15-004843MTR Jonathan Velez vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Tuesday, April 12, 2016.

Summary: Petitioner established that ACHA is entitled to be reimbursed for its Medicaid lien in a lesser amount than that calculated pursuant to section 409.910(11)(f).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JONATHAN VELEZ,

Petitioner,

vs. Case No. 15 - 4843MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

_______________________________/

FINAL ORDER

Administrat ive Law Judge June C . McKinney of the Division

of Administrative Hearings ( " DOAH " ) heard this case by video

teleconference at locations in Tallahassee and Lauderdale Lakes,

Florida , on December 17, 2015.

APPEARANCES

For Petitioner: Alejandro Larrazabal, Esquire

Velasquez Dolan Arias, P.A.

101 North Pin Island Road , Suite 201

Plantation, F lorida 33324

For Respondent: Alexander R. Boler, Esquire

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

The issue is the amount paya ble to Respondent, Agency

for Health Care Administration ( " Respondent " or " ACHA " ) , in

satisfaction of Respondent ' s Medicaid lien from a settlement

received by Petitioner, Jonathan Velez ("Petitioner" or

"Velez") , from a third party, pursuant to section 409.910,

Florida Statutes (2015).

PRELIMINARY STATEMENT

By letter , Petitioner was notified by Xerox Recovery

Services, Respondent ' s collection ' s contr actor , that he owed

$142, 855.89 to satisfy a Medicaid lien claim , fro m the medical

benefits paid to him from the proceeds of a settlement he

received as compensation for injuries he suffered as a result of

a football injury. On August 31, 2015, Velez protested the

claim and filed a Petition for Equitable Distribution to

Determine Medicaid Lien Claim Reimbursement Amount with DOAH ,

requesting a hearing. The Petition contend s that the portion

of the settlement that represents medical expenses is less

than the amount due under the statutory form u la in

section 409.910(11)(f), and Respondent is entitled only to

$12,900.00 (or 14 percent of the amount allocated to past

medicals ) .

On December 11, 2015, the parties filed a Joint Pre - hearing

Stipulation.

The hearing was set for December 17, 2015, and was held as

scheduled. At hearing, Petitioner presented the testimony of

Donna Waters - Romero, an attorney with Vernis & Bowling of

Broward, P.A. , who was qualified without objection as an expert

in valuation of damages. Petitioner ' s Exhibits 1 through 5

were received into evidence. Respondent did not pres ent any

witnesses or proffer an y exhibits for admission into evidence.

The pa rties stipula ted to facts 1, 2 , and 4 through 8 from the

Joint Pre - hearing Stipulation , and the relevant facts stipulated

therein are accepted and made part of the Findings of Fact

below .

The pr oceedings of the hearing were recorded and

transcribed. A one - volume Transcript of the hearing was filed

at DOAH on January 20, 2016. Both parties filed timely p roposed

f inal o rders that the undersigned has considered in the

preparation of this Final Order.

Unless otherwise noted, all statutory references are to the

Florida Statutes (2015).

FINDINGS OF FACT

1. On September 3, 2008, Velez , then a 14 - year - old

adolescent child was injured while playing football in

Clewiston, Florida.

2. On the date of the accident, Petitioner had a helmet

to helmet (face to face) collision with another football

participant. The collision caused a hyper - extended injury and

Velez immediately fell to the ground and los t consciousness.

3. Velez suffered a C5 burst fracture, a spinal cord

injury, anterior cord syndrome and subsequent injuries

origin ating from this accident, initially rendering him

paralyzed.

4. As a result of the injuries, and s ubsequent

ramifications from said injuries, V elez suffered extensive

permanent injuries and required extensive medical treatment in

Miami, Florida, from September 3, 2008, through October 28,

2013.

5. Petitioner sued numerous defendants for his injuries ,

but because of waiver and release forms signed by his guardian ,

the parties settled the case to avoid the possibility of summary

judgment against Petitioner.

6. Petitioner recove re d $430,000.00 from a settlement

against defendants. The settlement ' s allocation included :

a ttorney ' s fees (40 per cent ) in the amount of $172,000.00; cost s

in the amount of $4,789.72; past medicals in the amount of

$60,000 .00 ; and future medicals in the amount of $20,000.00 . 1 /

7. ACHA, through the Medicaid program, paid $142,855.89 on

behalf of Petitioner for medical benefits related to the

injuries sustained by Petitioner.

8. Xerox Recovery Services , Respondent ' s collection ' s

contractor, notified Petitioner that he owed $142,855.89 to

satisfy a Medicaid lien claim from the medical benefits paid to

him from the proceeds received from the third - party settlement .

Petitioner contested the lien amount.

9. At the final hearing, P etitioner presented , without

objection, the expert valuation of damages testimony of Donna

Waters - Romero ( " Waters - Romero " ) . Waters - Romero has 30 years '

experience in both state and federal cour t s and has solely

practice d in the area of personal injury defense , including

cases with similar injuries specific to this type of case .

Waters - Romero 's experience also encompasses evaluation of

personal injury cases based on the review of medical records,

case law , and injuries.

10. In preparation for her testimony, Waters - Romero

reviewed the pleadings, depositions , answers to interrogatories,

evaluation s , medical records, and defendant ' s motion for summary

judgment along with the attached documents. She also met with

Petitioner ' s attorneys and reviewed the mediation summa ry,

exhibits, case law on Medicaid liens , letter of discharge , and

release and settlement agreement .

11. Waters - Romero also specifically researched three

circuit court orders that were entered regarding allocation

regarding Medicaid liens. To determine how to value

Petitioner ' s claim , Waters - Romero relied on W os v . E.M.A ., 133

S. Ct. 1391(2013) , a United State s Supreme Court case, and on

the circuit court cases as guidance . She determined that every

category of the settlement should be reduced based on the

ultimate settlement.

12. During her evaluation, Waters - Romero also acknowledged

the litigation risk in Velez ' s case due to the issues with the

liability and the waiver and release.

13. Based on her review, Waters - R omero opined that the

overall value of Petitioner ' s cla i m was valued conservatively at

$2,000,000 .00 , which was unrebutted . Waters - Romero ' s testimony

was credible, persuasive, and is accepted.

14. The evidence was clear and convincing that the total

value of the damages related to Petitioner ' s injury was

$2,000,000.00 and that the settlement amount , $430,000 .00 was

21.5 percent of the total value. The settlement does not fully

compensate Petitioner for the total value of his damages.

15. ACHA ' s position is that it should be reimbursed for

its Medicaid expenditures pursuant to the statutory formula in

section 409.910(11)(f). Under the statutory fo rmula, the lien

amount is computed by d educting 25 percent attorney ' s fee of

$107,500.00 from the $430,000.00 recovery , which yields a sum of

$ 322,500 .00. In this matter, ACHA then deducted zero in taxable

costs, which left a sum of $322,500. 00, then divid ed that amount

by two, which yields $161,250.00. Under the statute, Respondent

is limited to recovery of the amount derived from the statutory

formula or the amount of its lien, whichever is less.

16. Petitioner ' s position is that reimbursement fo r past

medical expenses should be limited to the same ratio as

Petitioner ' s recovery amount to the total value of damages.

Petitioner has established that t he settlement amount of

$4 30,000 .00 is 21.5 percent of the total value ($2,000,000 .00 )

of Petitioner ' s damages. Using the same calculation, Petitioner

advances that 21.5 percent of $60,000 .00 (Petitioner ' s amount

allocated in the settlement for past medical expenses) ,

$12,900 .00 , should be the portion of the Medicaid lien paid .

17. Petitioner proved by clear and convincing evidence

that Respondent should be reimbursed for its Medicaid lien in a

lesser amount than the amount calculated by Respondent pursuant

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

CONCLUSIONS OF LAW

18. DOAH has jurisdiction over the subject matter and the

parties in this case, and final order authority pursuant to

sections 120.569, 120.57(1), and 409.910(17) , Florida Statutes .

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

states are required to seek reimbursement for medical expenses

incurred on behalf of beneficiaries who later recover from a

third party. See Ark. Dep't of Health & Hum. Servs. v. Ahlborn ,

547 U.S. 268, 276 (2006). To secure reimbursement from liable

third parties, the state must require a Medicaid recipient to

assign to the state his right to recover medical expenses from

those third parties . In relevant part, 42 U.S.C. § 1396a(a)(25)

requires:

(H) t hat 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 payment

has bee n 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.

2 0. To comply with this federal mandate, the Florida

Legislature enacted section 409.910, Florida's Medicaid

Third - Party Liability Act. This statute authorizes and requires

the State, through AHCA, 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 (Fla.

5th DCA 2009). The statute creates an automatic lien on any

such judgment or settleme nt for the medical assistance provided

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

21. It was undisputed that Medicaid provided $ 142,855.89

in medical expenses for Petitioner or that AHCA asserted a

Medicaid l ien against Petitioner's settlement and the right to

seek reimbursement for its expenses. The mechanism by which

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 hi s or her

legal representative, or the agency brings

an action against 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 noti ce, 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, shall 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 rights

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 order 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 t he 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 o ther provision

of law, the entire amount of any settlement

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 lie n pursuant

thereto.

(f) Notwithstanding any provision in this

section to the contrary, in the event of an

action in tort against a third party in

which the recipient or his or her legal

representative is a party which results in a

judgment, award, or set tlement from a third

party, the amount recovered shall be

distributed as follows:

1. After attorney's fees and taxable costs

as defined by the Florida Rules of Civil

Procedure, one - half of the remaining

recovery shall be paid to the agency up to

the tota l amount of medical assistance

provided by Medicaid.

2. The remaining amount of the recovery

shall be paid to the recipient.

3. For purposes of calculating the agency's

recovery of medical assistance benefits

paid, the fee for services of an attorney

retained by the recipient or his or her

legal 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 b enefits 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 heal th

clinic, and the portion of benefits

designated for medical payments under

coverage for workers' compensation, personal

injury protection, and casualty.

22. As discussed in Finding of Fact 15, supra , AHCA

calculated the l ien amount utilizing the statut ory formula in

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

deduction of 25 percent attorneys' fees and costs, would be

$ 161.250.00 , which exceeds the actual amount expended by

Medicaid on Petitioner's medical care. Application of the

formu la would provide sufficient funds to satisfy the Medicaid

lien of $ 142,855.89 .

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

automatically bound by the allocation of damages set forth in

Petitioner's settlement agreement:

(13) No action of the recipi ent shall

prejudice 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

"se ttlement agreement," 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 a gency for benefits accrued

without the express written consent of the

agency or an appropriate order of a court

having personal jurisdiction over the

agency.

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

recipient may challenge AHCA's presump tively correct calculation

of medical expenses payable to the agency . The mechanism is a

means for determining whether a lesse r portion of 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). Section 409.910(17)(b) provides in

pertinent part that :

A recipient may contest the amount

designated as recovered medical expense

damages payable to the agency pursuant to

the formula specified in par agraph (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 pa ragraph

(a). The petition shall 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 agency 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 o f 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

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.

25. The clear and convincing standard of proof has been

described by the Florida Supreme Court, as follows:

Clear and convincing evidence requires that

evidence must be found to be credible; the

facts to which the witnesses testify must be

distinctly remember ed; 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 belief or conviction, without

hesitancy, a s to the truth of the

allegations sought to be established.

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

v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

26. In this matter, Petitioner challenged AHCA ' s

calculation and demonstrated by clear and convincing evidence

that the settlement amount is 21.5 percent of the total value of

damages suffered by Velez. Petitioner ' s expert correctly

explained that lien recovery is based o n a reduction in every

category. However, the undersigned is not persuaded by

Petitioner ' s contention that $60,000 .00 ( the allocated amount of

the settlement for past medical expenses ) should be the amount

utilized when calculating the reduction in this case. Hence,

Petitioner ' s formula for calculating the Medicaid amount owed is

rejected . Instead of taking 21.5 percent of the allocated

medical expenses in the settlement amount of $60,000 .00 , the

21.5 percent should be applied to the total Medicaid lien to

determine the amount owed. Accordingly, ACHA is entitled to

21.5 percent of the total Medicaid lien of $ 142,855.89 , or

$30,714.02.

27. In summary, the evidence in this case is clear and

convincing that $30,714.02 of the total third - party recovery

represents the share of the settlement proceeds fairly

attributable to the expenditures that were actually paid by

Respondent for Petitioner ' s medical expenses .

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is hereby

ORDERED that:

The Agency for Health Ca re Administration is entitled to

$30,714.02 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 1 2 th day of April , 2016, in

Tallahassee, Leon County, Florida.

S

JUNE C. MCKINNEY

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 1 2 th day of April, 20 16 .

ENDNOTE

1/ See Exhibit 4.

COPIES FURNISHED:

Alejandro Larrazabal, Esquire

Velasquez Dolan Arias, P.A.

101 North Pin Island Road , Suite 201

Plantation, Florida 33324

(eServed)

Alexander R. Boler, Esquire

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

(eServed)

Richard J. Shoop, Agency Clerk

A gency 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)

Stuart Williams, General Co unsel

Agency for Health Care Administration

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 o riginal 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.