15-003159MTR Carissa Gaudio, By And Through Her Mother And Guardian, Roseann Gaudio vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Wednesday, February 17, 2016.

Summary: Petitioner proved by clear and convincing evidence that Respondent should be reimbursed for its Medicaid lein a lesser amount than that calculated pursuant to section 409.910(11)(f).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARISSA GAUDIO, BY AND THROUGH

HER MOTHER AND GUARDIAN, ROSEANN

GAUDIO,

Petitioner,

vs. Case No. 15 - 3159MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

_______________________________/

FINAL ORDER

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

via video teleconference with lo cations in Tallahassee and

West Palm Beach, Florida , on October 23, 2015, before W. David

Watkins, a designated Administrative Law Judge of the Division

of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello, Florida 32344

For Respondent: Alexander R. Boler , Esquire

Suite 300

2 0 73 Summit Lake Drive

Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

The issue is the am ount of PetitionerÓs $800,000 personal

injury settlement payable to Respondent, Agency for Health Care

Administration (ÐAHCAÑ) , to satisfy AHCAÓs $187,950.01 Medi caid

lien.

PRELIMINARY STATEMENT

On June 2, 2015, Petitioner filed a Petition to Determine

Amount Payable to Agency for Health Care Administration in

Satisfaction of Medicaid Lien, pursuant to section

409.910(17)(b), Florida Statutes. 1/ Thereafter, the ma tter was

assigned to the undersigned administrative law judge to conduct

a formal administrative hearing and enter a final order.

After once being continued, then briefly placed in

abeyance, the matter was ultimately set for hearing to commence

on October 23, 2015. Prior to hearing the parties filed a Joint

Prehearing Stipulation, which included numerous stipulated and

admitted facts. To the extent relevant, those facts have been

incorporated herein.

The hearing proceeded as scheduled, with the Petitione r

calling two witnesses, Joseph J. Slama, Esquire , and R. Vinson

Barrett, Esquire. PetitionerÓs Exhibits 1 through 16 were

admitted in evidence, and official recognition was taken of

PetitionerÓs Exhibits 17 and 18. Respondent called no witnesses

and off ered no documentary evidence.

The one - volume Transcript of the hearing was filed with

DOAH on November 25, 2015. After jointly requesting and

receiving two extensions of time to file proposed final orders,

both parties timely filed Proposed Final Orders on January 12,

2016. On the same day, Petitioner also filed a Notice of

Supplementary Authority, attached to which was a memorandum of

law filed by AHCA in Davis v. Roberts , 130 So. 3d 264 (Fla. 5th

DCA 2013) , and copies of several circuit court orders.

F INDING S OF FACT

Based on the stipulations of the parties, evidence adduced

at hearing, and the record as a whole, the following F indings of

F act are made:

Background

1 . On July 13, 2008, Ca rissa Gaudio (Carissa), then

26 years old, suffered severe physic al injury and catastrophic

brain damage when her car was struck by a train.

2 . Carissa received extensive medical intervention to save

her life and address her injuries. Eventually, her medical

condition stabilized and she was discharged to her parentÓs

home. While Carissa demonstrated consciousness and awareness,

due to her catastrophic brain damage, she was unable to speak,

ambulate, eat, toilet or care for herself in any manner. She

was totally dependent on others for every aspect of her daily

care.

3 . CarissaÓs past medical expenses related to her injuries

suffered on July 13, 2008 , were paid by private health insurance

through Blue Cross Blue Shield of Florida, Medicare , and

Medicaid. Blue Cross Blue Shield of Florida provided

$494,868.51 in bene fits, Medicare provided $6,364.89 in

benefits , and Medicaid provided $187,950.01 in benefits. The

combined amount of these benefits is $689,183.41, and this

$689,183.41 represented CarissaÓs entire claim for past medical

expenses.

4 . Carissa, or others on her behalf, did not make payments

in the past or in advance for CarissaÓs future medical care, and

no claim for damages was made for reimbursement, repayment,

restitution, indemnification, or to be made whole for payments

made in the past or in advance for future medical care.

5 . Due to CarissaÓs incapacity, CarissaÓs m other ,

Roseann Gaudio , was appointed her l egal g uardian.

6 . Roseann Gaudio, as CarissaÓs m other and g uardian,

brought a personal injury action in Broward County , Florida to

recover all of CarissaÓs damages against the railway company and

train engineer (ÐTortfeasorÑ).

7 . On January 10, 2015, Roseanne Gaudio , as CarissaÓs

m other and g uardian , settled CarissaÓs personal injury lawsuit

for $800,000.

8 . In making this settlement , the set tling parties agreed

that: 1) the settlement did not fully compensate Carissa for

all her damages; 2) CarissaÓs damages had a value in excess of

$16,000,000, of which $689,183.41 represents her claim for past

medical expenses; and 3) allocation of $34,459 .17 of the

settlement to CarissaÓs claim for past medical expenses was

reasonable and proportionate.

9 . Because Carissa was incapacitated, her settlement

required Court approval. Accordingly, by Order Approving

Settlement dated February 11, 2015, the Cir cuit Court Judge ,

Honorable Jack Tuter , approved CarissaÓs settlement.

10 . As a condition of CarissaÓs eligibility for Medicaid,

Carissa assigned to AHCA her right to recover from liable third -

parties medical expenses paid by Medicaid. See 42 U.S.C.

§ 13 96a(a)(25)(H) and § 409.910(6)(b), Fla. Stat.

11 . During the pendency of CarissaÓs lawsuit, AHCA was

notified of the lawsuit and AHCA , through its collections

contractor, Xerox Recovery Services Group, asserted a

$187,950.01 Medicaid lien against Cariss aÓs cause of action and

future settlement of that action.

12 . By letter of February 17, 2015, CarissaÓs personal

injury attorney notified AHCA of the settlement and provided

AHCA with a copy of the executed Final Release and a copy of the

Order Approving Settlement. This letter requested AHCA to

advise as to the amount AHCA would accept in satisfaction of the

Medicaid lien.

13 . AHCA did not respond to CarissaÓs attorneyÓs letter of

February 17, 2015.

14 . AHCA did not file an action to set aside, void , or

otherwise dispute CarissaÓs settlement with the Tortfeasor.

15 . The Florida Medicaid program spent $187,950.01 on

behalf of Carissa, all of which represents expenditures paid for

CarissaÓs past medical expenses.

16 . Carissa died on August 12, 2015 (Death Certificate

filed by Petitioner on September 11, 2015).

17 . No portion of the $187,950.01 paid by the Medicaid

program represents expenditures for future medical expenses, and

AHCA did not make payments in advance for medical care.

18 . AHCA has d etermined that of CarissaÓs $226,478.73 in

litigation costs, $210,463.10 are taxable costs for purposes of

the section 409.910(11)(f) formula calculation.

19 . Based on $210,463.10 in taxable costs, the section

409.910(11)(f) formula applied to CarissaÓs $800,000 settlement,

requires payment of $194,768.45 to AHCA in satisfaction of its

$187,950.01 Medicaid lien. Since $187,950.01 is less than the

$194,768.45 amount required to be paid to AHCA under the section

409.910(11)(f) formula, AHCA is seeking reim bursement of

$187,950.01 from CarissaÓs $800,000 settlement in satisfaction

of its Medicaid lien.

20 . The full Medicaid lien amount has been deposited into

an interest - bearing account pending an administrative

determination of AHCAÓs rights, and this con stitutes Ðfinal

agency actionÑ for purposes of chapter 120, pursuant to section

409.910(17)(b).

21 . At hearing, Petitioner called Joseph J. Slama, a

board - certified civil trial lawyer. Mr. Slama handles aviation

crash, products liability, roadway defect , and automobile

accident cases, including handling catastrophic brain injury

cases through jury trial. He stays abreast of jury verdicts

through review of publications and participation in trial

attorney organizations. He testified that he routinely

eval uates his clientÓs injuries and makes assessments concerning

the value of their damages, and he explained his process for

making these determinations based on his experience and

training . M r . Slama was accepted as an expert in the valuation

of damages suf fered by injured parties.

22 . Mr. Slama testified that he represented Carissa in

relation to her personal injury action. He explained that he

first met with Carissa and her mother after she was discharged

home from the hospital. Mr. Slama testified that he had

reviewed the accident report, CarissaÓs medical records, taken

depositions of witnesses and experts, and reviewed the Life Care

Plan prepared by Craig H. Lichtblau, M.D.

23 . Mr. Slama explained in great detail the facts and

circumstances of Caris saÓs accident. He explained that

CarissaÓs car became stuck on the railroad tracks.

Unfortunately, a train approached and shortly before impact,

Carissa exited her vehicle. Her vehicle was struck by the train

and she was propelled 167 feet from the poin t of impact.

24 . Mr. Slama testified that as a result of the accident ,

Carissa suffered catastrophic physical injury and brain damage.

He testified that due to this catastrophic brain inj ury, Carissa

was left in a semi - vegetative state and was unable to a mbulate.

While she was conscious and aware of her condition, she was

unable to communicate other than with limited facial

expressions. She lived in her parentsÓ living room where she

received around the clock care, provided by her family, until

her recent death.

25 . Mr. Slama testified that through his representation of

Carissa, interactions with her, review of her medical records

and reports, and based on his training and experience in similar

cases, it was his opinion that the Ðminimum reasonable valueÑ of

CarissaÓs damages was $16,000,000. He testified that this

$16,000,000 would be the amount a jury would award in damages if

the question of damages alone was presented to the jury, and he

would be disappointed in this result because he would ask for

mu ch more in damages. Mr. Slama explained that the basis of his

opinion was her past expenses, her need for future life care

needs, and her non - economic damages , including pain and

suffering, which would have been awarded from the date of her

injury by a ju ry and would be a huge amount.

26 . Mr. Slama explained that CarissaÓs lawsuit to recover

all her damages had issues related to comparative negligence and

disputed facts that called into question the responsibility of

the d efendants to pay for CarissaÓs da mages. He testified that

based on these issues, CarissaÓs lawsuit was settled for

$800,000. Mr. Slama testified that this $800,000 settlement did

not fully compensate Carissa for the full value of her damages

and that based on the $16,000,000 valuation o f all CarissaÓs

damages , the $800,000 settlement represented a five percent

recovery of CarissaÓs damages. He testified that because she

only recovered five percent of her damages in the settlement,

she Ðonly recovered 5 percent of each and every element of her

damages, including only 5 percent of her $689,183.41Ñ claim for

past medical expenses, or $34,459.17.

27 . R. Vincent Barrett has been a trial attorney since

1977 and is a partner with the Tallahassee law firm of Barrett,

Fasig & Brooks. He practic es in the area of medical malpractice

and medical and pharmaceutical product liability. He has

handled catastrophic injury cases and handled numerous jury

trials. Mr. Barret t stays abreast of jury verdicts by reviewing

Jury Verdict Reports, talking with other lawyers , and attending

seminars. He testified that as a routine part of his practice ,

he ascertains the value of damages suffered by injured parties

and has served as an expert in the valuation of damages in civil

cases. Mr. Barret t was accepted as an expert in the valuation

of damages suffered by injured parties.

28 . Mr. Barrett testified that he was very familiar with

CarissaÓs injuries and had reviewed a substantial amount of

CarissaÓs medical records, the Life Care Plan, accident report,

befor e and after pictures of Carissa, Day in the Life Video, the

Second Amended Complaint, the Release, and the Order Approving

Settlement. Mr. Barre t t explained that he was familiar with the

type of injury suffered by Carissa because he had handled a

number o f traumatic brain and orthopedic injury cases with

injuries similar to CarissaÓs. He testified that with respect

to virtually every injury that Carissa suffered , he had handled

a case that involved one or more of those injuries.

29 . Mr. Barret t stated t hat CarissaÓs case is Ðone of the

worst cases IÓve ever seen , Ñ and he described CarissaÓs accident

and extensive injuries. Mr. Barret t explained that CarissaÓs

injuries were ÐhorribleÑ and ÐdramaticÑ and that Ðtractor

trailer versus car, train versus car, those kinds of cases are

worth in a jury trial generally twice as much as in a regular

car accident just because of the dramatic traumatic nature of

the impact it has on jurors.Ñ

30 . Mr. Barrett testified that CarissaÓs damages had a

value of at least u p in the $30,000,000 range and that the

valuation of her damages at $16,000,000 was extremely

conservative. He explained that he had reviewed jury verdicts

in developing his opinion as to the value of CarissaÓs damages ,

and he compared a number of the ver dicts he had reviewed with

CarissaÓs case, including the Mosl e y 2014 Broward verdict for

$75,543,527, noting that the Mosley plaintiff, unlike Carissa,

was left with limited verbal language and the ability to walk

short distances with assistance. Mr. Barr ett stated in relation

to the $16,000,000 valuation of CarissaÓs damages that, Ðin

Broward County for a pretty, young, 26 - year old, gainfully

employed, Hispanic lady, who was engaged, itÓs got to be the

limit. I mean, some of those verdicts were $75 milli on and some

of those people werenÓt hurt as bad as Carissa. So, yes, itÓs

very conservative.Ñ

31 . The testimony of Mr. Slama and Mr. Barrett that the

minimum reasonable value of CarissaÓs damages was $16,000,000

was unrebutted, and is credible.

32 . Resp ondentÓs position is that it should be reimbursed

for its Medicaid expenditures on behalf of Petitioner pursuant to

the formula set forth in section 409.910(11)(f). Under the

statutory formula, the lien amoun t is computed by deducting a

25 percent attorne yÓs fee ($200,000) and taxable costs

($210,463.10) from the $800,000 recovery, which yields a sum of

$389,536.90, then dividing that amount by two, which yields a

result of $194,768.45.

33 . Under the statute, Respondent is limited to recovery of

the amo unt derived from the statutory formula or the amount of

its lien, whichever is less. Since the Medicaid lien amount is

$187,950.01, which is less than the $194,768.45 amount required

to be paid to AHCA under the section 409.910(11)(f) formula,

AHCA is see king reimbursement of $187,950.01 from CarissaÓs

$800,000 settlement in satisfaction of its Medicaid lien.

34 . PetitionerÓs position is that reimbursement for past

medical expenses should be limited to the same ratio as

PetitionerÓs recovery amount to the total value of damages.

Petitioner urges Respondent should be reimbursed $34,459.17 in

satisfaction of its Medicaid lien.

35 . The settlement amount of $800,000 is five percent of

the reasonable total value ($16 million) of PetitionerÓs damages.

By the same token, five percent of $689,183.41 (PetitionerÓs past

medical expenses paid by both Medicaid and private insurance) is

$34,459.17.

36 . Petitioner proved by clear and convincing evidence

that a lesser portion of the total recovery should be allocated

as reimbursement for past medical expenses than the amount

calculated by Respondent pursuant to the formula set forth in

section 409.910(11)(f).

CONCLUSIONS OF LAW

37 . 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.

38 . Respondent is the agency authorized to administer

FloridaÓs Medicaid program. £ 409.902, Fla. Stat.

39 . The Medicaid program Ðprovide[s] federal fin ancial

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, once a State

elects to participate in the Medicaid program, it must c omply

with federal requirements governing the same. Id.

40 . 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 who later recover from

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

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

41 . Consistent with this federal requirement, the Florida

Legislature has enacted section 409.910, which authorizes and

requires the State to be r eimbursed 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 (Fla. 5th DCA

2009). The statute creates a n automatic lien on any such

judgment or settlement for the medical assistance provided by

Medicaid. § 409.910(6)(c), Fla. Stat.

42 . The amount to be recovered for Medicaid medical

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

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

which sets that 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 paid by Medi caid on the recipientÓs behalf. Ag. For

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

DCA 2013).

43 . Respondent correctly asserts that it is not

automatically bound by any allocation of damages set forth in a

settlement between a Medic aid recipient and a third party that

may be contrary to the formulaic amount, citing section

409.910(13). 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, in

cases such as this, where Respondent has not been provided prior

notice and has not participated in or approved the settl ement,

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

is the means for determining whether a lesser portion 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).

44 . Section 409.910(17)(b) provides 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 peti tion 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 t he agency pursuant to

paragraph (a). The petition shal l be filed

with the 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

a gency action and notice 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 ex penses 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.

45 . Section 409.910(17)(b) thus makes clear that the

formula set forth in subsection (11) constitutes a default

allocation of the amount of a settlement that is attributable to

medical costs, and sets forth an administrative procedure for

adversarial testing of that allocation. See Harrell v. State ,

143 So. 3d 478, 480 (Fla. 1st DCA 2014)(adopting the holding in

Riley that petitioner Ðshould be afforded an opportunity to seek

the reduction of a Medicaid lien amount established by the

statutory default allocation by demonstrating, with evidence,

that the lien amount exceeds the amount recovered for medical

expensesÑ)(quoting Roberts v. AlbertsonÓs, Inc. , 119 So. 3d 457,

465 - 466 (Fla. 4th DCA 2012), rehÓg and rehÓg en banc denied sub

nom. Giorgione v. AlbertsonÓs, Inc. , 2013 Fla. App. LEXIS 10067

(Fla. 4th DCA June 26, 2013)).

46 . Clear and convincing evidence Ðrequires more proof

than a Òpreponderance of the evidenceÓ but less than Òbeyond and

to the exclusion 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 witnesses testify must

be distinctly remembered; the

testimony must be precise and

explicit and the witnesses m ust 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 belief or conviction, without

hesitancy, as to the truth of the

allegations sought to be

established.

In r e 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).

ÐAlthough [the clear and convincing] standard of proof may be

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

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

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

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

the allocation for PetitionerÓs past medical expenses in the

amount of $34,459.17 constitutes a fair and reasonable, and

accurate share of the total recovery for those past medical

expenses actually paid by Medicaid.

48 . Petitioner has proven, by clear and convincing

evidence, that $3 4,459.17 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.

ORDER

Upon consideration of the above Findings of Fact and

Conclusions of Law, it is hereby

ORDERED that:

The Agency for Health Care Administration is entitled to

$34,459.17 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 17th day of February , 2016 , in

Tallahassee, Leon County, Florida.

S

W. DAVID WATKINS

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 w ith the Clerk of the

Division of Administrative Hearings

this 17th day of February , 2016 .

ENDNOTE

1/ Unless otherwise noted, all statutory references are to the

2015 version of the Florida Statutes.

COPIES FURNISHED:

Alexander R. Boler, Esquire

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

(eServed)

Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello, Florida 32344

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

272 7 Mahan Drive , Mail Stop 1

Tallahassee, Florida 32308

(eServed)

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Admi nistration

2727 Mahan Drive, Mail Stop 3

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 renditio n 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 o therwise provided by law.