16-002768MTR James T. Stirk vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Tuesday, August 23, 2016.

Summary: Petitioner did not 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.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JAMES T. STIRK,

Petitioner,

vs. Case No. 16 - 2768MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

_______________________________/

FINAL ORDER

Lynne A. Quimby - Pennock, Admi nistrative Law Judge of the

Division of Administrative Hearings (DOAH) , conducted an

administrative hearing in this matter on July 1, 2016, by video

teleconference at sites in Fort Myers and Tallahassee, Florida.

APPEARANCES

For Petitioner: James M. Scarm ozzino, Esquire 1/

Webb & Scarmozzino, P.A.

Second Floor

2121 West First Street

Fort Myers, Florida 33901

For Respondent: Alexander R. Boler, Esquire

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

The issue is the amount payable to Respondent, Agency for

Health Care Administration (AHCA), in satisfaction of

RespondentÓs Medicaid lien from a settlement received by

Petitioner, James T. Stirk, from a third party pursuant to

section 409.910, Florida Statutes (2015).

PRELIMINARY STATEMENT

On May 20, 2016, Petitioner filed a Petition to Determine

Amount Payable to the Agency for Health Care Administration in

Satisfaction of Medicaid Lien. Mr. Stirk challenged AHCAÓs lien

for the recovery of medical expenses paid by Medicaid in the

amount of $32,062.25, after applying the statutory formula. The

basis for the challenge was the assertion that the application

o f section 409.910(17)(b), warranted reimbursement of a lesser

portion of the total third - party settlement proceeds than the

amount calculated by Respondent pursuant to the formula

established in section 409.910(11)(f).

The parties filed a Joint Pre - hearing Stipulation. The

final administrative hearing in this matter was held on July 1,

2016, as scheduled. As appropriate, the facts stipulated

therein are accepted and made a part of the Findings of Fact

below.

Petitioner testified on his own behalf and pres ented the

testimony of expert Ty Roland, Esquire. Petitioner's Exhibits 2/

Bate s - stamped pages 0001 through 0289 were admitted into

evidence without objection. Respondent did not present any

witnesses or offer any exhibits for admission into evidence.

A one - volume Transcript of the proceeding was filed on

July 28, 2016. 3/ The parties timely filed proposed final orders

that have been carefully considered by the undersigned in the

preparation of this Final Order.

All references to the Florida Statutes ar e to the 2015

version, unless otherwise noted.

FINDING S OF FACT

1. On January 24, 2014, Petitioner, t hen 25 year s old, was

involved in a serious motorcycle accident. Petitioner struck

the rear of a truck with a trailer near mile marker 129 on I - 75

in Lee County , Florida.

2. Petitioner was taken to Lee Memorial Hospital where he

remained in a coma for a couple of months. He sustained a

broken back at T - 4 level, two broken arms, a fractured neck and

internal injuries.

3. As a result of his injuries, Pe titioner is now a

paraplegic from the chest down and confined to a wheelchair.

4. Respondent is the state agency authorized to administer

FloridaÓs Medicaid program. See § 409.902, Fla. Stat.

5. Prior to the accident, Petitioner worked as an

appliance and air conditioning repairman, earning $16 an hour.

After the accident and his recovery, Petitioner has been unable

to work and his only source of income is through a Social

Security disability check of approximately $1 , 083 monthly. He

believes he is n ow eligible for Medicare, which should start

Ðnext monthÑ (August 2016). He rents a home ($750 monthly) and

lives there with his four - year - old son.

6 . P etitioner brought a negligence claim against the truck

driver to recover his damages sustained in th e c r a sh.

Petitioner settled his negligence claim for $95,000.00.

7. During the pendency of PetitionerÓs claim, AHCA was

notified of the third - party negligence claim.

8. AHCA has not filed an action to set aside or otherwise

object to PetitionerÓs $95,00 0.00 settlement.

9. PetitionerÓs past medical care related to his

motorcycle accident totaled approximately $929,589.46.

10. Petitioner was insured under a Florida Blue ERISA

Health Insurance Plan (Florida Blue) for a portion of the time

he received medi cal treatment. He subsequently became eligible

for Medicaid after being unable to work after the accident.

11. Florida Blue paid approximately $501,487.30 towards

PetitionerÓs medical care.

12. Medicaid paid $47,008.81 towards PetitionerÓs medical

care. No portion of this amount was paid for future medical

expenses and no payments were made in advance for medical care.

13. By letter dated January 20, 2016, AHCA, through its

contractor Xerox Recovery Services, asserted a lien of

$47,008.8 1 against Petit ionerÓs third - party negligence claim and

settlement thereof.

14. By letter dated January 21, 2016, PetitionerÓs counsel

provided Xerox Recovery Services the settlement information and

requested the Medicaid lien be proportionally reduced to

$714.05, 1.9 p ercent of the total value of PetitionerÓs claim.

15. By letter dated February 18, 2016, AHCA, through its

contractor, applied the statutory formula to PetitionerÓs gross

settlement and requested a check in the amount of $32,062.25 for

full satisfaction of its lien.

16. PetitionerÓs attorney forwarded payment of $32,062.25

from PetitionerÓs settlement proceeds. The payment of these

funds to AHCA constitutes Ðfinal agency actionÑ for purposes of

c hapter 120, Florida Statutes, pursuant to section 409.910(17 ).

1 7. Section 409.910(11)(f) , provides, in pertinent part,

as follows:

(f) [I]n 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 f rom a third party, the amount

recovered shall be distributed as follows:

1. After attorneyÓs fees and taxable costs

. . . one - half of the remaining recovery

shall be paid to the agency up to the total

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 agencyÓs

recovery of medical assistance benefits

paid, the fee for services of an attorney

retained by the recipient . . . shall be

calculated a t 25 percent of the judgement,

award, or settlement.

18. Pursuant to the formula set forth in 409.910(11)(f),

Respondent should be reimbursed $ 32,062.25 , the amount set forth

in the February 18, 2016 , letter .

19 . However, the statute provides a method b y which a

recipient may contest the amount designated as recovered medical

expense damages payable to the agency pursuant to the formula

set forth in subsection (11)(f). ÐIn order to successfully

challenge the amount payable to the agency, the recipient m ust

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 agencyÑ pursuant to the formula. § 409.910(17)(b), Fla.

St at.

20 . The testimony spoke in generalities and global

assessments. The testim ony did not explicitly disclose that a

lesser amount of the total recovery should be allocated for past

and future medical expenses in this instance.

21. Ty Roland is an att orney with over 20 yearsÓ

experience representing plaintiffs in personal injury and

wrongful death claims. The majority of Mr. RolandÓs cases have

been in the Fort Myers area.

22. Mr. Roland was accepted as an expert in the valuation

of the damages (in p ersonal injury cases), and testified as to

his opinion of the total value of damages in PetitionerÓs

underlying action. In formulating his opinion of the total

value of PetitionerÓs damages, Mr. Roland considered cases he

has previously tried. Petiti oner Ós suit demanded $5 million;

however , Mr. Roland estimated the value of PetitionerÓs suit at

$10 million. T he re were no specific s as to the elements of

damages .

23 . Total recovery for PetitionerÓs damages through

settlement was $95,000, roughly 1.9 perc ent of the estimated

total value of his damages. The parties stipulated the amount

due under section 409.910(11)(f) is $32,062.25.

CONCLUSIONS OF LAW

2 4 . The Division of Administrative Hearings (DOAH) has

jurisdiction over the subject matter and the part ies in this

case, and final order authority pursuant to sections 120.569,

120.57(1), and 409.910(17).

2 5 . The Medicaid program Ðprovide[s] federal financial

assistance to States that choose to reimburse certain costs of

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

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

elects to participate in the Medicaid program, it must comply

with federal requirements governing the same. Id .

2 6 . A s a condition for receipt of federal Medic aid funds,

states are required to seek reimbursement for medical expenses

incurred on behalf of beneficiaries who later recover from

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

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

27 . Consistent wi th this federal requirement, the Florida

Legislature has enacted section 409.910, which authorizes and

requires the State to be reimbursed for Medicaid funds paid for

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

personal injury judgment or settlement from a third party.

Smith v. Ag. for Health Care Admin . , 24 So. 3d 590 (Fla. 5th DCA

2009). The statute creates an automatic lien on any such

judgment or settlement for the medical assistance provided by

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

28 . The amount to be recovered for Medicaid medical

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

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

sets 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 Medicaid on the recipientÓs behalf. Ag. f or

Health Care Admin. v. Riley , 119 So. 3d 51 4, 515 n.3 (Fla. 2d DCA

2013).

29 . T he 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).

30 . Section 409.910 (17)(b) provides in pertinent part :

(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 petiti on 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 1 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 me dical 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.

1 Note. Ï As amended by s. 6, ch. 2013 - 48. The

a mendment by s. 2, ch. 2013 - 150, used the

words Ðthis sectionÑ instead of the words

Ðthis subsection.Ñ

31 . Section 409.910(17)(b) makes it clear that the formula

set forth in subsection (11) constitutes a default allocation of

the amount of a settlement t hat 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)).

32. Cle ar and convincing evidence Ðrequires more proof

than a Òpreponderance of th e evidenceÓ but less than Òbeyond and

to the exclusion of a reasonable doubt.ÓÑ In re Graziano , 696

So. 2d 744, 753 (Fla. 1997). In Evans Packing Company v.

Department of Agriculture and Consumer Services , 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 distinctly remembered; the

evidence must be precise and expli cit 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, without hesitancy, as to the

truth of the allegations sought to be

established. Slomowitz v. Walker , 429 So.

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

3 3 . Petitioner did not prove through clear and convincing

evidence that a lesser amount than $32,062.25 should be

allocated as reimbursement for past and future medical ex penses.

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

$32,062.25 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 23rd day of August , 2016 , in

Tallahassee, Leon County, Florida.

S

LYNNE A. QUIMBY - PENNOCK

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 23rd day of August , 2016 .

ENDNOTE S

1/ In RespondentÓs PRO, RespondentÓs counsel listed dif ferent

counsel for Petitioner.

2/ The parties claim ed the exhibits we re numbered 1 through 13,

however, the undersigned has only found Bate s - stamped pages 0001

through 0289 .

3/ PetitionerÓs Proposed Final Order incorrectly stated that the

Transcript was filed on July 26, 2016. The certi ficate of

service reflected the ÑNotice of Filing and Tran script [have]

been e - filed with . . . on this 27th day of July, 2016 Ñ ; however

t he Transcript was filed with the Division of Administrative

Hearings on July 28, 2016 at 8:00 a.m.

COPIES FURNISHED:

Alexander R. Boler, Esquire

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

(eServed)

James M. Scarmozzino, Esquire

Webb & Scarmozzino, P.A.

Second Floor

2121 West First Street

Fort Myers, Florida 33901

(eServed)

Richard J. Shoop, Agenc y Clerk

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)

Stu art Williams, Gen eral 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 revi ew 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 A dministrative 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.