18-003107MTR Jessica N. Toresco vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, December 21, 2018.

Summary: Petitioner proved that agency's Medicaid lien amount should be reduced.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JESSICA N. TORESCO,

Petitioner,

vs. Case No. 18 - 3107MTR

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 August 27 , 2018 .

APPEARANCES

For Petitioner: Floyd B. Faglie , Esquire

Staunton and Faglie , P . L .

189 East Waln ut Street

Monticello , Florida 32344

For Respondent: Alexander R. Boler , Esquire

Xerox Recovery Services Group

2073 Summit Lake Drive , Suite 300

Tallahassee , F lorida 32317

STATEMENT OF THE ISSUE

The issue is the amount paya ble to Respondent , Agency for

Health Care Administration ( " Respondent " or " AHC A " ) , in

satisfaction of Respondent ' s Medicaid lien from a settlement

received by Petitioner , from a third party , pursuant to

section 409.910 , Florida Statutes (201 7 ).

PRELIMINARY STATEMENT

On or about June 15, 2018, Jessica N. Toresco ( " Toresco " )

filed a Petition to Determine Amount Payable to Agency for Health

Care Administration in Satisfaction of Medicaid Lien

( " Petition " ) , pursuant to section 409.910(17)(b) , protesting the

lien claim and request ing a hearing .

On June 18 , 2018 , t he Petition was filed at DOAH and

assigned to the undersigned administrative law judge. The case

proceeded as scheduled on August 27 , 2018.

At hearing , Petitioner present ed the testimony of two

witnesses: Joseph Scott T homas McCullough ( " McCullough " ) and

Vinson Barrett ( " Barrett " ) . Petitioner ' s Exhibits 1 through 7

were received into evidence without objection . Respondent did

not present any witnesses or proffer any exhibits for admission

into evidence.

The proceedings of the hearing were recorded and

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

DOAH on September 24 , 2018. On October 15, 2018, the parties

filed a Joint Motion for Extension of Time to File Proposed Final

Orders by October 23 , 2018, which the undersigned granted. Both

parties fi led timely proposed final o rders that the undersigned

has considered in the preparation of this Final Order.

The pa rties stipulated to the facts in the Joint Pre - hearing

Stipulation , and the relevant facts stipulated therein are

accepted and made part of the Findings of Fact below . Unless

otherwise noted , all statutory references are to the Florida

Statutes ( 201 7 ).

FINDINGS OF FACT

1. On May 1 , 20 09 , Toresco, who was then 18 year s old, was

involved in a car accident. In the accident, Toresco suffered

severe personal injury , including numerous fractures and a closed

head injury resultin g in brain damage. Toresco is no w

permanently disabled, has limited use of her left arm and leg,

and cannot walk without assistance.

2. Toresco ' s accident occurred when she turned her vehicle

left in an intersection, in front of a 3000 - pound truck. The

truck hit her vehicle ' s passenger side, and her vehicle went over

a concrete curb and into two pa lm trees .

3. After the accident, Toresco was in a coma for

approximately two months and suffered skull fractures and brain

damage. Toresco ' s injuries included kidney failure, hemorrhages,

and cognitive loss . S he was fed by a feeding tube.

4. Toresco l ost full use of her right side d ue to a brain

injury. She is no longer able to work, horseback ride, dance, or

participate in many of the activities she had participated in

before the accident.

5. T oresco ' s medical care related to the injury was paid by

Medicaid, and the Medicaid program provided $116,549.10 in

benefits associated with her injury. The $116,549.10 represented

the entire claim for past medical expenses.

6. Toresco brought a personal injury lawsuit against the

driver/owner of the truck that caused the accident to recover all

of her damages associat ed with her injuries.

7. McCullough , a 23 - year civil trial attorney with the law

firm of McCullough and Leboff, P . A ., in Davie , Florida ,

represented Toresco in her personal injury action. He was her

third attorney handling the case and took over from the two

previous attorneys because of the difficult liability issues in

the personal injury action.

8. During the pendency of the personal injury action , AHCA

was notified of the action , and AHCA asserted a $ 116,549.10

Medicaid lien against cause of action and settlement of that

action.

9. McCullough handled the case through settlement. The

personal injury lawsuit was settled for the lump - sum unallocated

amount of $750,000. 00.

10. AHCA has neither file d an action to set aside , void , or

otherwise dispute the settlement nor started a civil action to

enforce its rights under section 409.910.

11. AHCA , through its Medicaid program , spent $ 116,549.10

on behalf of Toresco , all of which represents expenditures paid

for Toresco ' s past medical expenses.

12. The formula at section 409.910(11 )( f) , as applied to

the entire $ 750 , 000 .00 settlement , requires payment in the full

amount of the $116, 549.10 Medicaid lien , and AHCA is demanding

payment of $116, 549.10 from the $ 750 , 000 .00 settlement.

13. Toresco has deposited the section 409.910(11)(f )

formula amount in an interest - bearing account for the benefi t of

AHCA , pending an administrative determination of AHCA ' s rights ;

and this constitutes " final agency action " for purposes of

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

14. At the final hearing , Petitioner presented , without

objection , the expert valuation of damages testimony of her

Florida trial attorney, McCullough . McCullough practices

exclusively personal injury law and always represent s individual s

who are injured . The majority of his cases involv e automobile

accidents .

15. McCullough ' s expertise also encompasses evaluation of

personal injury cases . He stay s abreast of all S tate of Florida

jury verdicts by reviewing jury verdict reporters and discussing

personal injury verdicts and valuations with other attorneys in

his geographical area.

16. At hearing , McCullough explained that as a routin e part

of his practice , he makes assessments concerning the value of

damages suffered , and he detailed his process for making those

assessments.

17. McCullough credibly made clear the process he took to

develop an opinion concerning the value fo r the damages suffered

in Toresco ' s case. McCullough testified that he reviewed

Toresco ' s automobile report, medical records, Life Care Plan,

Economist Report, and met with his client , Toresco , numerous

times .

18. McCullough testified that prior to the accident ,

Toresco was a champion horseback rider , and she spent most of her

time at the stables. The accident " tremendously affected her "

because she is unable to work, ride horses , and participate in

daily activities due to her injury from the automobile accident.

19. McCullough analyzed how the acci dent occurred and

detailed that Toresco turned left in front of a 3000 - p ound truck ,

which hit the passenger side of T o resco ' s car and pushed her into

two palm trees . Tore sco was found to have significant head

injury , with facial fractures , and a closed head injury when she

was taken to the hospital. McCullough testified that the brain

damage from the head injury caused Toresco to lose use of her

full right side.

20. McCullough further testified at hearing that the

medical care related to the accident was paid by Medicaid in the

amount of $116, 549.10 , which constituted Toresco ' s claim for past

medical expenses.

21. McCullough explained th at Toresco sued the individual

driver and driver ' s company because even though Toresco turned

left in front of the driver ' s vehicle, if the driver had not been

moving a t a rate of speed above the speed limit, Toresco would

no t have been as seriously injured because she would not have

been hit squarely in the middle of the vehicle . A slower lawful

speed would not have resulted in as significant of an injury , or

the truck might have even missed her.

22. McCullough further stated that t he defense ' s position

was that Toresco was liable for her own injuries because she

turned in front of the vehicle , and , ultimately , the case hinged

on a b att l e of engineering exper t s and accident

reconstructionists .

23. McCullough explained that d uring the mediation of

Toresco ' s case , the damages were presented to the defendant. He

detailed how t he economic damages were outlined for the

defendant , including the $116,549.10 for past medicals and

noneconomic pain and suffering of around $ 7 ,000,000.00 .

U ltimately , the case settled during mediation with the liable

third parties for $750 , 000.00 .

24. McCullough opined that the settlement was not the full

value of Toresco ' s damages and that the settlement only

represents about ten percent of the full measure of her damages.

McCullough ' s testimony was uncontradicted and compelling .

25. McCullough explained that h e based his valuation of

Toresco ' s economic damages on the life care plan , which included

the following claims: past medical expenses of $116,549.10; lost

earnings of $68,106 .00 ; future lost earnings of $976,186.00; and

future medical expenses $2, 154,509.00. He added the past

medicals, past lost wages, future lost wages, and future medical

expenses together, which totaled $ 3 , 3 00,000.00 .

26. Based on his training and experience , McCullough also

credibly testified that the noneconomic damages would have

significant value under the circumstances and that Toresco ' s

economic and noneconomic damages together have a value that

total s between a conservative $7,500,000.00 and $10,000,000.00.

27. McCullough concluded that t he low - end conservative

number for the value of Toresco ' s damages is $7,500,000.00 .

28. At hearing, Barrett also provided an expert opinion

without objection regarding the value of Toresco ' s case. Barret t

is a 40 - year trial attorney who has represented p laintiffs in

various types of personal injury law suits , including automobile

accidents. He is a partner with the law firm of Barrett, Nonni ,

and Homola and handles jury trials.

29. Barrett routinely makes assessments concerning the

value of damages suffered by injured parties in his daily

practice. He is familiar with reviewing medical records, life

care plans, and economist reports. He stays abreast of jury

verdicts and routinely runs facts by a listserv group of

approximatel y 25 trial lawyers to get the value of what case s are

reasonably worth.

30. Barrett became familiar with Toresco ' s injuries after

he review ed the exhibits in this case, the report and patient

summary, life c are plan, economist report, and mediation summary.

Barre tt determined that Tore s co ' s medical damages were severe ,

and she was largely at fault when she turned left in front of the

vehicle that struck her.

31. Barrett detailed how severe Toresco ' s injuries were by

explaining that she was in a coma in the hospital for about two

months and suffered kidney failure because of the brain damage

and that " it affected her almost in every way. "

32. Barrett also explained that b efore the accident ,

Toresca was athletically built, a competitive equestrian and

dancer , and was a working senior in high school , but she will

never be able to work, ride a horse, dance , or do thing s young

women do again.

33. Barrett explained that the evidence supports over

$3,000,000.00 in economic damag es. He testified that he relied

on the economist who had calculated the present value of

Toresco ' s future medical expenses, lost past and future income ,

and claim for past medical expenses for a total of $3,315,350.00.

34. Barrett further opined that " [ Toresco's] future and

past pain and suffering and mental anguish , loss of enjoyment of

life was worth $6,000,000.00 " in noneconomic damages. Barrett

added the economic and noneconomic damages and determined the

total would have a value between approximate ly $8,000,000.00 and

$10,000,000.00 with an average around $9,000,0000.00 . He

credibly concluded that Petitioner ' s total conservative value of

damages is $7,500,000.00.

35. Barrett went on to explain that the $750,00 0 .00

settlement was very conservative and did not fully compensate

Toresco for the full value of her damages. Instead, he opined

that the settlement only covered a ten - percent recovery of the

conservative value of her damages , $7,500,000.00 .

36. Barrett furt her explained that each element of damages

should be reduced to ten percent of the amount attributable to

each element , and if ten p ercent was applied to the $116, 549.10

claim for past medical expenses , the amount is $11, 654.91.

37. The evidence demonstrates that the total conservative

value of the damages related to Toresco ' s injury was

$ 7,500,000.00 and that the settlement amount , $ 750,00 0 .00 , is

only ten percent of the total value. The $ 750,000 .00 settlement

does not fully compensate Petitioner for the total value of her

damages.

38. Petitioner ha s established by unrebutted uncontested

evidence that t he $ 750 , 000.00 settlement amount is ten percent of

the total value ($ 7,500,00 0 .00 ) of Petitioner ' s damages. Using

the same calculation , Petitioner correctly established that

applying ten percent t o $ 1 16,549.1 0 (Petitioner ' s amount

allocated in the settlement for past medical expenses) results in

$ 11,654.91 , the portion of the Medicaid lien owed .

39. Petitioner proved by a preponderance of the 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

40. 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

(201 8 ) .

41. AHCA is the agency authorized to administer Florida ' s

Medicaid program. See § 409.902 , Fla. Stat.

42. 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 an 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 or her right to recover medical expenses

from those third parties . In relevant part , 4 2 U.S.C.

§ 1396a(a)(25) requires:

(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 assistance , the State has in effect laws

under w hich , 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

fo r such health care items or services.

43. 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 c reates an automatic lien on any such

judgment or settlement for the medical assistance provided by

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

44. 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). Ag. for

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

2013).

45. The parties stipulated that the amount due to AHCA in

satisfaction of its lien , pursuant to the formula set forth in

section 409.910(11)(f) , is $ 116,549.10 . Petitioner , however ,

assert s that a lesser amount is owed to Respondent because

Petitioner did not recover the full value of her damages.

46. It is undisputed that Medicaid provided $ 116.549.10 in

medical expenses for Toresco and that AHCA asserted a Medicaid

lien against Petitioner ' s $ 750, 000.00 settlement and the right to

seek reimbursement for its expenses. AHCA is utilizing t he

mechanism set for th in section 409.910 (11)(f) to enforce its

right .

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

automatically bound by the allocation of damages set forth in

Petitioner ' s settlement agreement . Section 409.910(13) provides ,

in pertinent part , that :

(13) No action of the recipient 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 t o in

this subsection as a " settlement 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 effec tive

or binding against the agency for benefits

accrued without the express written consent

of the agency or an appropriate order of a

court having personal jurisdiction over the

agency.

48. Section 409.910(17)(b) provides a method whereby a

recipient may challenge AHCA ' s presumptively correct calculation

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

means for determining whether a lessor portion of total recovery

should be allocated as reimburseme nt for medical exp enses 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 :

If federal law limits the agency to

reimbursement from the recovered medical

expense damages, a recip ient, or his or her

legal representative, 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 da te 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 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 c onstitutes

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 of third - party

benefits payable to the agency. In order to

successfully challenge the amount designated

as recovered medical expenses, the recipient

must prove, by clear and convincing evidence,

that the portion of the total recovery which

should be allocated as past a nd future

medical expenses is less than the amount

calculated by the agency pursuant to the

formula set forth in paragraph (11)(f).

Alternatively, the recipient must prove by

clear and convincing evidence that Medicaid

provided a lesser amount of medical

assistance than that asserted by the agency.

49. An administrative procedure for adversarial testing o f

the fair allocation of the amount of the settlement that is

attributable to medical costs includes considering the evidence

used to rebut the section 409.910 (11)(f) formula when determining

whether AHCA ' s lien amount should be adjusted . See Harrell v.

State , 143 So. 3d 478 , 480 (Fla. 1st DCA 2014 )( holding that

petitioner " should 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 expenses " ) .

50. Notwithstanding the language of section 409.910(17)(b) ,

the parties stipulated that Petitioner ' s burden in this case is a

preponderance of the evidence and that any settlement proceeds

attributed to future medical expenses shall not be considered in

calculation of AHCA ' s lien.

51. The Florida Supreme Court defines " preponderance of the

e vidence " as follows:

The greater weight of the evidence , not

necessarily established by the greater number

of witnesses testifying to a fact but by

evidence that has the most convincing force;

superior evidentiary weight that , though not

sufficient to free the mind wholly from all

reasonable doubt , is still sufficient to

incline a fair and impartial mind to one side

of the issue rather than the other.

S. Fla. Water Mgmt. v. RLI Live Oak , LLC , 139 So. 3d 869 , 872 n.1

(Fla. 2014).

52. The undersigned is not persuaded by Respondent ' s

position in its Proposed Final Order that Petitioner ' s pro rata

allocation method ology is in accurate because Respondent failed to

provide any evidence or an alternative to rebut Petitioner ' s

method. Instead , the record demonstrates that the allocation

process in this matter is rational , proper , and reasonable.

53. In this matter , Petitioner challenged AHCA ' s

calculation and demonstrated by a preponderance of the evidence

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

damages suffered by Toresco . All the testimony and other

evidence offered proved that a lesser portion of the total

recovery should be allocated as reimbursement.

54. Specifically , the evidence presented at hearing

demonstrated that the settlement recovered in this matter was

only ten percent of the value of damages and that the lien

recovery should be allocated and reduced in each damage category

based on ten percent . Applying the ten - percent ratio to the

$ 116,549.10 claim for past medical expenses is $ 11,654.91 of the

settlement and represents Toresco ' s recovery of past medical

expenses , which constitutes a fair , reasonable , and accurate

share of the total recovery for past medical exp en ses actually

paid by AHCA .

55. In summary , the evidence in this case is that

$ 11,654.91 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 Toresco ' s

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

$ 11,654.91 in satisfaction of its Medicaid lien.

DONE AND ORDERED this 2 1st day of December , 201 8 , 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 2 1s t day of December , 2018.

COPIES FURNISHED:

Alexander R. Boler , Esquire

Xerox Recovery Services Group

2073 Summit Lake Drive , Suite 300

Tallahassee , Florida 32317

(eServed)

Floyd B. Faglie , Esquire

Staunton and Faglie , P.L.

189 East Walnut Street

Monticello , Florida 32344

(eServed)

Kim Annette Kellum , Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee , Florida 32308

(eServed)

Richard J. Shoop , Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee , Florida 32308

(eServed)

Justin Senior , Secretary

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 1

Tallahassee , Florida 32308

(eServed)

Stefan Grow , General Counsel

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee , Florida 32308

(eServed)

Shena Grantham , Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee , Florida 32308

(eServed)

Thomas M. Hoeler , Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee , Florid a 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 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 pa rty resides or

as otherwise provided by law.