14-002520MTR Leigh Ann Holland vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Monday, September 29, 2014.

Summary: Respondent could not satisfy its Medicaid lien for past Medicaid expenses from portions of a differentiated settlement designated for future medical expenses. Respondent entitled to $35,000 in satisfaction of its lien.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LEIGH ANN HOLLAND ,

Petitioner,

vs.

AGENCY FOR HEALTH CARE Case No. 1 4 - 2520 MTR

ADMINISTRATION,

Respondent.

/

FINAL ORDER

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

on July 25, 2014, in Tallahassee, Florida, before E. Gary Early,

a designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Joel F. Foreman , Esquire

Foreman, McInnis and Associates, P.A.

Post Office Box 550

Lake City , F lorida 32 056

Stephen A . Smith, Esquire

Stephen A. Smith, P.A.

153 Northeast Madison Street

Lake City, Florida 32055

For Respondent: Adam James Stallard , Esquire

Xerox Recovery Services Group

2316 Killearn Center Boulevard

Tallahassee, Florida 323 0 9

STATEMENT OF THE ISSUE

The issue to be determined is the amount to be reimbursed

to Respondent , Agency for Health Care Administration (Respondent

or Agency) , for medical expenses paid on behalf of Petitioner,

Leigh Ann Holland (Petitioner) , from a medical - malpractice

settlement received by Petitioner from a third - party .

PRELIMINARY STATEMENT

On May 28, 2014, Petitioner filed a Petition to Contest

Calculation of Recovered Medical Expense Damages, by which she

challenged RespondentÓs lien for recovery of medical expenses

paid by Medicaid in the amount of $129,804.69. The basis for

the challenge was the assertion that the application of secti on

409.910(17) (b) , Florida Statutes (2013), warranted reimbursement

of a lesser portion of the total third - party settlement proceeds

than the amount calculated by Respondent pursuant to the formula

established in section 409.910 (11)(f) .

On May 28, 2014 , Respondent referred the petition to the

Division of Administrative Hearings. T he final hearing was

scheduled for July 25, 2014, and was held as scheduled.

At the final hearing, Petitioner testified on her own

behalf, and presented the testimony of : Ric hard Schwann , an

attorney who represented the North Florida Regional Medical

Center, Inc. , in the medical malpractice action from which the

third - party settlement proceeds were obtained ; Stephen Smith, an

attorney who represented Petitioner in the medical malpractice

action from which the third - party settlement proceeds were

obtained ; 1/ and John P. Roberts, a life care planner, who

testified by videorecorded deposition in lieu of live

testimony. 2 / PetitionerÓs Exhibits 1 and 3 through 9 were

received into evidence. Respondent offered no independent

witnesses or exhibits.

A one - volume Transcript of the proceedings was filed on

August 27, 2014 . By agreement, post - hearing submittals were to

be filed withi n 20 days of the filing o f the T ranscript. B oth

parties timely filed Proposed Final Orders, which have been duly

considered by the undersigned in the preparation of this Final

Order.

All citations are to the 2014 Florida Statutes except as

otherwise indicated.

FINDINGS OF FACT

1 . On or about November 19, 2010, Petitioner entered the

North Florida WomenÓs Physicians , P.A. facility in Gainesville,

Florida, for the birth of her second child.

2. North Florida WomenÓs Physicians, P.A. (NFWP) operates

in space leased from the Nor th Florida Regional Medical Center

(NFRMC) . The two are separate entities.

3 . By all accounts, Petitioner was in good health at the

time of her admission. The child , Colt, was delivered on

November 19, 2010 , by a nurse midwife employed by NFWP.

4 . After Colt was delivered, Petitioner was transferred to

a room at the N FRMC, where she was attended to by staff of the

NFRMC. However, decisions regarding her care remained the

responsibility of the health care providers and staff of the

NFWP.

5 . On November 21, 201 0, Petitioner was slated for

discharge. The NFRMC nurse attending was concerned that

Petitioner was exhibit ing low blood pressure, an elevated heart

rate, and some shaking. PetitionerÓs nurse midwife was off - work

on November 21, 2010.

6. The NFRMC nurse called the nurse midwife at her home.

The substance of the call was disputed, with the NFRMC nurse

asserting that she expressed her concern with PetitionerÓs

condition, and with the nurse midwife asserting that the NFRMC

nurse failed t o convey the potential seriousness of PetitionerÓs

condition. 3/ Regardless, Petitioner was discharged on November

21, 2010.

7 . Over the course of the following two days, PetitionerÓs

health deteriorated. On November 23, 2010, Petitioner was taken

to the hospital in Lake City. Her condition was such that she

was sent by Life Flight to Shands Hospital (Shands) in

Gainesville.

8 . While in route to Shands, Petitioner Ðcoded , Ñ meaning

that, for practical purposes, she died. She was revived b y the

Life Flight medical crew.

9 . As a result of the efforts to revive her, drugs were

administered that had the effect of drawing blood away from her

extremities and toward her core organs. PetitionerÓs fingers

and toes were affected by blood loss. They mostly recovered,

except for her right big toe, which later had to be partially

amputated. Petitioner has since experienced some difficult y in

balance and walking normally.

10 . Upon arriva l at Shands, Petitioner was admitted with

post - partum endometritis which had developed into a widespread

sepsis infection. She spent the next three months in the

hospital, and underwent five surgeries. She had 2/3 of her

colon removed and underwent two i leostomies. She bears scars

that extend from sternum to pelvis. While in the hospital, h er

body temporarily swelled to twice its normal size, leaving her

with scars and stretch marks on her torso and legs.

11. Medicaid paid for PetitionerÓs medical expenses in the

amount of $148,554.69.

1 2 . Because PetitionerÓs ability to process food and

absorb nutrients is so dramatically compromised, she must use

the restroom 9 to 1 5 times per day, occasionally with no advance

warning which can lead to accidents . Thus, both her social life

and her ability to get and hold employment are severely limited .

1 3 . Petitioner has little stamina or endurance, limiting

her ability to play and keep - up with her six - year - old s on. Her

sex life with her husband is strained, due both to issu es of

physical comfort and body image. Finally, Petitioner can have

no more children , a fact rendered more tragic by ColtÓs

unexpected death at the age of three months, scarcely a week

after PetitionerÓs release from the hospital.

1 4 . As a result of the foregoing , Petitioner suffered

economic and non - economic damages. Therefore, Petitioner filed

a lawsuit in Alachua County seeking recovery of past and future

economic and non - economic damages. PetitionerÓs husband also

suffered damages, and was named as a plaintiff in the lawsuit.

Named as defendants to the lawsuit were NFWP and NFRMC.

1 5 . Medicaid is to be reimbursed for medical assistance

provided if resources of a liable third party become available.

Thus, Respondent asserted a Medicaid lien in the amount of

$148,554.69 against any proceeds received from a third party.

1 6 . NFWP was under - insured , which compelled Petitioner to

settle with NFWP for its policy limits of $100,0 00. As a

result, NFWP was removed as a party to the ongoing lawsuit. Of

the NFWP settlement proceeds, $18,750.00 was paid to Respondent

in partial satisfaction of its Medicaid lien, leaving a

remaining lien of $129,804.69.

1 7 . On July 10, 2013 , and November 15, 2013 , PetitionerÓs

counsel, Mr. Smith, provided NFRMCÓs counsel, Mr. Schwann , with

his assessment of the damages that might reasonably be awarded

by a jury.

1 8 . Mr. Smith testified convincingly that a jury would

have returned a verdic t for non - economic damages well in excess

of $1.5 million . However, in calculating the total damages , he

conservatively applied the statutory cap on non - economic damages

of $1.5 million that would have been allowed by the judgment .

With the application o f the capped amount, t he total damages --

i.e., the ÐvalueÑ of the case -- came to $3.1 million. That

figure was calculated by the application of the following:

P ast lost wages - $61,000

F uture loss of earning capacity - between

$360,000 and $720,000

P ast medical expenses - $ 148,982.90 4/

F uture medical expenses - $ 682,331.99

P ast and future non - economic damages -

$1,500,000 (capped)

1 9 . The elements of damages are those that appear on a

standard jury form.

20 . The numbers used in assessing PetitionerÓs economic

damages were developed and provided by Mr. Roberts. The

evidence in this case was convincing that the calculation of

economic damages reflected a fair, reasonable, and accurate

assessment of those dam ages.

21 . Mr. Smith was confident that the damages could be

proven to a jury, a belief that is well - founded and supported by

clear and convincing evidence . However, the existence of a

Fabre defendant 5 / led to doubt on the part of Petitioner as to

the amount of proven damages that would be awarded in a final

judgment.

22 . Counsel for NFRMC, Mr. Schwann, performed his own

evaluation of damages prior to the mediation between the

parties. Mr. Schwann agr eed that a jury verdict could have

exceeded $3 million. Although he believed the strengths of the

NFRMC Ós case to be significant, he had concerns as to Ðwhat the

worst day would have looked like,Ñ especially given the wild

unpredictability of juries. In Mr. SchwannÓs opinion, the NFRMC

nurse, Ms. Summers, was a credible, competent and believable

witness. However, the nurse midwife presented with a reasonably

nice appearance as well. Thus, there was little to tip the

balance of believability far in eithe r direction, leaving it to

the jury to sort out. Mr. Schwann understood PetitionerÓs

personal appeal, and the significant personal and intangible

damages suffered by Petitioner, that could lead a jury to award

a large verdict. He also credibly testified that juries were

consistent in awarding economic damages Ðto the penny.Ñ

23 . The case was submitted to mediation, at which the

parties established a framework for a settlement. Given the

uncertainty of obtaining a verdict for the full amount of the

damages due to the Fabre defendant, NFWP, the parties agreed

that the most likely scenarios would warrant a settlement with

NFRMC for some fraction of the total damages.

24 . Aft er mediation, Petitioner ultimately accepted a

settlement offer of $700,000 from NFRMC , which reflected, after

rounding, 22.5% percent of the total value of the case as

estimated by Mr. Smith. Given the facts of this case, the

figure agreed upon was suppo rted by the competent professional

judgment of the trial attorneys in the interests of their

clients .

25. There is no evidence that the monetary figure agreed

upon by the parties represented anything other than a reasonable

settlement, taking into account all of the strengths and

weaknesses of their positions. There was no evidence of any

manipulation or collusion by the parties to minimize the s hare

of the settlement proceeds attributable to the payment of costs

expended for PetitionerÓs medical care.

26 . On December 6, 2013, Petitioner and NFRMC executed a

Release of Claims which differentiated and allocated the

$700,000 total recovery in acco rdance with the categories

identified in Mr. SmithÓs earlier letters. As a differentiated

settlement, the settlement proceeds were specifically identified

and allocated, with e ach element of the total recovery being

assigned an equal and equitable percent age of the recovery.

27 . The parties knew of the Medicaid lien, and of the

formula for recovery set forth in section 409.910(11)(f). They

understood that if the damages were undiffer entiated, the rote

formula might apply. However, since the Medicaid lien applied

only to medical expenses , the parties took pains to ensure a

fair allocation as to each element of the damages , including

that element reflecting the funds spent by Medicaid .

28 . The differentiated settlement proceeds , after

rounding, were allocated as follows:

Past lost wages - $15,000

Future loss of earning capacity - $160,000

Past medical expenses - $35,000

Future medical expenses - $150,000

Past and future non - economic damages -

$340,000

The evidence was clear and convincing that a ll elements of the

damages were subject to the same calculation and percentage of

allocation , were fact - based and fair, and were subject to no

manipulation to increase or decrease any element.

29 . The full amount of the Medicaid lien (prior to the

partial payment from the NFWP described herein) was accounted

for and allocated as Ðpast medical expensesÑ in the stipulated

Release of All Claims that was binding on all parties .

30 . Respondent was not a party to the lawsuit or the

settlement. Petitioner did not invit e Respondent to participate

in litigation of the claim or in settlement negotiations , and no

one represented RespondentÓs interests in the negotiations.

Except for the amount recovered from the settlement with NFWP,

Resp ondent has not otherwise executed a release of the lien.

31 . Respondent correctly computed the lien amount pursuant

to the statutory formula in section 409.910(11)(f ) . Deducting

the 25 percent attorney Ó s fee from the $ 7 00,000 .00 recovery

leaves a sum of $ 525,000.00 , half of which is $ 262,500.00 . That

figure establishes the maximum amount that c ould be reimbursed

from the third - party recovery in satisfaction of the Medicaid

lien. Thus, application of the formula allows for sufficient

funds to satisfy the unsatisfied Medicaid lien amount of

$129,804.69 .

32 . Petitioner prove d by clear and convincing evidence

that the $3.1 million total value of the claim was a reasonable

and realistic value. Furthermore, Petitioner proved by clear

and convincing evidence, based on the relative strengths and

weaknesses of each partyÓs case, and on a competent and

professional asses sment of the likelihood that Petitioner would

have prevailed on the claims at trial and the amount she

reasonably could have expected to receive on her claim if

successful, that the amount agreed upon in settlement of

PetitionerÓs claims constitutes a fair , just , and reasoned

differentiated settlement for each of the listed elements,

including that attributable to the Medicaid lien for medical

expenses.

C ONCLUSIONS OF LAW

33 . The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties in this

case pursuant to sections 120.569 , 120.57(1), and 409.910(17) ,

Florida Statutes (201 3 ).

34 . Respondent is the agency authorized to administer

FloridaÓs Medicaid program. £ 409.902, Fla. Stat.

35 . The Medicaid program Ðprovide[s] federal financial

assistance to States that choose to reimburse certain costs of

medical treatment for needy persons.Ñ Harris v. McRae , 448 U.S.

297, 301 (1980). Though participation is optional, o nce a State

elects to participate in the Medicaid program, it must comply

with federal requirements governing the same. Id .

36 . As a condition for receipt of federal Medicaid funds,

s tates are required to seek reimbursement for medical expenses

incurred on behalf of Medicaid recipients wh o later recover from

legally liable third - parties . See Arkansas Dep't of Health &

Human Servs. v. Ahlborn , 547 U.S. 268 , 276 (2006).

37 . Consiste nt with this federal requirement, the Florida

Legislature has enacted section 409.910 , which authorizes and

requires the State to be reimbursed for Medicaid funds paid for

a recipient 's medical care when that recipient later receives a

personal injury judgment or settlement from a third party.

Smith v. Ag. for Health Care Admin . , 24 So. 3d 590, 590 (Fla.

5th DCA 2009). The statute create s a n automatic lien on any

such judgment or settlement for the medical assistance provided

by Medicaid. § 409.910(6)(c) , Fla. Stat .

38 . The amount to be recovered for Medicaid medical

expenses from a judgment, award, or settlement from a third

party is determined by the formula in section 409.910(11)(f) ,

which sets th at amount at one - half of the total recovery , after

deducting attorneyÓs fees of 25 percent of the recovery and all

taxable costs , up to, but not to exceed , the total amount

actually pai d by Medicaid on the recipient Ós behalf. Ag. For

Health Care Admin. v. Riley , 119 So. 3d 514, 515 , n . 3 (Fla. 2d

DCA 2013).

39 . Application of the formula to PetitionerÓs $700,000.00

settlement results in a maximum reimbursement amount of

$262,500.00, which exceeds the remaining Medicaid lien sought by

Respondent of $129,804.69 .

40 . Respondent correctly asserts that it is not

automatically bound by any allocation of damages set forth in a

settlement between a Medicaid recipient and a third party that

may be contrary to the formulaic amount , citing section

409.910(13), Florida Statutes. See also , § 409.910(6)(c)7.,

Fla. Stat. (ÐNo release or satisfaction of any . . . 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.Ñ). Rather, i n

cases as this , where Respondent has not been provided prior

notice and has not participated in or approved the settlement,

the administrative procedure created by section 409.910(17)(b)

is the means for determining whether a lesser por tion of a total

recovery should be allocated as reimbursement for medical

expenses in lieu of the amount calculated by application of the

formula in section 409.910(11)(f).

41 . Section 409.910 (17) (b) provide s that

A recipient may contest the amount

designated as recovered medical expense

damages payable to the agency pursuant to

the formula specified in paragraph (11)(f)

by filing a petition under chapter 120

within 21 days after the date of payment of

funds to the agency or after the date of

placing the full amount of the third - party

benefits in the trust account for the

benefit of the agency pursuant to paragraph

(a). The petition shall be filed with the

Division of Administrative Hearings. For

purposes of chapte r 120, the payment of

funds to the agency or the placement of the

full amount of the third - party benefits in

the trust account for the benefit of the

agency constitutes final agency action and

notice thereof. Final order authority for

the proceedings spec ified in this subsection

rests with the Division of Administrative

Hearings. This procedure is the exclusive

method for challenging the amount of third -

party benefits payable to the agency. In

order to successfully challenge the amount

payable to the agen cy, the recipient must

prove, by clear and convincing evidence,

that a lesser 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)

or that Medicaid provided a lesser amount of

medical assistance than that asserted by the

agency.

42 . Clear and convincing evidence Ðrequires more proof

than a Òpreponderance of the evidenceÓ but less than Òbeyond and

to the exclus ion of a reasonable doubt.ÓÑ In re Graziano ,

696 So. 2d 744, 753 (Fla. 1997). The clear and convincing

evidence level of proof

entails both a qualitative and quantitative

standard. The evidence must be credible;

the memories of the witnesses must be clear

and without confusion; and the sum total of

the evidence must be of sufficient weight to

convince the trier of fact without

hesitancy.

Clear and convincing evidence requires

that the evidence must be found to be

credible; the facts to which the

witn esses testify must be distinctly

remembered; the testimony must be

precise and explicit and the witnesses

must be lacking in confusion as to the

facts in issue. The evidence must be

of such weight that it produces in the

mind of the trier of fact a firm b elief

or conviction, without hesitancy, as to

the truth of the allegations sought to

be established.

In re Davey , 645 So. 2d 398, 404 (Fla. 1994) (quoting, with

approval, Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA

1983)); see also In re Henson , 913 So. 2d 579, 590 (Fla. 2005).

"Although [the clear and convincing] standard of proof may be

met where the evidence is in conflict, it seems to preclude

evidence that is ambiguous." Westinghouse Elec . Corp. v. Shuler

Bros. , 590 So. 2d 986, 989 (Fla. 1st DCA 1991).

Proof as to Reimbursement for Past Medical Expenses

43 . The evidence in this case is clear and convincing that

the allocation for PetitionerÓs past medical expenses in the

amount of $35,000.00 6 / as set forth in the differentiated

settlement agreement constitutes a fair, reasonable, and

accurate share of the total recovery for those past medical

expenses actually paid by Medicaid . The evidence is equally

clear and convincing that the parties to the settlement engaged

in no manipulation of the differentiated settlement to minimize

or prejudice RespondentÓs interest in its right to reimbursement

f or medical expenditures made.

44 . There was no evidence that Medicaid funds were either

committed to or paid for future medical expenses.

45. The full amount of the Medicaid lien (prior to the

partial payment from the NFWP described herein) was accounted

for, and made subject to Ðan allocation between medical and

nonmedical damages -- in the form of either a jury v erdict, court

decree, or stipulation binding on all parties,Ñ a process

approved in Wos v . E.M.A. , 528 U.S. ___ , 2013 U.S. LEXIS 2372

*18 (2013).

46 . Petitioner has proven, by clear and convincing

evidence, that $35,000.00 of the total third - party reco very

represents that share of the settlement proceeds fairly

attributable to expenditures that were actually paid by

Respondent for PetitionerÓs medical expenses.

Reimbursement from Future Medical Expens e Settlement Proceeds

47 . The remaining issue for determination in this

proceeding is whether the state Medicaid lien for reimbursement

of medical expenses authorizes not only recovery of funds

identified in a differentiated third - party settlement as

applying to medical expenses actually paid , i.e. past medical

expenses, but also authorizes recovery against separately

identified and allocated funds for other classes of damages,

including future, but as yet unincurred, medical expenses. For

the reasons set forth herein, the undersigned conclude s it

cannot.

Federal Anti - lien Statute

48 . 42 U.S.C. § 1396p(a)(1), generally referred to as the

federal Medicaid anti - lien statute, provides that Ð [n]o lien may

be imposed against the property of any individual prior to his

death on account of medical assistance paid .Ñ

49 . In Ark ansas Dep artment of Health and Human Serv ice s v.

Ahlborn , 547 U.S. 268 (2006), the Supreme Court addressed the

extent of recovery from a third - party settlement under a

Medicaid lien, in ligh t of the Medicaid anti - lien statute. In

that case, the Medicaid recipient, Ms. Ahlborn , filed suit for

injuries sustained in an automobile accident, in which she

sought damages for past medical costs ; future medical expenses;

permanent physical injury ; past and future pai n, suffering, and

mental anguish; past loss of earnings and working time; and

permanent impairment of the ability to earn in the future. Ark.

Dep't of Human Servs. v. Ahlborn , 547 U.S. at 467. The total

value of Ms. AhlbornÓs damages was estimated at $ 3,040,708.12.

The past medical costs paid by Medicaid and subject to the

Medicaid lien totaled $215,645.30.

50 . Ms. Ahlborn settled her lawsuit for $550 , 000.00 , of

which $35,581.47 was attributable to Ðmedical expenses.Ñ 7 /

51 . The Supreme Court posed the question as one in which

Ð[w]e must decide whether ADHS can lay claim to more than the

portion of Ahlborn's settlement that represents medical

expenses . Ñ

52 . To facilitate reimbursement from liable third parties,

states participating in Medica id must provide:

to the extent that payment has been made

under the State plan for medical assistance

in any case where a third party has a legal

liability to make payment for such

assistance, the State has in effect laws

under which, to the extent that pa yment has

been made under the State plan for medical

assistance for health care items or services

furnished to an individual, the State is

considered to have acquired the rights of

such individual to payment by any other

party for such health care items or

services.

42 U.S.C. § 1396 a (a)(25)(H).

53 . The Supreme Court identified th e following provisions

of 42 U.S.C. § 1396p as being pertinent to its decision :

(a) Imposition of lien against property of

an individual on account of medical

assistance rendered to him under a State

plan

(1) No lien may be imposed against the

property of any individual prior to his

death on account of medical assistance paid

or to be paid on his behalf under the State

plan, except --

(A) pursuant to the judgment of a court on

account of benefits incorrectly paid on

behalf of such individual, . . .

* * *

(b) Adjustment or recovery of medical

assistance correctly paid under a Stat e

plan

(1) No adjustment or recovery of any

medical assistance correctly paid on behalf

of an individual under the State plan may be

made . . . .

Ahlborn , 547 U.S. at 283 - 284.

54 . The Court recognized 42 U.S.C. § 1396 a (a)(25)(H) to be

an exception to the broader anti - lien provisions of 42 U.S.C

§ 1396p, and held that:

the federal statute places express limits on

the State's powers to pursue recovery of

funds it paid on the recipient's behalf.

These limitations [in 42 U.S.C. § 1396 p]

. . . prohibit[] States (except in

circumstances not relevant here) from

placing liens against, or seeking recovery

of benefits paid from, a Medicaid recipient.

Ark. Dep't of Human Servs. v. Ahlborn , 547 U.S. at 283.

55 . Based on its analysis of the interplay between the

Medicaid reimbursement provisions and the Medicaid anti - lien

provisions, the Supreme Court held that the States could recover

for their Medicaid expenditures to the extent a recovery from a

third - party accounted for such expenditures, but conditioned i ts

decision to state :

But that does not mean that the State can

force an assignment of, or place a lien on,

any other portion of Ahlborn's property. As

explained above, the exception carved out by

§§ 1396a(a)(25) and 1396k(a) is limited to

payments for m edical care. Beyond that, the

anti - lien provision applies.

Ark. Dep't of Human Servs. v. Ahlborn , 547 U.S. at 284 - 285.

56 . T he Court concluded that ÐFederal Medicaid law does

not authorize ADHS to assert a lien on Ahlborn's settlement in

an amount exce eding $35,581.47, and the federal anti - lien

provision affirmatively prohibits it from doing so.Ñ Ark. Dep't

of Human Servs. v. Ahlborn , 547 U.S. at 292.

57 . The analysis of the Supreme Court opinion in Ahlborn ,

including the facts regarding the nature of the $35,581.47 in

Ðmedical expensesÑ established in the lower court opinion, leads

to the conclusion that the $35,581.47 recovery against the

Medicaid lien represented the allocation of the third - party

settlement for past medical c are. In reviewing the case as a

whole, the only conclusion that can be drawn is that the Court

intended the narrow exception to the anti - lien statute to allow

for reimbursement from that portion of a recovery intended to

account for Ðmedical expensesÑ act ually paid by the state , i.e.,

past medical expenses, as opposed to that portion of a recovery

designated and reserved for future medical or life care costs

that may be required to sustain a Medicaid recipient in the

future, and which have not yet been pai d by Medicaid.

58 . Subsequent to its decision in Ahlborn , the Supreme

Court was again called upon to resolve issues relating to the

allocation of funds from a third - party recovery.

59 . In Wos v. E.M.A. , 528 U.S. _ _ _, 2013 U.S. LEXIS 2372

(2013), the Court reaffirmed its decision, as expressed in

Ahlborn , that the Medicaid anti - lien statute Ðprohibits States

from attaching a lien on the property of a Medicaid beneficiary

to recover benefits paid by the State on the beneficiary's

behalf [and] pre - e mpts a State's effort to take any portion of a

Medicaid beneficiary's tort judgment or settlement not

Ò designated as payments for medical care. ÓÑ Wos v. E.M.A. , 2013

U.S. LEXIS 2372 at *6. In Wos , the Court disapproved of an

irrebuttable formula by which the Medicaid share subject to

reimbursement would be calculated. Rather, the court required

some form of evidence - based process to determine the actual

amount of medical expenses subject to recovery. Wos v. E.M.A. ,

2013 U.S. LEXIS 2372 at *27.

60 . The CourtÓs discussion of the reasons that an

evidence - based calculation is necessary to determine that

portion of a third - party recovery that is attributable to

Ðmedical expensesÑ includes the following:

The facts of the present case demonstrate

why Ah lborn anticipated that a judicial or

administrative proceeding would be necessary

in that situation. Of the damages stemming

from the injuries E.M.A. suffered at birth,

it is apparent that a quite substantial

share must be allocated to the skilled home

ca re she will require for the rest of her

life. See App. 112. It also may be

necessary to consider how much E. M. A. and

her parents could have expected to receive

as compensation for their other tort claims

had the suit proceeded to trial. An

irrebuttable, one - size - fits - all statutory

presumption is incompatible with the

Medicaid Act's clear mandate that a State

may not demand any portion of a

beneficiary's tort recovery except the share

that is attributable to medical expenses.

Wos v. E.M.A. , 2013 U.S. LEX IS 2372 at *20 .

61 . ÐSkilled home careÑ for the rest of oneÓs life is

sufficiently analogous to Ðfuture medical expensesÑ to convince

the undersigned that the Ðmedical expensesÑ that may be

recovered in derogation of the Medicaid anti - lien statute are to

be limited to expenses that have been incurred and paid by

Medicaid, and not to include expenses that have yet to be

incurred, and have not been paid by Medicaid. Thus, that

portion of the third - party recovery from which the Medicaid lien

may be satisf ied is that designated and set aside for past

medical expenses actually paid by Medicaid .

62 . Consideration of the underlying Fourth Circuit Court

of Appeals case affirmed by Wos demonstrates with even greater

clarity and persuasiveness that the Medica id anti - lien statute

prohibits recovery of paid Medicaid funds from funds designated

for future medical expenses.

63 . In E.M.A. v. Cansler , 674 F.3d 290 (4th Cir. 2012) ,

the Fourth Circuit noted that, in the underlying third - party

tort case, Ðthe plaintiffs had alleged that Ò [E.M.A.] suffered

severe and permanent injuries and that both parents . . . have

incurred liability for past, present and future medical and life

car e expenses for treatment of [E.M.A.], ÓÑ and that Ð the sums

set out in the Settlement Schedule were fair and just

compensation for their respective claims . Ñ E.M.A. v. Cansler ,

674 F.3d at 294.

64 . The Fourth Circuit construed Ahlborn , as does the

undersi gned, that:

In Ahlborn , the Supreme Court reconciled

seemingly conflicting legal standards when

it considered whether an Arkansas third -

party liability statute permitting the state

to claim a right to the entirety of the

costs it paid on a Medicaid recipie nt's

behalf, regardless of whether that amount

exceeded the portion of the recipient's

judgment or settlement representing past

medical expenses, violated federal Medicaid

law. 547 U.S. at 278. In an opinion by

Justice Stevens for a unanimous

Court, Ahlb orn held that Arkansas' assertion

of a lien on a Medicaid recipient's tort

settlement in an amount exceeding the

stipulated medical - expenses portion was not

authorized by federal Medicaid law; to the

contrary, the state's attempt to do so was

affirmatively prohibited by the general

anti - lien provision in 42 U.S.C. § 1396p.

E.M.A. v. Cansler , 674 F. 3d at 292. The F ourth Circuit noted

that Ð Ahlborn is properly understood to prohibit recovery by the

state of more than the amount of settlement proceeds

representing payment for medical care already receivedÑ ( E.M.A.

v. Cansler , 674 F. 3d at 307), and concluded that Ð[a]s the

unanimous Ahlborn 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.Ñ

E.M.A. v. Cansler , 674 F. 3d at 312.

65 . Based on the foregoing, the undersigned is convinced

that reimbursement of Medicaid expenditures from that portion of

a settlement reserved for future care, in cluding medical

expenses, is prohibited by the Medicaid anti - lien statute.

66 . The conclusion drawn herein finds support in the case

of Davis v. Roberts , 130 So. 3d 264 (Fla. 5th DCA 2013) . In

that case, the Court disapproved of a lower court order which

determined that the Agency for Health Care Administration was

entitled to recover the full amount of its Medicaid lien ,

calculated pursuant to the formula established in section

409.910(11)(f) , from a Medicaid recipientÓs third - party

recovery . In re versing the trial court, the Court engaged in an

analysis of the combined effect of Ahlborn and Wos as requiring

a procedure by which the presumption created by application of

the section 409.910(11)(f) statutory formula could be rebutted

in an evidence - based proceeding.

67 . In its opinion, 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 provision to

the extent it creates an irrebuttable

presumption and permits recove ry beyond that

portion of the Medicaid recipient's third -

party recovery representing compensation for

past medical expenses.

Davis v. Roberts , 130 So. 3d at 270 ; see also Harrell v. Ag. for

Health Care Admin. , ___ So. 3d ___, 2014 Fla. App. LEXIS 11574

*3 - 4 (Fla. 1st DCA July 28, 2014) . Although the issue of

recovery of past versus future medical expenses was not the

direct issue before the Court, the CourtÓs understanding of the

nature of reimbursable expenses , as derived from its review of

Ahlborn and Wos , is worthy of consideration.

68 . T he 2012 version of section 409.910 at issue in Davis ,

did not contain the procedure now established in section

409.910(17)(b) allowing a Medicaid recipient to prove that Ða

lesser portion of the total recovery shou ld 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).Ñ (emphasis added). However, there

ha s been no change to the Medicaid anti - lien statute t hat formed

the basis for the Davis CourtÓs opinion. Therefore, the Fifth

District Court of AppealÓs analysis that the Medicaid anti - lien

statute, as interpreted by Ahlborn and Wos , limits RespondentÓs

recovery to that portion of Petitioners' settlement representing

compensation for past medical expenses remains viable and

effective, regar dless of the 2013 amendment to s ection 409.910.

69 . What is clear from an analysis of the cases construing

the effect of the Medicaid anti - lien statute is that the

exc eption 8 / for reimbursement of medical expenses is designed to

allow for Medicaid to recover those costs that it actually spent

on behalf of a Medicaid recipient. Thus, satisfaction of a

Medicaid lien from that portion of a third - party recovery

designed and designated to compensate for past medical expenses

expended on behalf of the Medicaid recipient is allowable under

the narrow exception to the anti - lien statute .

7 0 . F uture medical expenses identified and specified in a

differentiated sett lement agreement, and reserved for as yet

unincurred and unexpended costs necessary to sustain the injured

party in the future, are no more related to costs actually spent

by Medicaid than are reservations for future loss of earning

capacity or future skil led home care. By seeking recovery

against property -- in the form of third - party settlement

proceeds -- that is unrelated to the costs expended on

PetitionerÓs behalf by Medicaid, Respondent seeks to enforce a

lien against the property of Petitioner that exceeds the amount

of benefits allocated in an agr e ed upon and approved recovery of

medical assistance correctly paid under a State plan . Thus,

payment of the Medicaid lien from proceeds designated as future

medical expenses violates the M edicaid anti - lien statute.

Section 409.910(17)(b)

7 1 . I n 2013, t he Florida Legislature amended s ection

409.910(17) to address the Supreme CourtÓs opinion in Wos that a

State may implement administrative procedures to ascertain that

portion of a third - party recovery that may be recoverable as

allowable Ðmedical expenses.Ñ Even assuming the Florida statute

can supersede a limitation established by the Medicaid anti - lien

statute, the 2013 amendment does not, by its terms, allow

reimbursement from t hat portion of a third - party recovery

designated as future medical expenses.

7 2 . Section 409.910 (17)(b) provides, in pertinent part,

that in order to challenge a Medicaid lien calculated pursuant

to the statutory formula, Ð the recipient must prove, by clear

and convincing evidence, that a lesser portion of the total

recovery should be allocated as reimbursement for past and

future medical expenses than the amount calculated by the

agency .Ñ

7 3 . The term ÐreimburseÑ is commonly understood to mean

Ðto pa y someone an amount of money equal to an amount that

person has spent.Ñ MERRIAM WEBSTER ONLINE DICTIONARY, at

http://www.merriam - webster.com/dictionary/reimburse.

7 4 . In th is case, Medicaid spent $148,554 . 69 , all of which

represented expenditures paid f or PetitionerÓs past medical

expenses.

7 5 . There was no evidence that any portion of the Medicaid

expenditures were for future medical expenses.

7 6 . Respondent, in its proposed final order, argues that

section 409.910(17)(b) should be read to mean t hat:

the Agency can be reimbursed from the

medical expense portion of settlement, to

include both past and future medical

expenses. The statute is clear that it

allows for recovery from the past and future

medical expense portion of a settlement.

(emphas is added . )

7 7 . Respondent Ós proposed construction would require the

undersigned impute words to section 409.910(17) that simply are

not there. There is a fundamental linguistic difference between

Respondent being reimbursed for future medical expenses paid by

Medicaid, and Respondent being reimburse d for its past medical

expenses from that portion of a settlement reserved for as yet

un paid future medical expenses.

7 8 . Respondent correctly cites the case of Paul v. State ,

129 So. 3d 1058, 1064 (Fla. 2013) for the proposition that

Ð[o]ur purpose in construing a statute is to give effect to the

Legislature's intent. When a statute is clear, courts will not

look behind the statute's plain language for legislative intent

or resort to rules of statutory construction to ascertain

intent.Ñ

79 . The statute is clear. Respondent can seek

reimbursement of Medicaid funds spent for future medical

expenses. Here, there were no Medicaid funds spent for future

medical expenses . There is nothing in section 409.910 to

suggest that Respondent can be reimbursed from funds set aside

for expenses unrelated to those actually paid by Medicaid, and

such a construction would be contrary to the plain language of

the statute.

8 0 . It is the opinion of the undersigned that an

interpretation of section 409.910(17) (b) that allows for

reimbursement for past medical expenses to be recover ed from

funds designated for as yet unincurred future medical expenses

-- an interpretation that requires the modification of, or

addition of words to, the statute -- is clearly erroneous. 9 /

8 1 . Petitioner has proven, by clear and convincing

evidence, that the differentiated settlement allocated a fair

and reasonable percentage of the total recovery to reimbursement

of medical expenses paid by Medicaid, and that a lesser portion

of the total recovery than the amount calculated pursuant to the

formula in paragraph (11)(f) should thus be reimburse d to

Respondent for PetitionerÓs medical expenses , that amount being

$35,000.00 .

CONCLUSION

Upon consideration of the above F indings of F act and

C onclusions of L aw, it is hereby

ORDERED that :

The Agency for Health Care Administration is entitled to

$ 35,000.00 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 29th day of September , 201 4 , in

Tallahassee, Leon County, Florida.

S

E. GARY EARLY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of September , 201 4 .

ENDNOT ES

1/ Both Mr. Schwann and Mr. Smith had demonstrable degree s of

knowledge and experience in the field of medical malpractice and

personal injury. I t was clear from the record that both parties

regarded them as having expertise in their field , with counsel

for Respondent asking them on several occasions to express their

opinions with regard to the value and likelihood of success of

the underlying malpractice proceeding. Based upon their

knowledge, skill, and experience, they dem onstrated the quantum

of reliability so as to warrant giving weight to t heir testimony

offered in the form of opinion.

2 / Although Mr. Roberts was not formally tendered as an expert ,

he exhibited a degree of knowledge, skill, experience, training,

and ed ucation in the listed field of life care planning that

served to assist the undersigned in understanding the evidence

or in determining a fact in issue . His qualifications were such

as to warrant his acceptance by the undersigned as an expert in

life care planning in accordance with his designation in the

Joint Prehearing Stipulation .

3/ The testimony regarding the conversation is hearsay.

However, it is not used herein for the truth of the matters

asserted, but as evidence of the rationale of the attorneys in

formulating a reasonable settlement of PetitionerÓs lawsuit

against NFRMC.

4/ In the Joint Prehearing Stipulation, the parties agreed that

the actual amount spent by Medicaid for PetitionerÓs medical

expenses was $148,554.69.

5 / As a result of the settlement with NFWP for its policy

limits, NFWP was no longer a party to the lawsuit. Of concern

to Petitioner was the fact that a jury could have determine d

that much or all of the liability for PetitionerÓs injuries

rested with the negligence of NFWP and its staff.

L iability must be apportioned among responsible parties on th e

basis of fault, regardless of whether each party is joined in

the action. Fabre v. Marin , 623 So. 2d 1182 (Fla. 1993); see

also § 768.81(3), Fla. Stat. A Fabre defendant is not a party

to a lawsuit, but is alleged to be wholly or partially at fault

for the damages. The Fabre defendant is placed on the verdict

form so that a jury may apportion a percentage of fault , and

thereby a percentage of the awarded damages, to that defendant .

By application of Fabre , if a jury verdict awarded the full

amount of the calculated economic and non - economic damages , but

believed that some percentage of liability for PetitionerÓs

damages for the authorization of a premature discharge rested

with the NFWP nurse midwife, the verdict would be reduced by

that percentage in the judgment.

6 / The amount allotted to Respondent is actually greater than

the 22.5% share applied to other elements of the settlement due

to the fact that the 22.5% wa s applied to the entire lien amoun t

without subtracting the $18,750 already paid as a result of the

NFWP settlement. Had the 22.5% been applied to the $129,804.69

remaining lien amount, the amount payable to Respondent would

have been reduced by $4,125.00.

7 / A review of Ahlborn , in l ight of the facts recited in the

lower court proceeding affirmed by the Supreme Court ,

demonstrates that the $215,645.30 in Ðmedical expensesÑ at issue

in Ahlborn was limited to amounts spent for past medical

expenses, and that the $35,581.47 ultimately paid to the State

in satisfaction of its Medicaid lien represented Ða fair

representation of the percentage of the settlement constituting

payment by the tortfeasor for past medical care.Ñ Ahlborn v.

Ark. Dep't of Human Servs. , 397 F.3d 620, 622 (8th Cir. 2005).

Thus, the Ðmedical expensesÑ for which recovery from the

settlement was authorized under the anti - lien statute were

limited to those for past medical expen ses.

Though the full value of Ms. AhlbornÓs suit included an estimate

of future medical expenses, there was no suggestion by the

Supreme Court that recovery of past medical expenses from the

future medical expenses component of the settlement proceeds

w ould be allowed under the anti - lien statute. Based on an

analysis of the underlying case and facts being decided, the

undersigned concludes that when the Supreme Court stated that

Ð the relevant ÒliabilityÓ extends no further than [ $35,581.47 ] ,Ñ

( Ahlborn , 547 U.S. at 280 - 281) the liability for Ðm edical

expensesÑ at issue w as that for past medical expenses.

8 / In analyzing the effect of the Medicaid anti - lien statute in

light of the exception created in 42 U.S.C. § 1396a(a)(25)(H) by

which a State is con sidered to have acquired the rights of a

Medicaid recipient to payment by a liable third party Ðfor such

health care items or services,Ñ the undersigned recognizes the

general and oft - held proposition that Ð[i]n construing

provisions . . . in which a gener al statement of policy is

qualified by an exception, we usually read the exception

narrowly in order to preserve the primary operation of the

provision.Ñ Comm'r v. Clark , 489 U.S. 726, 739 (1989).

9 / The undersigned recognizes that at least two Administrative

Law Judge s have suggested that Medicaid expenditures may be

recovered from a portion of a settlement reserved for future,

but as yet unincurred medical expenses. See , Holland v. Ag. for

Health Care Admin. , Case No. 13 - 4951 (DOAH May 2, 201 4);

Silnicki v. Ag. for Health Care Admin. , Case No. 13 - 3852MTR

(DOAH July 15, 2014). With th ose decision s , the undersigned

must, respectfully, disagree.

COPIES FURNISHED :

Joel F. Foreman, Esquire

Foreman, McInnis and Associates, P.A.

Post Office Box 550

Lake City, Florida 32056 - 0550

(eServed)

Stephen A. Smith, Esquire

Stephen A. Smith, P.A.

153 Northeast Madison Street

Post Office Box 1792

Lake City, Florida 32056 - 1792

(eServed)

Adam James Stallard, Esquire

Xerox Recovery Services Group

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

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. Review 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 of the order to be reviewed, and a copy of

the notice, accompanied by any fil ing 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 otherwise provided by law.