15-005026MTR Austin Hopper vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, February 12, 2016.

Summary: Petitioner established that portion of settlement that represents part and future medical expenses is less than Medicaid lien due under statutory formula.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AUSTIN HOPPER,

Petitioner,

vs. Case No. 1 5 - 5026MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

_______________________________/

FINAL ORDER

D. R. Al exander, A dministrative Law Judge of the Division

of Administrative Hearings (DOAH), conducted a hearing in this

matter on November 17, 2015, by video teleconferencing at sites

in St. Petersburg and Tallahassee , Florida .

APPEARANCES

For Petitioner : Danie l J. Leeper , Esquire

Leeper and Leeper, P.A.

2532 Fifth Avenue North

St. Petersburg, Florida 33713 - 6902

For Respondent : Alexander R. Boler, Esquire

Xerox Recovery S ervices Group

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 323 17 - 7949

STATEMENT OF THE ISSUE

The issue is the amount payable to Respondent, Agency for

Health Care Administration, in satisfaction of Respondent's

Medicaid lien from a settlement received by Petitioner, Austin

Hopper, from a third party, pursuant to section 409.910, Florida

Statutes (2015) .

PRELIMINARY STATEMENT

On August 29, 201 3 , Petitioner was notified by Responde nt's

collections contractor that he owed $102, 398.81 in satisfaction

of his Medicaid lien for medical benefits paid to him , to be

paid from the proceeds of a settlement he received as

compensation for injuries he suffered as a result of being

struck by a m otor vehicle. When the claim could not be settled

informally, on Se ptember 11, 2015, Petitioner filed with DOAH a

Petition for Equitable Distribution to Determine Medicaid Lien

Claim Reimbursement Amount. As later clarified, h e contends the

portion of th e settlement that represents past and future

medical expenses is less than the amount due under the statutory

formula in section 409.910(11)(f), and Respondent is entitled

only to $28,043.00 .

At the final hearing, both Petitioner and his counsel

testified . Petitioner's Exhibits 1 through 20 were accepted in

evidence. Respondent did not present any witnesses or proffer

any exhibits for admission into evidence.

A one - volume T ranscript of the hearing has been prepared.

Proposed final orders (PFOs) were fil ed by the parties and have

been considered by the undersigned in the preparation of this

Final Order.

FINDINGS OF FACT

1. Petitioner is a 2 7 - year - old male who currently resides

in St. Petersburg, Florida.

2. R espondent is the state agency authorized to administer

Florida's Medicaid program. See § 409.902, Fla. Stat.

3. On November 27, 2012, Petitioner , then 24 years of age,

was se verely injured while riding a motorcycle that was struck

by a motor vehicle in St. Petersburg. Among other injuries,

Petit ioner suffered a severed spinal cord, three fractured

cervical vertebrae, a fractured jaw, fractured ribs, the loss of

seven teeth, and right shoulder laceration.

4. As a result of his injuries, Petitioner is now a

paraplegic confined to a wheelchair . He has other health issues

other than paralysis, including an inability to voluntarily void

his bladder or bowels. The injuries have had a profound effect

on Mr. Hopper's life, including his bodily functions, social

life, and work life.

5. The Florida Me dicaid program paid accident - related

medical expenses totaling $102,398.81 on behalf of Petitioner.

His damages also include the medical expenses paid by the B rain

and S pinal C ord I njury P rogram in the amount of $1,143.50.

These amounts are not in disput e.

6. Petitioner filed a lawsuit against the owner of the

vehicle that struck him. The owner maintained a policy of

bodily injury liability insurance, with policy limits of

$250,000.00 , which amount was paid to Petitioner . Thus, the

lawsuit d id not proc eed to trial. In addition, Petitioner had

available to him a n uninsured/underinsured motorist policy with

limits of $10,000.00 per person, which was paid to him.

Finally, the vehicle owner agreed to pay an additional

$30,000.00 to resolve all claims aris ing out of the accident.

In all, Petitioner has received $290,000.00 due to the limited

available insurance coverage and the financial resources of the

at - fault party. The settlement does not compensate Petitioner

for the total value of his damages. The moneys are not

differentiated, that is, apportioned to specific types of

damages, such as economic or non - economic, past or future.

7. Respondent contends it should be reimbursed for

Medicaid expenditures on behalf of Petitioner pursuant to the

formula set forth in section 409.9 10(11)(f). Under the formula,

the lien amount is computed by deducting a 25 percent attorney's

fee ($72,500.00) and taxable costs ($689.12) from the $290,000

recovery, which yields a sum of $21 6,810.88 . Th is amount is

then divi ded by two, which yields $108, 405.44 . Under the

statute, Respondent is limited to recovery of the amount derived

from the statutory formula or the amount of the lien, whichever

is less. The parties agree that the application of the formula

in section 4 09.910(11)(f) to the entire proceeds yields

$102,398.81 , or the full amount of the lien.

8. Pursuant to section 409.910(17)(b), which provides that

a Medicaid recipient has a right to rebut the default allocation

described above, Petitioner asserts that reimbursement for past

and future medical expenses should be limited to the same ratio

as his recovery amount is to the total value of damages. This

theory relies upon establishing the full or total value of

damages to the injured party. F ull damages inc lude past and

future economic losses and past and future non - economic damages.

Although Respondent contends that insufficient proof has been

submitted, t he use of this theory is not in dispute. Under this

theory, Petitioner asserts the full value of dama ges suffered by

him is $15,725,384.00, of which past and future medical expenses

comprise $1,519,792.31, or 9.67 percent of total damages. That

percent age o f the settlement amount of $290,000.00 is

$28,043.00 , which Petitioner claims is due Respondent in

satisfaction of the lien . The statute requires that Petitioner

substantiate his position by clear and convincing evidence.

9. Petitioner's counsel presented fact and opinion

testimony on the issue of valuation of damages. Counsel has

been practicing f or 25 years and tried dozens of jury and bench

trials, focusing primarily in civil trial law. He has handled

numerous personal injury cases in the seven - figure range,

including his most recent trial that resulted in a $3.1 million

judgment. In forming hi s opinions, counsel relied on peer -

reviewed studies , government studies , a damage evaluation by the

at - fault party's counsel, and his personal experience in

valuation of damages in personal injury suits . Except for the

damage evaluation by the at - fault pa rty's counsel, none of these

materials , all hearsay, were offered in evidence.

10 . After the accident, Mr. Hopper moved to his parents'

home. This required extensive modifications for his needs and

convenience , such as installing an ADA - accessible bathro om,

building a new room at ground level to serve as his bedroom, and

install ing a lift that allows him to access other areas of the

home that are above ground level . Also, it was necessary to

install paddles on Petitioner's motor vehicle which allows him

to drive. According to counsel's testimony, the se modifications

cost "$50,000, or so." Given the extensive modifications

described above , a cost of $50,000.00 is not an unreasonable

amount , is credible, and is hereby accepted.

1 1 . The parties agree th at l ost earnings and lost earning

capacity should be included in Mr. Hopper's damages. He was

employed full - time in the construction industry as a carpenter

just prior to the accident . To increase his income, h e also

worked weekends as a window installer , a food service helper ,

and a bouncer at a local bar . The testimony reflects that his

wages were in the $10 .00 to $20 .00 per hour range. He has not

returned to gainful employment since the date of the injuries .

At $ 10 .00 per hour, for 40 hours per week , which represents the

minimum hourly range that he earned, for the three years post

injury, Mr. Hopper's loss is $ 6 3, 4 00.00. This amount is a

conservative estimate of lost earnings over the last three

years , is reliable and persuasive, and is hereby acce pted.

1 2 . Lost earning capacity is the difference between what

Mr. Hopper would have earned, and what he can now earn. On this

issue, the record shows that Mr. Hopper has extremely serious

spinal cord injuries, but there is no credible e vidence that he

c annot work again in some capacity during his expected life

span. According to counsel's testimony , the national average

hourly wage is $24.05. C ounsel explained that he arrived at

this amount by "tak[ing] everyone's wages, you know, people that

are makin g substantial salaries and people who are making

minimum wage, and we dump them all together and we come up with

a national average. That's what the national worker's average

is." He further testified that in his most recent trial, "the

jury went with th at figure one hundred percent." A work - life

expectancy of 41 years was then assumed, when Mr. Hopper reaches

the normal retirement age o f 67, resulting in future loss of

earning capacity of $2,050,984.00. Respondent did not suggest

an alternative number, simply arguing in its PFO that no damages

for lost earning capacity can be found , as Petitioner now

performs minor household projects that entail some skill and

labor . The u ndersigned finds there is less than clear and

convincing evidence to support the national average hourly wage

used by counsel or his assumption that Petitioner will be unable

to work at any time during his expected life span. This element

of damages is accordingly rejected.

1 3 . The parties agree that f uture medical expenses should

al so be included in the full value of damages. Petitioner's

counsel opined that "roughly $27,500 per year" for 51.5 years

(the estimated remaining life expectancy of Mr. Hopper based on

Social Security Administration actuarial numbers ), or a total of

$1,416 ,250 .00 , should be considered the future medical expenses.

In formulating this opinion, counsel relied on research

performed by the United States Department of Veterans Affairs

for paraplegics who have incomplete motor function at any level ,

such as Mr. H opper . He also relied on t wo peer review studies

performed by the private sector in 1997 and 2009 t hat

corroborate th e government research . Th e proposed amount is

credible , reasonable, and persuasive and has been accepted.

1 4 . F uture non - medical expen ses should likewise be

included in the full value of damages. These expenses cover

such things as renovations to make future homes accessible,

special equipment such as wheelchairs, lifts, bathroom bars, and

modifications to motor vehicles so that he can drive. Relying

on "studies that are done at [unnamed] universities," counsel

testified that "the best information that [he has] available" i s

an average cost of $5,500.00 per year , for 51.5 years, or a

total of $283,250.00. Th ere is less than clear and c onvincing

evidence to support this element of damages , and the claim for

future non - medical expenses has been rejected.

1 5 . Mr. Hopper now lives with his parents. It is not

unreasonable to assume t hat he will outlive his parents and

require long - term car e for the last 21 and one - half years of his

life expectancy. Counsel opined that a conservative estimate of

those expenses is $1,000.00 per month, or an additional

$258,000.00. The undersigned has accepted this testimony as

credible, persuasive , and reli able.

1 6 . Past and future non - economic damages , which include

damages for pain and suffering, mental anguish, and the loss of

capacity for the full enjoyment of life, are a more difficult

item to estimate . Petitioner 's counsel testified that a jury

typic ally award s a larger amount for past non - economic damages

during the acute phase of the injury, that is, the first years

after the injury, but a lesser amount per year going forward in

the future. Based on his experience trying personal injury

cases , coun sel opined that , given the nature of the injuries, an

award of $500,000.00 per year for each of the three years since

the accident , or a total of $1,500,000.00 , w ould be an

appropriate amount. The undersigned finds th is amount for past

non - economic damage s is credible and persuasive and is hereby

accepted .

1 7 . B ased on numerous cases that h e has tried to verdict,

the number of multiple eight - figure verdicts handed down over

the last ten years in Pinellas County (where Petitioner

resides) , and Mr. Hopper 's life expectancy of 51.5 years,

counsel opined that a jury would award at least $10 million for

future non - economic damages . Th e undersigned finds this amount

to be credible and persuasive and is hereby accepted.

1 8 . In summary, by clear and convincing evidence ,

Petitioner has demonstrated that the f ull value of his damages

is $13,287,650.00 consisting of the following : past economic

l osses of $50,000.00 for extensive modifications to his parent's

home and his vehicle; future damages for medical expens e s

totaling $1,416,250.00 (comprised of $27,500.00 per year times

51.5 years); future assistance damages totaling $258,000.00

(consisting of $1,000.00 per month times 21.5 years); past lost

earnings of $63,400.00; past non - economic damages in the amount

of $ 1, 500 ,000.00 ($ 500 ,000.00 per year for three years); and

future non - economic damages total ing $ 10 ,000,000.00.

19. Of his total damages, the past and future medical

expenses comprise $1,519,792.31 ($102,398.31 Medicaid lien,

$1,143.50 paid by the Brain and Spinal Cord Injury Program, and

$1,416,250.00 in future medical expenses). As such, the past

and future medical expenses equal 1 1 .4 percent of the total

damages. When applying th at factor to the total settlement,

$3 3 , 0 60.00 of the settlement represe nts past and future medical

expenses. Respondent is entitled to recover that amount.

CONCLUSIONS OF LAW

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

states are required to seek reimbursement for medical expenses

incurred on behalf of benefic iaries who later recover from

third - party tortfeasors. See Ark. Dep't of Health & Hum. Servs.

v . Ahlborn , 547 U.S. 268 (2006). States may satisfy this

requirement by enacting statutes that impose Medicaid liens to

recover the portion of settlements that represent medical

expenses.

2 1 . Consistent with federal law, section 409.910

authorizes and requires the State to be reimbursed for Medicaid

funds paid for medical expenses when the beneficiary

subsequently receives a settlement from a third - party. The

statute creates an automatic lien on any such settlement for the

medical assistance provided by Medicaid. See § 409.910(6) (c),

Fla. Stat.

2 2 . Section 409.910(11)(f) establishes a formula to

determine the amount of Medicaid medical assistance benefits the

State is to be reimbursed. "The formula operates by reducing

the gross settlement amount by 25% to account for attorneys'

fees, then subtract taxable costs, then divides that number by

two, and awards Medicaid the lesser of the amount of benefits

paid or the resulting number." Mobley v. State, Ag . for Health

Care Admin. , 40 Fla. L. Weekly D2816 (1st DCA, Dec. 18, 2015).

2 3 . The application of the apportionment formula in

section 409. 910(11)(f)1. to the $290,000.00 settlement at issue

yields attorne y's fees of $72,500.00, less taxable costs of

$689.12, with $216,810.88 of the recovery amount remaining.

One - half of th is is $108,405.44, which is greater than the

$102, 398.81 of Medicaid assistance that Respondent provided for

Petitioner. Accordingly, if the statutory formula applies to

determine the reimbursement due in this case, Respondent is

entitled to $102,398. 81, or the amount of Medicaid medical

assistance it actually paid on Petitioner's behalf.

2 4 . Under section 409.917(17)(b), a Medicaid rec ipient has

the right to rebut this presumptively valid statutory default

allocation in an administrative proceeding. This is

accomplished by establishing, through clear and convincing

evidence, that either a lesser portion of the total recovery

should be allocated as a medical expense reimbursement than is

calculated under the statutory formula, or that Medicaid

actually provided a lesser amount of medical assistance than has

been asserted by Respondent. Clear and convincing evidence

"requires more proof than a 'preponderance of the evidence' but

less than 'beyond and to the exclusion of a reasonable doubt.'"

In re Graziano , 696 So. 2d 744, 753 (Fla. 1997).

2 5 . By clear and convincing evidence, Petitioner has

establish ed a total value of damages suffer ed in the amount of

$1 3,287,650.00, of which the past and future medical expenses

comprise $1, 416,250.00 , or 11.4 percent of that amount .

Accordingly, Respondent is entitled to 11.4 percent of the total

settlement amount of $290,000.00, or $ 33,060.00 .

2 6 . In summary, t he evidence in this case is clear and

convincing that $3 3 , 0 60.00 of the total third - party recovery

represents the share of the settlement proceeds fairly

attributable to expenditures that were actually paid by

Respondent for Petitioner's m edical expenses.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED that Respondent is entitled to reimbursement in the

amount of $ 3 3 , 0 60.00 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 12th day of February , 201 6 , in

Talla hassee, Leon County, Florida.

S

D . R. ALEXANDER

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.d oah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 12th day of February, 201 6.

COPIES FURNISHED:

Daniel J. Leeper, Esquire

Leeper and Leeper, P.A.

2532 Fifth Avenue North

St. Petersburg, Florida 33713 - 6902

(eServed)

Alexander R. Boler, Esquire

Xerox Recovery Services Group

Suite 3 00

2073 Summit Lake Drive

Tallahassee, Florida 323 17 - 7949

(eServed)

Stuart Fraser Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail St op 3

Tallahassee, Florida 32308 - 5407

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308 - 5407

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 - 5407

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

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

to judicial review pursuant to section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of rendition

of the order to be reviewed, a nd 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.