The Issue The issue to be determined is the amount to be reimbursed to Respondent, Agency for Health Care Administration (Respondent or AHCA), for medical expenses paid on behalf of Petitioners, Devyn Jeffries (Devyn) and Makayla Jeffries (Makayla), minors, by and through their parents and natural guardians, Theresa Jeffries and Christopher Jeffries, (collectively Petitioners), from settlement proceeds received by Petitioners from third parties.
Findings Of Fact On January 24, 2010, Devyn and Makayla were born via emergency C-Section at 27 weeks gestation. During the birthing process, both children suffered severe and permanent brain damage. As a result, Devyn suffers from Cerebral Palsy with spastic paralysis and cognitive developmental disabilities, and Makayla suffers from Cerebral Palsy, failure to thrive, feeding difficulties, and cognitive deficits. Devyn and Makayla’s medical care related to their birth injuries was paid by Medicaid in the following amounts: 1 Respondent’s Proposed Final Order was served by email and received by DOAH at 9:50 p.m. on October 21, 2020. It was, therefore, “filed” at 8:00 a.m. on October 22, 2020, in accordance with Florida Administrative Code Rule 28-106.104(3). However, it is accepted and considered as though timely filed. In regard to Devyn, Medicaid, through AHCA, provided $108,068.58 in benefits and Medicaid, through a Medicaid Managed Care Plan known as Simply Healthcare, provided $25,087.08 in benefits. The sum of these Medicaid benefits, $133,155.66, constituted Devyn’s entire claim for past medical expenses. In regard to Makayla, Medicaid, through AHCA, provided $107,912.33 in benefits and Medicaid, through a Medicaid Managed Care Plan known as Simply Healthcare, provided $13,915.84 in benefits. The sum of these Medicaid benefits, $121,828.17, constituted Makayla’s entire claim for past medical expenses. Devyn and Makayla’s parents and natural guardians, Theresa and Christopher Jeffries, pursued a medical malpractice lawsuit against the medical providers responsible for Devyn and Makayla’s care (“Defendants”) to recover all of Devyn and Makayla’s damages, as well as their own individual damages associated with their children’s injuries. The medical malpractice action settled through a series of confidential settlements, which were approved by the court on February 21, 2020. During the pendency of the medical malpractice action, AHCA was notified of the action and AHCA asserted a $108,068.58 Medicaid lien associated with Devyn’s cause of action and settlement of that action and a $107,912.33 Medicaid lien associated with Makayla’s cause of action and settlement of that action. AHCA did not commence a civil action to enforce its rights under section 409.910, nor did it intervene or join in the medical malpractice action against the Defendants. By letter, AHCA was notified of the settlement. AHCA has not filed a motion to set aside, void, or otherwise dispute the settlement. The Medicaid program through AHCA spent $108,068.58 on behalf of Devyn and $107,912.33 on behalf of Makayla, all of which represents expenditures paid for past medical expenses. No portion of the $215,980.91 paid by AHCA through the Medicaid program on behalf of Petitioners represented expenditures for future medical expenses. The $215,980.91 combined total in Medicaid funds paid towards the care of Devyn and Makayla by AHCA is the maximum amount that may be recovered by AHCA. In addition to the foregoing, Simply Health spent $39,002.92 on Petitioners’ medical expenses. Thus, the total amount of past medical expenses incurred by Petitioners is $254,983.83. The taxable costs incurred in securing the settlement totaled $109,701.62. Application of the formula at section 409.910(11)(f) to the settlement requires payment to AHCA of the full $108,068.58 Medicaid lien associated with Devyn and the full $107,912.33 Medicaid lien associated with Makayla. Petitioners have deposited the full Medicaid lien amounts in interest- bearing accounts 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). This case is somewhat unique in that it involves two petitioners, with separate injuries and separate Medicaid expenditures. However, the incident causing the injuries was singular, and resulted in a total settlement of all claims asserted by Devyn, Makayla, and their parents of $2,650,000. Therefore, for purpose of determining the appropriate amount of reimbursement for the Medicaid lien, it is reasonable and appropriate to aggregate the amounts paid in past medical expenses on behalf of Devyn and Makayla, and the economic and non-economic damages suffered by them. There was no suggestion that the monetary figure agreed upon by the parties represented anything other than a reasonable settlement. The evidence firmly established that the total of Devyn’s and Makayla’s economic damages, consisting of lost future earnings, past medical expenses, and future medical expenses were, at the conservative low end, roughly $4,400,000 for Devyn and $2,400,000 for Makayla, for a sum of $6,800,000 in economic damages.2 Based on the experience of the testifying experts, and taking into account jury verdicts in comparable cases, Petitioners established that non- economic damages would reasonably be in the range of $10,000,000 to $15,000,000 for each of the children. Based on the forgoing, it is found that $15,000,000, as a full measure of Petitioners’ combined damages, is very conservative, and is a fair and appropriate figure against which to calculate any lesser portion of the total recovery that should be allocated as reimbursement for the Medicaid lien for past medical expenses. The $2,650,000 settlement is 17.67 percent of the $15,000,000 conservative value of the claim.3
The Issue The issue to be decided is the amount to be paid by Petitioner to Respondent, Agency for Health Care Administration ("AHCA"), out of her settlement proceeds, as reimbursement for past Medicaid expenditures pursuant to section 409.910, Florida Statutes.
Findings Of Fact On or about September 17, 2007, Alicia M. Fallon ("Alicia"), then 17 years old, drove to the mall to meet friends and became involved in an impromptu street race. Alicia lost control of the vehicle she was driving, crossed the median into oncoming traffic, and was involved in a motor vehicle crash. Her injuries consisted of traumatic brain injury ("TBI") with moderate hydrocephalus, right subdural hemorrhage, left pubic ramus fracture, pulmonary contusions (bilateral), and a clavicle fracture. Since the time of her accident, she has undergone various surgical procedures including the insertion of a gastrostomy tube, bilateral frontoparietal craniotomies, insertion of a ventriculoperitoneal shunt, and bifrontal cranioplasties. As a result of the accident, in addition to the physical injuries described above, Alicia suffered major depressive disorder, and Post-Traumatic Stress Disorder injuries. She is confined to a wheelchair for mobility, has no bowel or bladder control, and suffers from cognitive dysfunction. Alicia is totally dependent on others for activities of daily living and must be supervised 24 hours a day, every day of the week. A lawsuit was brought against the driver of the other car in the race, as well as the driver's mother, the owner of the vehicle. It could not be established that the tortfeasor driver hit Alicia's car in the race, or that he cut her off. The theory of liability was only that because Alicia and the other driver in the race were racing together, that the tortfeasor was at least partially responsible for what happened. It was viewed that there was no liability on the part of the driver of the third vehicle. The tortfeasor only had $100,000 in insurance policy limits, but the insurance company did not timely offer payment. The tortfeasor had no pursuable assets. The lawsuit was bifurcated and the issue of liability alone was tried. The jury determined that the tortfeasor driver was 40 percent liable for Alicia's damages. Because of the risk of a bad faith judgment, the insurance company for the tortfeasor settled for the gross sum of $2.5 million. AHCA, through its Medicaid program, provided medical assistance to Ms. Fallon in the amount of $608,795.49. AHCA was properly notified of the lawsuit against the tortfeasors, and after settlement, asserted a lien for the full amount it paid, $608,795.49, against the settlement proceeds. AHCA did not "institute, intervene in, or join in" the medical malpractice action to enforce its rights as provided in section 409.910(11), or participate in any aspect of Alicia's claim against the tortfeasors or their insurance company. Application of the formula at section 409.910(11)(f), to the settlement amount requires payment to AHCA in the amount of $608,795.49. Another provider, Optum, provided $592,554.18 in past medical expense benefits on behalf of Ms. Fallon. However, that amount was reduced through negotiation to a lien in the amount of $22,220.78.1/ Petitioner deposited the full Medicaid lien amount in an interest bearing account for the benefit of AHCA pending an administrative determination of AHCA's rights, and this constitutes "final agency action" for purposes of chapter 120, Florida Statutes, pursuant to section 409.910(17). Petitioner, Donna Fallon, the mother of Alicia, testified regarding the care that was and is continuing to be provided to Alicia after the accident. She is a single parent, and with only the assistance of an aide during the day, she is responsible for Alicia's care. Alicia must be fed, changed, bathed, and turned every few hours to avoid bed sores. Alicia can communicate minimally by using an electronic device and by making noises that are usually only discernable by her mother. Although she needs ongoing physical therapy and rehabilitation services, the family cannot afford this level of care. Petitioner presented the testimony of Sean Domnick, Esquire, a Florida attorney with 30 years' experience in personal injury law, including catastrophic injury and death cases, medical malpractice, and brain injury cases. Mr. Domnick is board certified in Civil Trial by the Florida Bar. He represented Alicia and her mother in the litigation against the tortfeasors and their insurance company. As a routine part of his practice, he makes assessments concerning the value of damages suffered by injured clients. He was accepted, without objection, as an expert in valuation of damages. Mr. Domnick testified that Alicia's injuries are as catastrophic as he has handled. Alicia has no strength, suffers contractions and spasms, and is in constant pain. Alicia has impaired speech, limited gross and fine motor skills, is unable to transfer, walk, or use a wheelchair independently. Alicia is unable to self-feed. All of her food must be cooked and cut up for her. Alicia is unable to perform self-hygiene and has no ability to help herself in an emergency and therefore requires constant monitoring. As part of his work-up of the case, Mr. Domnick had a life care plan prepared by Mary Salerno, a rehabilitation expert, which exceeded $15 million on the low side, and $18 million on the high side, in future medical expenses alone for Alicia's care. Mr. Domnick testified that the conservative full value of Alicia's damages was $45 million. That figure included $30 million for Alicia's pain and suffering, mental anguish and loss of quality of life, disability, and disfigurement, extrapolated for her life expectancy, plus the low end of economic damages of $15 million. Petitioner also presented the testimony of James Nosich, Esquire, a lawyer who has practiced primarily personal injury defense for 29 years. Mr. Nosich and his firm specialize in defending serious and catastrophic personal injury/medical malpractice cases throughout Florida. As part of his practice, Mr. Nosich has reviewed more than 1,000 cases of personal injury/medical malpractice cases and formally reported the potential verdict and full value to insurance companies that retained him to defend their insureds. Mr. Nosich has worked closely with economists and life care planners to identify the relevant damages of those catastrophically injured in his representation of his clients. Mr. Nosich has also tried over 30 cases in Broward County in which a plaintiff suffered catastrophic injuries similar to those of Alicia. Mr. Nosich was tendered and accepted, without objection, as an expert in the evaluation of damages in catastrophic injury cases. In formulating his expert opinion with regard to this case, Mr. Nosich reviewed: Alicia's medical records and expenses; her life care plan prepared by Ms. Salerno; and the economist's report. He took into consideration the reputation of Alicia's lawyer (Mr. Domnick); and the venue in which the case would be tried. Mr. Nosich opined that Broward County is known for liberal juries who tend to award high amounts in catastrophic cases. He also testified that Mr. Domnick is known as a lawyer with extreme capability and who has an excellent rapport with juries and the ability to get higher dollar verdicts. Mr. Nosich agreed with Mr. Domnick that the estimated $45 million figure for the total value of Alicia's case was conservative. He agreed with Ms. Salerno's estimated economic damages of $15 million and a doubling of that amount ($30 million) for Alicia's noneconomic damages. Mr. Nosich credibly explained that the $45 million total value was very conservative in his opinion based on Alicia's very high past medical bills and the fact that she will never be able to work. The testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the settlement of $2.5 million does not fully compensate Alicia for the full value of her damages. As testified to by Mr. Domnick, Alicia's recovery represents only 5.55 percent of the total value of her claim. However, in applying a ratio to reduce the Medicaid lien amount owed to AHCA, both experts erroneously subtracted attorney's fees and costs of $1.1 million from Alicia's $2.5 million settlement to come up with a ratio of 3 percent to be applied to reduce AHCA's lien.2/ Further, in determining the past medical expenses recovered, Petitioner's experts also failed to include the Optum past medical expenses in the amount of $592,554.18. AHCA did not call any witnesses, present any evidence as to the value of damages, or propose a different valuation of the damages. In short, Petitioner's evidence was unrebutted. However, through cross-examination, AHCA properly contested the methodology used to calculate the allocation to past medical expenses. Accordingly, the undersigned finds that Petitioner has proven by a preponderance of the evidence that 5.55 percent is the appropriate pro rata share of Alicia's past medical expenses to be applied to determine the amount recoverable by AHCA in satisfaction of its Medicaid lien. Total past medical expenses is the sum of AHCA's lien in the amount of $608,795.49, plus the Optum past medicals in the amount of $592,554.18, which equals $1,201,349.67. Applying the 5.55 percent pro rata ratio to this total equals $66,674.91, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien.
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 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.
The Issue The issue to be decided in this proceeding is the amount to be paid to Respondent, Agency for Health Care Administration (“AHCA” or the “Agency”), from the proceeds of a personal injury settlement received by Petitioner, Emily E. Bryan (“Bryan”), to reimburse the Florida Medicaid Program (“Medicaid”) for expenditures made on her behalf.
Findings Of Fact The following Findings of Fact are derived from the exhibits and oral testimony at final hearing, as well as from the stipulated facts between the parties. On April 12, 2010, just a couple of days after her first birthday, Bryan was taken to the emergency room (“ER”) at a local hospital. (Due to a confidential settlement between the hospital and Bryan, the name of the healthcare facility will not be disclosed in this Final Order.) The reason for the hospital visit was a blunt head trauma Bryan had experienced, followed by multiple episodes of vomiting and excessive sleepiness. A CT scan of her brain revealed a subdual hemorrhage within the anterior falx and a small amount of subarachnoid hemorrhage adjacent to the anterior falx. She was admitted to the hospital for observation, but no surgery was deemed necessary at the time. Due to repeated emesis (vomiting), a repeat brain scan was done on April 15, 2010, i.e., three days later. This scan demonstrated less apparent areas of hemorrhage and no new areas of hemorrhage, but front scalp swelling was detected. Bryan was discharged from the hospital with instructions to return if the symptoms did not improve. Bryan was taken back to the hospital ER the very next day, April 16, 2010, and returned again on May 7, 2010, and on May 13, 2010. The day after her last hospital visit, Bryan experienced a grand mal seizure while at her daycare center. She went into respiratory distress and was transmitted by ambulance to the hospital ER. A brain scan was done, which revealed bilateral subdural hematomas involving the interhemispheric fissure, convexity of both frontal parietal lobes, as well as the inferior area of the corpus callosum, anteriorly. She required intubation and admitted to the pediatric intensive care unit. As a result of initially undiagnosed problems, Bryan developed severe neurological injury resulting in communication disabilities (receptive and expressive), cognitive impairments, seizures, quadriparesis (extremity function), bowel and bladder control issues, and difficulty swallowing. There does not appear to be any way to reverse the damage, and Bryan will likely lead a life without much development or growth. As a result of Bryan’s injuries, she sued the hospital, the ER, and two doctors who first treated her. She claimed damages well in excess of $30 million, perhaps as much as $60 or $70 million dollars. The amount she claimed was for both economic and non-economic damages. There was no evidence provided at final hearing as to whether either of those categories of damages was more or less critical than the other. The valuation experts did opine that non-economic damages are more vague, nebulous and ephemeral than economic damages. Bryan received extensive medical care for treatment of her condition. The majority of that care was paid for by Medicaid. Upon completion of her treatment, Medicaid imposed a lien in the amount of $379,599.90 (the “Medicaid Lien”), representing the amount of money Medicaid expended for Bryan’s past medical expenses. Medicaid is now seeking repayment of the Medicaid Lien. The medical malpractice action filed on Bryan’s behalf sought to obtain payments from the defendants in an amount sufficient to care for Bryan’s future needs and to pay for her medical expenses, past and present. The Medicaid Lien represented the majority of past medical expenses. Her other damages, economic and non-economic, were estimated from objective expectations based on similar cases, expert analysis, and reasonable guesswork. One of Bryan’s lawyers in her malpractice action estimated a value of her economic damages in the range of $26 to $30 million. He estimated the value of her non-economic damages at about the same amount, but possibly up to twice the amount of the economic damages. Again, non-economic damages are more difficult to ascertain. Another expert in valuation of claims of this sort estimated the total value of Bryan’s damages to be $30 to $60 million. Prior to the medical malpractice trial, Bryan’s attorneys and representatives began to worry that the hospital, which had the largest assets and best insurance coverage, might be able to avoid liability for Bryan’s damages. If there was no liability for the hospital, Bryan would have to receive any monetary recovery from the doctors, whose insurance coverages were woefully inadequate to pay the estimated value of Bryan’s damages. This situation induced her legal team to seek a settlement that included the hospital. During the settlement discussions, it was presumed by some of the defendants that Bryan’s counsel would be able to convince AHCA to reduce the Medicaid Lien. Neither Medicaid nor AHCA was represented in the settlement discussions, so it is not known how the defendants came to that belief concerning the Medicaid Lien. In fact, AHCA chose not to be involved in the settlement discussions; rather, they asserted their Medicaid Lien in full and left it up to the parties to address that potentiality. Bryan eventually settled with the defendants for the sum of three million dollars ($3,000,000), the “Settlement Amount.” This sum was much less than the potential or estimated value of her damages, but is the amount decided upon by her professional representatives as acceptable for the value of her claim. This settlement was reached despite the known liability of the Medicaid Lien. The estimated value of Bryan’s damages was not an absolute figure. That is, no one testified as to what amount would be awarded if the case went before a jury. In fact, the defendants seemed to have had significant defenses they might have raised if the case had proceeded to trial. The Settlement Amount was deemed acceptable by all parties considering the full circumstances of the case and all potential defenses that might have been raised. There is no dispute that AHCA paid for medical treatment in an amount commensurate with the Medicaid Lien. Bryan is not challenging that amount; she merely asserts that there is only a much smaller amount of funds available to pay that lien. Bryan asserts that only $38,106.28 of the $3 million settlement was actually allocated to past medical expenses and is, therefore, the pool of settlement funds from which the Medicaid Lien could be paid. As noted above, two qualified and experienced trial attorneys evaluated the settlement as it related to Bryan’s injuries. Each of those–-as confirmed by a hearsay affidavit from another expert-–noted that Bryan’s recovery in the settlement was far less than her actual damages. Those damages included, presumably, all of Bryan’s past medical costs, her pain and suffering, and her projected future costs (e.g., ongoing medical care, therapies, private nursing care, extensive rehabilitation and assistance, equipment and supplies, round- the-clock supervision). However, none of the experts qualified any of these costs, vis-à-vis the other costs. For example, if it had been determined that Bryan’s care going forward was much more critical than her past medical expenses, the past medical costs may have warranted a smaller percentage of the total settlement than future care was awarded. The “one size fits all” (percentage) approach by the three valuators puts each element of Bryan’s damages at equal value. That approach is simply not persuasive. The settlement agreement between the parties in the medical malpractice action did not allocate a specific portion of the Settlement Amount to past medical expenses. Any effort by Bryan to do so after the fact and without confirmation by the other parties is speculative. The allocation of 10 percent of the Settlement Amount to each and every element of Bryan’s damages is not proven by the evidence presented at final hearing.
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.1/
Findings Of Fact On the night of April 2, 2015, Mitchell Williams was riding his bicycle along a public sidewalk in Destin, Florida. The sidewalk intersected privately-owned driveways. At the north side of a privately-owned driveway at 239 Main Street, the concrete was broken at the point where the sidewalk and private driveway connected. The broken concrete created a dangerous condition to anyone riding along the sidewalk. Mr. Williams rode his bicycle into soft sand where the sidewalk should have been, causing his front wheel to bury into the sand before striking the leading edge of the undamaged portion of the sidewalk. Mr. Williams flipped over the handlebars of his bicycle and struck the concrete sidewalk face first. Mr. Williams underwent an anterior cervical discectomy and fusion (“ACDF”), placement of an inferior vena cava (“IVC”) filter, open reduction and internal fixation (“ORIF”) of a nasal maxillary fracture, and repair of facial lacerations. Mr. Williams was hospitalized for nine months. During his post- operative hospitalization, Mr. Williams developed stage IV decubitus ulcers that left him with significant scar tissue over his tailbone. The accident rendered Mr. Williams a partial quadriplegic from a cervical spinal cord injury. He remains confined to a wheelchair for mobility. Mr. Williams is totally dependent on others for his activities of daily living. Mr. Williams made a personal injury damages claim against the owner of the sidewalk, the City of Destin (“City”). On or about April 29, 2019, Mr. Williams entered into a pre-suit settlement of his tort claim against the City for $200,000, the statutory maximum provided by section 768.28(5), Florida Statutes. Because the City tendered the full amount for which it could be held liable, no express allocation for past medical expenses was made in the settlement. After settling with the City, Mr. Williams brought an action against Wagih Gargas, Gargas Commercial and City Produce of Fort Walton Beach, alleged as tortfeasors by virtue of their ownership and/or control of the private driveway where Mr. Williams was injured. The case against these parties remains pending with a very uncertain outcome as to liability. AHCA was properly notified of Mr. Williams’s personal injury action and indicated it had paid benefits related to his injuries in the amount of $70,460.35. AHCA’s payments were the only payments made for Mr. Williams’s past medical expenses. AHCA has asserted a lien for the full amount of $70,460.35 against Mr. Williams’s settlement proceeds. Mr. Williams will never fully recover from his injuries. He will require medical treatment and assistance with his activities of daily living for the rest of his life. Application of the formula in section 409.910(11)(f) would require Mr. Williams to pay back Medicaid all of its $70,460.35 lien. Mr. Williams contends that only a fraction of the settlement represents his recovery for past medical expenses. 10. Sections 409.910(11)(f) and 409.910(17)(b), as amended, provide for recovery by Medicaid for future medical expenses as well as past medical expenses. Section 409.910(17)(b) further imposes a clear and convincing burden of proof on a recipient attempting to show that the portion of the total recovery that should be allocated as past and future medical expenses is less than the amount calculated by AHCA. However, in Gallardo v. Dudek, 263 F. Supp. 3d 1247 (N.D. Fla. 2017), the court held that the provisions allowing Medicaid to recover future medical expenses and imposing a clear and convincing standard on recipients contesting AHCA’s calculations violate and are preempted by federal law. The parties have stipulated that Gallardo v. Dudek preempts the application of the future medical expenses provision and that Petitioner’s burden of proof in this section 409.910(17)(b) proceeding is a preponderance of the evidence. See also Giraldo v. Ag. for Health Care Admin., 248 So. 3d 53 (Fla. 2018)(under federal law AHCA may only reach the past medical expenses portion of a Medicaid recipient's tort recovery to satisfy its Medicaid lien). At the hearing, Mr. Williams testified as to the extent of the injuries and damages he suffered in the April 2, 2015, bicycle accident. Mr. Williams testified persuasively as to the overwhelming impact of the injuries on his life. Prior to the accident, Mr. Williams made a good living as a skilled carpenter and enjoyed fishing and golfing in his spare time. None of these activities is possible now. He is an “incomplete” quadriplegic, meaning that he is confined to a wheelchair but has limited use of his arms. John Wesley is the attorney who represented Mr. Williams in his personal injury lawsuit. Mr. Wesley is an 18-year practicing attorney who is board certified in civil trial practice. He is a partner with Wesley, McGrail & Wesley in Ft. Walton Beach. Mr. Wesley testified that he handles catastrophic personal injury and death cases, including cases involving injuries similar to those suffered by Mr. Williams. Mr. Wesley regularly evaluates the damages suffered by injured people. He testified that he does all of his work on a contingency fee basis, which makes the valuation of cases critical to his livelihood. Mr. Wesley’s representation of Mr. Williams gave him intimate familiarity with his client’s injuries and damages. Mr. Wesley testified that there are two aspects to the valuation of a case: liability and damages. As to liability, the attorney must ask whether the potential client is partly or wholly responsible for his own injuries due to factors such as comparative negligence or alcohol intake, and whether the tortfeasor is shielded under a legal concept such as sovereign immunity. The attorney must then decide whether the damages are worth pursuing even if the tortfeasor’s liability is unquestioned. Mr. Wesley testified that there was no question in this case as to the damages, which were catastrophic. The problem in Mr. Williams’s case was liability, because of the presence of contributory negligence and alcohol defenses. The most significant factor limiting Mr. Williams’s recovery was the sovereign immunity cap on damages. The City of Destin tendered $200,000, the full limit it would be required to pay under the cap. To recover more would require passing a claim bill in the legislature, an unlikely outcome given Mr. Williams’s contributory negligence. Under the circumstances, Mr. Wesley determined that nothing further could be recovered from the City. Mr. Williams’s net recovery, after attorney’s fees, was $140,000. Mr. Wesley provided detailed testimony about how the accident occurred and the mechanism of injury. He credibly testified regarding the process he undertook in evaluating and arriving at his opinion related to the value of the damages suffered by Mr. Williams. He met with Mr. Williams, evaluated the facts of the case, reviewed all the medical information and all other records and reports regarding Mr. Williams’s injuries, analyzed liability issues and comparative fault, developed economic damages estimates, and valued non-economic damages such as past and future pain and suffering, loss of capacity to enjoy life, and mental anguish. Mr. Wesley testified that the full value of Mr. Williams’s damages was likely in excess of $19 million. That figure included Mr. Williams’s pain and suffering, mental anguish, loss of quality of life, and economic damages. Mr. Wesley testified that non-economic damages were the greatest element of the damages sustained by Mr. Williams, and therefore were the largest driver of the valuation and the greatest portion of damages recovered in the settlement. Mr. Wesley stated that he used a very conservative valuation figure of $6 million for the purpose of resolving Medicaid’s lien, rather than his actual valuation of more than $19 million. If the conservative valuation of $6 million is accepted, then the $200,000 recovery is only 3.33 percent of the value of the damages. Mr. Williams’s $140,000 net recovery amounted to only 2.33 percent of the full measure of his damages. Mr. Wesley’s testimony was uncontroverted, reasonable, and persuasive. Charles F. Beall, Jr., a member of the Pensacola firm Moore, Hill & Westmoreland, P.A., testified on behalf of Mr. Williams. Mr. Beall is board certified in both civil trial and appellate practice. His practice focuses on defending large scale personal liability and mass tort cases. Mr. Beall has handled more than 225 appellate cases in state and federal courts. His cases have resulted in over 60 published opinions. At the trial court level, Mr. Beall has represented hundreds of clients ranging from individual homeowners to multinational corporations in a wide variety of civil litigation, including product liability suits, contract claims, and insurance coverage disputes. He has tried more than a dozen civil jury trials to verdict as lead counsel and has served on the trial team for several multi-week trials. Mr. Beall was accepted without objection as an expert in the valuation of personal injury claims. Mr. Beall and his firm specialize in defending serious and catastrophic personal injury cases throughout Florida. Mr. Beall has reviewed thousands of personal injury cases and formally reported potential verdicts and valuations to insurance companies that have retained him to defend their insureds. Mr. Beall has worked closely with economists and life care planners to identify the relevant damages of persons suffering catastrophic injuries. Mr. Beall testified that he has handled cases involving catastrophic injuries similar to those suffered by Mr. Williams. Mr. Beall testified that he arrived at his valuation opinion by examining all the elements of damages suffered by Mr. Williams. He agreed with Mr. Wesley that Mr. Williams’s greatest element of loss was non-economic damages. Mr. Beall reviewed numerous verdicts that had been affirmed on appeal involving injuries similar to those suffered by Mr. Williams. Mr. Beall opined that the valuation of the total damages suffered by Mr. Williams was in excess of $10 million. He agreed that Mr. Wesley’s more conservative $6 million valuation was appropriate for purposes of the lien reduction formula. AHCA did not offer any witnesses or documentary evidence to question the credentials or opinions of either Mr. Wesley or Mr. Beall. AHCA did not offer testimony or documentary evidence to rebut the testimony of Mr. Wesley and Mr. Beall as to valuation or the reduction ratio. AHCA did not offer alternative opinions on the damage valuation method suggested by either Mr. Wesley or Mr. Beall, both of whom testified knowledgably and credibly as experienced practitioners. The testimony of Petitioner's two experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the settlement of $200,000 does not begin to fully compensate Mr. Williams for the full value of his damages. Petitioner asserts that the settlement allocation should be based on the ratio between the net settlement, $140,000, and the conservative valuation of $6 million, meaning that 2.33 percent of the settlement proceeds should be allocated to past medical expenses. Petitioner cited no authority and the undersigned is not otherwise persuaded that section 409.910 allows attorney’s fees to be deducted from the settlement prior to calculating the percentage of the settlement that should be allocated to past medical expenses. With that correction, the undersigned finds that Petitioner has proven by a preponderance of the evidence that 3.33 percent (the ratio that $200,000 bears to $6 million) is the appropriate pro rata share of Mr. Williams’s past medical expenses to be applied to determine the amount recoverable by AHCA in satisfaction of its Medicaid lien. ACHA’s lien for past medical expenses is $70,460.35. Applying the 3.33 percent pro rata ratio to this total yields $2,346.33, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien.
The Issue The issue is the amount of Petitioner’s $800,000 personal injury settlement payable to Respondent, Agency for Health Care Administration (“AHCA”), to satisfy AHCA’s $187,950.01 Medicaid lien.
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: Background On July 13, 2008, Carissa Gaudio (Carissa), then 26 years old, suffered severe physical injury and catastrophic brain damage when her car was struck by a train. Carissa received extensive medical intervention to save her life and address her injuries. Eventually, her medical condition stabilized and she was discharged to her parent’s home. While Carissa demonstrated consciousness and awareness, due to her catastrophic brain damage, she was unable to speak, ambulate, eat, toilet or care for herself in any manner. She was totally dependent on others for every aspect of her daily care. Carissa’s past medical expenses related to her injuries suffered on July 13, 2008, were paid by private health insurance through Blue Cross Blue Shield of Florida, Medicare, and Medicaid. Blue Cross Blue Shield of Florida provided $494,868.51 in benefits, Medicare provided $6,364.89 in benefits, and Medicaid provided $187,950.01 in benefits. The combined amount of these benefits is $689,183.41, and this $689,183.41 represented Carissa’s entire claim for past medical expenses. Carissa, or others on her behalf, did not make payments in the past or in advance for Carissa’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. Due to Carissa’s incapacity, Carissa’s mother, Roseann Gaudio, was appointed her legal guardian. Roseann Gaudio, as Carissa’s mother and guardian, brought a personal injury action in Broward County, Florida to recover all of Carissa’s damages against the railway company and train engineer (“Tortfeasor”). On January 10, 2015, Roseanne Gaudio, as Carissa’s mother and guardian, settled Carissa’s personal injury lawsuit for $800,000. In making this settlement, the settling parties agreed that: 1) the settlement did not fully compensate Carissa for all her damages; 2) Carissa’s damages had a value in excess of $16,000,000, of which $689,183.41 represents her claim for past medical expenses; and 3) allocation of $34,459.17 of the settlement to Carissa’s claim for past medical expenses was reasonable and proportionate. Because Carissa was incapacitated, her settlement required Court approval. Accordingly, by Order Approving Settlement dated February 11, 2015, the Circuit Court Judge, Honorable Jack Tuter, approved Carissa’s settlement. As a condition of Carissa’s eligibility for Medicaid, Carissa assigned to AHCA her 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 Carissa’s lawsuit, AHCA was notified of the lawsuit and AHCA, through its collections contractor, Xerox Recovery Services Group, asserted a $187,950.01 Medicaid lien against Carissa’s cause of action and future settlement of that action. By letter of February 17, 2015, Carissa’s personal injury attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Final Release and a copy of the Order Approving Settlement. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the Medicaid lien. AHCA did not respond to Carissa’s attorney’s letter of February 17, 2015. AHCA did not file an action to set aside, void, or otherwise dispute Carissa’s settlement with the Tortfeasor. The Florida Medicaid program spent $187,950.01 on behalf of Carissa, all of which represents expenditures paid for Carissa’s past medical expenses. Carissa died on August 12, 2015 (Death Certificate filed by Petitioner on September 11, 2015). No portion of the $187,950.01 paid by the Medicaid program represents expenditures for future medical expenses, and AHCA did not make payments in advance for medical care. AHCA has determined that of Carissa’s $226,478.73 in litigation costs, $210,463.10 are taxable costs for purposes of the section 409.910(11)(f) formula calculation. Based on $210,463.10 in taxable costs, the section 409.910(11)(f) formula applied to Carissa’s $800,000 settlement, requires payment of $194,768.45 to AHCA in satisfaction of its $187,950.01 Medicaid lien. Since $187,950.01 is less than the $194,768.45 amount required to be paid to AHCA under the section 409.910(11)(f) formula, AHCA is seeking reimbursement of $187,950.01 from Carissa’s $800,000 settlement in satisfaction of its Medicaid lien. The full Medicaid lien amount has been deposited into an interest-bearing account pending an administrative determination of AHCA’s rights, and this constitutes “final agency action” for purposes of chapter 120, pursuant to section 409.910(17)(b). At hearing, Petitioner called Joseph J. Slama, a board-certified civil trial lawyer. Mr. Slama handles aviation crash, products liability, roadway defect, and automobile accident cases, including handling catastrophic brain injury cases through jury trial. He stays abreast of jury verdicts through review of publications and participation in trial attorney organizations. He testified that he routinely evaluates his client’s injuries and makes assessments concerning the value of their damages, and he explained his process for making these determinations based on his experience and training. Mr. Slama was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Slama testified that he represented Carissa in relation to her personal injury action. He explained that he first met with Carissa and her mother after she was discharged home from the hospital. Mr. Slama testified that he had reviewed the accident report, Carissa’s medical records, taken depositions of witnesses and experts, and reviewed the Life Care Plan prepared by Craig H. Lichtblau, M.D. Mr. Slama explained in great detail the facts and circumstances of Carissa’s accident. He explained that Carissa’s car became stuck on the railroad tracks. Unfortunately, a train approached and shortly before impact, Carissa exited her vehicle. Her vehicle was struck by the train and she was propelled 167 feet from the point of impact. Mr. Slama testified that as a result of the accident, Carissa suffered catastrophic physical injury and brain damage. He testified that due to this catastrophic brain injury, Carissa was left in a semi-vegetative state and was unable to ambulate. While she was conscious and aware of her condition, she was unable to communicate other than with limited facial expressions. She lived in her parents’ living room where she received around the clock care, provided by her family, until her recent death. Mr. Slama testified that through his representation of Carissa, interactions with her, review of her medical records and reports, and based on his training and experience in similar cases, it was his opinion that the “minimum reasonable value” of Carissa’s damages was $16,000,000. He testified that this $16,000,000 would be the amount a jury would award in damages if the question of damages alone was presented to the jury, and he would be disappointed in this result because he would ask for much more in damages. Mr. Slama explained that the basis of his opinion was her past expenses, her need for future life care needs, and her non-economic damages, including pain and suffering, which would have been awarded from the date of her injury by a jury and would be a huge amount. Mr. Slama explained that Carissa’s lawsuit to recover all her damages had issues related to comparative negligence and disputed facts that called into question the responsibility of the defendants to pay for Carissa’s damages. He testified that based on these issues, Carissa’s lawsuit was settled for $800,000. Mr. Slama testified that this $800,000 settlement did not fully compensate Carissa for the full value of her damages and that based on the $16,000,000 valuation of all Carissa’s damages, the $800,000 settlement represented a five percent recovery of Carissa’s damages. He testified that because she only recovered five percent of her damages in the settlement, she “only recovered 5 percent of each and every element of her damages, including only 5 percent of her $689,183.41” claim for past medical expenses, or $34,459.17. R. Vincent Barrett has been a trial attorney since 1977 and is a partner with the Tallahassee law firm of Barrett, Fasig & Brooks. He practices in the area of medical malpractice and medical and pharmaceutical product liability. He has handled catastrophic injury cases and handled numerous jury trials. Mr. Barrett stays abreast of jury verdicts by reviewing Jury Verdict Reports, talking with other lawyers, and attending seminars. He testified that as a routine part of his practice, he ascertains the value of damages suffered by injured parties and has served as an expert in the valuation of damages in civil cases. Mr. Barrett was accepted as an expert in the valuation of damages suffered by injured parties. Mr. Barrett testified that he was very familiar with Carissa’s injuries and had reviewed a substantial amount of Carissa’s medical records, the Life Care Plan, accident report, before and after pictures of Carissa, Day in the Life Video, the Second Amended Complaint, the Release, and the Order Approving Settlement. Mr. Barrett explained that he was familiar with the type of injury suffered by Carissa because he had handled a number of traumatic brain and orthopedic injury cases with injuries similar to Carissa’s. He testified that with respect to virtually every injury that Carissa suffered, he had handled a case that involved one or more of those injuries. Mr. Barrett stated that Carissa’s case is “one of the worst cases I’ve ever seen,” and he described Carissa’s accident and extensive injuries. Mr. Barrett explained that Carissa’s injuries were “horrible” and “dramatic” and that “tractor trailer versus car, train versus car, those kinds of cases are worth in a jury trial generally twice as much as in a regular car accident just because of the dramatic traumatic nature of the impact it has on jurors.” Mr. Barrett testified that Carissa’s damages had a value of at least up in the $30,000,000 range and that the valuation of her damages at $16,000,000 was extremely conservative. He explained that he had reviewed jury verdicts in developing his opinion as to the value of Carissa’s damages, and he compared a number of the verdicts he had reviewed with Carissa’s case, including the Mosley 2014 Broward verdict for $75,543,527, noting that the Mosley plaintiff, unlike Carissa, was left with limited verbal language and the ability to walk short distances with assistance. Mr. Barrett stated in relation to the $16,000,000 valuation of Carissa’s damages that, “in Broward County for a pretty, young, 26-year old, gainfully employed, Hispanic lady, who was engaged, it’s got to be the limit. I mean, some of those verdicts were $75 million and some of those people weren’t hurt as bad as Carissa. So, yes, it’s very conservative.” The testimony of Mr. Slama and Mr. Barrett that the minimum reasonable value of Carissa’s damages was $16,000,000 was unrebutted, and is credible. 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 ($200,000) and taxable costs ($210,463.10) from the $800,000 recovery, which yields a sum of $389,536.90, then dividing that amount by two, which yields a result of $194,768.45. 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. Since the Medicaid lien amount is $187,950.01, which is less than the $194,768.45 amount required to be paid to AHCA under the section 409.910(11)(f) formula, AHCA is seeking reimbursement of $187,950.01 from Carissa’s $800,000 settlement in satisfaction of its Medicaid 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 $34,459.17 in satisfaction of its Medicaid lien. The settlement amount of $800,000 is five percent of the reasonable total value ($16 million) of Petitioner’s damages. By the same token, five percent of $689,183.41 (Petitioner’s past medical expenses paid by both Medicaid and private insurance) is $34,459.17. 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 in this case is the amount to be paid to Respondent, Agency for Health Care Administration (“Respondent” or “AHCA”), to reimburse Medicaid for medical expenses paid on behalf of Petitioner from proceeds of a personal injury settlement received by Petitioner.
Findings Of Fact The following findings of fact are based on exhibits admitted into evidence, testimony offered by witnesses, and admitted facts set forth in the prehearing stipulation. Petitioner, William O’Malley, is the recipient of Medicaid for injuries he sustained in an automobile accident. Respondent is the state agency charged with administering the Florida Medicaid program, pursuant to chapter 409. On September 9, 2009, Petitioner, William O’Malley, lost control of his vehicle when it hydroplaned across three lanes of traffic. Mr. O’Malley’s vehicle left the roadway and struck a tree. While he was restrained with a seat belt, Mr. O’Malley suffered a severe brain injury, fractured skull, injury to his neck at the C6-C7 level, numerous fractured ribs, shattered spleen, lacerated liver, abdominal bleeding, a fractured ankle and other serious injuries. He remained in a coma for a number of weeks undergoing extensive surgical procedures to save his life. As a result of his severe and permanent injuries, Mr. O’Malley now suffers from cognitive deficits, is disfigured, and is unable to work. He receives disability payments due to his injuries. A portion of Mr. O’Malley’s past medical expenses related to his injuries was paid by Medicaid, in the amount of $196,125.72. Mr. O’Malley initiated a personal injury civil action to recover all his damages associated with his injuries against the construction companies who allegedly designed and constructed the roadway in a defective manner (“Defendants”). During the pendency of Mr. O’Malley’s personal injury action, AHCA was notified of the action, and asserted a $196,125.72 Medicaid lien against any damages received by Mr. O’Malley. AHCA was not otherwise involved in the personal injury action or settlement. In October 2016, Mr. O’Malley’s personal injury action settled for the gross amount of $1,750,000. The General Release memorializing the settlement agreement provides as follows: Although it is acknowledged that this settlement does not fully compensate William O’Malley 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 William O’Malley for a fraction of the total monetary value of his alleged damages. The parties agree that William O’Malley’s alleged damages have a value in excess of $20,000,000.00, of which $379,874.27 represents William O’Malley’s claim for past medical expenses. Given the facts, circumstances, and nature of William O’Malley’s injuries and this settlement, the parties have agreed to allocate $33,239.00 of this settlement to William O’Malley’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 William O’Malley’s damages. Further, the parties acknowledge that William O’Malley may need future medical care related to his injuries, and some portion of this settlement may represent compensation for future medical expenses William O’Malley will incur in the future. However, the parties acknowledge that William O’Malley, or others on his behalf, have not made payments in the past or in advance for the First Party’s future medical care and William O’Malley 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. By letter of October 13, 2016, Mr. O’Malley’s attorney notified AHCA of the settlement and provided AHCA with a copy of the executed Release and itemization of $123,699.86 in litigation costs. This letter explained that Mr. O’Malley’s damages had a value in excess of $20 million and the settlement represented only 8.75 percent of the recovery of Mr. O’Malley’s $379,874.27 claim for past medical expenses. This letter requested AHCA to advise as to the amount AHCA would accept in satisfaction of the $196,125.72 Medicaid lien. AHCA responded to Mr. O’Malley’s attorney’s letter and demanded full payment of the entire $196,125.72 Medicaid lien from the settlement. AHCA, through the Medicaid program, spent $196,125.72 on behalf of Mr. O’Malley, all of which represents expenditures paid for Mr. O’Malley’s past medical expenses. No portion of the $196,125.72 paid by AHCA represented expenditures for future medical expenses. Application of the formula at section 409.910(11)(f) to Mr. O’Malley’s settlement requires payment to AHCA of $196,125.72, the actual amount of the medical expenses paid by Medicaid. Petitioner disputes that $196,125.72 is the amount of recovered medical expenses payable to Respondent, and instead asserts that $33,239.00 in medical expenses are payable to Respondent. Notwithstanding Petitioner’s dispute, 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). In support of his position, Mr. O’Malley presented the testimony of two experts, Steven Browning, Esquire, and Vinson Barrett, Esquire. Mr. Browning represented Mr. O’Malley in the personal injury action. He testified as an expert regarding the valuation of Mr. O’Malley’s personal injury claim. Mr. Browning has practiced law for 31 years, primarily representing plaintiffs. He is a partner of his law firm and handles serious personal injury, wrongful death, and catastrophic injury cases. Mr. Browning handles cases that result in jury trials and, thus, he routinely researches jury verdicts to determine potential value of cases. In the litigation of civil actions, he also prepares mediation statements regarding the value of cases. He reviews life care plans, economic reports, and past jury verdicts to determine the value of a case. Mr. Browning opined that $20 million constituted a very conservative valuation of damages suffered by Mr. O’Malley. He based this opinion on having represented Mr. O’Malley in the underlying personal injury action and on his knowledge of jury verdicts and settlements in recent Florida cases involving awards of damages to individuals with similar injuries as Mr. O’Malley. He emphasized that his valuation was far more conservative than many comparable cases that resulted in substantially higher verdicts or settlements. Mr. Browning concluded that the $1,750,000 settlement amount represented 8.75 percent of the damages suffered by Mr. O’Malley. He also opined that only 8.75 percent of the $196,125.72, the past medical expenses paid by Respondent, was recovered. Mr. Browning was accepted as an expert in this matter and his testimony was found to be persuasive. Mr. O’Malley also presented the testimony of Mr. Barrett regarding the valuation of Petitioner’s claim. Mr. Barrett has practiced law for approximately 35 years. He primarily practices in the areas of medical malpractice, pharmaceutical liability, and catastrophic injuries resulting from automobile accidents. Mr. Barrett routinely handles jury trials. Thus, he routinely monitors jury verdicts and determines the value of damages suffered in personal injury actions. He reviewed recent jury verdicts and the life care plan for Mr. O’Malley to formulate his opinion regarding the valuation of Mr. O’Malley’s claim. Mr. Barrett testified that $20 million to $25 million was the estimated value of Mr. O’Malley’s claim. He testified that the amount was a very conservative estimate of damages suffered by Mr. O’Malley. Similar to Mr. Browning, Mr. Barrett opined that allocating 8.75 percent to past medical expenses in the amount of $196,125.72 was a reasonable allocation of past medical expenses and reflected the amount recovered by Mr. O’Malley for past medical expenses. Respondent also presented an expert regarding the valuation of Mr. O’ Malley’s claim, Steven Carter. Mr. Carter has been licensed to practice law for 23 years. He is the managing shareholder of his law firm. He has handled catastrophic injury cases in which he determined the value of the claim. He has conducted 35 to 40 jury or bench trials. Mr. Carter was accepted as an expert regarding valuation of Mr. O’Malley’s claim. Mr. Carter testified that the value of Mr. O’Malley’s damages was the actual settlement amount of $1,757,000. Ultimate Finding of Fact The undersigned finds that the testimony of Mr. Browning and Mr. Barrett was more persuasive regarding valuation of Mr. O’Malley’s claim than the testimony of Respondent’s expert witness. Mr. Browning and Mr. Barrett’s number of years of experience with handling catastrophic personal injury cases, and the fact that they had the benefit of the life care plan when evaluating the case, make their testimony more persuasive regarding the valuation of damages suffered by Mr. O’Malley in this case.
The Issue The issue in this case is the amount that must be paid to Respondent, Agency for Health Care Administration (AHCA or Respondent) from the proceeds of Petitioner’s confidential settlement to satisfy Respondent’s Medicaid lien against the proceeds pursuant to section 409.910, Florida Statutes (2019).1
Findings Of Fact Paragraphs 1 through 9 are the facts admitted8 and agreed upon by the parties, and required no proof at hearing. On December 7, 2012, A.F., an eight-year-old female, underwent an initial psychiatric evaluation. Following this assessment, A.F. was started on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD). A.F. was 4 Respondent’s Proposed Final Order provided that “Petitioner presented two witnesses: Andrew Needle, Esq., and Kenneth Bush, Esq.” The undersigned did not hear any testimony from Mr. Needle or Mr. Bush. 5 Respondent’s Exhibit 1, a “Provider Processing System Report,” contained a different “Total Claims” amount than the amount of A.F.’s medical expenses paid by AHCA to which the parties stipulated. Without testimony this exhibit is hearsay, and cannot support a finding of fact. As discussed at hearing, the parties agreed to use the stipulated amount: $261,334.61. 6 Although Petitioner’s PFO recites that Petitioner “did not order a transcript of the proceedings,” a review of the filed transcript shows otherwise. See Hearing Tran, pg. 10, lines 4–7. 7 The Hearing Transcript was electronically filed with DOAH on August 3, 2020; the hard– copy original Transcript was filed with DOAH on August 14, 2020. 8 Statement 3 has been reworded for clarity purposes. prescribed 18mg of the ADHD drug9 that was the subject of the personal injury litigation. On March 30, 2013, at the age of nine, and shortly after her ADHD medication was uptitrated from 18mg to 27mg daily, A.F. attempted suicide by way of hanging with a scarf fastened to her bunk bed. That action detrimentally impeded oxygen flow to A.F.’s brain for a dangerously prolonged period of time, resulting in extensive neurological damage and substantial motor impairment; ultimately leaving A.F. in a permanent vegetative state. Ms. Lopez, on behalf of A.F., brought a product liability and medical malpractice action to recover all of A.F.’s damages related to her prescription of the ADHD drug. This action was brought against various pharmaceutical and medical malpractice defendants. As a result of the alleged medical malpractice and pharmaceutical product liability claims, A.F. suffered a massive hypoxic brain injury. Since this incident and the resulting hypoxic brain injury, A.F. has been in a permanent vegetative state requiring 24/7 skilled nursing care. In 2020, Ms. Lopez, on behalf of A.F., settled her tort action for a limited confidential amount, due to significant liability challenges with her claims; even though she believed that A.F.’s injuries were tens of millions of dollars in excess of the recovery. AHCA was properly notified of A.F.’s lawsuit against the defendants and indicated it had paid benefits related to the injuries from the incident in the amount of $261,334.61. AHCA has asserted a lien for the full amount it paid, $261,334.61, against A.F.’s settlement proceeds. AHCA has maintained that it is entitled to application of section 409.910’s formula to determine the lien amount. Applying the statutory 9 The name of the drug is not being used based on the terms in the confidential settlement. reduction formula to this particular settlement would result in no reduction of the lien given the amount of the settlement. AHCA paid $261,334.61 on behalf of A.F., related to her claim against the liable third parties. The parties stipulated that AHCA is limited by section 409.910(17)(b) to the past medical expense portion of the recovery and that a preponderance of the evidence standard should be used in rendering this Final Order. There were two settlements regarding A.F.’s care and treatment: one with the doctor(s) who allegedly committed medical malpractice; and the second involving the pharmaceutical maker of the ADHD drug prescribed to A.F. Although AHCA was notified when the medical malpractice case was settled, AHCA did not file a lien on any of the recovery from the medical malpractice settlement. Limited information about the medical malpractice settlement was discussed, but the medical malpractice settlement is not considered in this Final Order. Petitioner’s Exhibit 1 is a February 16, 2019, letter (lien letter) from Conduent Payment Integrity Solutions, a subcontractor to Health Management Systems which is an authorized agent of AHCA “to operate the Florida Medicaid Casualty Recover Program.” In addition to directing A.F.’s counsel to review section 409.910, to determine the “responsibilities to Florida Medicaid,” Mark Lyles, Conduent’s case manager and author of this letter also posted the amount of the lien asserted by AHCA: $261,334.61. A.F. lives with her mother, sister, grandmother, and Ms. Lopez’s significant other. Everyone in the household can and does provide care and assistance to A.F. when necessary. Ms. Lopez rarely leaves A.F. in someone else’s care. A.F. is unable to speak and requires total care. Ms. Lopez described the injuries sustained by A.F. Ms. Lopez also detailed the care she has provided and is continuing to provide to A.F. since the event. A.F.’s activities of daily living (ADLs) must be met with assistance in every aspect of her being. When A.F. wakes up each morning: she is given all her medications; her diaper is changed; she is fed via a feeding tube; she is given lung treatments each morning; her trachea tube is cleaned and changed at times; and she is turned or moved every two hours to prevent sores forming on her skin. A.F. is on a ventilator at night and every four hours she is catheterized because she stopped urinating. In October 2019, A.F. started having seizures. Ms. Lopez testified that A.F.’s care is mentally and emotionally draining, and very tiring. She further added A.F.’s care is very repetitive and the “best way to describe it [each day] is the movie GROUNDHOG DAY,” (Columbia Pictures 1993); the same thing, every day. A.F. is confined to her hospital bed, a wheelchair, or a chair to which she can be secured. Although Ms. Lopez testified that A.F. is “entitled” to skilled nursing care 24/7, Ms. Lopez has learned how to care for A.F. because “they can’t staff me” with a skilled nurse (presumably referring to a Medicaid standard for care). Mr. Rafferty is a Florida board-certified civil trial lawyer with 26 years’ experience in personal injury law. He concentrates and specializes in pharmaceutical cases, including defective drug cases involving catastrophic injury, throughout Florida and the United States. As part of his ongoing practice, he routinely evaluates the damages suffered by injured clients, and relies on his own experience and his review of other jury verdicts to gauge any likely recovery for non-economic damages. Mr. Rafferty continues to handle cases involving similar injuries suffered by A.F. Mr. Rafferty was tendered and without objection was accepted as an expert regarding valuation of personal injury damages. Mr. Rafferty, along with Nathan Carter as co-counsel, represented A.F. and her mother in the civil litigation. He testified to the difficulties associated with pharmaceutical litigation in general, and then focused on the problematic causation and liability issues related to A.F. and her injuries. Mr. Rafferty met with the family; observed A.F. can no longer perform her ADLs; reviewed all of A.F.’s medical information; evaluated how the medication was uptitrated causing A.F.’s injury; analyzed the causation, liability issues, and fault; developed economic damages figures; and valued non-economic damages. Mr. Rafferty credibly testified regarding the evaluations he made regarding A.F.’s injuries and the pharmaceutical product prescribed. The non-economic damages included A.F.’s pain and suffering, both future and past, her loss of capacity to enjoy life, and her mental anguish. Mr. Rafferty explained the importance of assessing all of the elements of damages A.F. suffered as a result of her catastrophic injuries. Mr. Rafferty’s unrefuted testimony placed the total full value of A.F.’s damages conservatively in excess of $100,000,000.00.10 Mr. Rafferty included A.F.’s pain and suffering, mental anguish, and loss of quality of life, plus the economic damages. Further, using the $100,000,000.00 valuation amount and the confidential settlement proceeds, Mr. Rafferty opined that A.F. recovered only 4.75% of the full measure of all her damages. Mr. Rafferty reviewed Petitioner’s Exhibit 1, and as an experienced trial attorney understood the letter to contain the “lien for past medical” expenses of $261,334.61. Mr. Rafferty added that he routinely uses this type of approach with lien holders in his practice. Mr. Rafferty’s testimony was uncontradicted and persuasive on this point. Mr. Carter is an AV-rated Florida civil trial lawyer with 25 years’ experience in personal injury law, with an active civil trial practice. He has always handled plaintiff’s medical malpractice, product liability, and car accident-type litigation. As a routine part of his practice, he makes assessments concerning the value of damages suffered by injured clients, including the liability, causation, and possible damages. Mr. Carter 10 For ease of discussion, the conservative total amount, $100,000,000.00 will be used. All the witnesses agreed that the economic value of the case was above $70 million and the non- economic damages were at least $30 million. confirmed that it is essential to have every element (liability, causation, and damages) evaluated because these types of cases are expensive in both time and money. Mr. Carter specifically looks at the injuries sustained, who the plaintiff is, how the injuries have affected their life, and the permanency of those injuries. He continues to handles cases with catastrophic injuries. Mr. Carter testified that the injuries suffered by A.F. were “worse than almost, almost any case … handled.” He added that A.F.’s damages were “catastrophic” and “one of the worst damage cases [he had] ever seen.” Mr. Carter was tendered and without objection was accepted as an expert regarding valuation of medical malpractice damages.11 Mr. Carter testified that “as a matter of course, [we] put every lienholder on notice as soon as we learn about them” and “then throughout the case.” Mr. Carter was in regular contact with Mr. Lyles. The medical malpractice case was settled before the pharmaceutical action. After the medical malpractice case was settled, Mr. Carter understood that AHCA would not negotiate on the medical malpractice settlement. When the “entire case” was completed, Mr. Carter notified Mr. Lyles, and then received the lien letter. As an experienced trial attorney he understood the letter to contain the “final lien figure:” $261,334.61. Mr. Carter also met with the family, reviewed all of A.F.’s medical information and records, and evaluated the medication that was uptitrated. Mr. Carter utilized a similar detailed analysis of A.F.’s injuries and her current condition. Mr. Carter also described the severity of A.F.’s injuries that entered into his decision to pursue the civil case and to testify in this proceeding. Mr. Carter analyzed the causation, liability issues, and fault. He evaluated the economic damages figures and valued non-economic damages 11 Mr. Carter was offered as an expert in medical malpractice damages. His insight in the combined totality of the medical malpractice and pharmaceutical product litigation warranted consideration, but AHCA’s failure to include the medical malpractice settlement precluded any consideration of that settlement. Without a more decisive understanding of what “pretty significant” means, ACHA’s attempt to question Mr. Carter’s knowledge of A.F.’s past medical expenses is unpersuasive. such as pain and suffering, both future and past, loss of capacity to enjoy life, scarring and disfigurement, and mental anguish. Mr. Carter opined A.F.’s damages could have easily been in excess of $100,000,000.00. Mr. Carter further opined that A.F.’s non-economic damages were “very significant” and “could have driven the total value of damages in excess of the $100,000,000.00.” However, Mr. Carter testified he used $100,000,000.00 in order to resolve the Medicaid lien. Mr. Carter used the same mathematical approach he has used in other lien issues: he divided the confidential settlement amount by the conservative full value of damages ($100,000,000.00) and arrived at a recovery of 4.75% of the full measure of her damages. Mr. Carter’s testimony was uncontradicted and persuasive on this point. Mr. McKenna is a board-certified, AV-rated Florida civil trial lawyer with 25 years’ experience in personal injury law, who maintains an active civil trial practice. He has always practiced plaintiff’s work, and has tried between 40 and 50 cases to verdict. In the last 15 years, Mr. McKenna testified that “at least half … focused on … catastrophic cases either from the medical malpractice arena or from general liability trucking arena.” Mr. McKenna has reviewed thousands of personal injury cases relative to damages, and provided a detailed explanation of how he evaluates damages of catastrophic injury cases. He further provided that half of his cases were wrongful death cases and the other half were physical or brain injury cases. Mr. McKenna also provided the various resources he uses to keep abreast of personal injury verdicts and settlements. Mr. McKenna was tendered as “an independent expert attorney as to valuation of damages.” Mr. McKenna was not involved in the underlying civil litigation, but became A.F.’s guardian ad litem, appointed by the trial judge, to offer his “opinions regarding the reasonableness of the potential medical malpractice settlement, and ... the pharmaceutical settlement” which is the subject of this Final Order. Respondent did not object to Mr. McKenna’s tender and he was accepted as an expert in the valuation of damages. Mr. McKenna testified that he reviewed the facts and circumstances of both the medical malpractice and the pharmaceutical sides and the chronologies of A.F.’s medical records. He acquired an “intimate understanding” of A.F’s on going care and treatment in light of the injuries she sustained. Mr. McKenna agreed with Messrs. Rafferty and Carter that the non-economic damages in this case were very significant, and he agreed with their conservative $100,000,000.00 valuation of her total damages. Further, Mr. McKenna testified that the normal course for resolving liens in Florida was to look at the total value of damages in relation to the recovery to get a ratio by which to reduce the lien amount. Based on his past experiences in resolving Medicaid liens, other courts have resolved such liens using the formula from the Arkansas Department of Health & Human Services. v. Ahlborn, 547 U.S. 268 (2006), with the only other alternative formula found in section 409.910. The testimony of Petitioner’s three experts regarding the total value of damages was credible, unimpeached, and unrebutted. Petitioner proved that the confidential settlement does not fully compensate A.F. for the full value of her damages. As testified to by the experts, A.F.’s recovery represents only 4.75% of the total value of her claim. AHCA did not call any witnesses, present any evidence as to the value of damages, or propose a different valuation of the damages. In short, Petitioner’s evidence was unrebutted. AHCA did, however, contest the methodology used to calculate the allocation of past medical expenses, but was unpersuasive. The parties stipulated to the value of the services provided by Florida Medicaid as $261,334.61. It is logical and rational to conclude that this figure is the amount expended for A.F.’s past medical expenses. Applying the 4.75% pro rata ratio to $261,334.61 equals $12,413.39, which is the portion of the settlement representing reimbursement for past medical expenses and the amount recoverable by AHCA for its lien. Petitioner proved by a preponderance of the evidence as set forth in section 409.910(11)(f) that AHCA should be reimbursed at the lesser amount: $12,413.39.
The Issue The issue in this case is the amount that must be paid to Respondent from the proceeds of Petitioner’s confidential settlement with one defendant to satisfy Respondent’s Medicaid lien against the proceeds.
Findings Of Fact On September 12, 2010, Petitioner, then 19 years old, was thrown from his all-terrain vehicle (ATV) when the rubber portion of one tire separated from the rim, and the ATV rolled over. Petitioner was taken by air ambulance to Orlando Regional Medical Center, a trauma center in the area, where it was determined that Petitioner suffered a burst fracture of the eighth and ninth thoracic vertebrae (T-8 and T-9). The nature of this injury was described in layman’s terms by Petitioner’s trial counsel in the pending personal injury lawsuit as follows: In a burst fracture, the vertebra literally bursts, breaking into small bone fragments; in Petitioner’s case, one of the bone fragments sliced through the spinal cord at the T-8/T-9 level, resulting in complete paraplegia with zero function below that level. Two days later, Petitioner underwent surgery that involved putting in rods and bone grafts, and performing a spinal fusion. Three weeks later, Petitioner was transferred to ORMC Lucerne Rehabilitation Hospital, where he received care in the Brain Injury Rehabilitation Center. He was discharged on November 10, 2010. After his discharge, Petitioner had outpatient physical therapy and occupational therapy for several weeks. Petitioner developed complications that required readmission to the hospital on February 18, 2011. He was admitted initially with a kidney stone and pyelonephritis. He was placed in an induced coma, became septic, developed respiratory distress, and was placed on a ventilator. He remained hospitalized until March 28, 2011. Petitioner then restarted outpatient physical therapy and occupational therapy, which continued for several months. Petitioner was paralyzed from the chest down, and has been determined to be disabled by the Social Security Office. Nearly all of Petitioner’s past medical expenses following the ATV incident were paid for by Medicaid. As of March 2, 2015, the total amount of medical assistance provided by the Medicaid program was $322,222.27, representing over 92 percent of the $347,044.67 paid in total for past medical expenses. The rest of Petitioner’s medical expenses were paid for by United HealthCare ($1,457.40) and Medicare ($23,365.00). Petitioner brought a lawsuit to recover his damages against multiple defendants who are allegedly liable for his injuries under tort theories of products liability and negligence (tort lawsuit). The date on which the tort lawsuit was filed was not established in the record; the third amended complaint, in evidence, was filed on March 12, 2015. Petitioner’s lead counsel, Manuel Reboso, testified at hearing that the tort lawsuit was pending and set for trial in February 2016. Discovery was ongoing, but no expert witness depositions had been taken yet. AHCA is not a party in Petitioner’s tort lawsuit, but was notified of the action at some point after it was filed. By letter dated March 2, 2015, AHCA asserted a $322,222.27 Medicaid lien against Petitioner’s cause of action and any future settlement of, or recovery from, that action. Thereafter, AHCA updated the Medicaid lien amount to $324,607.25. On April 8, 2015, Petitioner reached a settlement with one defendant. The terms are reduced to writing in a document called “Confidential Settlement Agreement, General Release, and Indemnity Agreement” (settlement agreement). The settlement agreement is executed by Petitioner, one defendant, and the defendant’s insurer. The settlement did not resolve the tort lawsuit. The other parties to the tort lawsuit were not parties to the settlement. The settlement agreement was not presented to or reviewed by the trial court for approval. Instead, the settlement agreement is confidential, and the tort lawsuit continues. To the extent possible, the confidentiality will be protected, as set forth in a Protective Order that seals and restricts the disclosure of specified exhibits. The settlement agreement is an “undifferentiated settlement”; that is, “[t]here is no section of the release that goes through and itemizes the different elements of damage.” (Tr. at 93). Although the settlement agreement does not itemize the different elements of damage, one provision sets forth the agreement between Petitioner and the settling defendant that Petitioner’s “alleged damages have a value in excess of $25,000,000” (emphasis added), and that Petitioner and the settling defendant “have agreed to allocate $4,817.56 of this settlement to [Petitioner’s] claim for past medical expenses and allocate the remainder of the settlement towards the satisfaction of claims other than past medical expenses.” Mr. Reboso testified at hearing that the amount allocated in the settlement agreement to past medical expenses is incorrect. When asked why the parties allocated that amount in the settlement agreement, Mr. Reboso candidly admitted, “Because math is not my forte. I calculated it wrong. . . . Had I done the math correctly, that would be the correct number, $13,881.79.” (Tr. at 71-72). He admitted that he drafted this provision, and intended to put in the amount that bears the same proportion to the total past medical expenses as the settlement amount bears to the total value of Petitioner’s damages. Accordingly, by his testimony, he offered a “correction” to the settlement agreement’s allocation for past medical expenses, from $4,817.56 to $13,881.79. According to Mr. Reboso’s own testimony, then, the settlement agreement’s “agreed” allocation of $4,817.56 for past medical expenses is unreasonable. By letter dated April 24, 2015, Mr. Reboso notified AHCA of the settlement and provided AHCA with a copy of the executed settlement agreement, along with an itemization of Petitioner’s litigation costs in the tort lawsuit. The letter requested AHCA to advise Petitioner of the amount AHCA would accept from the settlement proceeds. AHCA responded by letter dated July 6, 2015, setting forth its calculation of the amount payable pursuant to the statutory formula in section 409.910(11)(f). As set forth in AHCA’s letter, the statutory formula first deducts from the settlement proceeds a 25 percent allowance for attorney’s fees. Next, the remaining proceeds are further reduced by $106,559.62, as the taxable costs incurred in connection with the tort lawsuit. After deducting the attorney fee allowance and the taxable costs, the remainder is then divided by two. The result of the statutory formula calculation is that the amount of settlement proceeds payable to AHCA is $321,720.16. The parties stipulated that AHCA’s July 6, 2015, letter accurately sets forth the calculation of the statutory formula amount. Petitioner does not dispute AHCA’s calculation of the attorney fee allowance, nor does Petitioner dispute the amount of taxable costs determined by AHCA and used in the statutory formula calculation. There is also no dispute that AHCA has spent more than $321,720.16 in payments through the Medicaid program for past medical assistance provided to Petitioner as a result of injuries sustained in the September 2010 ATV incident. As of the March 2, 2015, AHCA letter, the medical assistance provided by Medicaid totaled $322,222.27. The parties stipulated that “[n]o portion of the $322,222.27 paid by AHCA through the Medicaid program on behalf of Mr. Villa represent expenditures for future medical expenses, and AHCA did not make payments in advance for [future] medical care.” By the same token, there was no showing that the Medicaid program would ever pay in advance, or prepay, future medical expenses of current Medicaid beneficiaries. As authorized by section 409.910(17)(b), Petitioner initiated this proceeding to “contest the amount designated as recovered medical expense damages” payable to AHCA pursuant to the statutory formula. Accordingly, Petitioner endeavored to prove “that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated” pursuant to the statutory formula. Petitioner attempted to prove that the settlement agreement’s provision regarding total damages and allocation to past medical expenses should be accepted as reasonable and adopted. However, neither the agreed total value of “alleged” damages nor the agreed allocation of settlement proceeds to compensate for past medical expenses in Petitioner’s settlement agreement with one defendant can be credited as reasonable products of arms-length adversarial negotiation. Instead, the partial allocation to just one part of one category of damages (medical expenses) was admittedly prepared by Mr. Reboso shortly after notice of the Medicaid lien, and appears pointedly designed for use in this proceeding to support Petitioner’s positions. No other purpose for the limited allocation to only past medical expenses was suggested. And Mr. Reboso expressly opined that the limited allocation stated in the settlement agreement is not a reasonable allocation; instead, he supports an allocation that is three times the number in the settlement agreement. The one- sided nature of this provision in the settlement agreement could not be more clearly revealed than by Mr. Reboso’s concession that the settling parties “agreed” to an incorrect allocation to past medical expenses because Mr. Reboso made a math error in drafting the provision. A more reasonable inference is that the settling defendant, unaffected by this provision, apparently ceded authority to Petitioner to put into the agreement whatever the Petitioner drafted, error and all. As an alternative to relying on the settlement agreement’s partial allocation (in an unreasonably low amount) to past medical expenses, Petitioner attempted to prove the total value of Petitioner’s damages that would be proven to and awarded by a jury if/when the tort lawsuit goes to trial. Petitioner’s position is that the percentage derived from dividing the settlement proceeds by the total damages should be multiplied by the past medical expenses to determine AHCA’s share of the settlement proceeds. In preparation for the trial in the pending tort lawsuit, Petitioner retained experts to evaluate and quantify the economic damages to Petitioner by reason of the injuries from the September 2010 ATV incident. Paul M. Deutsch, Ph.D., a life care planner and vocational rehabilitation specialist with Paul M. Deutsch and Associates, P.A., was retained to prepare a life care plan for Petitioner.5/ Dr. Deutsch also developed some information about Petitioner’s future capacity to work. Dr. Deutsch did not testify in this proceeding. Petitioner also retained F.A. Raffa, Ph.D., an economist with Raffa Consulting Economist, Inc., to develop projections of Petitioner’s damages due to lost income and lost future earning capacity, reduced to present value. Dr. Raffa also reduced to present value the life care plan cost projections developed by Dr. Deutsch. Dr. Raffa did not testify in this proceeding. Both the life care plan and economic report, acknowledged to be hearsay, were admitted for the limited purpose of showing material relied on by Petitioner’s damage valuation experts in formulating their opinions offered at hearing. Mr. Reboso, lead counsel in Petitioner’s tort lawsuit, was accepted as an expert in valuation of damages. He testified that he relied on the Deutsch life care plan and Raffa economic report to gauge Petitioner’s economic damages, and that he relied on his own experience and his review of other jury verdicts to gauge Petitioner’s likely recovery for noneconomic damages. Considering these factors, he offered his opinion that as of the October 5, 2015, hearing date, the total value of Petitioner’s damages is estimated to be $25,000,000. The economic damage estimate is somewhat dated, however; the life care plan indicates that it was prepared on July 11, 2013, more than two years ago; and the economic report is dated October 17, 2013, nearly two years ago. The life care plan also appears to be incomplete.6/ Neither report has been sponsored and defended by its author in testimony, either in this proceeding or in depositions in the pending tort lawsuit in which experts have not yet been deposed. One would expect that both the life care plan and the economic report will be updated before the authors are deposed in the tort lawsuit. That assumption was likely true before Petitioner died on October 31, 2015, given the caveats in the reports regarding changing facts. The life care plan is self- described as a “dynamic document,” while the cover letter to the economic report states: “Please note that this analysis is based upon the best information currently available and is subject to change should additional information be received.” Petitioner’s unfortunate death on October 31, 2015, will alter the tort lawsuit and the expert evidence and opinions offered regarding Petitioner’s damages. Petitioner’s death surely constitutes a change in information that undermines the legitimacy of both the life care plan and the economic report as reasonable predicates for an assessment of Petitioner’s damages. Using two-year-old expert reports that have not been updated or defended in an adversarial proceeding as the sole predicate for offering an opinion as to the total value of Petitioner’s economic damages would have been questionable without consideration of Petitioner’s death. Yet Petitioner’s experts offered their opinions as to what Petitioner’s total damages were as of the October 5, 2015, hearing, relying solely on the two-year-old reports for the projected future economic damages. At hearing, Petitioner’s two experts described the same approach for reaching their identical opinions. As Mr. Reboso explained, he reached his total damage value estimate by taking the mid-point of the range of economic damages identified in the Deutsch and Raffa reports, and adding to that “eight to ten million dollars” for past and future noneconomic damages. He explained that past noneconomic damages would be awarded by a jury for pain and suffering from the date of the incident to the date of the trial, and an additional amount would be awarded by a jury for future pain and suffering from the trial date forward. Mr. Reboso testified that his opinion as to the amount Petitioner is expected to be awarded in a jury trial of his case is supported by comparisons with jury verdicts in other cases. In describing his comparisons, he highlighted such factors as the relative ages and life expectancies of the victims. He offered his opinion that a large noneconomic damage award is likely for Petitioner because he is young. Neither expert offered an opinion as to how much of the total damages amount to which they opined is attributable to future medical expenses. No non-hearsay evidence was offered to prove the amount of future medical expenses, with the exception of Mr. Reboso’s testimony that Petitioner’s future medical expenses would be $9.1 million at the low end. In fairness, however, Mr. Reboso was relying solely on hearsay, and he retreated from that testimony by later admitting uncertainty as to how much of the life care plan cost projections (which are hearsay) were future medical expenses.
