19-004228MTR Erica E. Ross, A Minor By And Through Her Mother And Natural Guardian, Kimberly S. Ross vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Friday, February 7, 2020.

Summary: Petitioner proved that AHCA should be reimbursed for its Medicaid lien in a lesser amount than that calculated under section 409.910(11)(f), & $35,505 represents a fair and reasonable determination of past medical expenses actually covered by Petitioner.

S TATE O F F LORIDA

D IVISION O F A DMINISTRATIVE H EARINGS

E RICA E. R OSS , A M INOR B Y A ND

T HROUGH H ER M OTHER A ND N ATURAL

G UARDIAN , K IMBERLY S. R OSS ,

Petitioner ,

vs. Case No. 19 - 4228 MTR

A GENCY F OR H EALTH C ARE

A DMINISTRATION ,

Respondent .

/

F INAL O RDER

On November 4, 2019, Administ rative Law Judge Hetal Desai of the

Division of Administrative Hearings (DOAH) conducted the final hearing by

video tele conference with sites in Tallahass ee and St. Petersburg, Florida.

A PPEARANCES

For Petitioner: Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East Walnut Street

Monticello, Florida 32344

For Respondent: Alexan der R. Boler, Esquire

2073 Summit Lake Drive, Suite 300

Tallahassee, Florida 32317

S TATEMENT O F T HE I SSUE

The issue in this proceeding is h ow much of Pet itioner' s settlement

proceeds should be paid to Respon dent, the Agency for Health Care

Administration (AHCA or Agency), to satisfy AHCA's Medicaid lien under

section 409.910, Florida Statutes (2019) . 1

P RELIMINARY S TATEMENT

On August 12, 2019 , Petitioner fi led a " Petition to Determine Amount

Payable to Agency for Health Care Administration in S atisfaction of Medicaid

L ien" (Petition) with DOAH. Shortly thereafter, DOAH notified AHCA of the

Petition and assigned it to an Administrative Law Judge.

Petition er challenges the Medicaid lien asserted by AHCA against h er

settlement proceeds and asserts it should be reduced because she was not

"fully compensated for the full value of her damages and she is only

recovering a fraction of the total monetary value of her damages." The

Agency argues it must be reimbursed for its Medicaid lien in the amount of

$118,705.82, as calculated pursuant to section 409.910(11)(f).

The final hearing was held on November 4, 2019. 2 Petitioner offered the

testimony of Jeffery Hensley, Esquire , as an expert in valuation and as a fact

witness . Petitioner ' s Exhibits 1 and 3 through 12 were admitted into evidence

without objection. Petitioner's Exhibit 2 was admitted over the Agency's

objections. The Agency did not offer any witnesses or exhibits.

1 Unless referenced otherwise, all citations to state and federal statutes, rules , and

regulations are to the 2019 versions, which were in effect at the time of Petitioner's

settlement agreement. See Cabrera v. Ag. f or Health Care Admin. , Case No. 17 - 4557MTR,

FO at 22, n.1 (Fla. DOAH Jan. 23, 2018)(citing Suarez v. Port Charlotte HMA , 171 So. 3d 740

(Fla. 2d DCA 2015)).

2 The Agency's attorney was almost an hour late to the hearing, and arrived only after DOAH

staff contacted the Agency to determine whether it would be participating in the duly noticed

hearing.

Although t here was no cou rt reporter at the hea ring, a transcript of the

proceedings was filed on November 26, 2019. 3 At the conclusion of the

hearing, the parties requested an extension of an additional 21 days after the

filing of the transcript to file proposed final orders (PFOs), and this request

w as granted. A subsequent Joint Motion for Extension of Time to File the

PFOs was submitted and granted on December 17, 2019. Both parties timely

filed PFOs on January 8, 2020, and both PFOs have been considered.

F INDINGS O F F ACT

The Accident

1. Erica Ross ( Petitioner or Ms. Ross) is a 17 - year - old female who brings

this action by and through her mother and natural guardian, Kimberly Ross

(Mrs. Ross).

2 . On the night of May 13, 2017, a Cadillac Escalade (a large sports utility

vehicle) struck Ms. Ross and a friend while they were crossing the road in

front of the Ross home . Ms. Ross suffered a crushed pelvis and severe

orthopedic injuries, and was helicoptered from the accident site to the

hospital. Her friend died at the scene of the accident or shortly ther eafter.

3 . At the time of the accident , Ms. Ross was a 15 - year - old freshman in an

International Baccalaureate (IB) high school program, making the Honor

Roll. In addition, s he participated in extra - curricular activities including

dance and a student medic al leadership program.

3 The Agency failed to obtain a court reporter despite instructions in the Notice of Heari ng

and agreeing to do so in the Joint Pre - h earing S tipulation: "Res pondent agrees to arrange a

court reporter for the hearing." See also § 120.57 (1)(g) , Fla. Stat. ("The agency shall

accurately and completely preserve all testimony in the proceeding, and, on the request of

any party, it shall make a full or partial trans cript available at no more than actual cost.").

Given the option of rescheduling the hearing, the parties instead chose to digitally record the

hearing on the Agency attorney's mobile smartphone, and then obtain a transcription. Th is

method is less than de sirable , especially when the only witness testifies by video

teleconferencing, as evidenced by the "unintelligible" notations indicated in Mr. Hensley's

answers in the transcript.

Petitioner's Damages

4 . As a result of the accident, Ms. Ross was h ospitalized for approximately

ten days and suffered severe physical injuries, including the following:

multiple fractures to her pelvis and tibia; process fractures to the L1, L2, L3,

and L5 vertebrae; comminuted fracture of the S1 vertebra ; renal laceration;

closed head injury with brain damage; and a large parietal scalp contusion.

Later , Ms. Ross was also diagnosed with cognitive and emotional disorders

related to the accident , including the following : post - traumatic stress disorder

(PTSD) ; traumatic brain injury (TBI); post - concussion syndrome ; and

depression.

5 . The parties stipulated that Medicaid provided $118,705.82 toward

Petitioner ' s past medical expenses ari sing out of the accident.

6. A dditionally, there was $4,868 of medical expenses not paid by

Medicaid, for a total of approximately $123,573 in medical expenses.

7. The unrebutted evidence established Ms. Ross was bed ridden for

approximately six weeks af ter being released from the hospital, and then

returned to school using a wheelchair. Ms. Ross can currently walk without

assistance, but still has a slight limp in her right leg and has difficulty with

prolonged walking or standing. She no longer can part icipate in dance

activities, and is anticipated to have life - long limitations on the length of time

she can walk and stand. When she returned to school after the accident,

Ms. Ross had trouble concentrating and p e r forming simple tasks; she also

had problem s with her short - term memory. Ms. Ross's grades dropped and

she was no longer eligible for the IB program.

8. As a result of the TBI, Ms. Ross was evaluated by a pediatric brain

injury education specialist. The specialist prepared a special education repo rt

for Ms. Ross , which establishe s the accident caused cognitive issues related to

her concentration and memory. As a result of these issues, coupled with the

PTSD and depression caused by the death of her friend, Ms. Ross would have

difficulty finishing s chool without special accommodations. Although the

specialist 's report noted Ms. Ross could finish a basic college degree with the

proper accommodations, it noted that it will more than likely take her longer

than the typical four years . The specialist's r eport also states the cognitive

issues will affect the type of employment Ms. Ross will be able to successfully

maintain. The Agency did not challenge the specialist's report or the facts

underlying the report.

9. According to Petitioner's economist's rep ort, Ms. Ross 's cognitive,

physical, and me ntal health issues will have a negative impact on her future

wages. The present value of her lost future wages i s $1,068,044 if Ms. Ross

completes a four - year college degree; t he loss i s greater if Ms. Ross does n ot

obtain a college degree. Again, the Agency made no objections to the

economist's report , and did not challenge the underlying facts or ultimate

concl usions .

10 . Petitioner also presented a l ife c are p lan report , which was admitted

into e vidence without objection. The life c are p lan establishe s Petitioner will

require life - long extensive physical and mental therapy, medication, and

future surgeries. The unrebutted evidence established the present value of

her future medical expenses at $424,966.

11 . The e vidence in the various reports was corroborated by Mr. Hensley's

testimony. Mr. Hensley was Petitioner's attorney in the personal injury claim

against the owner and operator of the Escalade that struck Petitioner. As

Petitioner's attorney , Mr. Hensley knew Petitioner , and was familiar with

her m edical records, life care plan, economist 's report, and the special

education report.

12 . The evidence also established Ms. Ross has suffer ed non - economic

damages as a result of the accident. The injuries will impac t her daily life

functions and her ability to maintain normal family, social, and work

relationships.

The Settlement

13 . The parties stipulated that Mrs. Ross pursued a personal injury claim

against the owner and operator of the car that struck her daugh ter to recover

damages associated with Petitioner's injuries.

1 4 . AHCA was notified of Petitioner ' s personal injury action, but did not

intervene or join the action. Instead, AHCA asserted a $118,705.82 Medicaid

lien against Petitioner's personal injury a ction and any resulting settlement.

1 5 . The personal injury claim was settled for an unallocated lump sum

amount of $1,000,000, and fully executed on June 22, 2019. The taxable costs

incurred in securi ng the $1,000,000 settlement were $130,110 .67.

16 . Neit her the settlement agreement nor any related release was

presented at the hearing. The parties have stipulated however, that AHCA

was notified of the settlement , and AHCA did not file a motion to set aside,

void , or otherwise dispute Petitioner's settlemen t.

17. Mr. Hensley was also accepted, without any objection by the Agency,

as an expert in the valuation of damages. Mr. Hensley has 33 years of legal

experience and specializes in handling personal injury litigation involving

brain injuries. In addition , he has served on the board of directors for a

publically funded organization that works with victims of brain injuries in

Florida. Based on his experience and familiarity with other similar cases and

verdicts, Mr. Hensley opined as to the total value of P etitioner's damages and

the formula used in these types of cases to estimate the amount of non -

economic damages.

18 . Regarding the value of Petitioner's damages, Mr. Hensley testified

that "my thoughtful value would be no less than $3.5 million . " T his was a

conservative valuation of the "full value of all of [Petitioner's] damages." This

amount include s total economic damages ($1,616,583) , made up of

Petitioner's past medical expenses ($123.573) , plus future income loss

($1,068,044) , plus future medical exp enses ($424,966) . T he remaining amount

($1,883,417) is attributable to non - economic damages such as past and future

pain and suffering. Although t he Agency questioned Mr. Hensley, it did not

credibly challenge him on these numbers.

19. The non - economic dam ages, explained Mr. Hensley, are generally 2.85

to three times the amount of economic damages. This is how Mr. Hensley

arrived at th e $1,883,417 figure for the non - economic damages. Again, the

Agency did not convincingly challenge this formula or amount .

A llocation of Past Medical Expenditures

20 . The key factual issue in this case is how much of the $1,000,000

settlement funds are available to AHCA for payment of the Medicaid lien.

One way to determine this amount is through a default formula set forth in

section 409.910(11)(f). The parties stipulated that under this default formula,

Petitioner is required to pay AHCA the full amount of the Medicaid lien,

$118,705.82 . 4

2 1 . Alternatively, Petitioner can show that a lesser amount than the

default amount " sho ul d be allocated as reimbursement" for past medical

expenses. See § 409.910(17)(b), Fla. Stat. Here, Petitioner urges the reduction

of the Medicaid lien by the ratio of the act ual settlement recovery to the

"settlement value" amount.

22 . Although the Agen cy challenged Mr. Hensley on the "pro rata"

approach he used to arriv e at the amount of the settlement that could be

reasonably attributed to past medical expenses, the Agency did not offer an

alternative methodology or present evidence why this "pro rata" approach

should not be used. Ultimately, the undersigned must accept Mr. Hensley's

unrebutted testimony that in this case "there really doesn't seem to be

another rational, reasonable way to do it."

23. Petitioner provided evidence supporting the allocati ons of past lost

wages, future lost earnings, and non - economic damages, such as pain and

4 Section 409.910(11)(f) establishes the Agency's default recovery amount fo r a Medicaid lien:

the default amount is equal to one - half of the total award, after deducting attorney's 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 recipient's beha lf.

suffering. Based on the valuation of $3.5 million, Petitioner's $1,000,000

settlement would equal approximately 28.57 percent of Petitioner's full

damages. Using a "pr o rata" approach, this same percentage applied to the

past medical expenses wo uld equal approximately $35,305 .

C ONCLUSIONS O F L AW

24 . The Division of Administrative Hearings has jurisdiction over the

subject matter and parties in this case pursuant to sect ions 120.569, 120.57,

and 409.910, Florida Statutes (201 9 ) ( the Medicaid Third - Party Liability

Act ).

25 . As explained by the Florida Supreme Court in Giraldo v. Ag ency for

Health Care Admin istration , 248 So 3d 53, 5 5 (Fla. 2018) , Medicaid is a joint

govern mental program designed to help participating states provide medical

treatment for their residents who cannot afford to pay for treatment. 5 In

order for the S tate of Florida to take advantage of federal Medicaid funds for

patient care costs, it must comply with the federal regulations requiring it to

recover its expenditures for the medical expenses from third - party sources ,

such as settlement agreements. See 42 U.S.C. § 1396a(a)(25)(B); Ahlborn , 547

U.S. at 284 - 85. At the same time, the Medicaid statute li mi ts a state' s right

to collect reimbursement of expended funds to only those third - party monies

that can be allocated for medical care. 42 U.S.C. § 1396p(a)(1); Ahlborn , 547

U.S. at 285 - 86.

26 . As mentioned above, the Florida Legislature set forth a " defa ult

formula " to determine the amount AHCA may recover for past Medicaid

5 Although participation in Medicaid is voluntary, all states take advantage of this funding

source for the medical needs of its citizens. See Ark. DepÔt of Health & Human Servs. v.

Ahlborn , 547 U.S. 268, 275 (2006) ("States are not required to partic ipate in Medicaid, but all

of them do. The program is a cooperative one; the Federal Government pays between 50%

and 83% of the costs the State incurs for patient care, and, in return, the State pays its

portion of the costs and complies with certain statu tory requirements for making eligibility

determinations, collecting and maintaining information, and administering the program.");

see also Gallardo v. Dudek , 263 F. Supp. 3d 1247, 1250 (N.D. Fla. 2017), amended on

rehearing, 2017 U.S. Dist. LEXIS 112448 ( N.D. Fla. 2017), rev. granted , Case No. 17 - 13693

(11th Cir. 2017).

payments from a judgment, aw ard, or settlement from a third party. See

§ 409.910(11)(f), Fla. Stat. The statute, however, provides Medicaid recipients

with a method for challenging thi s default amount by initiating an

administrative proceeding through DOAH. See § 409.910(17)(b) , Fla. Stat.

(providing the procedure by which a Medicaid recipient may contest the

amount designated as recovered medical expenses payable under section

409.910( 11)(f)). Certain aspects of the default formula statute have been

called into question, including (1) what portion of a Medicaid beneficiary's

recovery is subject to a lien by AHCA, and (2) what is the proper burden of

proof for a Medicaid beneficiary to p rove the default formula is inappropriate.

S ee Giraldo , 248 So. 3d at 54 (holding " federal law allows AHCA to lien only

the past medical expenses portion of a Medicaid beneficiary's third - party tort

recovery to satisfy its Medicaid lien ." ); G allardo , 263 F . Supp. 3d at 1260

(holding Florida 's "clear and convincing" burden in section 409.910(17)(b) is

preempted by federal law). 6 Regarding the first issue, AHCA has stipulated

it only seeks recovery for past medical expenses, and not the future medical

expens es.

27. Regarding the burden of proof, a lthough this issue is currently before

the federal 11th Circuit on appeal in the Gallardo case , the Agency has

stipulated to the preponderance of the evidence default standard under

section 120.57(1)(j). Regardless of whether the burden is "clear and

convincing" or a "preponderance of the evidence , " the burden was on

Petitioner -- as the Medicaid recipient -- to prove that a lesser portion of the

6 In Gallardo , Judge Mark Walker enjoined A H C A from applying the clear and convincing

standard in section 409.910(17)(b). But see Gray v. Ag. for Health Care Admin ., 44 Fla. L.

Weekly D301 7 (Fla. 1st DCA December 19, 2019)("But the decision in Gallardo is not binding

on this Court or the Division of Administrative Hearings, even though it may be persuasive

authority. And, even if Gallardo were binding, the invalidated portion of the statute Ð the

clear and convincing burden of proof Ð would be replaced with the default burden of proof for

administrative hearings under Florida's Administrative Procedure Act. Thus, if Gallardo

was binding, [the petitioner] would have to show by a preponderance of the evidence that

AHCA's lien should be less than the statutory amount." ( Citations and quotations omitted ) ).

total recovery should be allocated as reimbursement for past medical

expen ses , rather than the amount calculated by AHCA.

28 . In Giraldo , the court explained "there must be a 'reasonable basis in

the evidence' for the [the administrative law judge] to reject uncontradicted

testimony supporting the reduction of a Medicaid lien." Giraldo , 248 So. 3d at

56 . A " reasonable basis" can include "conflicting medical evidence, evi dence

that impeaches the expert' s testimony or calls it into question, such as the

failure of the plaintiff to give the medical expert an accurate or complete

me dical history, conflicting lay testimony or evidence that disputes the injury

claim, or the plaintiff' s conflicting testimony or self - contradictory statements

regarding the injury." Wald v. Grainger , 64 So. 3d 1201, 1206 (Fla. 2011).

29 . This case is simil ar to the recent decisions in Eady v. State , 279 So. 3d

1249 (Fla. 1st DCA 2019) and Mojica v. State , 44 Fla. L. Weekly D3018 (Fla.

1st DCA December 19, 2019). In Eady , the Medicaid recipient settled his

lawsuit, but the terms of the settlement were confid ential. There, as in this

case, the petitioner presented unrebutted expert testimony regarding the

total value of his damages and the appropriate share of the settlement funds

that should be allocated to past medical expenses. Id. at 1252 - 53. The First

Dis trict Court of Appeal held that despite the ALJ's finding that the expert

spoke in "generalities, speculations, and reasonableness as to the settlement

in relation to the Medicaid lien," the petitioner had met his burden. Relying

on Giraldo , the Eady court noted that the Agency had not put on any

contradictory evidence, and the ALJ could not ignore the expert's testimony

establishing the appropriate share of settlement funds properly allocated to

past medical expenses.

30 . Similarly in Mojica , the court he ld that a pro rata methodology is

appropriate where a petitioner presents "unrebutted and unimpeached expert

testimony concerning the full value of her damages . . . [and] AHCA did not

present any evidence contesting the pro rata methodology used to calcul ate

the [ ] allocation to past medical expenses. " Id. at D3018 (citations omitted).

31. Because the Agency has not rebutted or impeached the expert

testimony, or offered any witnesses or evidence contradicting Petitioner's

case, Petitioner has prove d that $35,305 represents the amount that can be

fairly attributable to past medical expenses and is available to the Agency for

repayment on its Medicaid lien .

O RDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED that the Agency f or Health Care Ad ministration may recover

$35,505 from PetitionerÔs settlement proceeds at issue in this matter in

satisfaction of its Medicaid lien.

DONE AND ORDERED this 7th day of February , 2020 , in Tallahassee,

Leon County, Florida.

S

HETAL DESAI

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 t he

Division of Administrative Hearings

this 7th day of February , 2020 .

C OPIES F URNISHED :

Alexander R. Boler, Esquire

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

(eServed)

Floyd B. Faglie, Esquire

Staunton and Faglie, P.L.

189 East W alnut 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

2 727 Mahan Drive , Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Mary C. Mayhew, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

Stefan Grow, General Counsel

Agency for Health Care Adm inistration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Shena Grantham, Esquire

Agency for Health Care Administration

Building 3, Room 3407B

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Thomas M. Hoeler, Esquire

Agency f or Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

N OTICE O F R IGHT T O J UDICIAL R EVIEW

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 o f

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 resid es or as otherwise provided by law .