14-003806MTR Gregory Mierzwinski vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, March 6, 2015.

Summary: Petitioner proved by clear and convincing evidence that the Medicaid anti-lien statute limited AHCA's recovery to $33,255.54, the portion of Petitioner's settlement representing compensation for past medical expenses.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GREGORY MIERZWINSKI ,

Petitioner,

vs. Case No . 1 4 - 3806MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION ,

Respondent.

/

FINAL ORDER

A formal hearing was con ducted in this case on December 1 9 ,

2014 , in Tallahassee , Florida, before Lawrence P. Stevenson, a

duly - designated Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello , Florida 32 344

For Respondent: Kevin Andrew Joyce , Esquire

Associate Corporate Counsel

Xerox Rec overy Services

2073 Summit Lake Drive, Suite 300

Tallahassee , Florida 32 317

STATEMENT OF THE ISSUE

The issue in this proceeding is how much of PetitionerÓs

settlement proceeds should be paid to Respondent , the Agency for

Health Care Administration (ÐAHCAÑ) to satisfy AHCA 's Medicaid

lien under section 409.910, Florida Statutes. 1/

PRELIMINARY STATEMENT

On August 18, 2014, Petitioner Gregory Mierzwi n ski

("Petitioner") filed with the Division of Administrative

He arings (ÐDOAHÑ) a Petition to Determine Amount Payable to

Agency for Health Care Administration in Satisfaction of

Medicaid Lien (the ÐPetitionÑ). The Petition challenged AHCA Ós

lien for recovery of medical expenses paid by Medicaid in the

amount of $135, 047.86 . Petitioner asserted that section

409.910(17)(b) provided for the reimbursement of a lesser amount

of the total third - party settlement proceeds than the amount

calculated by AHCA pursuant to the formula established in section

409.910(11)(f).

The case was originally scheduled for hearing on

November 17, 2014. One continuance w as granted. The hearing

was ultimately held on December 1 9 , 2014 .

At the hea ring, Petitioner testified on his own behalf and

offered the testimony of William E. Hahn, the ci vil trial

attorney who handled PetitionerÓs medical malpractice action.

Mr. Hahn testified as a fact witness and was also accepted

without objection as an expert in the value of damages suffered

by injured parties. Petitioner Ós Exhibits 1 through 5, 11 a nd

13 were admitted into evidence. Judicial notice was taken of

PetitionerÓs Exhibits 10 and 12. AHCA presented no witnesses

and offered no exhibits.

At the close of the hearing, the undersigned approved the

partiesÓ request that they be given 20 days af ter the filing of

the transcript in which to submit their proposed final orders.

The one - volume T ranscript of the hearing was filed at DOAH on

January 1 3 , 2015 . Both parties filed their proposed final

orders withi n 20 days of the filing of the T ranscript .

On February 2, 2015, Petitioner filed a Motion for Official

Recognition request ing that official recognition be taken of the

final orders entered by circuit courts on remand from the Second

District Court of Appeal in Agency for Health Care

Admin istrat ion v. Riley , 119 So. 3d 514 (Fla. 2d DCA 2013) and

from the First District Court of Appeal in Harrell v. Agency for

Health Care Admin istration , 143 So. 3d 478 (Fla. 1 st DCA 2014).

AHCA did not object to the motion, which is hereby granted.

FINDINGS OF FA CT

1. In mid - October 2012, Petitioner, a trial lawyer, woke

up on a Friday morning with a pain in the big toe of his left

foot. He called his family practice physician 2/ and was able to

obtain an appointment for the following Tuesday. At the

appointment , Petitioner saw a nurse practitioner who examined

him and pronounced that he had gout. The nurse practitioner

prescribed a gout medication.

2. Over the course of the next week, PetitionerÓs

condition worsened , with pain radiating all the way to his hip .

On the following Tuesday, he saw the physician. Despite blood

testing that showed an elevated white blood cell count, the

physician concurred with the nurse practitioner that Petitioner

was suffering from an extreme case of gout. The physician

prescrib ed a regimen of steroids for the gout .

3. By the next Saturday, November 3, 2012, Petitioner was

so sick that a neighbor drove him to Tampa General Hospital.

His blood pressure was extremely low and his kidneys had ceased

functioning. Petitioner was on the verge of death. At the

hospital, he learned that the physician and his nurse

practitioner had misdiagnosed PetitionerÓs condition. He in

fact had a raging staphylococcus aureus infection.

4. Over the course of the next several days, Petitioner

under went several surgeries to save his life. First, the toes

on his left foot were amputated . Then, his left foot was

amputated. Next, his left leg was amputated below the knee.

Finally, the left leg was amputated above the knee.

5. Still, the infection was not controlled. Petitioner

was in and out of a coma for a month. He testified that his

infectious disease doctor told him that the infection was so bad

that the treatment team was at a loss on how to proceed.

However, the infection ultimately was b rought under control.

Once he was stabilized, Petitioner was transferred to Tampa

GeneralÓs rehabilitation facility and finally released to return

to his home.

6. Petitioner was sixty - one years old at the time his leg

was amputated. He testified that he practiced as a trial lawyer

in Florida from 1977 until his illness. Petitioner stated that

he does not find it possible to be a trial lawyer with a

prosthetic leg and a walker, but that he does some mediation

work. His basic income is $1,653 per month i n Social Security

benefits. Petitioner testified that this amount is never enough

to cover his expenses and that he is required to dip into the

proceeds of his settlement with the medical providers in order

to make ends meet. He stated that it is Ðterrif yingÑ to watch

the money going out and to wonder what he will do when it is

gone.

7. Petitioner lost his Tampa home to foreclosure and was

forced to move 40 miles away to find a house that he could

afford. Moving away from his longtime home further iso lated

Petitioner and necessitated paying money for things that he

could previously rely on friends and neighbors to help with,

such as grocery shopping.

8. Petitioner testified that prior to the amputation he

had led an active lifestyle. He ran, rode a b ike, and played

golf twice a week. He was an instructor pilot. Petitioner is

now incapable of engaging in any of those activities.

9. Petitioner testified that if he falls and is not near a

piece of furniture or other object that allows him to use his

upper body strength to lift himself, he is helpless until

someone comes along to assist him. Merely going to the bathroom

involves a complicated transfer from his wheelchair using

specially installed bars.

10 . Petitioner testified that prior to his settl ement he

had not, and to his knowledge others had not, made payments in

the past or in advance for his future medical care.

11 . Civil trial attorney William E. Hahn testified on

behalf of Petitioner. Mr. Hahn has practiced since 1972, is a

board certifie d civil trial lawyer, and is a past president of

the Florida chapter of the American Board of Trial Advocates, a

group that named Mr. Hahn Ðtrial lawyer of the yearÑ in 2012.

12. Mr. Hahn testified that he generally represents

plaintiffs in medical malpra ctice cases and has tried over 100

complex jury trials. He has won verdicts as high as $22.5

million, as low as zero, and Ðall in between.Ñ

13. Mr. Hahn takes cases involving Ðdevastating,

catastrophicÑ injuries such as that suffered by Petitioner. A

ro utine part of his practice is to make a determination of the

value of a clientÓs damages. Mr. Hahn was accepted without

objection as an expert in assessing the value of damages

suffered by injured parties.

14. Mr. Hahn testified that his evaluation proce ss begins

with acquainting himself with the nature of the injury. He then

calculates the expenses that have been incurred in the past for

the clientÓs treatment and predicts the costs of future

treatment. He looks at the medical records and performs his own

medical research. He speaks with the treating physicians as

well as the client. Mr. Hahn bases his assessments on his

experience and training and the experience of other lawyers in

handling similar cases throughout Florida and the United States.

15. Mr. Hahn testified that he has known Petitioner since

they were both young lawyers practicing in Tampa. When

Petitioner called him and explained his situation, Mr. Hahn

agreed to represent Petitioner in his medical malpractice

action.

16. Mr. Hahn noted that with proper medical treatment

Petitioner would have been spared multiple surgeries and the

amputation of his leg. He would likely have recovered and

returned to law practice. Mr. Hahn opined that the value of

PetitionerÓs case was Ðwell in excess o f $2 million,Ñ based on

PetitionerÓs background, his training and experience, and the

devastating injury and its long term effects . Given

PetitionerÓs status in Tampa and the legal community, and the

outrageousness of what happened, Mr. Hahn believed the verdict

would have Ðexceeded two, four or many more millions of

dollars.Ñ

17. Mr. Hahn explained that i n order to proceed with a

medical malpractice claim in Florida, the plaintiff must go

through a number of administrative steps called the Ð notice of

int ent Ñ process. Mr. Hahn secured the services of a board

certified internal medicine physician as his expert. The

surgeon confirmed what Mr. Hahn had surmised from the medical

records, that this was a case of gross malpractice. Mr. Hahn

obtained an affida vit from the surgeon and notified the

potential defendants that he was about to make a claim on

PetitionerÓs behalf.

18. Mr. Hahn was aware that Petitioner had received

services from Medicaid and initiated a correspondence with

AHCA . 3/ The correspondenc e indicated that Medicaid had paid

$135,047.86 in medical expenses for Petitioner . Mr. Hahn stated

that this amount would have been part of PetitionerÓs claim had

the matter been fully litigated.

19. Mr. Hahn testified that, despite the clear liability,

the recoverable assets complicated any potential award of

damages from the medical providers. The total insurance

available was $500,000. The insurance company was acting in

good faith in trying to settle the case, which ruled out a bad

faith case agains t the insurer. The only other potential

sources of funds were the personal assets of the nurse

practitioner and the physician. The defense attorney informed

Mr. Hahn that any assets possessed by these individuals were

protected from judgment.

20. The de fendants recognized that this was a ÐterribleÑ

case and wanted to settle. Mr. Hahn stated that it became

apparent to him that the best business decision for Petitioner

was to get the case resolved within the limits of the insurance

coverage. He was able to reduce his fee, keep the litigation

costs down, and get the matter resolved quickly. Mr. Hahn

secured a settlement of $492,500.

21. Mr. Hahn testified that no amount of money could ever

make Petitioner whole, but that the amount of the settlement did

not come close to fully compensating him for his damages and

would not come close to taking care of him for the rest of his

life . Mr. Hahn pointed out that in the document memorializing

the settlement agreement, the defendants acknowledged that the

settle ment would not come close to making Petitioner whole.

22. The portion of the settlement agreement referenced by

Mr. Hahn was the ÐAllocation of SettlementÑ language, which read

as follows:

Although it is acknowledged that this

settlement does not fully compensate the

Releasor for the damages he has allegedly

suffered, this settlement shall operate as a

full and complete release as to all claims

against the Releasees, without regard to

this settlement only compensating the

Releasor for a fraction of the t otal

monetary value of his alleged damages.

These damages have a value in excess of

$2,000,000, of which $135,047.86 represents

ReleasorÓs claim for past medical expenses.

Given the facts, circumstances, and nature

of the ReleasorÓs alleged injuries and this

settlement, $33,255.54 of this settlement

has been allocated to the ReleasorÓs claim

for past medical expenses and the remainder

of the settlement has been allocated 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 of

the ReleasorÓs alleged damages.

Further, the parties acknowledge that the

Releasor may need future medical care

related to h is alleged injuries , and some

portion of this settlement may represent

compensation for these future medical

expenses that the Releasor may incur in the

future. However, the parties acknowledge

that the Releasor, or others on his behalf,

have not made pay ments in the past or in

advance for the ReleasorÓs future medical

care and the Releasor 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 payments made to secure

future medical care.

23. Mr. Hahn testified that t he allocation of settlement

paragraph s were the product of a negotiation with the

defendantsÓ lawyer. Th e language was acknowledged and agreed to

by all parties. The defendants agreed with the valuation of

damages Ðin excess of $2 million.Ñ The allocation of $33,255 . 54

to past medical expenses was Ð simple math ,Ñ its relation to the

$492 ,500 settlement amou nt being proportional to the relation of

$135,047.86 to the $2 million value of the claim. Petitioner

was settling for 24.625% of his claimÓs value, and therefore the

Medicaid lien should be reduced proportionately. Mr. Hahn

testified that all the partie s believed this settlement to be

reasonable.

24. Mr. Hahn stated that in his professional judgment, the

allocation of $33,255.54 was not only reasonable, it was overly

generous. The real value of th e case was well in excess of

$2 million. Mr. Hahn belie ved that it would have been

reasonable to value the claim at $4 million, in which case the

Medicaid allocation would have been cut in half.

25. Mr. Hahn testified that the parties were trying to

recognize that Medicaid did Ð wonderfully Ñ by Petitioner . They

valued the case conservatively at $2 million. Many lawyers

would have valued it much higher, and could have supported their

valuation with documentation . Mr. Hahn stated that the partiesÓ

concern was to be appropriate, conservative, and provide a fa ir

recovery to Medicaid.

26. AHCA called no witness to contest the valuation of

damages made by Mr. Hahn or to offer an alternative methodology

to calculate the allocation to past medical expenses. No

evidence was presented indicating the settlement agre ement was

not reasonable given all the circumstances of the case. It does

not appear that the parties colluded to minimize the share of the

settlement proceeds attributable to MedicaidÓs payment of costs

for PetitionerÓs medical care. In fact, the eviden ce established

that the settlement was extremely conservative in its valuation

of PetitionerÓs claim and that the settling parties could have

reasonably apportioned far less to Medicaid than they actually

did.

27. AHCA was not a party to the settlement of PetitionerÓs

claim . AHCA correctly computed the lien amount pursuant to the

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

25 percent attorneyÓs fee , or $123,125, from the $ 492,500

recovery leaves $371,375 , half of which is $ 185,687.50 . Tha t

figure exceeds the actual amount expended by Medicaid on

PetitionerÓs medical care. Application of the formula would

provide sufficient funds to satisfy the Medicaid lien of

$135,047.86.

28. Petitioner proved by clear and convincing evidence that

the $ 2 million total value of the claim was a reasonable , if not

unduly conservative, amount . Petitioner proved by clear and

convincing evidence, based on the clear strength of his case and

on the fact that it was limited only by the inability to collect

the full amount of the likely judgment, that the amount agreed

upon in settlement of PetitionerÓs claims constitute d a fair

settlement , including th e portion attributed to the Medicaid

lien for medical expenses.

CONCLUSIONS OF LAW

29 . The Division of Adminis trative Hearings has

jurisdiction over the subject matter of and the parties to this

proceeding. §§ 120.569 , 120.57(1), and 409.910(17), Fla. Stat.

(2014).

30. AHCA is the agency authorized to administer FloridaÓs

Medicaid program. § 409.902, Fla. Stat.

31. The Medicaid program has been succinctly described as

follows:

The Medicaid program was established in 1965

by Title XIX of the Social Security Act

("the Act"), codified at 42 U.S.C. § 1396 -

1396v. The primary purpose of the program

is to provide fed eral 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, 65 L. Ed. 2d 784, 100 S. Ct. 2671

(1980). States voluntarily agree to

participate in the program , but must comply

with federal requirements once they do so.

Id . It is often said that Congress wanted

Medicaid to be a "payer of last resort, that

is, other available resources must be used

before Medicaid pays for the care of an

individual enrolled in the Medicaid

program." S. Rep. No. 99 - 146, at 312

(1985), reprinted in 1986 U.S.C.C.A.N. 42,

279.

Ahlborn v. Arkansas DepÓt of Hum an Servs. , 397 F.3d 620, 623

(8 th Cir. 2005), affÓd Arkansas DepÓt of Health and Hum an Servs.

v. Ahlborn , 547 U.S. 268 (2006 ).

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

states are required to seek reimbursement for medical expenses

incurred on behalf of Medicaid recipients who later recover from

liable third parties. 42 U.S.C. § 1396a(a)(25) (H) provides:

A. A State plan for medical assistance

must Ï

* * *

(25) provide Ï

* * *

(H) that 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 assi stance, the State has in effect

laws under which, to the extent that payment

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.

33. 42 U.S.C. § 1396k(a)(1)(A) provides:

(a) For the purpose of assisting in the

collection of medical support payments . . .

a State plan for medical assistance shall Ï

(1) provide that, as a condition o f

eligibility for medical assistance under the

State plan to an individual who has the

legal capacity to execute an assignment for

himself, the individual is required Ï

(A) to assign the State any rights

. . . to payment for medical care from any

third party.

34 . To implement th ese federal requirement s , the Florida

Legislature has enacted section 409.910, the ÐMedicaid Third -

Party Liability Act.Ñ In its statement of intent, the statute

provides as follows:

(1) It is the intent of the Legislature

that Medicaid be the payor of last resort

for medically necessary goods and services

furnished to Medicaid recipients. All other

sources of payment for medical care are

primary to medical assistance provided by

Medicaid . If benefits of a liable third

party are discovered or become available

after medical assistance has been provided

by Medicaid, it is the intent of the

Legislature that Medicaid be repaid in full

and prior to any other person, program, or

entity. Medica id 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.

Principles of common law and equity as to

assignment, lien, and subrogation are

abrogated to the exte nt necessary to ensure

full recovery by Medicaid from third - party

resources. It is intended that if the

resources of a liable third party become

available at any time, the public treasury

should not bear the burden of medical

assistance to the extent of s uch resources.

35. It was undisputed that Medicaid provided $135,047.86

in medical expenses for Petitioner or that AHCA had a valid

Medicaid lien against PetitionerÓs settlement and the right to

seek reimbursement for its expenses. The mechanism by whic h

AHCA enforces its right is set forth in section 409.910 as

follows:

(11) The agency may, as a matter of right,

in order to enforce its rights under this

section, institute, intervene in, or join

any legal or administrative proceeding in

its own name in one or more of the following

capacities: individually, as subrogee of the

recipient, as assignee of the recipient, or

as lienholder of the collateral.

(a) If either the recipient, or his or

her legal representative, or the agency

brings an action ag ainst a third party, the

recipient, or the recipient's legal

representative, or the agency, or their

attorneys, shall, within 30 days after

filing the action, provide to the other

written notice, by personal delivery or

registered mail, of the action, the name of

the court in which the case is brought, the

case number of such action, and a copy of

the pleadings. If an action is brought by

either the agency, or the recipient or the

recipient's legal representative, the other

may, at any time before trial on the merits,

become a party to, or shall consolidate his

or her action with the other if brought

independently. Unless waived by the other,

the recipient, or his or her legal

representative, or the agency shall provide

notice to the other of the intent to dismiss

at least 21 days prior to voluntary

dismissal of an action against a third

party. Notice to the agency shall be sent

to an address set forth by rule. Notice to

the recipient or his or her legal

representative, if represented by an

attorney, shal l be sent to the attorney,

and, if not represented, then to the last

known address of the recipient or his or her

legal representative.

(b) An action by the agency to recover

damages in tort under this subsection, which

action is derivative of the r ights of the

recipient or his or her legal

representative, shall not constitute a

waiver of sovereign immunity pursuant to

s. 768.14.

(c) In the event of judgment, award,

or settlement in a claim or action against a

third party, the court shall orde r the

segregation of an amount sufficient to repay

the agency's expenditures for medical

assistance, plus any other amounts permitted

under this section, and shall order such

amounts paid directly to the agency.

(d) No judgment, award, or settlement

in any action by a recipient or his or her

legal representative to recover damages for

injuries or other third - party benefits, when

the agency has an interest, shall be

satisfied without first giving the agency

notice and a reasonable opportunity to file

and satisfy its lien, and satisfy its

assignment and subrogation rights or proceed

with any action as permitted in this

section.

(e) Except as otherwise provided in

this section, notwithstanding any other

provision of law, the entire amount of any

s ettlement of the recipient's action or

claim involving third - party benefits, with

or without suit, is subject to the agency's

claims for reimbursement of the amount of

medical assistance provided and any lien

pursuant thereto.

(f) Notwithstanding an y 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 recov ered 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 pro vided 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 representative shall be calculated

at 25 percent of the judgment, award, or

settlement.

4. Notwithstanding any provision

of this section to the contrary, the agency

shall be entitled to all medical coverage

benefi ts up to the total amount of medical

assistance provided by Medicaid. For

purposes of this paragraph, "medical

coverage" means any benefits under health

insurance, a health maintenance

organization, a preferred provider

arrangement, or a prepaid health cl inic, and

the portion of benefits designated for

medical payments under coverage for workers'

compensation, personal injury protection,

and casualty.

36. As shown in Finding of Fact 27, supra , AHCA correctly

computed the lien amount pursuant to the statu tory formula in

subsection (11)(f). One - half of the amount remaining , after

deduction of the attorneyÓs fee , would be $185,687.50, which

exceeds the actual amount expended by Medicaid on PetitionerÓs

medical care. Application of the formula would provide

sufficient funds to satisfy the Medicaid lien of $135,047.86.

37. Section 409.910(13) provides that AHCA is not

automatically bound by the allocation of damages set forth in

PetitionerÓs settlement agreement:

(13) No action of the recipient shall

prejud ice the rights of the agency under

this section. No settlement, agreement,

consent decree, trust agreement, annuity

contract, pledge, security arrangement, or

any other device, hereafter collectively

referred to in this subsection as a

"settlement agreeme nt," entered into or

consented to by the recipient or his or her

legal representative shall impair the

agency's rights. However, in a structured

settlement, no settlement agreement by the

parties shall be effective or binding against

the agency for benefi ts accrued without the

express written consent of the agency or an

appropriate order of a court having personal

jurisdiction over the agency.

38 . Section 409.910(17)(b) provides a mechanism whereby a

recipient may challenge AHCAÓs presumptively correct c alculation

of medical expenses payable to the agency:

(b) 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 th e Division of

Administrative Hearings. For purposes of

chapter 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 n otice

thereof. Final order authority for the

proceedings specified 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 agency, 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 am ount

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.

39 . In Evans Packing Co mpany v. Dep artmen t of Agric ulture

& Consumer Se rv ice s , 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA

1989), the Court defined clear and convincing evidence as

follows:

[C]lear and convincing evidence requires

that the evidence must be found to be

credible; the facts to which the witnesses

testify must be dist inctly remembered; the

evidence 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 the firm belief of

conviction, with out hesitancy, as to the

truth of the allegations sought to be

established. Slomowitz v. Walker , 429

So. 2d 797, 800 (Fla. 4th DCA 1983).

40 . Judge Sharp, in her dissenting opinion in Walker v.

Dep artmen t of Bus iness & Prof essiona l Reg ulation , 705 So. 2 d

652, 655 (Fla. 5th DCA 1998) (Sharp, J., dissenting), reviewed

recent pronouncements on clear and convincing evidence:

Clear and convincing evidence requires more

proof than preponderance of evidence, but

less than beyond a reasonable doubt. In re

Inqui ry Concerning a Judge re Graziano , 696

So. 2d 744 (Fla. 1997). It is an

intermediate level of proof that entails

both qualitative and quantative [sic]

elements. In re Adoption of Baby E.A.W. ,

658 So. 2d 961, 967 (Fla. 1995), cert.

denied , 516 U.S. 1051, 116 S. Ct. 719, 133

L. Ed. 2d 672 (1996). The sum total of

evidence must be sufficient to convince the

trier of fact without any hesitancy. Id.

It must produce in the mind of the fact

finder a firm belief or conviction as to the

truth of the allegations sought to be

established. Inquiry Concerning Davey , 645

So. 2d 398, 404 (Fla. 1994).

41. The evidence is clear and convincing that the

allocation for PetitionerÓs past medical expenses in the amount

of $3 3,255.5 4 as s et forth in the settlement agreeme nt

constitutes a fair, reasonable, and accurate share of the total

recovery for those past medical expenses actually paid by

Medicaid. The evidence is clear and convincing that the parties

to the settlement engaged in no manipulation of the apportionment

to minimize or prejudice AHCA Ós right to reimbursement for

medical expenditures. If anything, the parties to the settlement

were overly generous in the apportionment for medical expenses .

They based the apportionment on a very conservative estimate of

th e value of PetitionerÓs claim. They also based the

apportionment on the full value of the $492,500 settlement,

without deducting an attorneyÓs fee for Mr. Hahn.

42. There was no evidence that Medicaid funds were either

committed to or paid for future med ical expenses.

43. The full amount of the Medicaid lien was accounted for,

and made subject to Ðan allocation between medical and nonmedical

damages -- in the form of either a jury verdict, court decree, or

stipulation binding on all parties,Ñ a process app roved in Wos v.

E.M.A. , 528 U.S. ___; 133 S. Ct. 1391, 1399; 185 L. Ed. 2d 471,

483 ; 20 13 U.S. LEXIS 2372 , *18 - 19 (2013).

44. Petitioner has proven, by clear and convincing

evidence, that $3 3,255.54 of the total third - party recovery

represents that share of the settlement proceeds fairly

attributable to expenditures that were actually paid by

Respondent for PetitionerÓs medical expenses.

45. 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. It bases this contention on the language

from section 409.910(17)(b) that a challenger such as Petiti oner

must prove by clear and convincing evidence ͻ 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) .Ñ ( e mphasis added.)

46. 42 U.S.C. £ 1396p(a)(1), the Ðanti - lien provisionÑ of

the Medicaid statute, prohibits the state from attaching a lien

on the property of a Medicaid beneficiary to recover benefits

paid by the state. ÐThe anti - lien provisi on pre - empts a StateÓs

effort to take any portion of a Medicaid beneficiaryÓs tort

judgment or settlement not Òdesignated as payments for medical

care. Ó Ñ Wos at 133 S. Ct. 1395; 185 L. Ed. 2d 478; 2013 U.S.

LEXIS 2372, *6.

47. In Ahlborn v. Arkansas Depa rtment 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 (ÐADHSÑ) in a dispute concerning t he extent to which a

recovery from a tortfeasor could be taken by the State as

reimbursement for the cost of medical care p rovided to

Ms. Ahlborn by the Medicaid program. Id . at 621.

48. ADHS had provided Medicaid benefits in the amount of

$215,645.30 to Ms. Ahlborn. The parties agreed that

Ms. AhlbornÓs injuries gave rise to a damages claim estimated at

$3,040,708.12, which claim was settled for a lump sum of

$550,000. Pursuant to Arkansas Ó third party liability statute,

ADHS asserted a lien against Ms. AhlbornÓs settlement for the

full amount of the benefits ADHS had provided. Id . at 622.

49. Ms. Ahlborn brought suit seeking a declaratory judgment

Ðarguing that ADHS can only recover that portion of her

settlement representing payment for past medi cal expenses.Ñ Id .

Thus, the issue presented by the case was Ðwhether federal

Medicaid statutes, which provide for the assignment of rights to

third - party payments, but prohibit placing a lien on a Medicaid

recipientÓs property, limit the StateÓs recover y to only those

portions of the payments made for medical expenses.Ñ Id . The

parties stipulated that if the state prevailed, it would recover

$215,645.30, the total amount of the Medicaid payments made for

the care of Ms. Ahlborn. If Ms. Ahlborn prevail ed, the state

would recover $35,581.47, which represented 16.5% of the total

amount as Ða fair representation of the percentage of the

settlement constituting payment by the tortfeasor for past

medical care.Ñ Id . (emphasis added).

50. The Eighth Circuit concluded, after review of the

relevant statutes, that Ms. Ahlborn Ðhas the better of the

argument.Ñ Id . at 621 - 22. ADHS Ós main assertion was that

because other federal statutes require the state to impose a

statutory lien for Medicaid re imbursement, the Arkansas third -

party liability statute could not be in conflict with the federal

anti - lien statute. Id . at 624.

51. The Eighth Circuit examined the text of 42 U.S.C.

§ 1396a(a)(25)(H) and 42 U.S.C. § 1396k(a)(1)(A), the relevant

portions of which are set forth at Conclusions of Law 32 and 33,

supra . The court concluded that Ða straightforward

interpretation of the text of these statutes demonstrates that

the federal statutory scheme requires only that the State recover

payments from third parties to t he extent of their legal

liability to compensate the beneficiary for medical care and

services incurred by the beneficiary.Ñ Id . at 625. Both of the

cited statutes are Ðlimited to rights to third - party payments

made to compensate for medical care.Ñ Id .

52. The Eighth Circuit reversed the district courtÓs

summary judgment in favor of ADHS and remanded the case Ðwith

directions to enter judgment for the State in the amount of

$35,581.47.Ñ Id . at 628. It should be noted that this amount

was expressly not ed by the court as constituting payment for past

medical care.

53. The case was appealed to the United States Supreme

Court, which unanimously affirmed the decision of the Eighth

Circuit. Arkansas DepÓt of Health and Human Servs. v. Ahlborn ,

547 U.S. 268 (2006) . T he Supreme Court concluded , as had the

Eighth Circuit, that Ðthe federal statute places express limits

on the StateÓs powers to pursue recovery of funds it paid on the

recipientÓs behalfÑ and that ÐFederal Medicaid law does not

authorize ADHS to assert a lien on Ahlborn's settlement in an

amount exceeding $35,581.47, and the federal anti - lien provision

affirmatively prohibits it from doing so. Ñ 547 U.S. at 283, 292.

The Medicaid lawÓs third - party liability provisions are an

exception to the ant i - lien provision and therefore are strictly

limited to payments for medical care. Id . at 284 - 85.

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

issue before the Fourth Circuit was whether North CarolinaÓs

third - party liability statute compor ted with federal Medicaid law

and Ahlborn Ðmerely because the subrogation statute . . . ÒcapsÓ

the stateÓs recovery at the lesser of the actual medical expenses

paid or one - third of the total settlement.Ñ Id . at 307. The

Fourth Circuit concluded that the North Carolina statute violated

federal law because its presumption that the state is entitled to

the actual medical expenses or one - third of the total settlement

was unrebuttable. The court held that to comport with federal

law as interpreted in Ahlborn , the statutory presumption Ðmust be

subject to adversarial testing.Ñ Id . at 311.

55. The Fourth Circuit succinctly and correctly described

Ahlborn as follows:

In Ahlborn , the Supreme Court reconciled

seemingly conflicting legal standards when

it consi dered 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 recipient's behalf,

regardless of whether that amount exceeded

the portion of the recipient's judgment or

settl ement representing past medical

expenses, violated federal Medicaid law.

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

Stevens for a unanimous Court, Ahlborn held

that Arkansas' assertion of a lien on a

Medicaid recipient's tort settlement in an

amount exce eding 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. Id . at 292.

E.M.A. v. Cansler , 6 74 F.3d at 299.

56. The lower court had seized upon the fact that E.M.A.Ós

settlement was an unallocated lump sum to hold that Ahlborn was

inapplicable and that the North Carolina statuteÓs mandatory

allocation of one - third of the settlement was reasonabl e . The

Fourth Circuit rejected Ðsuch a crabbed interpretationÑ of

Ahlborn . 674 F.3d at 307. The Fourth Circuit noted that the

Ahlborn courtÓs analysis Ðin no way restedÑ Ðon whether there

has been a prior determination or stipulation as to the medical

e xpenses portion of a Medicaid recipientÓs settlement.Ñ The

court found 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

received.Ñ Id .

57. The Fourth Circuit concluded as follows:

As the unanimous Ahlborn Court's decision

makes clear, f ederal Medicaid law limits a

state's recovery to settlement proceeds that

are shown to be properly allocable to past

medical expenses . In the event of an

una llocated lump - sum settlement exceeding

the amount of the state's Medicaid

expenditures, as in this case, the sum

certain allocable to medical expenses must

be d etermined by way of a fair and impartial

adversarial procedure that affords the

Medicaid benefic iary an opportunity t o rebut

the statutory presumption i n favor of the

state that allocation of one - third of a lump

sum settlement i s consistent with the a nti -

lien provision in federal law.

E.M.A. v. Cansler , 674 F.3d at 312 (emphasis added) .

58. On rev iew, the United States Supreme Court affirmed

the Fourth CircuitÓs decision. Wos v. E.M.A. , 528 U.S. _ _ _; 133

S. Ct. 1391; 185 L. Ed. 2d 471; 2013 U.S. LEXIS 2372 (2013). At

the outset of its opinion, the Supreme Court reaffirmed its

Ahlborn holding that ÐThe anti - lien provision pre - empts a

StateÓs effort to take any portion of a Medicaid beneficiaryÓs

tort judgment or settlement not Òdesignated as payments for

medical care. Ó Ñ Wos , 2013 U.S. LEXIS 2372 at *6, quoting

Ahlborn , 547 U.S. at 284.

59. Nothi ng in Wos contradicts the Fourth CircuitÓs

statement that Ahlborn Ð makes clear Ñ that federal Medicaid law

limits a stateÓs recovery to settlement proceeds that are

allocable to past medical expenses. The Fourth CircuitÓs

statement was based on Ahlborn Ós u nanimous affirm ance of the

Eighth CircuitÓs express determination that the state was

entitled only to Ðthe percentage of the settlement constituting

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

Arkansas Dep Ó t of Human Servs . , 397 F.3d 620 , 622 (emphasis

added) .

60. The conclusion is inescapable that reimbursement of

Medicaid expenditures from a settlement is limited by the

federal Medicaid anti - lien statute to that portion of a

settlement allocable to past medical expenses. Reimbursement

from a portion of a settlement reserved for future care,

including medical expenses, is prohibited by the Medicaid anti -

lien statute.

61. This conclusion is supported by Florida case law. In

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

reversed a lower court ruling that AHCA 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. The Court held that:

Ahlborn and Wos make clear that section

409.910(11)(f) is preempted by the federal

Medicaid s tatute's anti - lien provision to

the extent it creates an irrebuttable

presumption and permits recovery beyond that

portion of the Medicaid recipient's third -

party recove ry representing compensation for

past medical expenses.

Davis v. Roberts , 130 So. 3d at 270 (footnote omitted). Accord ,

Harrell v. Ag. for Health Care Admin . , 143 So. 3d 478 (Fla. 1st

DCA 2014).

62. The decision in Davis v. Roberts was reached prior t o

the 2013 amendments establishing the procedure in section

409.910(17)(b) that allows a Medicaid recipient to contest the

amount designated as recovered medical expense damages payable

to AHCA by proving that Ða 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).Ñ (emphasis added).

However, there has been no change to the federal Medicaid anti -

lien st atute on which Davis v. Roberts is based and therefore no

reason to believe that the CourtÓs analysis would be any

different in light of the change to section 409.910 . The

Medicaid anti - lien statute, as interpreted by Ahlborn and Wos ,

limits AHCAÓs recove ry to that portion of PetitionerÓs

settlement representing compensation for past medical expenses.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is hereby:

ORDERED that t he Agency for Health Care Administration is

entitled to $3 3,255.54 in satisfaction of its Medicaid lien.

DONE AND ORDER ED this 6th day of March , 2015 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

T he DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of March , 2015 .

ENDNO TES

1/ Citations will be to Florida Statutes (2013) unless otherwise

indicated.

2/ Out of courtesy to the settling medical providers, Petitioner

has requested that their names not be used in this Final Order.

Seeing no pressing need to identify the pr oviders in the context

of this order, the undersigned is respecting PetitionerÓs

request.

3/ AHCAÓs authorized contract representative for the Medicaid

Third Party Liability Program is Xerox Recovery Services. The

referenced correspondence was with an e mployee of Xerox.

However, because Xerox was effectively standing in the agencyÓs

shoes, the main body of the text refers to AHCA.

COPIES FURNISHED :

Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello, Florida 32344

(e Served)

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)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Frank Dichio

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 19

Tallahas see, Florida 32308

(eServed)

John Cofield

Affiliated Computer Services, Inc.

2308 Killearn Center Boulevard

Tallahassee, Florida 32309

(eServed)

Kevin Andrew Joyce, Esquire

Xerox Services

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

(e Served)

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 Pr ocedure. 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 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 otherwise provided by law.