19-001889MTR Sonja L. Nicolas, As Plenary Guardian For Her Son, Claude Zavier Nicolas, An Incapacitated Person vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Wednesday, June 12, 2019.

Summary: Unrebutted evidence proved past medical expenses were 7.9% of Petitioner's damages. Therefore, AHCA can recover only 7.9% of Medicaid payments. Preponderance of the evidence is Petitioner's burden.

S TATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SONJA L. NICOLAS, AS PLENARY

GUARDIAN FOR HER SON, CLAUDE

ZAVIER NICOLAS, AN INCAPACITATED

PERSON,

Petitioner,

vs. Case No. 19 - 1889MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

_______________________________/

FINAL ORDER

Administrative Law Judge John D. C. Newton, II, of the

Division of Administrative Hearings (Division) , conducted the

final hearing in this case on May 28, 2019, by video

teleconference at locations in Tampa and Tallahassee, Florida.

APPEARANCES

For Petitioner: David D. Dickey, Esquire

The Yerrid Law Firm

Suite 3900

101 East Kennedy Boulevard

Tampa, Florida 33602

For Respondent: Alexander R. Boler, Esquire

Suite 330

2073 Summit Lake Drive

Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

What amount of PetitionerÓs malpractice settlement must be

paid to Respondent, Agency for Health Care Administration

(Agency), to satisfy the AgencyÓs $13,904. 0 6 Medicaid Lien? 1/

PRELIM INARY STATEMENT

On April 12, 2019, Petitioner Ós mother as guardian for and

on behalf of her son filed a Petition to Determine Amount Payable

to AHCA in Satisfaction of Medicaid Lien with the Division. The

Petition asserts that Petitioner brought medical malpractice

claims in circuit court against the treatin g physician and a

hospital that provided services. It also asserts that Medicaid

spent $13,904.36 for PetitionerÓs treatment between September 14,

2015, and December 31, 2015, and $335,312.20 after January 1,

2016, for a total of $3 49,904.36 . The Petitio n does not state

the amount of the settlement. However, it maintains that the

settlement amount is less than ten percent of the value of

PetitionerÓs damages. Consequentl y , the Petition says that the

Agency may only recover less than ten percent of Medicaid

payments for PetitionerÓs past medical expenses, or approximately

$35,000. The parties filed a pre - hearing stipulation that

included stipulated facts. Findings of Fact 1 through 14

replica te those stipulated facts verbatim unless otherwise

i ndicated .

Petitioner presented the testimony of h is mother and

Mike Tonelli, Esquire. PetitionerÓs Exhibits 1 through 7 were

received in evidence without objection.

The Agency did not present a witness. The Agency did not

offer an exhibit.

Neither party ordered a transcript. Both parties timely

filed proposed final orders. They have been considered in the

preparation of this Final Order.

FINDING S OF FACT

Stipulated Facts 2/

1. On September 12, 2015, [Petitioner] was a 28 - year - old

single male living alone in Tampa, Florida and enrolled as a

student at the University of Sout h Florida working on his

masterÓ s degree in education. Because he recently ceased his

employment with the Hillsborough County School Board,

[Petitioner] had no health insura nce. He called 911 for

emergency medical services due to severe abdominal pain and was

taken by EMS to the Emergency Department at St. JosephÓs Hospital

where he was diagnosed with acute pancreatitis and admitted. His

condition worsened and was complicat ed by abdominal distention

that made his breathing difficult. In the evening of

September 13th, [Petitioner] was transferred to th e Medical

Intensive Care Unit (Ð ICU Ñ ) because of a rapidly worsening

condition and need for close monitoring.

2. Over the n ext several hours, vital sign monitoring

showed high heart and respiratory rates. A consulting physician

found Ð acute respiratory insufficiency likely developing ARDS, Ñ

and directed he be Ð monitor closely, may need to be on mechanical

ventilation, his wor k of breathing is hard to keep current sats

[sic] Ñ .

3. During the early morning of September 14, [PetitionerÓs]

heart rate and respiratory rates remained high, he was short of

breath, and given multiple doses of Morphine for severe pain and

Ativan for agi tation/anxiety, which drugs are known to suppress

respiratory function. Throughout the morning, [Petitioner] was

in a perilous condition due to a combination of his prolonged

efforts to breathe, suppressive medications, and systemic

complications of acute pancreatitis including electronical

abnormalities associated with hypokalemia and hypocalcemia, and

with electrocardiographic changes resulting in arrhythmia,

conduction abnormalities and changes in cardiac T wave and QT

period.

4. At around 11:30, [Peti tioner] attempted to perform a

breathing exercise as instructed earlier that morning which

required him to get on his hand and knees to relieve the pressure

on his chest. [PetitionerÓs mother], a licensed and practicing

RN herself, was present and attempt ed to help him when his

cardiac monitoring leads became disconnected. At this time, the

attending RN was on break. An unknown RN reported [Petitioner]

to have a change in the condition Ð with increased confusion and

restlessness Ñ and a call was made to th e ICU specialist who

issued verbal orders for Haldol, a medication used for sedation

but in combination with the Morphine, Ativan and Labetatol,

further lowers blood pressure and is contraindicated for cardiac

arrhythmias.

5. Without informing [Petitioner or his mother] , the

nursing staff mistakenly issued a "code grey" to control

[Petitioner] and the nursing supervisor approved the

administration of the Haldol without any physician assessment or

knowing his cardiac status because the monitor was not conne cted.

The ICU specialist who ordered the Haldol was close by in the ICU

area but did not evaluate [Petitioner] or assess his condition,

cardiac status and need for mechanical ventilation before the

Haldol was administered.

6. Immediately upon administrat ion of the Haldol,

[Petitioner] became Ð agonal Ñ and his heart was thrown into a

cardiac arrhythmia (PEA) causing a prolonged time period where

his brain was deprived of oxygen that resulted in permanent

hypoxic encephalopathy so that [ Petitioner ] now lives in a

persistent minimally conscious state. The acute pancreatitis

which [Petitioner] initially sought treatment resolved without

further complications. His current medical condition is only

complicated by the sequelae of his hypoxic encephalop athy and

persistent minimally conscious state.

7. Petitioner complied with all requirements of

Chapter 766, Florida Statutes, including, all pre - suit

requirements and presuit investigation of claims against the

treating Hospital, the ICU Specialist and h er employer that were

corroborated by an expert witness, which were rejected. On

October 27, 2017, Petitioner filed a lawsuit in the Circuit Court

for Hillsborough County Florida, Case No. 17 - CA - 009829, against

the treating Hospital and the ICU Specialist asserting claims for

medical negligence.

8. Based on the foregoing limitations, the medical

malpractice claims were settled for a total of $1,975,000, which

was approved by the Court to be in the best interest of

[Petitioner].

9. [The Agency] , through its Medicaid program, provided

medical assistance to [Petitioner] in the amount of $13,904.36.

10. During the pendency of the medical negligence case,

[the Agency] was notified of the action and asserted a $13,904.06

Medicaid lien against Petitioner's cau se of action and

settlement.

11. [The Agency] did not commence a civil action to enforce

its rights under £409.910 or intervene or join in [PetitionerÓs]

action against Defendants.

12. [The Agency] did not file a motion to set - aside, void

or otherwise di spute Petitioner's settlement with Defendants.

13. Applicati on of the formula at §409.910(1 l)(f) to the

settlement requires payment to [the Agency] in the amount of the

full $13,904.06 Medicaid lien.

14. Petitioner deposited the full Medicaid lien amount in

an interest - bearing account for the benefit of [the Agency]

pending an administrative determination of [the AgencyÓs] rights,

and this constitutes "final agency action" for purposes of

chapter 120, pursuant to §409.910(17).

Credible, Unimpeached, and U nrebutted Testimony

15. Mr. Tonelli is the only person who testified about the

value of the various elements of damages making up PetitionerÓs

malpractice claim.

16. Mr. Tonelli has practiced law for 44 years. He has

practiced in Tampa, Florida, the venue where PetitionerÓs case

would have been tried if it had not settled. He first practiced

primarily in the area of personal injury defense. Presently,

Mr. Ton elli spends over 25 per cent of his time as a mediator.

Since 1985 , he has mediated many medical negligence cases .

Mr. Tonelli also serves as a guardian ad litem in approximately

50 cases per year. Usually two to five of the cases involve

catastrophic injury. Mr. Tonelli has served as c ounsel in 50 to

75 civil trials. Approximately 20 were jury trials.

Mr. TonelliÓs practice includes review of medical records and

life care plans. He also consults with economists about lost

wage claims and works with doctors to identify the nature and

extent of injuries and costs of medical services for injured

persons.

17. Mr. Tonelli participates in regular intake review of

personal injury cases for his firm. The review includes

evaluat ing the recoverable damages. He informs himself about

jury awa rds and settlement amounts through his firm work, his

participation in the American Board of Trial Attorneys, and his

mediation practice.

18. Mr. Tonelli was PetitionerÓs Guardian Ad Litem. He

reviewed the case and the proposed settlement and reported to the

court about whether the settlement was in PetitionerÓs best

interests. Mr. TonelliÓs knowledge, skill, and experience

qualify him to provide an opinion about the value of the elements

of the damages for PetitionerÓs malpractice claims against the

hos pital and the physician.

19. Mr. Tonelli reviewed PetitionerÓs hospital and

physician medical records. He also reviewed the deposition of

Roland Snyder, M.D., who prepared the life care plans admitted

into evidence. Between Mr. TonelliÓs service as Gu ardian Ad

Litem for Petitioner and his record review to prepare for his

testimony, he had sufficient facts and data to form an opinion

about the value of elements of damages of PetitionerÓs

malpractice claims. Also, he reasonably and reliably applied

prin ciples and methods based upon his knowledge, skill, and

experience to provide a credible and conservative determination

of the value of each element of damages that make up PetitionerÓs

malpractice claim. His testimony was unrebutted , unimpeached,

credibl e, and persuasive .

Injuries and Negligence

20. Petitioner suffers from profound anoxic encephalopathy.

This brain damage leaves him in a permanent, minimally conscious

state, just barely more conscious than a patient in a vegetative

state. He cannot speak, walk, or care for himself. Petitioner

lives in pain. He breathes and eats only with the assistance of

a tracheostomy. He takes nourishment through a ÐG - tube.Ñ This

is a gastrojejunostomy tube that delivers nutrient s directly to

the stomach. Petitioner requires daily care and assistance in

every task of life from eating to waste elimination. His

condition will not change for his estimated 20 - year remaining

life span. PetitionerÓs multiple, severe medical conditions

require that he live those 20 years in a long - term care facility

with medic al services, such as a skilled nursing home.

21. This condition resulted from treatment he received for

pancreatitis, a condition from which he fully recovered. While

in the hospital, Petitioner developed cardiac and respiratory

problems. A cascading se ries of improper prescriptions

exacerbated PetitionerÓs medical problems leading to catastrophic

injuries resulting in his current conditi on.

Damages

22. The elements of damages for PetitionerÓs malpractice

claims are past medical expenses, future medical expenses, loss

of current income, loss of future income, pain and suffering, and

loss of enjoyment of life. The value of the damages in

PetitionerÓs malpractice claims falls within a range of

$25,000,000 to $35,000,000. The amount of $25,000,000 is a

re asonable, conservative value to place on PetitionerÓs damage

claims.

23. The only evidence of past medical expenses is the

stipulation that Medicaid paid $13,904.36. Consequently, that is

the amount of past medical expenses.

24. Future medical expenses in the form of costs for

continued treatment and supports necessary to maintain

PetitionerÓs existence are a significant part of the damages. As

explicated in two detailed life care plans, those expenses will

range from $14,535,508.26, for residence in a modified home with

supportive caregivers, to $31,082,301.36, for residence in a

skilled long - term nursing facility. Loss of current income,

comparatively, is not a major factor in this case. Loss of

future income is. Petitioner was 30 years old earning $34,000

per year teaching Ðat - riskÑ children who would have otherwise

been suspended from school. He was dedicated to his profession,

volunteered at Boys and Girls Clubs , and had just been accepted

to a master Ó s degree program. PetitionerÓs lost future i ncome

ranges between $750,000 to $1,000,000.

25. PetitionerÓs injuries and resulting conditions are

catastrophic. Pain and suffering damages and loss of enjoyment

of life damages easily range between 10 and 20 million dollars.

They could reasonably exceed 50 million dollars. Consideration

of the value of the elements of damages affirms that the total

damages that w ould have been proven if PetitionerÓs claims had

been tried would have been at least $25,000,000 .

Settlement Realities

26. PetitionerÓs claims were not tried. Petitioner had a

strong malpractice claim against the doctor. The doctor,

however, had only $500,000 worth of insurance coverage. There is

no evidence of assets of the doctor that could hav e been reached

to enforce a judgment.

27. PetitionerÓs claim against the hospital was not as

strong. The hospital had significant liability and causation

defenses. The doctor was not an employee or agent of the

hospital. Hospital employees in most inst ances were following

the doctorÓs instructions, including when administering the

medications that caused the damages.

28. The limits of the doctorÓs insurance coverage and the

liability and causation issues of the claim against the hospital

resulted in the decision to settle. Uncertainty about the

provability or amount of damages was not a factor. The trial

court approved the settlement.

29. The settlement amount is 7.9 percent of the value of

PetitionerÓs claims.

30. The stipulated amount of med ical expenses the Agency

paid through the Medicaid program is $13,904.36. The reasonable

inference from the record in this case is that applying the

7.9 percent ratio of claims value to settlement recovery to the

stipulated amount of medical expenses pai d by the Medicaid

program demonstrates that $1,098.44 of PetitionerÓs settlement

recovery was for past medical expenses.

31. The Agency did not call witnesses, present evidence of

the value of damages, or propose an alternative way to value

damages.

CONCLUSIONS OF LAW

32. Sections 120.569, 120.57(1), and 409.910(17), Florida

Statutes (2018) , 3/ grant the Division jurisdiction over the

subject matter and parties in this case.

33. The Legislature authorized the Agency to administer

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

34. 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). If a state partic ipates in the Medicaid

program, it must comply with federal requirements governing the

program. Id.

35. Federal law requires states to seek reimbursement for

medical expenses incurred on behalf of Medicaid recipients who

recover from third parties. See Ark. Dep Ó t of Health & Human

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

36. FloridaÓs Legislature enacted section 409.910 , Florida

Statutes, to comply with that requirement. Section 409.910

authorizes and requires the Agency to recover for Medicaid funds

paid for a Medicaid recipient Ó s medical care when the 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 automa tic lien on

the proceeds of any judgment or settlement for the medical

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

37. The formula in section 409.910(11)(f) determines the

amount the Agency may recover from a judgment, award, o r

settlement from a third party for Medicaid medical expenses.

Ag. for Health Care Admin. v. Riley , 119 So. 3d 514, 515 n.3

(Fla. 2d DCA 2013).

38. Section 409.910(17)(b) establishes the right to contest

a Medicaid lien and provides that section 409.9 10(11) establishes

the default allocation of damage amounts attributable to medical

costs.

39. The parties stipulated that the amount Petitioner owe s

the Agency to satisfy its lien, pursuant to the formula in

section 409.910(11)(f), is $13,904. 0 6. 4/ However, the stipulated

value of the medical services provided by Medicaid is $1,904.36 . 5/

Petitioner maintains that he owes less because he did not recover

the full value of his damages, including his claim for past

medical expenses.

40. Section 409.910 (17)(b) also creates a right to

challenge the statutory allocation at the Division. It requires

the Medicaid recipient to Ðprove, by clear and convincing

evidence, that a lesser portion of the total recovery should be

allocated as reimbursement for past a nd future medical expenses

than the amountÑ resulting from application of the statutory

formula. See Harrell v. State , 143 So. 3d 478, 480 (Fla. 1st DCA

2014) (adopting the holding in Riley , 119 So. 3d at 516, that

petitioner Ðshould be afforded an opport unity 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 e xpensesÑ)

(quoting Roberts v. AlbertsonÓs, Inc. , 119 So. 3 d 457, 465 - 466

(Fla. 4th DCA 2012)).

41. Despite the language of section 409.910(17)(b) ; because

of rulings in Gallardo v. Dudek , 263 F. Supp. 3d 1247 (N.D. Fla.

2017) ; and by stipulation of the parties, t he burden of proof is

a preponderance of the evide nce. In addition , the lien may not

be calculated or satisfied from settlement proceeds attributed to

future medical expenses or other damages. Giraldo v. Ag. for

Health Care Admin. , 248 So. 3d 53, 56 (Fla. 2018).

42. Petitioner proved by a preponderance of the evidence

that the settlement proceeds of $1,975,000 are 7.9 percent of the

total value of the malpractice claim. Applying that 7.9 percent

to the value of the services for which Medicaid paid is a

rational way to determine the portion of the settlement amount

attributable to past medical expenses and therefore recoverable

by the Agency.

43. The Agency criticizes this allocation method. However,

it did not offer evidence to support its criticism. ÐAlthou gh a

factfinder may reject Òuncontradicted testimony,Ó there must be a

Òreasonable basis in the evidenceÓ for the rejection.Ñ Wald v.

Grainger , 64 So. 3d 1201, 1205 - 06 (Fla. 2011). See also Giraldo

v. Ag. for Health Care Admin. , 248 So. 3d 53, 56 (Fla. 2018).

44. The Agency cites the F inal O rder in Mojica v. Ag ency

f or Health Care Admin istration , Case No. 17 - 1966MTR (Fla. DOAH

May 3, 2018) , to support its argument that the evidence is

insufficient to prove the proportion of the recovery that should

be allocated to past medical expenses. The record in that case

differs significantly from the record here. The evidence in

Mojica did not estab lish the value of any dam a ges el e ment other

than past medical expenses. The record did not support findings

about the value of other elements of damages such as lost earning

capacity, future medical expenses, and loss of consortium . In

addition, the Agen cy provided evidence in that case, including

testimony of an expert witness.

45. The Agency also cites Savain v. Ag ency f or Health Care

Admin istration . , Case No. 17 - 5946MTR (Fla. DOAH Feb. 26, 2018).

The record in Savain also differs materially from the record in

this case. In Savain the petitioner did not prove how to

allocate the various elements of damages. Endnote five of the

Final Order specifically notes that the record included two

general releases but no settlement agreement or comparable

docume nt allocating the settlement amount among elements of

damages. Endnotes two, six, and ten of the Savain Order point

out that petitionerÓs exhibit 24 was not admitted into evidence.

Paragraph 18 of the Savain O rder states that without e xhibit 24

petitioner Ðdid not present any admissible evidence to support a

finding of the actual value of her personal injury claim or to

support the Òpro - rataÓ or Ò proportionalityÓ formula she advanced

through her counselÓs arguments.Ñ PetitionerÓs Propo sed Final

Order in Savain makes it clear that e xhibit 24 was an attorneyÓs

affidavit presenting a method for allocating damage amounts, much

like the testimony of Mr. Tonelli here.

46 . The Savain Order includes dicta stating that the

Administrative Law Ju dge found the approach in Smith v. Ag ency

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

2009) , more persuasive. The Smith opinion , however, emphasized

that the record Ðproffered nothing from which the trial judge

could determine how much of the $7,000,000.00 in damages

represented Thomas Ó medical expenses, and made no other showing

to support her argument that the m edical expense portion of the

$ 2,225,000.00 settlement was less than $ 122,783.87. Ñ Smith v.

Ag. for Health Care Admin. , 24 So. 3 d 590, 592 (Fla. 5th DCA

2009). The Smith petitioner relied upon a narrow legal argument

that Ark ansas Dep artmen t of Health & Human Serv ice s. v. Ahlborn ,

547 U.S. 268, 292, 126 S. Ct. 1752, 164 L. Ed. 2d 459 (2006),

mandated a percentage reduction in the Medicaid lien in the same

ratio as the settlement bore to the actual damages. Smith and

Savain correctly state that Ahlborn does not require use of a

percentage reduction. That does not mean a percentage allocation

may not be used when the record support s it. In addition, the

Smith opinion and Savain Order predate the supreme courtÓs

opinion in Giraldo v. Ag ency for Health Care Admin istration .

4 7 . Courts have accepted the allocation approach us ed in

this Order. Lugo v. Beth Israel Med. Ctr. , 819 N.Y.S. 2d 892,

897 ( N.Y. Sup. Ct. 2006). See a lso Delgado v. Ag. for Health

Care Admin. , Case No. 1D16 - 5786, 2018 Fla. App. LEXIS 1012, 43

Fla. L. Weekly D 245 (Fla. 1st DCA, Jan. 26, 2018)(accepting use

of this allocation process in Delgado v. Ag. for Health C are

Admin. , Case No. 16 - 2084 (Fla. DOAH Nov. 30, 2016)). The

evidence in this case proved that the allocation process

described in this Order is reasonable, proper, and rational.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that Respondent, Agency for Health Care

Administration, is entitled to recover $1,098.44 in satisfaction

of its Medicaid lien.

DONE AND ORDERED this 12th day of June , 2019 , in

Ta llahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

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 12th day of June , 2019 .

ENDNOTE S

1/ This Order uses Petitioner to refer both to the guardian and

to her son to preserve his privacy.

2/ A prehearing stipulation binds the parties and the tribunal.

Gunn Plumbing, Inc. v. Dania , 252 So. 2d 1, 4 (Fla. 1971).

3/ All citations to Florida Statutes are to the 2018 compilation

unless otherwise noted.

4/ Prehearing Stipulation at paragraph 13 .

5/ Prehearing Stipulation at paragraph 10.

COPIES FURNISHED:

Alexander R. Boler, Esquire

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

(eServed)

David D. Dickey, Esquire

The Yerrid Law Firm

Suite 3900

101 East Kennedy Boulevard

Tampa, Florida 33602

(eServed)

Kim Annette Kellum, Esquire

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Thomas M. Hoeler, Esquire

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Mary C. Mayhew, Secretary

Agency for Health Care Administration

Mail Sto p 1

2727 Mahan Drive

T allahassee, Florida 32308

(eServed)

Stefan Grow, General Counsel

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

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.