19-001923MTR Donna L. Fallon, As Power Of Attorney For Alicia M. Fallon vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, July 26, 2019.

Summary: Petitioner proved Respondent should 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

DONNA L. FALLON, AS POWER OF

ATTORNEY FOR ALICIA M. FALLON,

Petitioner,

vs. Case No. 19 - 1923MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION,

Respondent.

_______________________________/

FINAL ORDER

Pursuant to notice, a formal administrative hearing was

conducted before Administrative Law Judge Mary Li Creasy by

video teleconference , with locations in Lauderdale Lakes and

Tallahassee, Florida, on June 24, 2019.

APPEARANCES

For Petitio ner: Jason Dean Lazarus, Esquire

Special Needs Law Firm

911 Outer Road

Orlando, Florida 32814

For Respondent: Alexander R. Boler, Esquire

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

The issue to be decided is the amount to be paid by

Petitioner to Respondent, Agency for Health Care Administration

("AHCA"), out of her settlement proceeds, as reimbursement for

past Medicaid expend itures pursuant to section 409.910, Florida

Statutes.

PRELIMINARY STATEMENT

On Apri l 15, 2019, Petitioner filed a Petition to Determine

Medicaid's Lien Amount to Satisfy Claim against Personal Injury

Recovery by the Agency for Health Care Administration pu rsuant

to s ection 409.910 (17)(b), Florida Statutes . The matter was

assigned to the undersigned administrative law judge to conduct

a formal administrative hearing and enter a final order.

Prior to the final hearing , the parties filed a Joint

Prehearing Stipulation , which included numerous stipulated and

admitted issues of law and fact. Those stipulated issues of law

and fact have been incorporated herein.

The final hearing proceeded as scheduled on June 24, 2019.

Petitioner, Donna L. Fallon, as mother and Power of Attorney for

Alicia M. Fallon, testified and also presented the testimony of

two expert witnesses, attorneys Sean Domnick , Esquire, and

James Nosich , Esquire . Petitioner's Exhibits 1 through 9 were

admitted into evidence. AHCA did not call a ny witnesses or

offer any exhibits.

The parties elected not to order a transcript of the final

hearing. The parties timely filed their respective proposed

final orders , which were considered by the undersigned in the

preparation of this Final Order. All references to the Florida

Statutes are to the 2017 version unless otherwise stated.

FINDING S OF FACT

1. On or about September 17, 2007, Alicia M. Fallon

("Alicia"), then 17 years old, drove to the mall to meet friends

and became involved in an impro mptu street race. Alicia lost

control of the vehicle she was driving, crossed the median into

oncoming traffic, and was involved in a motor vehicle crash.

Her injuries consisted of traumatic brain injury ("TBI") with

moderate hydrocephalus, right subdura l hemorrhage, left pubic

ramus fracture, pulmonary contusions (bilateral), and a clavicle

fracture. Since the time of her accident, she has undergone

various surgical procedures including the insertion of a

gastrostomy tube, bilateral frontoparietal crani otomies,

insertion of a ventriculoperitoneal shunt, and bifrontal

cranioplasties.

2. As a result of the accident, in addition to the

physical injuries described above, Alicia suffered major

depressive disorder, and Post - Traumatic Stress Disorder

inju ries. She is confined to a wheelchair for mobility, has no

bowel or bladder control, and suffers from cognitive

dysfunction. Alicia is totally dependent on others for

activities of daily living and must be supervised 24 hours a

day, every day of the week .

3. A lawsuit was brought against the driver of the other

car in the race, as well as the driver's mother, the owner of

the vehicle. It could not be established that the tortfeasor

driver hit Alicia's car in the race, or that he cut her off.

The t heory of liability was only that because Alicia and the

other driver in the race were racing together , that the

tortfeasor was at least partially responsible for what happened.

It was viewed that there was no liability on the part of the

driver of the thi rd vehicle. The tortfeasor only had $100,000

in insurance policy limits, but the insurance company did not

timely offer payment. The tortfeasor had no pursuable assets.

4. The lawsuit was bifurcated and the issue of liability

alone was tried. The jury determined that the tortfeasor driver

was 40 percent liable for Alicia's damages. Because of the risk

of a bad faith judgment, the insurance company for the

tortfeasor settled for the gross sum of $2.5 million.

5. AHCA, through its Medicaid pr ogram, provided medical

assistance to Ms. Fallon in the amount of $608,795.49. AHCA was

properly notified of the lawsuit against the tortfeasors, and

after settlement, asserted a lien for the full amount it paid,

$608,795.49, against the settlement procee ds. AHCA did not

"institute, intervene in, or join in" the medical malpractice

action to enf orce its rights as provided in section 409.910(11),

or participate in any aspect of Alicia's claim against the

tortfeasors or their insurance company. Application of the

formula at section 409.910(11)(f), to the settlement amount

requires payment to AHCA in the amount of $608,795.49.

6. Another provider, Optum, provided $592,554.18 in past

medical expense benefits on behalf of Ms. Fallon. However, that

amoun t was reduced through negotiation to a lien in the amount

of $22,220.78 . 1/

7. Petitioner deposited the full Medicaid lien amount in

an interest bearing account for the benefit of AHCA pending an

administrative determination of AHCA's rights, and this

constitutes "final agency action" for purposes of c hapter 120,

Florida Statutes, pursuant to s ection 409.910(17).

8. Petitioner , Donna Fallon, the mother of Alicia,

testified regarding the care that was and is continuing to be

provided to Alicia aft er the accident. She is a single parent,

and with only the assistance of an aide during the day, she is

responsible for Alicia's care. Alicia must be fed, changed,

bathed, and turned every few hours to avoid bed sores. Alicia

can communicate minimally b y using an electronic device and by

making noises that are usually only discernable by her mother.

Although she needs ongoing physical therapy and rehabilitation

services, the family cannot afford this level of care.

9. Petitioner presented the test imony of Sean Domnick,

Esquire, a Florida attorney with 30 years' experience in

personal injury law, including catastrophic injury and death

cases, medical malpractice, and brain inju ry cases. Mr. Domnick

is board certified in Civil Trial by the Florida B ar. He

represented Alicia and her mother in the litigation against the

tortfeasors and their insurance company. As a routine part of

his practice, he makes assessments concerning the value of

damages suffered by injured clients. He was accepted , without

objection, as an expert in valuation of damages .

10. Mr. Domnick testified that Alicia's injuries are as

catastrophic as he has handled. Alicia has no strength, suffers

contractions and spasms , and is in constant pain. Alicia has

impaired speech, limited gross and fine motor skills, is unable

to transfer, walk, or use a wheelchair independently. Alicia is

unable to self - feed. All of her food must be cooked and cut up

for her. Alicia is unable to perform self - hygiene and has no

ability to help he rself in an emergency and therefor e requires

constant monitoring.

11. As part of his work - up of the case, Mr. Domnick had a

life care plan prepared by Mary Salerno, a rehabilitation

exp ert, which exceeded $15 million on th e low side, and

$18 million on the high side , in future medical expenses alone

for Alicia's care. Mr. Domnick testified that the conservative

full value of Alicia's damages was $45 million. That figure

included $30 million for Alicia's pain and suffering, mental

anguish and loss of quality of life, disability, and

disfigurement, extrapolated for her life expectancy, plus the

low end of economic damages of $15 million.

12. Petitioner also p resented the testimony of

James Nosich, Esquire, a lawyer who has practiced primarily

per sonal injury defense for 29 years. Mr. Nosich and his firm

specialize in defending serious and catastrophic personal

injury/medical malpractice cases throughout Florida. As part of

his practice, Mr. Nosich has reviewed more than 1,000 cases of

personal i njury/medical malpractice cases and formally reported

the potential verdict and full value to insurance companies that

retained him to defend their insureds. Mr. Nosich has worked

closely with economists and life care planners to identify the

relevant dam ages of those catastrophically injured in his

representation of his clients. Mr. Nosich has also tried over

30 cases in Broward County in which a plaintiff suffered

catastrophic injuries similar to those of Alicia. Mr. Nosich

was tendered and accepted , w ithout objection, as an expert in

the evaluation of damag es in catastrophic injury cases .

13. In formulating his expert opinion with regard to this

case, Mr. Nosich reviewed: Alicia's medical records and

expenses; her life care plan prepared by Ms. Salerno; and the

economist's report. He took into consideration the reputation

of Alicia's lawyer (Mr. Domnick); and the venu e in which the

case would be tri ed. Mr. Nosich opined that Broward County is

known for liberal juries who tend to award high amou nts in

catastrophic cases. He also testified that Mr. Domnick is known

as a lawyer with extreme capability and who has an excellent

rapport with juries and the ability to get higher dollar

verdicts.

14. Mr. Nosich agreed with Mr. Domnick that the e stimated

$45 million figure for the total value of Alicia's case was

conservative. He agreed with Ms. Salerno's estimated economic

damages of $15 million and a doubling of that amount ($30

million) for Alicia's non economic damages. Mr. Nosich credibly

ex plained that the $45 million total value was very conservative

in his opinion based on Alicia's very high past medical bills

and the fact that she will never be able to work.

15. The testimony of Petitioner's two experts regarding

the total value of damages was credible, unimpeached, and

unrebutted. Petitioner p roved that the settlement of

$2.5 million does not fully compensate Alicia for the full value

of her damage s .

16. As testified to by Mr. Domnick, Alicia's recovery

represents only 5.55 p ercent of the total value of her claim.

However, in applying a ratio to reduce the Medicaid lien amount

owed to AHCA, both experts erroneously subtracted attorney's

fees and costs of $1.1 million from Alicia's $2.5 million

settlement to come up with a rat io of 3 percent to be applied to

reduce AHCA's lien. 2/ Further, in determining the past medical

expenses recovered, Petitioner's experts also failed to include

the Optum past medical expenses in the amount of $592,554.18.

17. AHCA did not call any w itnesses, present any evidence

as to the value of damages, or propose a different valuation of

the damages. In short, Petitioner's evidence was unrebutted.

18. However, through cross - examination, AHCA properly

contested the methodology used to calcu late the allocation to

past medical expenses.

19. Accordingly, the undersigned finds that Petitioner has

proven by a preponderance of the evidence that 5.55 percent is

the appropriate pro rata share of Alicia's past medical expenses

to be applied to determine the amount recoverable by AHCA in

satisfaction of its Medicaid lien.

20. Total past medical expenses is the sum of AHCA's lien

in the amount of $608,795.49, plus the Optum past medicals in

the amount of $592,554.18, which equals $1,201,34 9.67. Applying

the 5.55 percent pro rata ratio to this total equals $66,674.91,

which is the portion of the settlement representing

reimbursement for past medical expenses and the amount

recoverable by AHCA for its lien.

CONCLUSIONS OF LAW

21. DOAH has jurisdiction over the parties and subject

matter in this case, and has fina l order authority pursuant to

sections 120.569, 120.57(1), and 409.910(17)(b), Florida

Statutes (2018) .

22. AHCA is the state agency authorized to administer

Florida's Medicaid pro gram. § 409.902, Fla. Stat.

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

states are required to seek reimbursement for medical expenses

from Medicaid recipients who later recover from legally liable

third parties.

24. By accepting Medicaid benefits, Medicaid recipients

automatically subrogate their rights to any third - party benefits

for the full amount of Medicaid assistance provided by Medicaid

and automatically assign to AHCA the right, title, and interest

to those benefits, other than tho se excluded by federal law.

Section 409.910(6)(c) creates an automatic lien on any such

judgment or settlement with a third party for the full amount of

medical expenses paid to the Medicaid recipient. However,

AHCA's recovery is limited to those proceed s allocable to past

medical expenses.

25. Section 409.910(11)(f) establishes the amount of

AHCA's recovery for a Medicaid lien to the lesser of its full

lien; or one - half of the total award, after deducting attorney's

fees of 25 percent of the recovery an d all taxable costs, up to,

but not to exceed, the total amoun t actually paid by Medicaid on

the recipient's behalf. In this case, the parties agree the

formula results in AHCA recovering the full amount of the lien.

26. However, section 409.910(17)(f) p rovides a method

(default allocation) by which a Medicaid recipient may contest

the amount designated as recovered Medicaid expenses payable

under section 409.910(11)(f). In order to successfully

challenge the amount payable to AHCA, the recipient must pr ove,

by a preponderance of the evidence, that a lesser portion of the

total recovery should be allocated as reimbursement for past

medical expenses than the amount calculated by AHCA pursuant to

the formula. Gallardo v. Dudek , 263 F. Supp. 3d 1247 (N.D. F la.

2017).

27. As explained in Smith v. Agency for Health Care

Administration , 24 So. 3d 590 (Fla. 5th DCA 2009), evidence of

all medical expenses must be presented, as AHCA may recover from

the entirety o f the medical expense portion -- not just the

portio n that represents its lien. Further, section

409.910(17)(b) grants the undersigned power to find "the portion

of the total recovery which should be allocated as past . . .

medical expenses," and to limit AHCA to that amount. The

statute does not authoriz e a reduction of the Medicaid lien to

the Medicaid - only portion of a recipient's recovery.

28. Where uncontradicted testimony is presented by the

recipient, there must be a "reasonable basis in the record" to

reject it. Giraldo v. Ag. for Health Care Adm in. , 248 So. 3d 53

(Fla. 2018). Here, there is no reasonable basis to reject that

testimony.

29. In the instant case, Petitioner proved by a

preponderance of the evidence that the settlement proceeds of

$2.5 million represent only 5.55 percent of Petitio ner's claim

valued conservatively at $45 million. Therefore, it is

concluded that AHCA's full Medicaid lien amount should be

reduced by the percentage that Petitioner's recovery represents

of the total value of Petitioner's claim.

30. The application o f the 5.55 percent ratio to

Petitioner's total past medical expenses of $1,201,349.67

results in $66,674.91. This amount represents that share of the

settlement proceeds fairly and proportionately attributable to

expenditures that were actually paid by AH CA for Petitioner's

past medical expenses.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that the Agency for Health Care

Administration is entitled to $66,674.91 from Petitioner's

settlement proceeds in satisfaction of its Medicaid lien.

DONE AND ORDERED this 26th day of July , 2019 , in

Tallahassee, Leon County, Florida.

S

MARY LI CREASY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Par kway

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 26th day of July , 2019 .

ENDNOTE S

1/ The evidence presented was unclear as to wheth er the amount

owed to Optum of $592,554.18 was reduced to the lien of

$22,220.78 before or after the 2.5 million settlement agreement.

No evidence was presented by Petitioner regarding the actual

amount paid by Optum to healthcare providers.

AHCA persuasively argues that Optum's total past medical

expenses of $592,554.18 must be included in determining the

actual total past medical expenses attributable to Petitioner's

care. It is a reasonable inference that it was this greater

number, rather than the significantly reduced Optum lien amount,

that the life care expert and economist based the calculation of

economic damages in the amount of $15 million. Accordingly, the

full amount of the expenses incurred by Optum must be included

to determine the full amount of medical expenses recovered in

the settlement against which AHCA can assert its lien.

2/ $1.4 million divided by $45 million equals 3 percent.

COPIES FURNISHED:

Alexander R. Boler, Esquire

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

(eServed)

Kim Annette Kellum, Esquire

Agency for Health Care Administration

2727 Mahan Drive , Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Jason Dean Lazarus, Esquire

Special Needs Law Firm

911 Outer Road

Orlando, Florida 32814

(eSer ved)

Richard J. Shoop , Agency Clerk

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, Flor ida 32308

(eServed)

Stefan Grow, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Mary C. Mayhew , Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tall ahassee, 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 Rule s

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 not ice, 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.