19-005338MTR Mitchell Williams, Individually vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Thursday, December 19, 2019.

Summary: Petitioner proved by a preponderance of the evidence that Respondent should be reimbursed for its Medicaid lien in a lesser amount than that calculated under section 409.910(11)(f).

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MITCHELL WILLIAMS, INDIVIDUALLY ,

Petitioner,

vs. Case No. 19 - 5338MTR

AGENCY FOR HEALTH CARE

ADMINISTRATION ,

Respondent .

/

FINAL ORDER

A formal hearing was conducted in this case on November 22,

2019, via video teleconference from sites in Pensacola and

Tallahassee, Florida, before Lawrence P. Stevenson, a duly -

designated Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Jason D ean Lazarus, Esquire

Special Needs Law Firm

Suite 160

2420 South Lakemont Avenue

Orlando, Florida 32814

For Respondent: Alexander R. Boler, Esqui re

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

STATEMENT OF THE ISSUE

The issue in this proceeding is how much of PetitionerÓs

settlement proceeds should be paid to Respondent, Agency for

Health Care Administration (ÐAHCAÑ), to satisfy AHCA's Medicaid

lien under section 409.910, Florida Statutes. 1/

PRELIMINARY STATEMENT

On October 9, 2019, Petitioner , Mitchell Williams , filed

with the Division of Administrative Hearings a plead ing styled

ÐPetition to Determine MedicaidÓs Lien Amount to Satisfy Claim

Against Personal Injury Recovery by the Agency for Health Care

AdministrationÑ (the ÐPetitionÑ). The Petition challenged

AHCA Ós lien for recovery of medical expenses paid by Medicai d in

the amount of $70,460.35. Petitioner asserted that established

case law provides for the reimbursement of a lesser amount of

the total third - party settlement proceeds than the amount

calculated by AHCA pursuant to the formula established in

section 4 09.910(11)(f).

The case was scheduled for hearing on November 22, 2019, on

which date it was convened and completed. Prior to the hearing,

the parties submitted a Pre - hearing Stipulation, which has been

accepted and incorporated into the Findings of Fac t in this

Final Order.

At the hearing, Petitioner testified on his own behalf and

offered the testimony of John Wesley, the attorney who

represented him in connection with his personal injury claim;

and attorney Charles Beall, who was accepted as an expert in the

valuation of personal injury claims. PetitionerÓs Exhibits 1

through 4 were admitted into evidence. AHCA presented no

witnesses and offered no exhibits.

No transcript of the hearing was ordered. The parties

agreed to submit their p roposed f inal o rders within 10 days of

the hearing date. Petitioner timely filed his Proposed Final

Order on November 27, 2019.

AHCA submitted a Proposed Final Order on December 4, 2019,

two days after the agreed - upon deadline. No objection was made

to the late fili ng. Therefore, ACHAÓs Proposed Final Order has

been considered in the preparation of this Final Order.

FINDING S OF FACT

1. On the night of April 2, 2015, Mitchell Williams was

riding his bicycle along a public sidewalk in Destin, Florida .

The sidewalk i ntersected privately - owned driveways. At the

north side of a privately - owned driveway at 239 Main Street, the

concrete was broken at the point where the sidewalk and private

driveway connected. The broken concrete created a dangerous

condition to anyone riding along the sidewalk. Mr. Williams

rode his bicycle into soft sand where the sidewalk should have

been, causing his front wheel to bury into the sand before

striking the leading edge of the undamaged portion of the

sidewalk. Mr. Williams flipped ove r the handlebars of his

bicycle and struck the concrete sidewalk face first.

2. Mr. Williams underwent an anterior cervical discectomy

and fusion (ÐACDFÑ), placement of an inferior vena cava (ÐIVCÑ)

filter, open reduction and internal fixation (ÐORIFÑ) of a nasal

maxillary fracture, and rep air of facial lacerations.

Mr. Williams was hospitalized for nine months. During his post -

operative hospitalization, Mr. Williams developed stage IV

decubitus ulcers that left him with significant scar tissue over

hi s tailbone.

3. The accident rendered Mr. Williams a partial

quadriplegic from a cervical spinal cord injury. He remains

confined to a wheelchair for mobility. Mr. Williams is totally

dependent on others for his activities of daily living.

4. Mr. Willia ms made a personal injury damages claim

against the owner of the sidewalk, the City of Destin (ÐCityÑ).

5. On or about April 29, 2019, Mr. Williams entered into a

pre - suit settlement of his tort claim against the City for

$200,000, the statutory maximum p rovided by section 768.28(5),

Florida Statutes. Because the City tendered the full amount for

which it could be held liable, no express allocation for past

medical expenses was made in the settlement .

6. After settling with the City, Mr. Williams brough t an

action against Wagih Gargas, Gargas Commercial and City Produce

of Fort Walton Beach, alleged as tortfeasors by virtue of their

ownership and/or control of the private driveway where

Mr. Williams was injured. The case against these parties

remains pe nding with a very uncertain outcome as to liability.

7. AHCA was properly notified of Mr. WilliamsÓ s personal

injury action and indicated it had paid benefits related to his

injuries in the amount of $70,460.35. AHCAÓs payments were the

only payments mad e for Mr. WilliamsÓ s past medical expenses.

AHCA has asserted a lien for the full amount of $70,460.35

against Mr. WilliamsÓ s settlement proceeds.

8. Mr. Williams will never fully recover from his

injuries. He will require medical treatment and assistan ce with

his activities of daily living for the rest of his life.

9. Application of the formula in section 409.910(11)(f)

would require Mr. Williams to pay back Medicaid all of its

$70,460.35 lien. Mr. Williams contends that only a fraction of

the settl ement represents his recovery for past medical

expenses.

10. Sections 409.910(11)(f) and 409.910(17)(b), as

amended, provide for recovery by Medicaid for future medical

expenses as well as past medical expenses . Section

409.910(17)(b) further imposes a c lear and convincing burden of

proof on a recipient attempting to show that the portion of the

total recovery that should be allocated as past and future

medical expenses is less than the amount calculated by AHCA.

11. However, in Gallardo v. Dudek , 263 F. Supp. 3d 1247

(N.D. Fla. 2017), the court held that the provisions allowing

Medicaid to recover future medical expenses and imposing a clear

and convincing standard on recipients contesting AHCAÓs

calculations violate and are preempted by federal law. The

parties have stipulated that Gallardo v. Dudek preempts the

application of the future medical expenses provision and that

PetitionerÓs burden of proof in this section 409.910(17)(b)

proceeding is a preponderance of the evidence. See also Giraldo

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

federal law AHCA may only reach the past medical expenses

portion of a Medicaid recipient's tort recovery to satisfy its

Medicaid lien).

12. At the hearing, Mr. Williams testified as to the

extent of the injuries and damages he suffered in the April 2,

2015 , bicycle accident. Mr. Williams testified persuasively as

to the overwhelming impact of the injuries on his life. Prior

to the accident, Mr. Williams made a good living as a skilled

carpenter a nd enjoyed fishing and golfing in his spare time.

None of these activities is possible now. He is an ÐincompleteÑ

quadriplegic, meaning that he is confined to a wheelchair but

has limited use of his arms.

13. John Wesley is t he attorney who represented

Mr. Williams in his personal injury lawsuit. Mr. Wesley is an

18 - year practicing attorney who is board certified in civil

trial practice . He is a partner with Wesley, McGrail & Wesley

in Ft. Walton Beach. Mr. Wesley testified that he handles

catastrophi c personal injury and death cases , including cases

involving injuries similar to those suffered by Mr. Williams.

14. Mr. Wesley regularly evaluates the damages suffered by

injured people. He testified that he does all of his work on a

contingency fee bas is, which makes the valuation of cases

critical to his livelihood. Mr. WesleyÓs representation of

Mr. Williams gave him intimate familiarity with his clientÓs

injuries and damages.

15. Mr. Wesley testified that there are two aspects to the

valuation of a case: liability and damages. As to liability,

the attorney must ask whether the potential client is partly or

wholly responsible for his own injuries due to factors such as

comparative negligence or alcohol intake , and whether the

tortfeasor is shielded under a legal concept such as sovereign

immunity. T he attorney must then decide whether the damages are

worth pursuing even if the tortfeasorÓs liability is

unquestioned.

16. Mr. Wesley testified that there was no question in

this case as to the damages , which were catastrophic. The

problem in Mr. WilliamsÓ s case was liability, because of the

presence of contributory negligence and alcohol defenses. The

most significant factor limiting Mr. WilliamsÓ s recovery was the

sovereign immunity cap on damages. The City of Destin tendered

$200,000, the full limit it would be required to pay under the

cap. To recover more would require passing a claim bill in the

legislature, an unlikely outcome given Mr. WilliamsÓs

contributory negligence . Under the circumstan ces, Mr. Wesley

determined that nothing further could be recovered from the

City. Mr. William s Ós net recovery, after attorneyÓs fees,

was $140,000.

17. Mr. Wesley provided detailed testimony about how the

accident occurred and the mechanism of injury. H e credibly

testified regarding the process he undertook in evaluating and

arriving at his opinion related to the value of the damages

suffered by Mr. Williams. He met with Mr. Williams, evaluated

the facts of the case, reviewed all the medical information and

all other records and reports regarding Mr. WilliamsÓs injuries,

analyzed liability issues and comparative fault, developed

economic damages estimates, and valued non - economic damages such

as past and future pain and suffering, loss of capacity to en joy

life, and mental anguish.

18. Mr. Wesley testi fied that the full value of

Mr. WilliamsÓs damages was likely in excess of $19 million.

That figure included Mr. WilliamsÓs pain and suffering, mental

anguish, loss of quality of life, and economic damage s.

Mr. Wesley testified that non - economic damages were the greatest

element of the damages sustained by Mr. Williams, and therefore

were the largest driver of the valuation and the greatest

portion of damages recovered in the settlement.

19. Mr. Wesley stated that he used a very conservative

valuation figure of $6 million for the purpose of resolving

MedicaidÓs lien, rather than his actual valuation of more than

$19 million. If the conservative valuation of $6 million is

accepted, then the $200,000 rec overy is only 3.33 percent of the

value of the damages. Mr. WilliamsÓs $140,000 net recovery

amounted to only 2.33 percent of the full measure of his

damages. Mr. WesleyÓs testimony was uncontroverted, reasonable,

and persuasive.

20. Charles F. Beall, J r., a member of the Pensacola firm

Moore, Hill & Westmoreland, P .A., testified on behalf of

Mr. Williams. Mr. Beall is board certified in both civil trial

and appellate practice. His practice focuses on defending large

scale personal liability and mass t ort cases. Mr. Beall has

handled more than 225 appellate cases in state and federal

courts. His cases have resulted in over 60 published opinions.

At the trial court level, Mr. Beall has represented hundreds of

clients ranging from individual homeowners to multinational

corporations in a wide variety of civil litigation, including

product liability suits, contract claims, and insurance coverage

disputes. He has tried more than a dozen civil jury trials to

verdict as lead counsel and has served on the tr ial team for

several multi - week trials. Mr. Beall was accepted without

objection as an expert in the valuation of personal injury

claims.

21. Mr. Beall and his firm specialize in defending serious

and catastrophic personal injury cases throughout Florida .

Mr. Beall has reviewed thousands of personal injury cases and

formally reported potential verdicts and valuations to insurance

companies that have retained him to defend their insureds.

Mr. Beall has worked closely with economists and life care

planner s to identify the relevant damages of persons suffering

catastrophic injuries. Mr. Beall testified that he has handled

cases involving catastrophic injuries similar to those suffered

by Mr. Williams.

22. Mr. Beall testified that he arrived at his valuati on

opinion by examining all the elem ents of damages suffered by

Mr. Williams. He agreed with Mr. Wesley that Mr. WilliamsÓs

greatest element of loss was non - economic damages. Mr. Beall

reviewed numerous verdicts that had been affirmed on appeal

involving injuries similar to those suffered by Mr. Williams.

Mr. Beall opined that the valuation of the total damages

suffered by Mr. Williams was in excess of $10 million. He

agreed that Mr. WesleyÓs more conservative $6 million valuation

was appropriate for pu rposes of the lien reduction formula.

23. AHCA did not offer any witnesses or documentary

evidence to question the creden tials or opinions of either

Mr. Wesley or Mr. Beall. AHCA did not offer testimony or

documentary evidence to rebut the testimony of M r. Wesley and

Mr. Beall as to valuation or the reduction ratio. AHCA did not

offer alternative opinions on the damage valuation method

suggested by either Mr. Wesley or Mr. Beall, both of whom

testified knowledgably and credibly as experienced

practitione rs.

24. The testimony of Petitioner's two experts regarding

the total value of damages was credible, unimpeached, and

unrebutted. Petitioner proved that the settlement of $200,000

does not begin to fully compensate Mr. Williams for the full

value of his damages.

25. Petitioner asserts that the settlement allocation

should be based on the ratio between the net settlement,

$140,000, and the conservative valuation of $6 million, meaning

that 2.33 percent of the settlement proceeds should be allocated

to pas t medical expenses. Petitioner cited no authority and the

undersigned is not otherwise persuaded that section 409.910

allows attorneyÓs fees to be deducted from the settlement prior

to calculating the percentage of the settlement that should be

allocated to past medical expenses.

26. With that correction, the undersigned finds that

Petitioner has proven by a preponderance of the evidence that

3.33 percent (the ratio that $200,000 bears to $6 million) is the

appropriate pro rata share of Mr. WilliamsÓ s past medical

expenses to be applied to determine the amount recoverable by

AHCA in satisfaction of its Medicaid lien.

27. ACHAÓs lien for past medical expenses is $70,460.35.

Applying the 3.33 percent pro rata ratio to this total yields

$2,346.33, whic h is the portion of the settlement representing

reimbursement for past medical expenses and the amount

recoverable by AHCA for its lien.

CONCLUSIONS OF LAW

28. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parti es to this

proceeding. §§ 120.569, 120.57(1), and 409.910(17), Fla. Stat.

29. AHCA is the agency authorized to administer FloridaÓs

Medicaid program. § 409.902, Fla. Stat.

30. 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.

31. By accepting Medicaid benefits, Medicaid recipients

automatically subrogate their rights to any third - party benefits

for the full am ount of Medicaid assistance provided by Medicaid

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

to those benefits, other than those 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 proceeds allocable to past

medical expenses.

32. Section 409.910(11)(f) limits 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 and all taxable costs, not to exceed the total

amount actually paid by Medicaid on the recipient's behalf. In

this case, application of the formula would result in AHCA

recovering the full amount of the lien.

33. However, section 409.910(17)(f) provides a method by

which a Medicaid recipient may contest the amount designated as

recovered Medicaid expenses payable under section

409.910 (11)(f). To successfully challenge the amount payable to

AHCA, the recipient must prove, 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 calcula ted by AHCA pursuant to the formula. Gallardo ,

263 F. Supp. 3d 1247.

34. Where uncontradicted testimony is presented by the

recipient, the factfinder must have a "reasonable basis in the

record" to reject it. Giraldo , 248 So. 3d at 56 ( quoting Wald

v. Grainger , 64 So. 3d 1201, 1205 - 06 (Fla. 2011) ) . In the

instant case, AHCA has provided no reasonable basis to reject

the testimony of Mr. Wesley and Mr. Beall.

35. Petitioner proved by a preponderance of the evidence

that the settlement proceeds of $200 ,000 represent only

3.33 percent of PetitionerÓs claim valued at $6 million, which

both testifying attorneys reasonably believed was a very

conservative valuation. Therefore, AHCA's Medicaid lien should

be reduced to the ratio of Petitioner's actual recov ery to the

total value of his claim.

36. The application of the 3.33 percent ratio to the

Medicaid lien amount of $70,460.35 results in $2,346.33. This

amount represents that share of the settlement proceeds fairly

and proportionately attributable to exp enditures that were

actually paid by AHCA for Petitioner's past medical expenses.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is hereby ORDERED that:

The Agency for Health Care Administration is entitled to

$2,346.33 in satisfa ction of its Medicaid lien.

DONE AND ORDERED this 19 th day of December , 2019 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

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 19 th day of December , 2019 .

ENDNOTE

1/ Citations will be to Flo rida Statutes (2018) unless otherwise

indicated.

COPIES FURNISHED:

Alexander R. Boler, Esquire

Suite 300

2073 Summit Lake Drive

Tallahassee, Florida 32317

(eServed)

Shena Grantham, Esquire

Agency for Healthcare Administration

Mail Stop 3

2727 Mahan Dr ive

Tallahassee, Florida 32308

(eServed)

Jason Dean Lazarus, Esquire

Special Needs Law Firm

Suite 160

2420 South Lakemont Avenue

Orlando, Florida 32814

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mai l 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 Administration

2727 Mah an Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

Thomas M. Hoeler, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial 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 adminis trative 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 App eal in the appellate

district where the agency maintains its headquarters or where a

party resides or as otherwise provided by law.