13-004720MTR Georgia-Rose Gibbons, By And Through Her Guardians Robert Gibbons And Robert Gibbons, Jr. vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Wednesday, May 7, 2014.

Summary: Petitioners proved by clear and convincing evidence that AHCA is not entitled to recover the statutory default amount of its Medicaid lien.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GEORGIA - ROSE GIBBONS, BY AND

THROUGH HER GUARDIANS ROBERT

GIBBONS AND ROBERT GIBBONS, JR.,

Petitioners,

vs. Case No. 13 - 4720MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

___________________________ ____/

FINAL ORDER

Pursuant to notice, a final hearing in this cause was held

by video teleconference between sites in S arasota and

Tallahassee, Florida, on March 5, 2014 , before the Division of

Administrative Hearings by its designated Administrative Law

Judge Linzie F. Bogan.

APPEARANCES

For Petitioner: Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello, Florida 32344

For Re spondent: Adam James Stallard, Esquire

Xerox Recovery Services Group

2316 Killearn Center Boulevard

Tallahassee, Florida 32309

STATEMENT OF THE ISSUE

What is the amount from Petitioners ' settlement proceeds

that should be paid to satisfy Respondent ' s Medicaid lien under

section 409.910, Florida Statutes (2013)? 1/

PRELIMINARY STATEMENT

On December 6, 2013, Georgia - Rose Gibbons, by and through

her guardians, Robert Gibbons and Robert Gibb ons, Jr.

(collectively referred to as " Petitioners " ), filed with the

Division of Administrative Hearings (DOAH) a Petition to

Determine Amount Payable to Agency for Health Care Administration

in Satisfaction of Medicaid Lien. At the final hearing

Petition ers offered testimony from Jeffrey Luhrsen, Esquire, and

Frankie Dichio, Contract Manager, Agency for Health Care

Administration. The Agency for Health Care Administration

(Respondent or AHCA) did not call any witnesses to testify on its

behalf.

Petition ers ' Exhibits 1 through 10, 11A through 11F, 12 and

13 were admitted into evidence. Respondent did not offer any

exhibits into evidence. Pertinent legal authorities identified

by the parties were officially recognized including those

authorities identifi ed post final hearing.

A Transcript of the final hearing was filed with DOAH on

March 28, 2014. Each party filed a proposed order, and the same

have been considered in the preparation of this Final Order.

FINDING S OF FACT

1. By Order entered August 15, 2013, the Circuit Court of

the Twelfth Judicial Circuit, in and for Manatee County, Florida,

appointed Robert Gibbons and Robert Gibbons, Jr. , as joint

plenary guardians of Georgia - Rose Gibbons. On April 6, 2012,

Georgia - Rose Gibbons (Ms. Gibbons), who w as a college freshman at

the time, sustained numerous sever e and permanent injuries,

including a traumatic head injury, when she was struck by a motor

vehicle while walking across a multi - lane road.

2. Ms. Gibbons is totally incapacit ated and currently

r esides in a nursing home. As of the date of this Order, Ms.

Gibbons has a rated life expectancy of approximately 47

additional years.

3. At the final hearing, Petitioners presented the

testimony of Jeffrey A. Luhrsen, an attorney with extensive

experie nce representing injured claimants in personal injury

litigation. Mr. Luhrsen has practiced law in the State of

Florida for more than twenty years and has tried multiple

personal injury cases to jury verdict. Mr. Luhrsen opined that

based upon a reasonab le degree of certainty, and taking into

consideration issues of comparative fault, $20,000,000 is the

value of Ms. Gibbons ' claim. AHCA did not offer evidence to the

contrary. Mr. Luhrsen also credibly opined that the $400,000

settlement (explained below ) , which Ms. Gibbons received as a

consequence of her injuries, did not fully compensate Ms. Gibbons

for her damages. Mr. Luhrsen ' s opinions are accepted.

4. The operator of the vehicle that collided with

Ms. Gibbons was uninsured. Pursuant to an auto mobile insurance

policy with AAA Auto Club South Insurance Company, Ms. Gibbons

was insured in the amount of $400,000.00 against personal injury

resulting from the negligent operation of a motor vehicle by an

uninsured motorist.

5. By correspondence date d September 19, 2013, Respondent

informed Petitioners ' personal injury attorney (PI attorney) that

$220,519.42 is the amount of Respondent ' s Medicaid lien. In

response, Petitioners ' PI attorney, by correspondence dated

October 3, 2013, advised Respondent that Ms. Gibbon ' s uninsured

motorist claim against AAA was settled, pending approval of the

Circuit Court, for $400,000. A copy of the proposed limited

release and settlement agreement was included with the

correspondence.

6. The Circuit Court approved the settlement agreement on

October 4, 2013. On October 17, 2013, Petitioners ' PI attorney

provided Respondent with copies of the Circuit Court ' s Order

Granting Authority to Settle Claim on Behalf of Ward, and the

executed Limited Release and Settlement A greement. Respondent

neither joined in the settlement nor participated in any way in

settlement negotiations.

7. The Limited Release and Settlement Agreement provides in

part as follows:

1. For and in consideration of the payment of

$400,000, the recei pt of which is hereby

acknowledged, the Releasors being of lawful age,

do hereby release, acquit and forever discharge,

AAA AUTO CLUB, limited to the

uninsured/underinsured liability limits of the

Subject Policy, of or in any way growing out of

any and all known or unknown personal injuries

result[ing] from, related to and/or arising out of

the Subject Accident. The Releasors acknowledge

that the damages sustained as a result of the

Subject Accident are permanent and that recovery

therefrom is uncertain an d indefinite.

* * *

8. It is understood and agreed that this is a

partial release and settlement agreement and that

the payment referenced herein does not fully

compensate the Releasors for the damages arising

out of or related to the Subject Accide nt. . . .

* * *

11. Although this settlement does not fully

compensate GEORGIA ROSE GIBBONS for all the

damages she has suffered, this settlement shall

operate as a full and complete Release as to the

Releasees without regard to this settlement only

compensating GEORGIA ROSE GIBBONS for a fraction

of the total monetary value of her damages. The

Releasees in this settlement are specifically not

compensating one element of damage

disproportionately from any other element of

damage. Given the nature o f the injuries suffered

by GEORGIA ROSE GIBBONS, the value of the damages

associated with those injuries, and the limited

ability of this settlement to compensate even a

fraction of GEORGIA ROSE GIBBONS ' damages, the

parties have agreed to an allocation of the

settlement. The parties agree that a fair

assessment would place 20% of her total claim for

damages as past and future medical expenses, and

the remaining 80% of her total claim for damages

for other economic damages and non - economic

damages. Accord ingly, the parties have allocated

20% of the settlement, $80,000, to past and future

medical expenses and the remainder of the

settlement, $320,000, towards satisfaction of

other damages. 2/

8. Respondent, pursuant to section 409.910(11)(f),

calculates t he amount that it is to be paid to satisfy its lien

as follows: $400,000 less 25% (attorney fees) is $300,000;

$300,000 less $11,029.89 in taxable costs is $288,970.01;

$288,970.01 divided by 2 is $144,485.01, which is less than

Respondent paid for Ms. Gib bons ' treatment. Accordingly,

Respondent seeks $144,485.01 in satisfaction of its Medicaid

lien. 3/

9. For the period mid - September 2013 through January 5,

2014, Medicaid paid $14,402.94 in additional medical assistance

benefits on behalf of Ms. Gibbons. There is no evidence of

record indicating that Respondent amended its lien to reflect the

additional benefits paid.

CONCLUSIONS OF LAW

10. DOAH has jurisdiction in this matter. §§ 409.910(17),

120.569, and 120.57, Fla. Stat. (2013).

11. In Robert s v. Albertson ' s Inc. , 119 So. 3d 457, 465

(Fla. 4th DCA 2012), modified on reh ' g , 2013 Fla. App. LEXIS

10067 (Fla. 4th DCA June 26, 2013), the Court held that " section

409.910, Florida Statutes, creates a presumptively valid

allocation of settlement proce eds subject to a Medicaid lien when

AHCA does not participate in the settlement agreement. " Under

such circumstances, a challenger can " seek the reduction of a

Medicaid lien amount established by the statutory default

allocation by demonstrating, with evi dence, that the lien amount

exceeds the amount recovered for medical expenses. " Davis v.

Roberts , 130 So. 3d 264, 268 (Fla. 5th DCA 2013).

12. The clear and convincing evidence establishes that the

total amount of $220,519.42 paid by Medicaid for past m edical

expenses represents 1 . 1 0% of the total value of Ms. Gibbon ' s

damages ( ($220,519.42 ÷ $20,000,000) x 100 = 1 . 1 0% ) . When the

settlement figure of $400,000 is multiplied by 1 . 1 0% , the

resulting figure of $4,400 represents the portion of the $400,000

s ettlement attributable to past medical expenses.

13. In addition to being able to satisfy its lien from the

portion of the settlement proceeds representing payment for past

medical expenses, AHCA also contends that settlement funds

received by Petitioner for payment of future medical expenses are

subject to AHCA ' s lien. Section 409.910(17)(b) provides in part

that " [i] n order to successfully challenge the amount payable to

the agency, the recipient must prove, by clear and convincing

evidence, that a les ser portion of the total recovery should be

allocated as reimbursement for past and future medical expenses

than the amount calculated by the agency pursuant to the formula

set forth in paragraph (11)(f). " (emphasis added ) . It is

important to note that p rior to July 1, 2013, section 409.910 did

not contain any language authorizing AHCA to seek satisfaction of

its Medicaid lien from settlement funds earmarked for the payment

of future medical expenses.

14. The primary purpose of the Medicaid program is t o

provide federal financial assistance to States that elect to

reimburse certain costs of medical treatment for needy

individuals. See Harris v. McRae , 448 U.S. 297, 301 (1980).

Once a State voluntarily agrees to participate in the Medicaid

program, it m ust comply with federal requirements governing the

same. Id . Therefore, in administering the Medicaid program,

AHCA ' s authority, with respect to pursuing its lien in the

instant case, is limited by the anti - lien provision found in

federal Medicaid law.

15. In Ahlborn v. Arkansas Department of Human Services ,

397 F.3d 620 (8th Cir. 2004), the United States Court of Appeals

for the Eighth Circuit reviewed a district court ' s grant of

summary judgment in favor of the Arkansas Department of Human

Services in a dispute concerning the extent to which a recovery

from a tortfeasor could be taken by the State as reimbursement

for the cost of medical care paid by the Medicaid program. The

Ahlborns argued that the Arkansas Department of Human Services

could " only recover that portion of [the] settlement representing

payment for past medical expenses. " Id. at 622. The parties in

Ahlborn entered into a stipulation regarding damages, whereby the

Arkansas Department of Human Services would recover $215,645.30

if the agency ' s interpretation of the Medicaid statute prevailed,

or recover only $35,581.47 if the Ahlborn ' s interpretation of the

Medicaid statute prevailed.

16. In concluding that " Ahlborn has the better of the

argument, " the appellate court held that " a st raightforward

interpretation of the text of these [Medicaid] statutes

demonstrates that the federal statutory scheme requires only that

the State recover payments from third parties to the extent of

their legal liability to compensate the beneficiary for m edical

care and services incurred by the beneficiary. " Id. at 625. The

court reversed the judgment of the district court and remanded

the case with directions to enter judgment for the Arkansas

Department of Human Services in the lesser amount of $35,581 .47.

On appeal, the United States Supreme Court agreed with the Eighth

Circuit Court of Appeal that the federal Medicaid lien law

limited the State ' s recovery to only that portion of the

Ahlborn ' s settlement representing payment for past medical

expenses. Accordingly, the Supreme Court unanimously affirmed,

without modification, the decision of the Eighth Circuit.

Ark. D HS v. Ahlborn , 547 U.S. 268 (2006).

17. In E.M.A. v. Cansler , 674 F.3d 290 (4th Cir. 2011), the

United States Court of Appeals for the Fourth Circuit, in a

dispute concerning the extent to which a state Medicaid program

could satisfy its lien from personal injury settlement proceeds,

held that " [a]s the unanimous Ahlborn [Supreme] Court ' s decision

makes clear, federal Medicaid law limits a state ' s recovery to

settlement proceeds that are shown to be properly allocable to

past medical expenses . " (emphasis added ) . Id. at 312. In

reaching its holding, the court noted that " Ahlborn is properly

understood to prohibit recovery by the state of more than the

amount of settlement proceeds representing payment for medical

care already received. " Id. at 307. On review, the United

States Supreme Court affirmed the decision of the Court of

Appeals. Wos v. E.M.A. , __U.S.__, 133 S. Ct. 1391 (2013).

18. In the case of Davis v. Roberts , 130 So. 3d 264 (Fla.

5th DCA 2013), the court reviewed a trial court ' s order which

determined, pursuant to the formula outlined in section

409.910(11)(f), Florida Statutes (2012), that AHCA was entitled

to recover t he full amount of its Medicaid lien from personal

injury settlement proceeds received by appellants. In reversing

the trial court, the Court of Appeal specifically agreed with

appellant ' s argument that " section 409.910 is unenforceable to

the extent it al lows AHCA to recover more than what [the]

settlement allocated for past medical expenses. " Id. at 266.

Specifically, the court held that " Ahlborn and Wos make clear

that section 409.910(11)(f) is preempted by the federal Medicaid

statute ' s anti - lien provi sion to the extent it . . . permits

recovery beyond that portion of the Medicaid recipient ' s third -

party recovery representing compensation for past medical

expenses. " Id. at 270.

19. While it is true that the court in Davis v. Roberts

resolved the disp ute under the 2012 version of section 409.910,

which did not contain language allowing for recovery from " future

medical expenses, " it is also true that during all times relevant

to the instant proceeding there have been no changes to the anti -

lien provisi on in federal Medicaid law. Therefore, in accordance

with Davis v. Roberts , the anti - lien provision in federal

Medicaid law, as interpreted by Ahlborn and Wos , limits AHCA ' s

recovery to that portion of Petitioners ' settlement representing

compensation for past medical expenses.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is DETERMINED that the amount of AHCA ' s Medicaid lien

payable from Petitioners ' $400,000 settlement is $4,400.

DONE AND ORDERED this 7th day of May , 20 14 , in Tallahassee,

Leon County, Florida.

S

LINZIE F. BOGAN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filin g (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of May , 2014 .

ENDNOTE S

1/ All subsequent references to Florida Statutes will be to 2013,

unless otherwise indicated.

2/ In the Circuit Court Order Granting Authority to Settle Claim

on Behalf of Ward, the court held that " [t]he allocation of

damages contained in the proposed release is fair and accurate,

and is expressly adopted by this Court. " Section 409.910(6)(c)7.

provides, in part, that " [n]o release or satisfaction of any

cause of action, suit, claim, counterclaim, demand, judgment,

settlement, or settlement agreement shall be valid or effectual

as against a lien created under this paragraph, unless the agency

joins in the release or satisfaction or executes a release of the

lien. " Ordinarily, the undersigned would show appropriate

deference to the factual findings of the Circuit Court. However,

because Respondent did not join in the settlement agreement, the

undersigned, pursuant to section 409.910(6)(c)7. affords no

weight to the Circuit Court ' s finding that the allocation of

damages set forth in the settlement agreement " is fair and

accurate. "

3/ Section 409.910(11)(f) provides in part that:

" [n]otwithstanding any provision in this section to

the contrary, in the event of an action in tort

against a third party in which the recipient or his or

her legal representative is a party which results in a

judgment, award, or settlement from a third party, the

amount recovered shall be distributed as follows:

1. After attorney ' s fees and taxable costs as

defined by the Florida Rules of Civil Procedure, one -

half of the remaining recovery shall be paid to the

agency up to the total amount of medical assistance

provided by Medicaid.

2. The remaining amount of the recovery shall be

paid to the recipient.

3. For purposes of calculating the agency ' s

recovery of medical assistance benefits paid, the fee

for services of an attorney retained by the recipient

or his or her legal represe ntative shall be calculated

at 25 percent of the judgment, award, or settlement.

(emphasis added ) .

The settlement in the instant case resulted from a claim for

uninsured motorist benefits. A claim for uninsured motorist

benefits is not an " action in tort , " but is instead an action in

contract. Lumbermens Mut. Cas. Co. v. August , 530 So. 2d 293,

295 (Fla. 1988)( " Although we recognize that an action to recover

uninsured motorist benefits is not strictly an action dealing

with contract, but also involves so me aspects of a tort action,

we agree . . . that the rights and obligations of the parties

under an insurance policy are governed by contract law since they

arose out of an insurance contract. " ).

Section 409.910(1), provides in part that it is the intent

of the Legislature that " Medicaid is to be repaid in full from,

and to the extent of, any third - party benefits, regardless of

whether a recipient is made whole or other creditors paid. "

Section 409.901(28) defines a third - party benefit, in part, as

" any benefit that is or may be available at any time through

contract, court award, judgment, settlement, agreement, or any

arrangement between a third party and any person or entity,

including, without limitation, a Medicaid recipient . . . for any

Medicaid - co vered injury, illness, goods, or services, including

costs of medical services related thereto, for personal injury or

for death of the recipient . . . . " " It is axiomatic that

statutes must be read with other related statutes and other

relate d portions of the same statute. " State v. Negrin , 306 So.

2d 606, 607 (Fla. 1st DCA 1975). " Where possible, courts must

give effect to all statutory provisions and construe related

statutory provisio ns in harmony with one another. " Forsythe v.

Longboat Key Beach Ero sion Control Dist. , 604 So. 2d 452, 455

(Fla. 1992). In harmonizing that portion of section

409.910(11)(f) that speaks to " an action in tort " with related

statutory provisions found in section 409.910, it is evident that

the intent of the Legislature, as applied to the instant case,

was not to deprive a Medicaid recipient of the right to contest

the lien amount designated as recovered medical expense damages

payable to the Agency for Health Care Administration when such

recovery derive s from an action in c ontract.

COPIES FURNISHED:

John Cofield

Affiliated Computer Services, Inc.

2308 Killearn Center Boulevard

Tallahassee, Florida 32309

Frank Dichio

Agency for Health Care Administration

Mail Stop 19

2727 Mahan Drive

Tallahassee, Florida 32308

Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello, Florida 32344

Adam James Stallard, Esquire

Xerox Recovery Services Group

2316 Killearn Center Boulevard

Tallahassee, Florida 32309

Stuart F. Williams, General Counsel

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

Elizabeth Dudek, Secretary

Agency for Health Care Administration

Mail Stop 1

2727 Mahan Drive

Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to section 120.68, Florida Statutes.

Re view proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of rendition

o f the order to be reviewed, and a copy of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the District Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as othe rwise provided by law.