensation for medical expenses. As a means of complying with this anti-lien law, section 409.910(11)(f) prescribes a formula for determining how the proceeds of a settlement or other recovery from a third-party tortfeasor should be divided between medical expense damages and all other (i.e., nonmedical) compensatory damages, and it directs that the portion attributable to payments for medical care be paid to AHCA up to the total amount spent by Medicaid. The parties agree that, under this statutory formula, AHCA is entitled to be reimbursed in full for Medicaid's outlays on Smathers's behalf ($206,445.41) because that amount, which represents approximately 20.6% of Smathers's gross settlement proceeds ("GSP"), is less than the portion of his GSP that paragraph (11)(f) otherwise presumptively designates as recovered medical expense damages. Exercising his rights under section 409.910(17)(b), which provides the "exclusive method for challenging the amount of third-party benefits payable to" AHCA, Smathers initiated this proceeding to contest the statutory designation of $206,445.41 as payments for medical care. Paragraph (17)(b) confers upon DOAH final order authority over this administrative remedy. Smathers presented evidence regarding his total provable damages ("TPD"),1/ which he asserts are between $16 million and $22 million. Smathers's TPD includes past medical expenses of $2.7 million and future medical expenses of $5.7 million, for a total of $8.4 million in medical expense damages.2/ Medical expense damages and general damages comprising injury, pain, disability, disfigurement, and loss of capacity for enjoyment of life (collectively, "pain and suffering") constitute, effectively, the entirety of Smathers's TPD.3/ Smathers contends that the amount of his settlement that should be allocated as reimbursement for medical expense damages, and thus become subject to the Medicaid lien, is $12,903. Smathers arrives at this figure as follows. He reasons that because he recovered just 6.25% of his TPD ($1 million is 6.25% of $16 million), AHCA likewise should be paid just 6.25% of its total expenditures, which works out to $12,903. (That sum is 1.29% of $1 million.) For ease of discussion, this approach will be referred to as the settlement- ?????? to-value ratio method, expressed as ?????? (??), where ?? = actual Medicaid expenditures. The amount payable to AHCA pursuant to the formula set forth in section 409.910(11)(f) (the "Statutory Distribution") is either (a) an amount equal to .75 times the gross settlement, minus taxable costs, divided by 2 (hereafter, the "Presumed Recovered Medical Expense Damages" or "PRMED"); or (b) the total dollar amount of medical assistance that Medicaid actually has provided (hereafter, the "Actual Expenditure"), whichever is lower. The ratio of PRMED to GSP reflects the portion of the GSP that the statutory formula allocates by default as reimbursement to the injured party for both past and future medical expenses (hereafter collectively referred to as "Medical Damages"). ?????? The statute, it will be seen, presumes that a uniformly calculable percentage (i.e., ??????????) of any recipient's undifferentiated GSP constitutes compensation for Medical Damages. In the run of cases, this percentage likely will be somewhere in the neighborhood of one-third, although in particular cases, as here, the percentage——which cannot exceed 37.5%——can be smaller.4/ Section 409.910(17)(b), Florida Statutes (2017), provides that "[i]n order to successfully challenge the amount designated as recovered medical expenses, the recipient must prove, by clear and convincing evidence, that the portion of the total recovery which should be allocated as past and future medical expenses is less than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f)."5/ Thus, the presumption regarding the allocation of the recipient's recovery to Medical Damages is one which affects the burden of proof. See §§ 90.302(2) and 90.304, Fla. Stat. To elaborate, paragraphs (11)(f) and (17)(b) operate in tandem to create the rebuttable presumption that a certain percentage of the recipient's GSP is attributable to Medical Damages (the presumed fact), and paragraph (17)(b) makes plain that the recipient has the burden of proving, by clear and convincing evidence, the nonexistence of the presumed fact. The presumption at issue, according to paragraph (17)(b), is not a "bursting bubble" presumption that vanishes upon the introduction of credible evidence contrary to the presumed fact, see section 90.302(1), Florida Statutes, but rather it imposes upon the recipient the burden to prove that a smaller portion of the settlement is attributable to Medical Damages. On April 18, 2017, the U.S. District Court for the Northern District of Florida entered a Final Judgment in Gallardo v. Dudek, No. 4:16-cv-116, 2017 U.S. Dist. LEXIS 59848 (N.D. Fla. Apr. 18, 2017), which declared that section 409.910(17)(b) is preempted by federal law (and thus unconstitutional under the Supremacy Clause) at least insofar as the statute authorizes AHCA to "seek[] reimbursement of past Medicaid payments from portions of a recipient's recovery that represents [sic] future medical expenses." Id. at *31. The court enjoined AHCA from "enforcing that statute in its current form" and specifically forbade AHCA from "requiring a Medicaid recipient to affirmatively disprove" the statutory allocation of third-party recoveries as reimbursement for past and future medical expenses "where . . . that allocation is arbitrary." Id. Three months later, on AHCA's motion, the court amended its judgment, slightly, to read as follows: [P]ortions of § 409.910(11)(f), Fla. Stat. (2016) and § 409.901(17)(b), Fla. Stat. (2016) are preempted by federal law. It is declared that the federal Medicaid Act prohibits the State of Florida Agency for Health Care Administration from seeking reimbursement of past Medicaid payments from portions of a recipient's recovery that represents [sic] future medical expenses. The State of Florida Agency for Health Care Administration is therefore enjoined from doing just that: seeking reimbursement of past Medicaid payments from portions of a recipient's recovery that represents [sic] future medical expenses. It is also declared that the federal Medicaid Act prohibits the State of Florida from requiring a Medicaid recipient to affirmatively disprove § 409.910(17)(b)'s formula-based allocation with clear and convincing evidence to successfully challenge it where, as here, that allocation is arbitrary and there is no evidence that it is likely to yield reasonable results in the mine run of cases. Gallardo v. Senior, 2017 U.S. Dist. LEXIS 112448, *24 (N.D. Fla. July 18, 2017).
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (AHCA), for medical expenses paid on behalf of Petitioner, Shamarion Manley, from a personal injury settlement received by Petitioner from a third party.
Findings Of Fact Based on the stipulations of the parties, evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: On June 12, 2010, Shamarion Manley (“Shamarion”) suffered a severe left brachial plexus injury, right humerus fracture, neurological injury, and cardiac arrest during his birth. He was hospitalized until July 7, 2010, when he was discharged home to the care of his parents. Due to his severe left brachial plexus injury and other injuries suffered during birth, Shamarion is unable to use his left arm and hand and suffers from a speech impairment. (JPHS p. 8) Shamarion’s past medical expenses related to his injuries were paid in part by Medicaid and Sunshine State Health. Medicaid paid $74,061.27 in benefits and Sunshine State Health paid $106,656.23 in benefits. The amounts paid by Medicaid and Sunshine State Health, together with $22,118 in unpaid medical bills, constituted Shamarion’s entire claim for past medical expenses. Accordingly, Shamarion’s entire claim for past medical expenses was $202,835.50. (JPHS p. 8-9) Shamarion, or others on his behalf, did not make payments in the past or in advance for Shamarion’s future medical care, and no claim for damages was made for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Shamarion’s parents and natural guardians, Victoria and Sharmane Manley, brought a medical malpractice action to recover all of Shamarion’s damages, as well as their individual damages associated with their son’s injury, against the medical providers allegedly responsible for Shamarion’s injuries (“Defendants”). (JPHS p. 9) Shamarion’s parents compromised and settled the medical malpractice lawsuit with the Defendants for the amount of $410,000. (JPHS p. 9) In making this settlement, the settling parties agreed that: 1) the settlement did not fully compensate Shamarion for all his damages; 2) Shamarion’s damages had a value in excess of $2,250,000, of which $202,835.50 represented his claim for past medical expenses; and 3) allocation of $36,916.06 of the settlement to Shamarion’s claim for past medical expenses was reasonable and proportionate. In this regard the two (2) Releases (“Releases”) memorializing the settlement stated: Although it is acknowledged that this settlement does not fully compensate Shamarion Manley for all of the damages he has allegedly suffered, this settlement shall operate as a full and complete Release as to RELEASEES without regard to this settlement only compensating Shamarion Manley for a fraction of the total monetary value of his alleged damages. The parties agree that Shamarion Manley’s alleged damages have a value in excess of $2,250,000, of which $202,835.50 represents Shamarion Manley’s claim for past medical expenses. Given the facts, circumstances, and nature of Shamarion Manley’s injuries and this settlement, the parties have agreed to allocate {$36,916.06}[1/] of this settlement to Shamarion Manley’s claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Shamarion Manley’s damages. Further, the parties acknowledge that Shamarion Manley may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses Shamarion Manley will incur in the future. However, the parties acknowledge that Shamarion Manley, or others on his behalf, have not made payments in the past or in advance for Shamarion Manley’s future medical care and Shamarion Manley has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses. (JPHS p. 9) Because Shamarion was a minor, court approval of the settlement was required. Accordingly, on December 14, 2015, the Palm Beach County Circuit Court Judge handling the litigation of the medical malpractice action, the Honorable Edward Artau, approved the settlement by entering an Order on Plaintiffs’ Petition for Approval of Settlement (Order Approving Settlement). (JPHS p. 10) As a condition of Shamarion’s eligibility for Medicaid, Shamarion assigned to AHCA his right to recover from liable third-parties medical expenses paid by Medicaid. See 42 U.S.C. § 1396a(a)(25)(H) and § 409.910(6)(b), Fla. Stat. During the pendency of Shamarion’s medical malpractice action, AHCA was notified of the action, and AHCA, through its collections contractor, Xerox Recovery Services, asserted a $74,061.27 Medicaid lien against Shamarion’s cause of action and settlement of that action. (JPHS p. 9) By letter of January 5, 2016, AHCA was notified by Shamarion’s medical malpractice attorney of the settlement and provided a copy of the executed Releases, Order Approving Settlement, and itemization of $146,540.70 in litigation costs. This letter explained that Shamarion’s damages had a value in excess of $2,250,000, and the $410,000 settlement represented only an 18.2 percent recovery of Shamarion’s damages. Accordingly, he had recovered only 18.2 percent of his $202,835.50 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of its Medicaid lien. (JPHS p. 10) AHCA did not respond to Shamarion’s attorney’s letter of January 5, 2016. (JPHS p. 10) AHCA did not file an action to set aside, void, or otherwise dispute Shamarion’s settlement with the Defendants. (JPHS p. 10) AHCA has not commenced a civil action to enforce its rights under section 409.910. (JPHS p. 10) The Medicaid program spent $74,061.27 on behalf of Shamarion, all of which represents expenditures paid for Shamarion’s past medical expenses. (JPHS p. 10) No portion of the $74,061.27, paid by the Medicaid program on behalf of Shamarion, represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. (JPHS p. 10) AHCA has determined that $146,540.70 of Shamarion’s litigation costs are taxable costs for purposes of the section 409.910(11)(f) formula calculation. (JPHS p. 11) Subtracting the $146,540.70 in taxable costs and 25 percent in allowable attorney’s fees, the section 409.910(11)(f) formula, applied to Shamarion’s $410,000 settlement, requires payment of $80,479.65 to AHCA in satisfaction of its $74,061.27 Medicaid lien. Since the $80,479.65 formula amount is more than the $74,061.27 Medicaid lien, AHCA is seeking payment of the full $74,061.27 Medicaid lien from Shamarion’s $410,000 settlement. (JPHS p. 11) Petitioner has deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). (JPHS p. 11) Testimony of Scott M. Newmark Mr. Newmark has been an attorney for 30 years, and during that entire time he has practiced plaintiff personal injury and medical malpractice law. Mr. Newmark testified that he handles jury trials and routinely represents children who have suffered catastrophic injury, particularly at birth. He is a member of the Florida Justice Association, the Palm Beach Justice Association, and the Trial Lawyer Section of the Florida Bar. Mr. Newmark testified that he stays abreast of jury verdicts in his area and that he routinely makes assessments concerning the value of damages suffered by injured parties, explaining his process for these determinations. He testified that he has been accepted as an expert in the valuation of damages suffered by injured parties by DOAH in the past. Mr. Newmark was accepted as an expert in the valuation of damages suffered by injured parties. He represented Shamarion and his parents relative to Shamarion’s medical malpractice action. He explained that as part of his representation, he reviewed Shamarion’s medical records, met with his doctors, met with experts, reviewed expert reports, and met with Shamarion and his parents many times. Mr. Newmark gave a detailed explanation of the injuries suffered by Shamarion during his birth. He explained that during the birth process, improper force was used and Shamarion suffered a brachial plexus injury when the nerves in his left shoulder were ripped off the spinal column. As a result of this injury, he is unable to use his left arm and has no grip strength in his left hand. Mr. Newmark testified that this injury is a permanent neurological injury and for the remainder of his life will continue to have a “tremendously dramatic impact on Shamarion.” Mr. Newmark testified that Shamarion’s claim for past medical expenses related to his injury was $202,835.50, which consisted of $74,061.27 in Medicaid benefits paid by AHCA, $106,656.23 in benefits paid by Sunshine State Health, and $22,118 in unpaid medical bills. Mr. Newmark testified that Shamarion, or others on his behalf, did not make payments in the past or in advance for future medical care, and no claim was brought to recover reimbursement for past payments for future medical care. Mr. Newmark testified that through his representation of Shamarion, review of Shamarion’s file, and based on his training and experience, he had developed the opinion that the value of Shamarion’s damages “would be in excess of $2,250,000.” He explained that he had discussed Shamarion’s case with other experienced attorneys and they concurred in this damage valuation. Further, to supplement his opinion concerning the value of Shamarion’s damages, Mr. Newmark outlined that the jury verdicts in Petitioner’s Exhibit 12 were comparable to Shamarion’s case. He outlined that the Cherenfant v. Lewis 2016 Broward County $4,821,000 verdict was most supportive. Mr. Newmark outlined that in Lewis, the same plaintiff and defense experts were used as were used in Shamarion’s case, and the facts and injury in Lewis were nearly identical to the facts and injury in Shamarion’s case. Mr. Newmark outlined that in Lewis, the jury awarded $3,000,000 in pain and suffering to the child and this underscores that his valuation of all Shamarion’s damages at $2,250,000 is extremely conservative. Mr. Newmark explained that Shamarion’s medical malpractice lawsuit was brought against the obstetrician who delivered Shamarion and the hospital where the birth took place. He noted that there were many considerations that led to settlement, including most importantly that the primarily responsible party, the obstetrician, was uninsured, and the parents needed the certainty of a settlement over the risk of a defense verdict or verdict that may or may not be collectable. Based on these considerations, the case settled for $410,000. Mr. Newmark testified that the settlement did not fully compensate Shamarion for the full value of his damages. He testified that based on the conservative valuation of all Shamarion’s damages of $2,250,000, the settlement represented a recovery of 18.2 percent of the value of Shamarion’s damages. Mr. Newmark testified that because Shamarion only recovered 18.2 percent of the value of his damages in the settlement, he only recovered 18.2 percent of his $202,835.50 claim for past medical expenses, or $36,916.06. Mr. Newmark testified that the settling parties agreed in the Releases that Shamarion’s damages had a value in excess of $2,250,000, as well as the allocation of $36,916.06 of the settlement to past medical expenses. He further testified that the allocation of $36,916.06 of the settlement to past medical expenses was reasonable and rational, as well as “the fair thing to do.” Mr. Newmark testified that the allocation of $36,916.06 to past medical expenses was conservative because it was based on a low-end valuation of Shamarion’s damages of $2,250,000, and if a higher valuation of the damages was used, the amount allocated to past medical expenses would have been much less. Mr. Newmark testified that because no claim was made to recover reimbursement for past payments for future medical care, no portion of the settlement represented reimbursement for past payments for future medical care. Mr. Newmark testified that the parties agreed in the Releases that no claim was made for reimbursement of past payments for future medical care, and no portion of the settlement represented reimbursement for future medical expenses. Mr. Newmark testified that because Shamarion was a minor, court approval of the settlement was required. Mr. Newmark testified that the court reviewed the settlement and entered an order approving it. Testimony of R. Vinson Barrett Mr. Barrett has been a trial attorney since 1977 and has dedicated his practice to handling plaintiff personal injury cases, including medical malpractice, medical products liability, and pharmaceutical products liability. He is the senior partner with the Tallahassee law firm of Barrett, Fasig & Brooks, which exclusively works in the area of plaintiff’s personal injury. Mr. Barrett has handled many jury trials and has handled many catastrophic injury cases, including medical malpractice cases involving injury to children. Mr. Barrett testified that he has handled a number of cases involving brachial plexus birth injuries similar to Shamarion’s injury. Mr. Barrett testified that he stays abreast of jury verdicts and he daily makes assessments concerning the value of damages suffered by injured parties explaining his process for making these determinations. He testified that he has been accepted as an expert in the valuation of damages by DOAH in Medicaid lien dispute proceedings in other cases. Mr. Barrett was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Barrett testified that he was familiar with Shamarion’s injuries and had reviewed Shamarion’s medical records and the exhibits filed in this proceeding. He provided a detailed explanation of Shamarion’s brachial plexus birth injury noting that “he’s probably never going to be able to have anywhere near a normal childhood or work-hood because of the limitations that he has from this injury.” Mr. Barrett testified that based on his review of Shamarion’s case, and based on his professional experience and training, Shamarion’s damages had a value higher than the $2,250,000 value used by the settling parties. Mr. Barrett testified that Shamarion’s damages have a value of $2,500,000. He further testified that Shamarion’s “loss of enjoyment of life is going to be huge for him, remember, he is going to have birth to death in actual pain and suffering . . . so with all that in mind, you know, the opinion that I have $2,000,000 wouldn’t trouble me as a jury verdict for pain and suffering and loss of enjoyment of life” alone. Mr. Barrett outlined that the jury verdicts in Petitioner’s Exhibit 12 were comparable with Shamarion’s case and supported his valuation of the damages. Consistent with Mr. Newmark’s testimony, Mr. Barrett identified the Lewis $4,821,000 verdict as most relevant and comparable to Shamarion’s case. Mr. Barrett testified that he was aware of the settlement amount and he testified that the settlement did not fully compensate Shamarion for the full value of his damages. He explained that he was aware that the parties had allocated $36,916.06 to past medical expenses based on a valuation of all damages of $2,250,000. Mr. Barrett testified that he believes allocation of $36,916.06 to past medical expenses was reasonable, rational, and conservative. “I think it’s conservative because it’s based on a total damage number ($2,250,000) which I think is conservative.” AHCA did not propose a differing valuation of Shamarion’s damages or contest the methodology used by the parties to calculate the $36,916.06 allocation to past medical expenses. Consequently, the testimony and evidence presented concerning the value of Petitioner’s damages and the allocation to past medical expense was unrebutted. The Agency was not a party to settlements or written settlement agreements, if any exist, separate and apart from the Releases. Nor were the Defendants signatories to the settlement agreement, apparently accepting the Releases signed by Petitioners in exchange for the settlement payments. No value of Shamarion’s future medical expenses was advanced by either party. As noted earlier, both Releases contained the following provision: Further, the parties acknowledge that Shamarion Manley may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses Shamarion Manley will incur in the future. Given the nature and severity of Shamarion’s injury, it can reasonably be expected that Shamarion will incur future medical expenses. Notably, Mr. Newmark testified that Shamarion has suffered a permanent neurological impairment, and has “already had five surgeries down at Miami Children’s with Dr. Grossman and Dr. Price.” Moreover, the Life Care Plan prepared for Shamarion reflects regular pediatric orthopedist and psychiatric evaluations and treatments to age 18. Mr. Newmark further testified that Shamarion’s total damages would be in excess of $2,250,000, which “would take into account his future life care needs, his past medicals, his future earning and earning capacity, benefits, losses.” Petitioner offered in evidence a Preliminary Economic Damages Analysis, which presented life care cost computations and earnings capacity losses. A summary of those computations is presented below: BASIC INFORMATION Shamarion Manley All Figures are in Present Value LOW AVERAGE HIGH LIFE CARE PLAN: EARNINGS LOSSES: BENEFIT LOSSES: $556,109.16 $858,606.03 $1,161,102.90 $262,214.24 $262,214.24 $262,214.24 $52,442.85 $52,442.85 $52,442.85 Overall Range LOW AVERAGE HIGH $870,766.24 $1,173,263.11 $1,475,759.99 Mr. Newmark also noted that some portion of the $2,250,000 valuation would be for non-economic (pain and suffering) damages. Mr. Newmark testified that Shamarion’s non- economic damages would be factored in “at over a million dollars.” Other than the Life Care Plan and Preliminary Economic Damages Analysis, at hearing, Petitioner did not advance a valuation for future medical expenses. However, given the figures contained in the economic damages analysis, it is clear that the vast majority of future economic damages will relate to the costs associated with the life care plan, including future medical expenses. Petitioner has not proven by clear and convincing evidence that $36,916.06 of the settlement represents reimbursement for past medical expenses and payment for future medical expenses. Petitioner has not proven by clear and convincing evidence that a lesser portion of the total recovery should be allocated as reimbursement for past medical expenses than the $74,061.27 amount calculated by Respondent pursuant to the formula set forth in section 409.910(11)(f).
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner, Micaiah McCray, from a medical-malpractice settlement received by Petitioner from a third party.
Findings Of Fact Petitioner was born on November 11, 2008. In the months following birth, Petitioner underwent several surgeries and procedures including a percutaneous endoscopic gastrostomy tube placement on January 26, 2009, a repair of incomplete atrioventricular canal defect on April 15, 2009, and Nissen Fundoplication and revision of gastrostomy tube on July 8, 2009. On July 23, 2009, Petitioner was admitted to St. Mary’s Medical Center with suspected bronchitis and exacerbation of reactive airway distress. During this hospitalization, on or about August 15, 2009, Petitioner suffered a stroke involving the right hand and part of the right leg. A CT scan of Petitioner’s brain revealed a left middle cerebral artery distribution infarction suggesting a large ischemic infarct. Petitioner’s condition stabilized and Petitioner was released from the hospital on August 27, 2009, with the following discharge summary: Exacerbation of reactive airway disease Bronchitis Mitral stenosis Mild pulmonary hypertension Hypersecretory upper airway Pansinusitis Clostridium difficile colitis Hypoxemia with oxygen dependency Gastroesophageal reflux disease, status post fundoplication Left cerebral infarction of unknown etiology Endocardial cushion defect status post atrioventricular canal repair Bilateral optic nerve colobomas Rule out CHARGE association/Goletz syndrome On September 21, 2009, Petitioner was admitted to Palms West Hospital with a diagnosis of respiratory distress. Petitioner’s condition improved and he was discharged home on September 25, 2009. Subsequent to that hospitalization, an MRI performed on October 19, 2009, revealed new acute strokes. In the years following Petitioner’s strokes, he underwent numerous surgeries, procedures, and therapies for a multitude of medical conditions. Petitioner’s past medical expenses related to his injuries were paid by both private health insurance and Medicaid. Medicaid paid for Petitioner’s medical expenses in the amount of $217,545.58. United Healthcare and Aetna provided $37,090.17 and $3,231.72 in benefits, respectively. Total healthcare expense incurred for Petitioner’s injuries was $257,867.47. Petitioner is developmentally delayed and cannot walk or crawl. Petitioner requires a wheelchair or stroller for mobility and requires positioning and trunk support to maintain a seated position. His ability to independently explore his environment is severely restricted. Petitioner is completely dependent on others for activities of daily living. He cannot bathe, dress, or eat on his own. He requires a feeding tube, and receives professional in-home services to monitor his respiration and heartrate, manage his GJ tube, administer medication, and monitor bowel and bladder function. Petitioner does not vocalize words and has limited communication. He has no function of his right hand and has tightness in the right leg below the knee. Petitioner’s condition is permanent. Petitioner’s parents brought a medical malpractice action on his behalf in the Circuit Court of the 15th Judicial Circuit Court in and for Palm Beach County against Tenet St. Mary’s Inc., d/b/a St. Mary’s Medical Center; Palms West Hospital Limited Partnership, d/b/a Palms West Hospital; David Evan Mound Drucker, M.D.; South Florida Pediatric Surgeons, P.A.; Physicians Professional Liability Risk Retention Group; Alberto Antonio Marante, M.D.; Florida Pediatric Critical Care, P.A.; Diego Maurcio Diaz, M.D.; Gerard Minor, P.A.-C; Children’s Center Gastroenterology & Nutrition, P.A.; Chartis Claims, Inc.; Lexington Insurance Company; Eunice Cordoba, M.D; and Edwin Liu, M.D., P.A., d/b/a Pediatric Neurologist of Palm Beach (Defendants). Petitioner’s action alleged, among other theories, that the Defendants failed to recognize in Petitioner a sickle cell trait and properly treat Petitioner’s dehydration, a factor contributing to Petitioner’s strokes. Petitioner’s parents retained Scott Marlowe Newmark, an attorney specializing in personal and catastrophic injury claims for over 30 years, to represent Petitioner in the medical malpractice action against Defendants. In preparation for litigation, Stephanie P. Chalfin, M.S., prepared a life care plan for Petitioner. The plan sets out the need for future medical care, equipment, hospitalizations, surgeries, medications, and attendant care, through Petitioner’s expected life span. In this case, Petitioner’s life expectancy is an additional 66.9 years. During the pendency of the medical malpractice action, J. Rody Borg, Ph.D., an economist, prepared a report assigning a present value between $24,373,828 and $29,065,995 for the future costs of Petitioner’s life care plan, lost benefits, and lost earning capacity. Mr. Newmark’s expert valuation of the total damages suffered by Petitioner is at least $30 million. Mr. Newmark considered the life care plan and Dr. Borg’s report in arriving at the value of total economic damages. Mr. Newmark then examined jury verdicts in similar cases involving catastrophic injury to value non-economic damages. Of the nine jury verdicts examined, Mr. Newmark highlighted three as particularly relevant because they involved young children with brain injuries similar to Petitioner’s injury and who required life-long care. The nine cases had an average award of $12 million for non-economic damages (past and future pain and suffering). Mr. Newmark arrived at his valuation of Petitioner’s damages at $30 million by considering the low-end of Dr. Borg’s economic damages estimate, $24 million, along with the average jury award for non-economic damages in similar cases. Mr. Newmark’s testimony was credible, reliable and persuasive. Mr. Newmark’s valuation of total damages was supported by the testimony of two additional personal injury attorneys, Mark Finklestein and R. Vinson Barrett, both of whom have practiced personal injury law for more than 30 years and were accepted as experts in valuation of damages (in personal injury cases). Mr. Finkelstein served as Petitioner’s guardian ad litem in the underlying medical malpractice action and agreed with the valuation of total damages at $30 million. In formulating his opinion on the value of Petitioner’s damages, Mr. Barrett reviewed the discharge summaries from Petitioner’s hospitalizations, the life care plan, Dr. Borg’s report, and a day-in-the-life video of Petitioner. Mr. Barrett also reviewed the jury trial verdicts and awards relied upon by Mr. Newmark. Mr. Barrett likewise agreed with the $30 million valuation of Petitioner’s total damages. Respondent was notified of Petitioner’s medical malpractice action during its pendency. Respondent asserted a Medicaid lien in the amount of $217,545.58 against the proceeds of any award or settlement arising out of that action. In 2012 and again in 2015, Petitioner received a series of settlements from the Defendants. The settlements totaled $2,450,000. The settlements do not fully compensate Petitioner for the total value of his damages. The settlements are undifferentiated, meaning they are not apportioned to specific types of damages, such as economic or non-economic, past or future. In all of the releases signed by the parties thereto, the parties agreed that, “if an allocation of this settlement is necessary in the future, this allocation should be made by applying the same ratio this settlement bears to the total monetary value of all [Petitioner’s] damages to the specific damage claim.” Respondent was not a party to the 2012 and 2015 settlements and did not execute any of the applicable releases. 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, $613,131) from the $2,450,000 recovery, which yields a sum of $1,836,869 then dividing that amount by two, which yields $918,434.50. Under the statute, Respondent is limited to recovery of the amount derived from the statutory formula or the amount of its lien, whichever is less. In the case at hand, Respondent may recover under the statute the full amount of its lien. Petitioner’s position is that reimbursement for past medical expenses should be limited to the same ratio as Petitioner’s recovery amount to the total value of damages. Petitioner urges Respondent should be reimbursed $21,067.77 in satisfaction of its Medicaid lien. The settlement amount of $2,450,000 is 8.17 percent of the total value ($30 million) of Petitioner’s damages. By the same token, 8.17 percent of $257,867.47 (Petitioner’s past medical expenses paid by both Medicaid and private insurance) is $21,067.77. Both Mr. Finklestein and Mr. Barrett testified that $21,067.77 is a reasonable and rational reimbursement for past medical expenses. Their testimony is accepted as persuasive. 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).
The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (“AHCA”), for medical expenses paid on behalf of Clifford J. Deyampert (“Petitioner” or “Mr. Deyampert”) pursuant to section 409.910, Florida Statutes (2015),1/ from settlement proceeds received by Mr. Deyampert from a third party.
Findings Of Fact The following findings of fact are based on exhibits accepted into evidence, admitted facts set forth in the pre- hearing stipulation, and matters subject to official recognition. Facts Pertaining to the Underlying Personal Injury Litigation and the Medicaid Lien On July 25, 2015, Mr. Deyampert was attending a party held at a friend’s house and was shot in the throat by another guest. The bullet traveled down Mr. Deyampert’s throat, struck his spinal cord, and caused Mr. Deyampert to be paralyzed from the chest down. As a result, Mr. Deyampert is permanently disabled, disfigured, and wheelchair-bound. In addition, Mr. Deyampert is bowel and bladder incontinent.2/ Medicaid paid $76,944.67 in order to cover Mr. Deyampert’s past medical expenses. No portion of the $76,944.67 paid by Medicaid on Mr. Deyampert’s behalf represents expenditures for future medical expenses, and Medicaid did not make payments in advance for medical care. Mr. Deyampert initiated a personnel injury lawsuit by making a claim against a homeowner’s insurance policy that covered the shooter. Mr. Deyampert’s personal injury action settled for $305,000, and that was the limit of an aforementioned insurance policy.3/ The General Release memorializing the settlement stated the following: Although it is acknowledged that this settlement does not fully compensate Clifford Deyampert for all of the damages he has allegedly suffered, this settlement shall operate as a full and complete Release as to Releasees without regard to this settlement only compensating Clifford Deyampert for a fraction of the total monetary value of his alleged damages. The parties agree that Clifford Deyampert’s alleged damages have a value in excess of $6,000,000, of which $76,944.67 represents Clifford Deyampert’s claim for past medical expenses. Given the facts, circumstances, and nature of Clifford Deyampert’s injuries and this settlement, the parties have agreed to allocate $3,847.23 of this settlement to Clifford Deyampert’s claim for past medical expenses and allocate the remainder of the settlement toward the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Clifford Deyampert’s damages. Further, the parties acknowledge that Clifford Deyampert may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses Clifford Deyampert will incur in the future. However, the parties acknowledge that Clifford Deyampert, or others on his behalf, have not made payments in the past or in advance for Clifford Deyampert’s future medical care and Clifford Deyampert has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses. During the pendency of Mr. Deyampert’s personal injury action, AHCA was notified of the suit and asserted a Medicaid lien in the amount of $76,944.67 against any damages received by Mr. Deyampert. Via a letter issued on July 24, 2017, Mr. Deyampert’s attorney notified AHCA that Mr. Deyampert’s personal injury action had settled. The letter asked AHCA to specify what amount it would accept in satisfaction of the $76,944.67 Medicaid lien. AHCA responded by demanding full payment of the lien. Section 409.910(11)(f) sets forth a formula for calculating the amount that AHCA shall recover in the event that a Medicaid recipient or his or her personal representative initiates a tort action against a third party that results in a judgment, award, or settlement from a third party.4/ AHCA is seeking to recover $76,944.67 in satisfaction of its Medicaid lien. See § 409.910(11)(f)4., Fla. Stat. (providing that “[n]otwithstanding any provision in this section to the contrary, [AHCA] shall be entitled to all medical coverage benefits up to the total amount of medical assistance provided by Medicaid.”). Valuation of the Personal Injury Claim F. Emory Springfield represented Mr. Deyampert during the personal injury action and testified during the final hearing. Mr. Springfield has practiced law for 32 years. He owns his own law firm and handles cases involving personal injury, workers’ compensation, and social security disability. Mr. Springfield has experience with jury trials and monitors jury verdicts issued in his fields of practice. Mr. Springfield routinely assesses the value of damages suffered by injured parties. He makes those assessments by determining the injured person’s life expectancy, evaluating the injuries, and conferring with lifecare planners about the injured party’s need for future care. In addition, Mr. Springfield learns as much as possible about the injured party’s past life activities and compares those activities to what the injured party is presently capable of doing. Mr. Springfield also assesses an injured party’s damages by examining jury verdicts from other cases. Mr. Springfield was accepted in this proceeding as an expert regarding the valuation of damages. Mr. Springfield is of the opinion that Mr. Deyampert’s damages (including damages for pain and suffering and economic damages) are well in excess of $6 million. According to Mr. Springfield, the $305,000 settlement does not “come close” to fully compensating Mr. Deyampert for all of his damages. Furthermore, the $305,000 settlement only represents a five percent recovery of the more than $6 million in damages incurred by Mr. Deyampert. Therefore, in Mr. Springfield’s opinion, only five percent (i.e., $3,847.23) of the $76,944.67 in Medicaid payments for Mr. Deyampert’s past medical expenses were recovered. Mr. Deyampert also presented the testimony of R. Vinson Barrett, Esquire, during the final hearing. Mr. Barrett is a trial attorney who has been practicing in North Florida since the mid 1970s. Over the last 30 years, he has focused his practice on the areas of medical malpractice, medical products liability, and pharmaceutical liability. Mr. Barrett routinely handles jury trials and monitors jury verdicts issued in his practice areas. Mr. Barrett routinely assesses the value of damages suffered by injured parties. According to Mr. Barrett, a personal injury attorney must be skilled at estimating the value of a client’s claim. Otherwise, the high cost of bringing a case to trial can result in a personal injury attorney losing money and going bankrupt. Mr. Barrett was accepted in this proceeding as an expert regarding the valuation of damages. Mr. Barrett gave the following testimony regarding Mr. Deyampert’s damages: This man not only is a paraplegic, but during all this, and I couldn’t really tell from the records I read whether the bullet caused this or some intubation in the hospital, but he got air into the space between his lung and his diaphragm, which can be a very painful problem, he had to be intubated to get that out. He developed, I believe, sepsis, at some point in his -- in his treatment; and it’s already evidence early on in his situation that he’s going to be, and is very susceptible to pressure ulcers on his skin. His skin is going to be prone to breakdown from prolonged periods of sitting in the same position and that sort of thing. Fortunately, he has enough strength left in his upper body that he’s able to ameliorate that somewhat. He’s able actually, on his own, and after a lot of rehab, to roll over in his bed to different positions even though his lower extremities are not working at all. He’s able to -- he’s able to reposition himself in his chair using the strength of his arms, so that will cut down a little bit on that. But he had already developed a pressure ulcer or two by the time he got into rehab in this case. He – so, he’s got no use at all, it appears, of his lower extremities. He had a number of complications that had to be dealt with. He was in the hospital a long time. His overall prospects after rehabilitation -– and he was still in some rehabilitation as early as about February of this year, so I’m not totally sure he’s through all his rehab yet. He has to take rehabilitation courses to learn -– relearn how to do things. He’ll need his home made wheelchair accessible, cabinets, and thing[s] like that, all the things that a person normally does without thinking about, are going to be challenges for him just in daily household stuff. He will have to have modifications, most likely, of his kitchen, his bathroom, that sort of thing. And so, yeah, there’s quite a bit to work within this case to come up with an evaluation. Mr. Barrett opined that $6 million was a “very conservative” estimate of the damages suffered by Mr. Deyampert. Mr. Barrett also opined that allocating five percent of the $76,000 claim (i.e., $3,847.23) to past medical expenses was a reasonable and rational allocation to past medical expenses and reflected the ratio of the amount recovered to the actual value of Mr. Deyampert’s damages. Findings Regarding the Testimony Presented at the Final Hearing The undersigned finds that the testimony from Mr. Springfield and Mr. Barrett was compelling and persuasive. While attaching a value to the damages that a plaintiff could reasonably expect to receive from a jury is not an exact science, Mr. Springfield’s and Mr. Barrett’s decades of experience with litigating personal injury lawsuits make them very compelling witnesses regarding the valuation of damages suffered by injured parties such as Mr. Deyampert.5/ Accordingly, the undersigned finds that Mr. Deyampert proved by a preponderance of the evidence that $3,847.23 constitutes a fair and reasonable recovery for past medical expenses actually paid by Medicaid.
The Issue The issue in this proceeding is how much of Petitioner’s settlement proceeds should be paid 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 August 29, 2011, Brody Hurd, a male child who was then 2.7 years old, suffered injuries after a child gate gave way causing him to fall down a flight of stairs. Brody was taken to the Emergency Room (“ER”) where ER staff failed to identify a visible cerebral bleed on the cervical CT scan. Brody was discharged home where his condition worsened. The next day he was taken to his pediatrician who reviewed the CT scan and correctly noted the cerebral bleed. Thereafter, Brody was admitted to the hospital where he underwent numerous surgeries, including a significant laminectomy. After the surgery, Brody’s parents took Brody to Scottish Rite Hospital in Atlanta for recovery and he received treatment for several months. Brody is now wheelchair bound, unable to stand, walk, toilet, bathe, or care for himself in any manner. Based on his current condition, it is anticipated that Brody will require treatment and be confined to a wheelchair for the rest of his life. As a result of the delay in proper diagnosis and treatment of the cerebral bleed, Brody was permanently rendered an incomplete quadriplegic. Brody has a life expectancy of approximately 78 years of age. Brody’s medical care related to the injury was paid by Medicaid. Medicaid, through AHCA, paid $266,092.46 in benefits; Medicaid, through the Department of Health Children’s Medical Services, paid $73,253.94 in benefits; and the Brain and Spinal Cord Injury Program paid $5,504.31 in benefits. The sum of benefits totaling $344,850.71 represents the amount Medicaid paid on Brody’s behalf, which are attributed to past medical expenses. Brody’s parents and natural guardians, Nicholas and Brittany Hurd, pursued a medical malpractice lawsuit against the parties allegedly liable for Brody’s injuries (“Defendants”) to recover all of Brody’s damages, as well as their own individual damages associated with their son’s injuries. After nearly five years of litigation, Petitioner settled the medical malpractice action for a lump-sum amount of $2,875,000.00. The settlement did not allocate Petitioner’s award between past medical and other damage categories. During the pendency of Brody’s medical malpractice action, AHCA was notified of the action and AHCA asserted a $266,092.46 Medicaid lien against Brody’s cause of action and settlement of that action. The Medicaid program through AHCA spent $266,092.46 on behalf of Brody, all of which represents expenditures paid for Brody’s past medical expenses. By letter dated January 26, 2020, AHCA was notified of Brody’s settlement. AHCA did not commence a civil action to enforce its rights under section 409.910 or intervene or join in Brody’s action against the Defendants. AHCA has not filed a motion to set-aside, void, or otherwise dispute Brody’s settlement. Brody’s taxable costs incurred in securing the settlement totaled $68,087.32. Application of the formula at section 409.910(11)(f) to Brody’s $2,875,000.00 settlement requires payment to AHCA of the full $266,092.46 Medicaid lien. Petitioner offered Brody’s life care plan and economist report as evidence of future medical expenses and loss of employment or wages. Expert Testimony Petitioner called two experts to testify on his behalf pertaining to valuation of Petitioner’s damages, Henry Lawrence Perry and Karen Gievers. Mr. Perry, a founding partner of the Perry and Young Law Firm in Panama City Beach, Florida, has been practicing law for 29 years. He served as the lead attorney for the underlying case. In addition to Petitioner’s case, he has represented clients in personal injury matters, including many cases involving catastrophic injuries similar to that of Brody. Mr. Perry evaluated Petitioner’s case and opined that $25 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. Perry opined that there would be no admission of liability, so no cap on medical malpractice would be applicable. Mr. Perry opined that Petitioner settled the case for the lower amount because of issues with medical causation. Since Petitioner filed his action against the radiologist group and the hospital, the defense also raised an issue of the pediatrician being a Fabre defendant.1 As a result, Brody’s recovery could have been reduced based on the liability issues related to the claim. Mr. Perry opined that Brody’s settlement represented 11.5 percent of the full value of his claim, including past medical expenses. Mr. Perry opined that the allocation formula is 11.5 percent. The past medical expenses recovered as part of the settlement resulted in a total of $344,850.71. That figure multiplied by 11.5 percent would result in recovery of $39,657.83 allocated to past medical expenses. Karen Gievers also testified as an expert regarding valuation of Brody’s claim. Ms. Gievers, a licensed attorney for 42 years and a former 1 A Fabre defendant is a defendant that is not named in a lawsuit, but which can still be assigned liability by a jury. See Fabre v. Marin, 623 So. 2d 1182 (Fla. 1993). circuit court judge, focuses her practice on civil litigation. In her practice as an attorney, she has handled personal injury cases involving catastrophic injuries. She has also represented children in her practice. Similar to Mr. Perry, she opined that the value of Brody’s case was conservatively estimated at $25 million. She opined that Brody’s settlement amount of $2,875,000.00 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 of the $344,850.71 claim for past medical expenses would be $39,657.83. Ms. Gievers looked at Brody’s economic and noneconomic damages in her valuation of the case. Petitioner asserted that the $2,875,000.00 settlement is far less than the actual value of Petitioner’s injuries and does not adequately compensate Brody 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. Perry and Ms. Gievers credibly opined that a ratio should be applied based on the full value of Petitioner’s damages, $25,000,000.00, compared to the amount that Petitioner actually recovered, $2,875,000.00. 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 by 11.5 percent. Therefore, $39,657.83 is the portion of the third-party settlement that represents the amount AHCA should recover for its payments for Brody’s past medical care. The expert witnesses’ testimony was supported by their extensive experience in valuing damages and their knowledge of Brody’s injuries. AHCA, on the other hand, did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Perry or Ms. Gievers. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Perry 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. Perry 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 Brody’s settlement should be allocated as reimbursement for past medical expenses than the amount AHCA calculated. Accordingly, AHCA is entitled to recover $39,657.83 from Petitioner’s recovery of $2,875,000.00 to satisfy the Medicaid lien.
The Issue What is the amount to be reimbursed to Respondent, Agency for Health Care Administration (AHCA), for medical expenses paid on behalf of Petitioner Bryant (Petitioner) pursuant to section 409.910, Florida Statutes, from a personal injury settlement received by Petitioner from a third party?
Findings Of Fact Factual Allegations that Served As a Basis for the Underlying Personal Injury Litigation On March 11, 2009, Petitioner, then 21 years old, suffered catastrophic physical injury and brain damage when her bicycle was struck by a car near the Oakland Park I-95 overpass in Broward County. Petitioner was taken to the North Broward Hospital, where she was intubated with mechanical ventilation. Imaging revealed a right subdural hematoma, and Petitioner showed signs of increased intracranial pressure. On March 12, 2009, Petitioner underwent bilateral frontoparietal craniotomies through separate incisions with evacuation of a left parietooccipital epidural hematoma and right frontal temporoparietal subdural hematoma; bilateral duraplasty to accommodate brain swelling; and repair of a left occipital laceration. On that same date, a CT scan revealed that Petitioner had numerous pelvic and hip fractures. Petitioner underwent an upper gastrointestinal endoscopy with a PEG tube placement. Eventually, her medical condition stabilized and she was discharged to rehabilitation. Petitioner is now unable to move the left side of her body. She receives her nutrition through a g-tube and is bowel and bladder incontinent. She suffers from cognitive deficits. Petitioner is cognizant of her condition and her surroundings, but has extreme difficulty with communication. Petitioner is severely disabled and unable to ambulate or care for herself in any manner. Prior to the accident, Petitioner was a healthy 21-year-old. It is anticipated that Petitioner's life span will be approximately another 60 years, her condition is permanent, and she will always need full-time medical care. The Personal Injury Litigation Due to Petitioner's incapacity, Freda Bryant (Bryant) was appointed the guardian of the person and property of Petitioner. As Petitioner's guardian, Bryant brought a personal injury action to recover all of Petitioner's damages against the company responsible for maintaining the lights on the highway where Petitioner's accident occurred ("Defendant"). Freda Bryant retained the Krupnick, Campbell, Malone, et al., law firm of Fort Lauderdale, a firm concentrating in the areas of catastrophic personal injury, wrongful death, and products liability. The Medicaid Lien Petitioner is a Medicaid recipient and her medical care was paid for by Medicaid. AHCA, through the Medicaid program, paid $404,399.68 on behalf of Petitioner for medical benefits related to the injuries sustained by Petitioner. This $404,399.68 paid by Medicaid represented Petitioner's entire claim for past medical expenses up until the time of settlement. During the pendency of Petitioner's personal injury action, AHCA was notified of the action and AHCA, through its collections contractor Xerox Recovery Services, asserted a $404,399.68 Medicaid lien against Petitioner's cause of action and settlement of that action. Valuation of the Personal Injury Claim Joseph Slama (Slama), the attorney representing Petitioner in her personal injury action, prepared an evaluation of her claim in preparation for trial and/or settlement negotiations. Slama has extensive experience representing parties in catastrophic personal injury, wrongful death, and product liability cases since 1982. Slama has practiced in this field for 33 years, is a board-certified civil trial attorney, first certified in 1987, who has litigated hundreds of these types of cases. Slama is a member of the American Board of Trial Advocates (ABOTA), the Florida chapter of ABOTA (FLABOTA), Attorneys Information Exchange Group, Florida Justice Association, Broward Justice Association, and the Florida Bar. Slama was offered and accepted, without objection, as an expert in the valuation of damages in catastrophic injury cases. In making the determination regarding the valuation of Petitioner's personal injury claim, Slama reviewed Petitioner's medical records, accident report, prepared fact and expert witnesses for trial, and personally interacted with Petitioner on multiple occasions. Slama is very familiar with the injuries suffered by Petitioner and her need for constant care. Slama was present during the filming of Petitioner's "Day in the Life" video which was intended to be shown to the jury if Petitioner's case went to trial. Slama also reviewed Petitioner's economic damages report prepared by an economist1/ and is familiar with the mental pain and suffering Petitioner experiences as a result of her ability to understand the change in her life from a normal functioning individual to someone requiring total care for the rest of her life. To properly determine the value of Petitioner's claim, Slama researched Florida jury verdicts in personal injury cases with catastrophic brain injuries for young people requiring total care. Slama reviewed five comparable cases with verdicts for the plaintiff. The average jury award per plaintiff in these five cases was $51,474,346.00, and the average pain and suffering component of that award was $28,735,850.00. The case most closely comparable to that of Petitioner was the 2014 case of Mosley v. Lloyd, Case No. CACE09-025532, 2014 WL 7910512, a Broward County Circuit Court trial in which the jury awarded $75,543,527.00, of which $39,500,000.00 represented damages for past and future pain and suffering. Another similar case was that of Lymans v. Bynum Transportation, Case No. 2007CA-007728, 2009 WL 9051959, decided by a Pasco County jury. According to Slama, Pasco County juries are generally considered very conservative. In the Lymans case, a 21-year-old sustained a catastrophic brain injury resulting in her requiring 24/7 total care, much like the Petitioner. The jury awarded $65,000,000.00, of which $41,000,000.00 represented damages for pain and suffering. Based upon the five verdicts, including the Mosley and Lymans jury verdicts, review of the medical records, extensive personal interaction with Petitioner, and his personal experience and knowledge in valuing catastrophic personal injury cases from decades of practice in this field, Slama conservatively valued the damages for mental pain and suffering to be $15 million or greater. Slama acknowledged litigation risk issues with this personal injury action, which included a reduction or elimination of liability based on the defense of contributory negligence and a statutory restriction on liability for a utility company unless there was prior written notice to the utility company of deficient lighting. Slama consulted Allen McConnaughhay, Esquire, an attorney with the Tallahassee law firm of Fonvielle, Lewis, Foote & Messer, for an independent assessment of Petitioner's claim. McConnaughhay has practiced in the field of catastrophic personal injury cases for 15 years. He was offered and accepted, without objection, as an expert in the field of valuation of catastrophic injury cases. McConnaughhay explained that his firm, like that of Slama, relies on the expertise of its partners, a review of the injured party's medical records, research of jury verdicts in comparable cases, and it conducts a roundtable discussion to determine the value of a catastrophic personal injury claim. McConnaughhay and his partners engaged in such review of Petitioner's claim and found that a figure in excess of $50 million was a proper value for her pain-and-suffering damages. McConnaughhay opined that the $15 million figure ascertained by Slama was extremely conservative. The Settlement Allocation On May 18, 2015, Bryant settled Petitioner's personal injury lawsuit for $1,164,000. Given the facts of this case, the figure agreed upon was supported by the competent professional judgment of the trial attorneys in the interests of their clients. There is no evidence that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement, taking into account all of the strengths and weaknesses of their positions. There was no evidence of any manipulation or collusion by the parties to minimize the share of the settlement proceeds attributable to the payment of costs expended for Petitioner's medical care by AHCA. The General Release with the settling Defendants stated, inter alia: Although it is acknowledged that this settlement does not fully compensate Petitioner Bryant for all of the damages she has allegedly suffered, this settlement shall operate as a full and complete Release as to Released Parties without regard to this settlement only compensating Petitioner Bryant for a fraction of the total monetary value of her alleged damages. The parties agree that Petitioner Bryant's alleged damages have a value in excess of $15,000,000, of which $404,399.68 represents Petitioner Bryant's claim for past medical expenses. Given the facts, circumstances, and nature of Petitioner Bryant's injuries and this settlement, the parties have agreed to allocate $31,381.42 of this settlement to Petitioner Bryant's claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses. This allocation is a reasonable and proportionate allocation based on the same ratio this settlement bears to the total monetary value of all Petitioner Bryant's damages. Further, the parties acknowledge that Petitioner Bryant may need future medical care related to her injuries, and some portion of this settlement may represent compensation for future medical expenses Petitioner Bryant will incur in the future. However, the parties acknowledge that Petitioner Bryant, or others on her behalf, have not made payments in the past or in advance for Petitioner Bryant's future medical care and Petitioner Bryant has not made a claim for reimbursement, repayment, restitution, indemnification, or to be made whole for payments made in the past or in advance for future medical care. Accordingly, no portion of this settlement represents reimbursement for future medical expenses. Because Petitioner was incapacitated, court approval of the settlement was required. Accordingly, on June 4, 2015, the Honorable Circuit Court Judge Cynthia Imperato approved the settlement by entering an Order Approving Settlement. By letter of May 26, 2015, Petitioner's personal injury attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Release, Order Approving Settlement, and itemization of Petitioner's $75,852.90 in litigation costs. This letter explained that Petitioner's damages had a value in excess of $15,000,000, and the settlement represented only a 7.76 percent recovery of Petitioner's $404,399.68 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $404,399.68 Medicaid lien. AHCA responded to Petitioner's attorney's letter by letter of June 25, 2015, and demanded a "check made payable to 'Agency for Health Care Administration' in the amount of $404,399.68." AHCA has not filed an action to set aside, void, or otherwise dispute Petitioner's settlement. AHCA has not commenced a civil action to enforce its rights under Section 409.910, Florida Statutes. No portion of the $404,399.68 paid by AHCA through the Medicaid program on behalf of Petitioner represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. AHCA has determined that of Petitioner's $75,852.90 in litigation costs, $63,375.06 are taxable costs for purposes of the section 409.910(11)(f) formula calculation. Based on $63,375.06 in taxable costs, the section 409.910(11)(f) formula applied to Petitioner's $1,164,000 settlement, results in $404,812.47 payable to AHCA in satisfaction of its $404,399.68 Medicaid lien. Because $404,399.68 is less than the $404,812.47 amount derived from the formula in section 409.910(11)(f), AHCA is seeking reimbursement of $404,399.68 from Petitioner's settlement in satisfaction of its Medicaid lien. Petitioner has deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, which constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). Petitioner proved by clear and convincing evidence that the $15 million total value of the claim was a reasonable and realistic value. Furthermore, Petitioner proved by clear and convincing evidence, based on the relative strengths and weaknesses of each party's case, and on a competent and professional assessment of the likelihood that Petitioner would have prevailed on the claims at trial and the amount she reasonably could have expected to receive on her claim if successful, that the amount agreed upon in settlement of Petitioner's claims constitutes a fair, just, and reasoned settlement, including $31,381.42, the amount attributable to the Medicaid lien for medical expenses as its 7.76 percent proportionate share of the total settlement.
The Issue What amount of Petitioner’s malpractice settlement must be paid to Respondent, Agency for Health Care Administration (Agency), to satisfy the Agency’s $13,904.06 Medicaid Lien?1/
Findings Of Fact On September 12, 2015, [Petitioner] was a 28-year-old single male living alone in Tampa, Florida and enrolled as a student at the University of South Florida working on his master’s degree in education. Because he recently ceased his employment with the Hillsborough County School Board, [Petitioner] had no health insurance. He called 911 for emergency medical services due to severe abdominal pain and was taken by EMS to the Emergency Department at St. Joseph’s Hospital where he was diagnosed with acute pancreatitis and admitted. His condition worsened and was complicated by abdominal distention that made his breathing difficult. In the evening of September 13th, [Petitioner] was transferred to the Medical Intensive Care Unit (“ICU”) because of a rapidly worsening condition and need for close monitoring. Over the next several hours, vital sign monitoring showed high heart and respiratory rates. A consulting physician found “acute respiratory insufficiency likely developing ARDS,” and directed he be “monitor closely, may need to be on mechanical ventilation, his work of breathing is hard to keep current sats [sic]”. During the early morning of September 14, [Petitioner’s] heart rate and respiratory rates remained high, he was short of breath, and given multiple doses of Morphine for severe pain and Ativan for agitation/anxiety, which drugs are known to suppress respiratory function. Throughout the morning, [Petitioner] was in a perilous condition due to a combination of his prolonged efforts to breathe, suppressive medications, and systemic complications of acute pancreatitis including electronical abnormalities associated with hypokalemia and hypocalcemia, and with electrocardiographic changes resulting in arrhythmia, conduction abnormalities and changes in cardiac T wave and QT period. At around 11:30, [Petitioner] attempted to perform a breathing exercise as instructed earlier that morning which required him to get on his hand and knees to relieve the pressure on his chest. [Petitioner’s mother], a licensed and practicing RN herself, was present and attempted to help him when his cardiac monitoring leads became disconnected. At this time, the attending RN was on break. An unknown RN reported [Petitioner] to have a change in the condition “with increased confusion and restlessness” and a call was made to the ICU specialist who issued verbal orders for Haldol, a medication used for sedation but in combination with the Morphine, Ativan and Labetatol, further lowers blood pressure and is contraindicated for cardiac arrhythmias. Without informing [Petitioner or his mother], the nursing staff mistakenly issued a "code grey" to control [Petitioner] and the nursing supervisor approved the administration of the Haldol without any physician assessment or knowing his cardiac status because the monitor was not connected. The ICU specialist who ordered the Haldol was close by in the ICU area but did not evaluate [Petitioner] or assess his condition, cardiac status and need for mechanical ventilation before the Haldol was administered. Immediately upon administration of the Haldol, [Petitioner] became “agonal” and his heart was thrown into a cardiac arrhythmia (PEA) causing a prolonged time period where his brain was deprived of oxygen that resulted in permanent hypoxic encephalopathy so that [Petitioner] now lives in a persistent minimally conscious state. The acute pancreatitis which [Petitioner] initially sought treatment resolved without further complications. His current medical condition is only complicated by the sequelae of his hypoxic encephalopathy and persistent minimally conscious state. Petitioner complied with all requirements of Chapter 766, Florida Statutes, including, all pre-suit requirements and presuit investigation of claims against the treating Hospital, the ICU Specialist and her employer that were corroborated by an expert witness, which were rejected. On October 27, 2017, Petitioner filed a lawsuit in the Circuit Court for Hillsborough County Florida, Case No. 17-CA-009829, against the treating Hospital and the ICU Specialist asserting claims for medical negligence. Based on the foregoing limitations, the medical malpractice claims were settled for a total of $1,975,000, which was approved by the Court to be in the best interest of [Petitioner]. [The Agency], through its Medicaid program, provided medical assistance to [Petitioner] in the amount of $13,904.36. During the pendency of the medical negligence case, [the Agency] was notified of the action and asserted a $13,904.06 Medicaid lien against Petitioner's cause of action and settlement. [The Agency] did not commence a civil action to enforce its rights under §409.910 or intervene or join in [Petitioner’s] action against Defendants. [The Agency] did not file a motion to set-aside, void or otherwise dispute Petitioner's settlement with Defendants. Application of the formula at §409.910(1l)(f) to the settlement requires payment to [the Agency] in the amount of the full $13,904.06 Medicaid lien. Petitioner deposited the full Medicaid lien amount in an interest-bearing account for the benefit of [the Agency] pending an administrative determination of [the Agency’s] rights, and this constitutes "final agency action" for purposes of chapter 120, pursuant to §409.910(17). Credible, Unimpeached, and Unrebutted Testimony Mr. Tonelli is the only person who testified about the value of the various elements of damages making up Petitioner’s malpractice claim. Mr. Tonelli has practiced law for 44 years. He has practiced in Tampa, Florida, the venue where Petitioner’s case would have been tried if it had not settled. He first practiced primarily in the area of personal injury defense. Presently, Mr. Tonelli spends over 25 percent of his time as a mediator. Since 1985, he has mediated many medical negligence cases. Mr. Tonelli also serves as a guardian ad litem in approximately 50 cases per year. Usually two to five of the cases involve catastrophic injury. Mr. Tonelli has served as counsel in 50 to 75 civil trials. Approximately 20 were jury trials. Mr. Tonelli’s practice includes review of medical records and life care plans. He also consults with economists about lost wage claims and works with doctors to identify the nature and extent of injuries and costs of medical services for injured persons. Mr. Tonelli participates in regular intake review of personal injury cases for his firm. The review includes evaluating the recoverable damages. He informs himself about jury awards and settlement amounts through his firm work, his participation in the American Board of Trial Attorneys, and his mediation practice. Mr. Tonelli was Petitioner’s Guardian Ad Litem. He reviewed the case and the proposed settlement and reported to the court about whether the settlement was in Petitioner’s best interests. Mr. Tonelli’s knowledge, skill, and experience qualify him to provide an opinion about the value of the elements of the damages for Petitioner’s malpractice claims against the hospital and the physician. Mr. Tonelli reviewed Petitioner’s hospital and physician medical records. He also reviewed the deposition of Roland Snyder, M.D., who prepared the life care plans admitted into evidence. Between Mr. Tonelli’s service as Guardian Ad Litem for Petitioner and his record review to prepare for his testimony, he had sufficient facts and data to form an opinion about the value of elements of damages of Petitioner’s malpractice claims. Also, he reasonably and reliably applied principles and methods based upon his knowledge, skill, and experience to provide a credible and conservative determination of the value of each element of damages that make up Petitioner’s malpractice claim. His testimony was unrebutted, unimpeached, credible, and persuasive. Injuries and Negligence Petitioner suffers from profound anoxic encephalopathy. This brain damage leaves him in a permanent, minimally conscious state, just barely more conscious than a patient in a vegetative state. He cannot speak, walk, or care for himself. Petitioner lives in pain. He breathes and eats only with the assistance of a tracheostomy. He takes nourishment through a “G-tube.” This is a gastrojejunostomy tube that delivers nutrients directly to the stomach. Petitioner requires daily care and assistance in every task of life from eating to waste elimination. His condition will not change for his estimated 20-year remaining life span. Petitioner’s multiple, severe medical conditions require that he live those 20 years in a long-term care facility with medical services, such as a skilled nursing home. This condition resulted from treatment he received for pancreatitis, a condition from which he fully recovered. While in the hospital, Petitioner developed cardiac and respiratory problems. A cascading series of improper prescriptions exacerbated Petitioner’s medical problems leading to catastrophic injuries resulting in his current condition. Damages The elements of damages for Petitioner’s malpractice claims are past medical expenses, future medical expenses, loss of current income, loss of future income, pain and suffering, and loss of enjoyment of life. The value of the damages in Petitioner’s malpractice claims falls within a range of $25,000,000 to $35,000,000. The amount of $25,000,000 is a reasonable, conservative value to place on Petitioner’s damage claims. The only evidence of past medical expenses is the stipulation that Medicaid paid $13,904.36. Consequently, that is the amount of past medical expenses. Future medical expenses in the form of costs for continued treatment and supports necessary to maintain Petitioner’s existence are a significant part of the damages. As explicated in two detailed life care plans, those expenses will range from $14,535,508.26, for residence in a modified home with supportive caregivers, to $31,082,301.36, for residence in a skilled long-term nursing facility. Loss of current income, comparatively, is not a major factor in this case. Loss of future income is. Petitioner was 30 years old earning $34,000 per year teaching “at-risk” children who would have otherwise been suspended from school. He was dedicated to his profession, volunteered at Boys and Girls Clubs, and had just been accepted to a master’s degree program. Petitioner’s lost future income ranges between $750,000 to $1,000,000. Petitioner’s injuries and resulting conditions are catastrophic. Pain and suffering damages and loss of enjoyment of life damages easily range between 10 and 20 million dollars. They could reasonably exceed 50 million dollars. Consideration of the value of the elements of damages affirms that the total damages that would have been proven if Petitioner’s claims had been tried would have been at least $25,000,000. Settlement Realities Petitioner’s claims were not tried. Petitioner had a strong malpractice claim against the doctor. The doctor, however, had only $500,000 worth of insurance coverage. There is no evidence of assets of the doctor that could have been reached to enforce a judgment. Petitioner’s claim against the hospital was not as strong. The hospital had significant liability and causation defenses. The doctor was not an employee or agent of the hospital. Hospital employees in most instances were following the doctor’s instructions, including when administering the medications that caused the damages. The limits of the doctor’s insurance coverage and the liability and causation issues of the claim against the hospital resulted in the decision to settle. Uncertainty about the provability or amount of damages was not a factor. The trial court approved the settlement. The settlement amount is 7.9 percent of the value of Petitioner’s claims. The stipulated amount of medical expenses the Agency paid through the Medicaid program is $13,904.36. The reasonable inference from the record in this case is that applying the 7.9 percent ratio of claims value to settlement recovery to the stipulated amount of medical expenses paid by the Medicaid program demonstrates that $1,098.44 of Petitioner’s settlement recovery was for past medical expenses. The Agency did not call witnesses, present evidence of the value of damages, or propose an alternative way to value damages.
The Issue The issue for determination is the amount Petitioner, Kimikia Molina, must pay to Respondent, Agency for Health Care Administration (the Agency or AHCA), out of her settlement proceeds as reimbursement for past Medicaid expenditures pursuant to section 409.910, Florida Statutes (2017).1/ More specifically, it must be determined whether Petitioner owes the default amount, $41,250, pursuant to section 409.910(11)(f); and, if not, what portion of her $110,000 settlement proceeds is due to AHCA.
Findings Of Fact Underlying Accident and Injuries Although there was no testimony regarding Petitioner’s accident or injuries, the following information can be gleaned from her medical records. On February 3, 2017, Petitioner, then age 22, was admitted to a medical facility after being involved in a motor vehicle accident. Petitioner had been a passenger in the car and was not wearing her seatbelt; the driver of the car was declared “signal 7” (or deceased) by the emergency responders at the scene of the accident. Petitioner was treated for neurological and orthopedic injuries, including surgical care to her left knee, right ankle and fibula. After numerous surgeries, on March 8, 2017, Petitioner was released from the medical facility to return home. At the time of her release, she still had splints on her left arm and right leg and dressings on her wounds, but was otherwise stable and alert. Upon discharge, Petitioner was placed on restrictions that included the following: No driving. No tub baths. No heavy lifting (over 10 pounds). No lifting, pulling, pushing, or straining. No weight bearing on the lower right side. These restrictions were to remain in effect until lifted by a doctor. Petitioner was also given instructions to follow up with physical and occupational therapy. The parties stipulated that Medicaid provided $55,042.63 toward Petitioner’s past medical expenses arising out of the February 2017 car accident. Additionally, Amerigroup Community Care has a lien against the settlement amount for $3,199.59. Petitioner submitted billing records establishing she incurred $3,865 for services provided by Rehab Consultants of Central Florida from March 16 to August 24, 2017. There was no evidence if this amount remains unpaid, what kinds of services were provided, or whether they were effective in Petitioner’s rehabilitation. There was no evidence as to whether Petitioner suffered from any emotional injuries. There was no evidence as to whether the accident had a permanent impact on her physical abilities. There was also no evidence as to whether Petitioner, who is relatively young, suffered from memory or other cognitive injuries that would prevent her from working in the future. There was no evidence how the accident affected Petitioner’s daily life functions, or her ability to maintain normal family, social, and work relationships. Petitioner’s Sources of Recovery The parties stipulated that in total, Petitioner received $110,000 in gross settlement proceeds. These proceeds came from two sources. The bulk of the proceeds were provided as a result of a unilateral “Bodily Injury Release” (Release) with Progressive American Insurance Company (Progressive), executed by Petitioner on March 22, 2018. The release indicates Petitioner would receive $100,000 in exchange for forfeiting her rights to pursue any claims arising out of the February 2017 accident against the estate of Loron Michael Turner (presumably the driver and/or owner of the vehicle). The remaining $10,000 was provided to Petitioner by State Farm Insurance under a policy held by Jesmarie and Mirian Perez. There was no evidence or testimony identifying the relationship of the Perezes to Petitioner or the driver of the vehicle. Allocation of Past Medical Expenditures The key factual issue in this case is how much of the $110,000 settlement funds are available to ACHA for payment of the Medicaid lien. One way to determine this amount is through a default formula set forth in section 409.910(11)(f). The parties stipulated that under this default formula, Petitioner is required to pay AHCA $41,250 for its Medicaid lien from the $110,000 total settlement proceeds.3/ Alternatively, Petitioner can show that a lesser amount than the default amount “should be allocated as reimbursement” for past medical expenses. See § 409.910(17)(b), Fla. Stat. Here, Petitioner urges the reduction of the Medicaid lien by the ratio of the actual settlement recovery to the “settlement value” amount. Using this formula, Petitioner claims AHCA can only recover 5.5 percent of the past medical expenses, or a total of $3,208.72 from the $110,000 settlement proceeds. Petitioner offered only the Release and the opinion of Frank Currie in support of using this formula. The Release, signed only by Petitioner (not Progressive or the Turner estate), states in relevant part: The parties to this release agree that the total value of Kimikia Molina’s claim is $2,000,000.00 that of that $58,340.35 is allocated for past medical bills, $41,659.70 is allocated to past lost wages, $720,000.00 is allocated to future loss of earning capacity, $590,000.00 is allocated to past pain and suffering and $590,000.00 is allocated to future pain and suffering. There was no evidence as to how the parties arrived at the monetary allocations in the Release. Petitioner provided no evidence supporting the Release’s allocations of past lost wages, future loss earnings, or noneconomic damages, such as pain and suffering. AHCA was not a party to the Release. There was no evidence as to how the $10,000 State Farm proceeds were to be allocated among the damage categories. Regarding Mr. Currie’s testimony, although he may have had litigation experience in personal injury lawsuits, his testimony did not establish why an alternative to the default formula should be used in Petitioner’s case. Mr. Currie testified Petitioner’s “settlement value” would have been $2 million, but it was not clear from his testimony that the “settlement value” is equivalent to the “total value of Kamikia Molina’s claim,” as referenced in the Release. See Smathers v. Ag. for Health Care Admin., Case No. 16-3590MTR, 2017 Fla. Div. Adm. Hear. LEXIS 540, at *7-8 (Fla. DOAH Sept. 13, 2017) (defining total provable damages as “all components of a plaintiff’s recoverable damages, such as medical expenses, lost wages, and noneconomic damages (e.g., pain and suffering)”). Moreover, according to Mr. Currie, the terms “settlement value” and “jury award” are different from each other and do not necessarily establish the total value of Petitioner’s claim or the amount of damages suffered by Petitioner. He explained, the factors in determining a “settlement value” include the best interest of the client, as well as the cost and risk of going to trial. In contrast, a “jury award” is the amount of damages that can be proven at trial, and can be influenced by a jury’s emotions. In this case, Mr. Currie admitted a hypothetical jury could have been influenced by a number of facts, including: the defendant was an estate (as opposed to an individual); Petitioner failed to use her seat belt; and alcohol contributed to the accident. Regardless of whether the $2 million figure cited by Mr. Currie was a “settlement value” or potential “jury award,” there was insufficient evidence establishing this figure because there was no evidence establishing the elements other than past medical expenses, such as an amount attributable to future medical expenses, lost wages, or pain and suffering. Thus, Mr. Currie’s opinion as to the medical expenses portion of the settlement is purely speculative and inconsistent with the Release. For example, Mr. Currie testified Petitioner previously made approximately $18,000 a year in salary.4/ But using this figure, Petitioner’s past lost earnings from February 2017 (the date of the accident) to March 2018 (the date of the settlement) would total approximately $20,000, not the $42,000 agreed to in the Release. Moreover, Mr. Currie’s opinion regarding the value of Petitioner’s case was not based on an established methodology or verifiable facts. Although Mr. Currie testified he reviewed the Release and Petitioner’s medical records in reaching the $2 million figure, there was no evidence at the hearing that he was sufficiently familiar with the facts of Petitioner’s current economic situation, her work history, or current employability. There was no evidence that he met with Petitioner or knew any information other than what was in Petitioner’s exhibits. Even Mr. Currie noted the cases he relied upon to establish his $2 million settlement valuation were procedurally and factually distinguishable from Petitioner’s situation. For example, some of the cases involved recovery after a jury award, others involved settlements; some involved alcohol, some did not; and unlike one of the other claimants, Petitioner was not known to have a pre-existing medical condition. The undersigned rejects Mr. Currie’s testimony because, although unrebutted, it was not based on a reliable methodology or sufficiently established facts. Although he relied on a number of verdict reports where the claimant had injuries similar to Petitioner’s, the underlying facts of Petitioner’s accident and medical situation were never sufficiently established at the hearing to meaningfully compare them to the facts of these cases; there was no evidence regarding Petitioner’s pre-accident health, her occupation, or her future ability to work. Neither the Release nor Mr. Currie’s testimony establish that the “actual settlement”-to-“settlement value” formula should be applied to Petitioner’s Medicaid lien instead of the default formula, nor did Petitioner establish the “settlement value” of her claim was $2 million. Petitioner has not proven by a preponderance of the evidence an alternative amount should be allocated for reimbursement for past medical expenses.
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 At all times material, Jones lived at a small apartment complex, which had a history of criminal activity involving drug trafficking. On September 1, 2016, Jones, who was then 37 years old, confronted a drug dealer on the premises concerning a disturbance during a previous night. The drug dealer shot Mr. Jones numerous times in the abdomen, chest, and left wrist. Jones underwent extensive medical intervention, but his wrist was inoperable. As a result of his gunshot wound, Jones suffered catastrophic and permanent injury to his spinal cord, rendering him a paraplegic. Jones is now permanently wheelchair-bound and unable to use his left hand to assist in mobility and transfers. He is unable to care for himself and lives with his mother, who provides for his care. Further, he suffers from neuropathy, depression, and post-traumatic stress disorder. Jones's injury has had a profoundly negative impact on his life. Jones's injury-related medical care was paid for by Medicaid. AHCA provided $188,757.39 in benefits, and a Medicaid Managed Care Organization known as Simply Health provided an additional $191,527.53 in medical assistance expenditures related to the incident. The combined amount of these benefits, $380,284.92, constituted Jones's entire claim for past medical expenses. Jones brought a personal injury lawsuit against the owner of the apartment complex (the "Defendant"), alleging that the Defendant should have known about the risk of crime-related injuries on the premises and, accordingly, provided reasonable security for the tenants, which it negligently failed to do. For Jones, the main barrier to a full recovery of his damages was not liability, but the fact that the Defendant's only means of satisfying a judgment was an insurance policy with $1,000,000 limits. Based on the limited insurance available, the case settled for an unallocated lump sum of $1,000,000. AHCA was notified of Jones's personal injury action. AHCA did not "institute, intervene in, or join in" the personal injury action to enforce its rights as provided in section 409.910(11), Florida Statutes, or participate in any aspect of the personal injury action against the Defendant. Instead, AHCA asserted a $188,757.39 Medicaid lien against Jones's cause of action and settlement of that action. By letter, AHCA was notified of Jones's settlement. AHCA has not filed a motion to set-aside, have declared void, or otherwise disputed Jones's settlement. The Medicaid program, through AHCA, spent $188,757.39 on behalf of Jones, all of which represents expenditures paid towards Jones's past medical care and treatment. Jones's taxable costs incurred in securing the $1,000,000 settlement totaled $59,652.67. Application of the section 409.910(11)(f) formula to Jones's $1,000,000 recovery produces a statutory default allocation of $188,757.39 in settlement funds to past medical expenses, which would satisfy AHCA's Medicaid lien in full—a 100% recovery. Jones has deposited the 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). As mentioned, Jones's recovery was an undifferentiated lump sum. It is reasonable to infer that the Defendant (and its carrier) had little or no interest in negotiating an allocation, between elements of Jones's damages, of the $1,000,000 settlement. There is no evidence, in any event, of such bargaining between Jones and the Defendant. There is no dispute that, under the anti-lien provisions in the federal Medicaid statute, the Agency's lien attaches only to the portion of Jones's recovery attributable to past medical expenses. The ultimate question presented is whether the Agency's default distribution, in the stipulated amount of $188,757.39, reflects "the portion of the total recovery which should be allocated"1 to Jones'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 Jones'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. To meet his burden, Jones 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 or attorneys who specialize in personal injury law and represent plaintiffs in negligence actions. Jones called two experienced plaintiff's personal injury lawyers, one of whom represented him in the underlying personal injury lawsuit, 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 Jones'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 Jones's case. Having no evidential basis for discounting or disregarding the opinions of Jones's expert witnesses, the undersigned bases the findings on valuation that follow upon their unchallenged testimony. Jones 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 1 See § 409.910(17)(b), Fla. Stat. 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 plaintiff's recovered past medical damages. The mathematical operation behind a 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 past medical expenses; 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 use the term "plaintiff's best-case value" ("PBV"), instead of "true value," to refer to the amount that the plaintiff would have asked the jury to award him at trial. Where there is a PBV, there is also a "defendant's best-case value" ("DBV"). In a jury trial, DBV might well be $0, if the defendant is contesting liability, and it will nearly always be, in any event, less than PBV. As mentioned above, the Agency chose not to present expert witness testimony as to DBV, or any value. There are other constructs that might be considered in regard to value, such as, for example, "settlement value" as described in Mojica v. State, Agency for Health Care Administration, 285 So. 3d 393, 395 (Fla. 1st DCA 2019). "Settlement value," in the Mojica sense, takes into account, among other factors, the "defendant's ability to pay." Id. Jones's recovery was arbitrarily capped at $1,000,000, 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 Jones'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 PBV or even DBV; 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.2 The uncontested and unimpeached expert testimony in this case establishes, by any standard of proof, that Jones's PBV is no less than $20,000,000, which is the conservative figure presented by Jones's witnesses, Douglas J. McCarron, Esquire, and R. Vinson Barrett, Esquire. Mr. McCarron represented Jones in his personal injury claim. Mr. McCarron has been an attorney for 24 years and practices with the Haggard Law Firm in Coral Gables, Florida. For the past 20 years he has practiced personal injury and wrongful death law representing clients who have been catastrophically injured or killed. He is a trial attorney and routinely handles jury trials. He routinely reviews medical records, life care plans, and economist reports, and interviews or deposes expert witnesses. As a routine part of his practice, Mr. McCarron stays abreast of jury verdicts, which is important in making assessments concerning the value of damages suffered by injured clients. Mr. McCarron is familiar with, and routinely participates in, allocation of settlements in the context of health insurance liens, workers' compensation liens, and Medicare set-asides, as well as allocations of judgements made by trial judges post-verdict. A regular practice of Mr. McCarron's is to "roundtable" cases with the other attorneys in his firm to discuss valuation of damages, as well as the strengths and weaknesses of cases. Jones's case was "roundtabled" at 2 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. Mr. McCarron's firm, and it was the consensus of the attorneys involved that Jones's damages had a value more than $20,000,000. In preparing Jones's case for trial, Mr. McCarron obtained a life care plan and an economist's report, to ascertain the present value of Jones's future medical and life care needs. The economist placed the present value of Jones's future medical expenses and claim for lost services at $12,598,946.3 Together with the $380,284.92 claim for past medical expenses, therefore, Jones's economic damages alone would have had a value of approximately $13,000,000. Jones's claim for noneconomic damages, such as past and future pain and suffering, would have a high monetary value of at least $7,000,000. Mr. McCarron testified that, based on his experience, valuing Jones's total damages at $20,000,000 is very conservative. Jones's other expert witness, Mr. Barrett, has been a trial attorney for more than 40 years and is a partner with the law firm of Barrett, Nonni and Homola, PA , in Tallahassee, Florida. His practice is dedicated to plaintiff's personal injury and wrongful death cases. He has handled cases involving catastrophic injuries and routinely handles jury trials. Mr. Barrett is familiar with medical records, life care plans, and economist reports. Mr. Barrett stays abreast of jury verdicts by reviewing jury verdict reports and discussing cases with other trial attorneys. As a routine part of his practice, Mr. Barrett makes assessments concerning the value of damages suffered by injured parties. He is familiar with the process of allocating settlements in the context of Medicaid liens. Mr. Barrett has been accepted as a credible expert in the valuation of damages by judges in numerous cases such as this. Mr. Barrett testified that, based on his professional training and experience, he believed Jones's damages had a conservative value of 3 Jones's life care plan and economist report are in evidence as Petitioner's Exhibits 3 and 4, respectively. $20,000,000. Mr. Barrett noted that the economist's report placed the present value of Jones's future medical needs and lost services at $12,598,946, an amount which, when added to the $380,284.92 claim for past medical expenses, brings the value of Jones's economic damages, alone, to nearly $13,000,000. Mr. Barrett testified that Jones's noneconomic damages would be, "quite, quite conservatively," $10,000,000. Mr. Barrett testified that Jones's recovery of $1,000,000 did not fully compensate Jones for all the damages he had suffered. Mr. Barrett testified that the $1,000,000 settlement represents a recovery of 5% of the total value of Jones's damages, conservatively appraised at $20,000,000. Mr. Barrett testified that because Jones recovered only 5% of his total damages, conservatively appraised, it stands to reason that he recovered only 5% of the $380,284.92 in past medical damages caused by the shooting, or $19,014.25. Mr. Barrett testified that it would be very reasonable to allocate $19,014.25 of the settlement to past medical expenses. Mr. Barrett testified, and the undersigned finds, that the allocation of $19,014.25 of the settlement to past medical expenses, and the methodology for making that allocation, are consistent with Mr. Barrett's expert testimony in other Medicaid lien adjustment cases, which has been accepted by ALJs and reviewing courts. Once Jones made a prima facie showing of PBV by adducing competent substantial evidence thereof, the Agency, if it wanted to prove that the PBV in question, $20,000,000, is an inflated figure, needed to introduce some evidence that would have given the fact-finder an evidentiary basis for discounting or rejecting this value.4 Here, the Agency elected not to present 4 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 DBV, 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. Defense arguments are matters that the Agency may address in its case, if it wants to show that PBV 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 evidence of value, but instead it chose to argue that Jones 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 $20,000,000 that Jones's witnesses testified, credibly, was a conservative appraisal of Jones's total damages. The opinion testimony elicited at hearing, in addition to being unchallenged and unimpeached, is otherwise persuasive to the fact-finder and convincingly establishes that the probable "value" of Jones's case, i.e., v in the proportional reduction formula, is $20,000,000. The unchallenged expert testimony convincingly shows, as well, that a proportional reduction methodology appropriately identifies the "portion of the total recovery which should be allocated" in this case as past medical expense damages. Accordingly, the undersigned determines as a matter of ultimate fact that the portion of Jones's $1,000,000 recovery that "should be allocated" to past medical expenditures is $19,014.25, or 5% of Jones's total past medical expenses. This distribution places AHCA in a better position, percentagewise, than Jones, since $19,014.25 amounts to a recovery of approximately 10% of AHCA's total expenditures, whereas Jones recovered only 5% of his total damages.5 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 PBV is too high, and it risks a finding that the unrebutted evidence of PBV is a fair reflection of value. If, however, the Agency presents evidence of DBV, 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. 5 This is because Jones's past medical damages ($380,284.92), which include expenditures on his behalf by Simply Health, exceed AHCA's total outlay (188,757.39) by just over 100%.
The Issue The issue in this case is the amount of money to be reimbursed to Respondent, Agency for Health Care Administration, for medical expenses paid on behalf of Petitioner, Larry J. Griffis, from a personal injury claim settlement received by Petitioner from a third party.
Findings Of Fact Griffis was severely injured in an accident occurring on April 29, 2012. The accident occurred generally as follows: Griffis owned and operated a large truck with a long aluminum dump trailer attached. He hauled hazardous waste and other materials for a living. At the end of each job, Griffis would raise the dump trailer for the purpose of cleaning out any residual material. On the date of the accident, Griffis did not clean his trailer in the usual because of some obstruction on that date. Instead, he drove out into a field next to his house to clean the trailer. When Griffis raised the trailer to clean it, he failed to notice electrical lines just above his trailer. He raised the trailer into the lines, resulting in an extremely high voltage of electricity running through his body. As a result of the accident, Griffis was transported to the burn unit at Shands hospital in Gainesville for treatment of his extensive injuries. He had over 50 medical procedures while at Shands, including debridement, skin grafts, tracheostomies, multiple chest tubes, etc. He had 19 different complications while in the hospital, including infections and kidney failure. Over 30 percent of his body surface area was burned; 23 percent of those burns were third degree. While undergoing treatment, Shands gave him only a 22 percent chance of surviving. Griffis remained in the hospital for three and one half months. The medical bills for Griffis’ treatment totaled Griffis cost $1,363,285.65. Medicaid paid $48,640.57 of that total amount. The Veterans Administration (VA) paid $275,911.87. Shands was eventually paid $324,552.44 of its charges and wrote off over $1 million. Griffis filed a lawsuit against Suwannee Valley Electric Cooperative, Inc. (“Suwannee”), seeking payment of economic and non-economic damages related to Suwannee’s alleged liability for the accident. After negotiations and mediation, a settlement was reached whereby Griffis was to receive the sum of $500,000 from Suwannee in full settlement of all his claims. After the settlement was reached between Griffis and Suwannee, the Agency attempted to enforce its lien, seeking repayment of the entire amount it had paid. Griffis, believing that less than the lien amount was actually owed, filed a Motion for Order Apportioning Damages as part of his pending lawsuit against Suwannee. The purpose of the motion was not to have the circuit court judge determine the amount of the Agency’s lien. The motion was filed to obtain an Order that would apportion the settlement among the lawful elements of damages to which Griffis was entitled. A hearing on the motion was set for April 14, 2015, before Circuit Court Judge Andrew J. Decker, III. The Agency was served a copy of the motion and the notice of hearing. The Agency filed an objection to the motion, seeking to relieve the circuit court of jurisdiction in favor of the Division of Administrative Hearings. See § 409.910 (17)(b), Fla. Stat. Griffis replied to the Agency’s objection, stating that “the purpose of the Motion is to differentiate or allocate the settlement among Mr. Griffis’ different elements of damages [rather than] asking this Court to resolve a Medicaid lien dispute.” At the Circuit Court hearing on Griffis’ motion, the Agency made an appearance and, in fact, cross-examined the expert witness who testified. The only testimony provided at that hearing was from retired District Court of Appeal Judge Edwin B. Browning, Jr. Judge Browning provided expert testimony as to the value of Griffis’ claim, which he set at $6 million. Mr. Smith also provided some argument in support of Griffis’ claim, but as an attorney, rather than a sworn witness. Judge Decker took the $6 million figure, plus economic damages in the sum of $211,518, plus past medical expenses of $324,552.44 for a total of $6,536,070.44. That was then divided into the $500,000 settlement figure amount. That resulted in a factor of 7.649 percent, which, applied to the “value of the case” amount, resulted in a figure of $458,919.49. Applying the factor to economic damages resulted in an amount of $16,179.01. The past medical expenses amount, once factored, resulted in a figure of $24,825.01.1/ After hearing the evidence presented at his motion hearing, Judge Decker entered an Order dated April 21, 2015, establishing the past medical expenses amount, i.e., the Agency’s lien, at $24,901.50. The Order did not address future medical expenses because they were not sought by Petitioner. Inasmuch as his future medical costs would be paid by VA, his attorneys did not add potential medical expenses to the claim.2/ A copy of Judge Decker’s Order was received into evidence in the instant proceeding (although, pursuant to section 90.202, Florida Statutes, it could have been officially recognized by the undersigned Administrative Law Judge). The Order, along with Griffis’ other exhibits and Mr. Smith’s testimony, constituted the evidence in this matter.
