20-002062MTR Krystal Combs vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Thursday, August 6, 2020.

Summary: After reducing putative true value by inflated claim for pain and suffering, proportional reduction of total past medical expenses and imposition of pro rata share of attorneys' fees and costs resulted in a recovery of $123,000.

S TATEMENT O F T HE I SSUE S

The issues are whether, pursuant to section 409.910(17)(b), Florida

Statutes (17b), 1 P etitioner has proved that Respondent's recovery of

$ 224,0 00 2 in medical assistance expenditures 3 from $ 1.4 million in proceeds

from the settlement of a personal injury action must be reduced to avoid

conflict with 42 U.S.C. § 1396p(a)(1) (Anti Lien Statute) 4 ; and, if so, the

maximum allowable amount of Respondent's recovery.

P RELIMINARY S TATEMENT

On Apri l 29, 2020 , Petitioner filed with DOAH a Petition to Determine

Amount Payable to Agency for Health Care Administration in Satisfaction of

Medicaid Lien (Petition) . The P etition invokes Petitioner's right to a

17b proceeding and alleges that Respondent's re co very of $224,0 00 is

excessive because it violates the Anti - Lien Statute. The P etition alleges that

Petitioner accepted $1.4 million to settle a personal injury action with a true

value of $10 million. The P etition alleges that Petitioner's total past med ic al

expenses were $1,383,416, loss of future earning capacity was $1.6 million ,

and noneconomic damages over a remaining life expectancy of five years were sufficient to generate a total true value of $10 million.

The P etition claims that the settlement w as driven by past and future

pain and suffering with no more than $10,000 allocated to past medical

1 All references to sections are to Florida Statutes, and all statutory references are to 2019. Stipulation, p. 8 .

2 Respondent's total medical assistance expe n ditures are less than its recovery under section 409.910(11)(f),

so the issue in this case is whether Petitioner has proved tha t Respondent's recovery must be less than its

actual medical assistance expenditures. Also, to avoid mathematical mistakes and, m ore importantly, to

facilitate their detection , this final order rounds off many values.

3 "Medical assistance expenditures" i s synonymous with Medicaid payments.

4 All references to the "Anti - Lien Statute" include its counterpart , 42 U.S.C. § 1396p(b)(1 ), which operates

similarly as an "Anti - Recovery Statute." "Recovery" and "lien" are used interchangeabl y in this final order

t o describe the portion of judgment or settlement proceeds allocable to the state Medicaid agency.

expenses. The P etition states that Petitioner agreed to pay her trial counsel a

contingency fee of one - third of the recovery, or $466,200, and costs, whic h

totaled $40,602.

T he P etition calculates Respondent's recovery by reducing the $ 10,000

allocated to past medical expenses by a 25% attorney's fee and by the entire

$ 40,602 in costs, so as to result in a net recovery of zero dollars. The P etition

reques ts a final order determining that Respondent's recovery is zero dollars.

The parties filed a Joint Prehearing Stipulation on June 24, 2020.

Applying the proportional reduction in a more conventional fashion,

Petitioner conceded that Respondent could reco ve r about $19,000. Stipulated

facts 5 have been incorporated , as appropriate, into the Findings of Fact

below.

At the hearing, Petitioner called one witness and offered into evidence ten

exhibits: Petitioner Exhibits 1 - 10. Respondent called no witnesses an d offered

into evidence one exhibit : Respondent Exhibit A . All exhibits were admitted.

The parties did not order a transcript . Each party filed a proposed final

or der on July 9 , 2020.

F INDINGS O F F ACT

1. On the evening of March 1 3 , 2016, 28 - year - old Pet it ioner presented at a

regional hospital in eastern Kentucky, where she has lived all of her life , with

a chief complaint of abdominal pain , as well as nausea and vomiting

throughout the da y . Petitioner reported that she had suffered intermittent

5 Most significantly, pa ge 7 of the Prehearing Stipulation states: " Petitioner’s injuries will significantly

shorten her life and will require a lifetime o f medical care and will not allow her to work, likely for the

remainder of her life. "

abdominal p ain and nausea since undergoing a gastric bypass procedure

seven years earlier. A physical exam revealed normal bowel sounds in all four

quadrants and a nondistended abdomen . Petitioner underwent a CT scan,

and the radiologist reported a normal gastroint es tinal tract, other than

"postoperative changes of [ the ] gastric bypass . " Petitioner was admitted to

the hospital for observation.

2 . After being released from the hospital and returning the next day , 6

Petitioner complained of increased abdominal pain, al th ough she did not

have a fever , and her vital signs and white blood cell count were normal .

E arly on March 15, Petitioner began to vomit blood and was transferred to

the intensive care unit . A second abdominal CT scan revealed a twisted

bowel, which neces si tated emergency surgery that resulted in the removal of

her entire small intestine and part of her large intestine . The radiologist had

misread the first CT scan or failed to communicate adequately the intestinal

blockage from which Petitioner was suffer in g when she was admitted to the

hospital.

3. On March 16, Petitioner developed sepsis . She was intubated and

transferred by helicopter to the University of Kentucky medical center , where

she remained hospitalized until April 11 . At the university medical ce nter,

Petitioner began total parenteral nutrition through a peripherally inserted

central catheter (PICC) line. When discharged, Petitioner returned home ,

where a home health nurse visited her to provide care.

4. A physician at the University of Kentucky m edical center recommended

that Petitioner consider transplant surgery at the intestinal - transplant

program at Jackson Memorial Hospital in Miami (Program) . An intestinal

transplant is the rarest type of transplant and presents exceptional challenges in m an aging the potential for the rejection of the foreign organ by

6 Stipulation, p. 5. Actually, this stipul ated finding is incorrect. The hospital medical records state that

Petitioner was "released" from the emergency department, but to a medical - surgical bed, rather than from

the hospital. In her deposition, Petitioner confirmed that her hospitalization was c ontinuous . Petitioner

Exhibit 15, p. 39.

the host. The Program is one of the leading programs of its type in the United

States.

5. In July 2016, Petitioner and her mother flew to Miami to meet a

Program surgeon and discuss whether sh e would be a good candidate for the

procedure. At the time of this trip , Petitioner was so lacking in strength and

stamina that she required the use of a wheelchair within the airport.

6 . The surgeon and Petitioner agreed that she would likely benefit from a

transplant. Petitioner and her mother returned to Florida on September 1 to

be placed on the organ - transplant waiting list and wait for a suitable organ to

become available .

7 . Petitioner underwent successful intestinal - transplant surgery at

Jackson Me mo rial on December 22 during a procedure that took fiv e and

one - half hours. At this time, the total parenteral nutrition was discontinued

and PICC line removed . Petitioner was discharged from the hospital on

January 9, 2017 , with instructions to remain in th e Miami area for at least

six months so that any post - operative problems could be addressed by the

Program physicians . Either by the time of discharge or one week later, a

Program physician placed in Petitioner an ostomy bag for the elimination of

waste. T he ostomy bag typically remains in place for six months after an

intestinal - transplant procedure, at which time a Program surgeon removes

the bag, and the patient is released to return home .

8 . About three weeks after the transplant surgery, Petitioner be came ill

and exhibited abdominal discharge because she had developed a small leak in

the colon, which required corrective surgery of two or three hours to trim the

involved tissue . Due to post - surgical adhesions, three or four weeks after the

transplant su rgery is a bad time to reopen the patient, but there was no other

option, and Petitioner remained hospitalized for a couple of weeks.

9. Petitioner visited one of the Program surgeons for routine checks in

early February and mid - March , and , on both occa si ons, the surgeon found

that Petitioner was doing well and had no complaints . However, on March 28,

Petitioner was readmitted to Jackson Memorial due to vomiting and

dehydration. On April 21, a Program surgeon performed an exploratory

laparotomy and parti al gastrectomy after determin ing that Petitioner was

experiencing gastritis from an alteration of her native stomach that had

taken place during the gastric bypass . The procedure to rework this portion of

the stomach took about two hours, and Petitioner re ma ined hospitalized

seven to ten days after this procedure.

10 . Finally, in late July, Petitioner underwent a two - or three - hour

procedure for the removal of the ostomy bag . Petitioner remained

hospitalized for a couple of weeks after this procedure.

1 1 . Except for the leak in the colon and the failure of the alteration of the

native stomach , as well as, perhaps, the extra month that elapsed before the

removal of the ostomy bag , Petitioner's post - transplant care and progress

were normal for a patient who h ad just undergone an intestinal transplant.

For the first year after a transplant, Program physicians and staff meet

regularly with the transplant patient to perform lab work and educate the

patient about dietary changes and medication regimes, as initia ll y the

patient is taking 20 to 40 pills daily. For the first few months, these office

vi sits take place once or twice weekly. Eventually, the number of pills tapers

off, but, based on the present state of medical science, for the rest of her life,

Petitio ne r will have to take anti - rejection medication, which presently must

be taken twice daily. Over time, the frequency of office visits is reduced . At

the time of the deposition in August 2019 of the Program surgeon primarily

responsible for Petitioner's car e, Petitioner was having lab work done

monthly, and the surgeon was seeing Petitioner every six months, which

would later be reduced to every year.

1 2 . On March 1, 2017, Petitioner commenced a personal injur y action in

Kentucky against the radiologist and th e regional hospital where the

intestin al - removal surgery had taken place. Petitioner agreed to pay her trial

counsel costs plus 33.3 % of the gross recovery . 7 In December 2019, prior to

trial, the parties settled the case for $1.4 million , which represent ed the

radiologist's policy limits of $1 million and $400,000 from the hospital. The

liability of the radiologist was clear , but the liability of the hospital was

doubtful; in fact, Petitioner's trial counsel never obtained an expert witnesses

to testify t ha t the hospital was liable . The trial court did not allocate the

settlement proceeds among damages components. On April 9, 2020,

Petitioner deposited in trust for the benefit of Respondent an amount equal to

Respondent's lien of $224,000.

1 3 . According to t he testimony of Petitioner's trial lawyer, paid past

medical expenses totaled about $578,000, so one or more other payors paid

$354,000 in addition to Respondent's Medicaid payments of $224,000. 8

Future medical expenses following the settlement appear t o be limited to the

anti - rejection medication , which is expensive, but the record does not specify

its cost.

1 4 . Petitioner claims a loss of earning capacity of about $1.6 million. Her

trial counsel hired an economist who, in August 2019, issued a report

pr ojecting a loss in this amount . The economist's report notes that Petitioner

completed high school and 45 credit hours at a local community college. She

obtained a medical assistant certificate in 2012 and , as of March 13, 2016,

Petitioner was working as a nursing service clerk at the regional hospital

where she presented with a twisted intestine.

1 5 . The economist comprehensively analyzed Petitioner's earnings ,

including benefits, to project a loss of earnings and benefits through age 65

and pension bene fi ts through age 82 . Although the parties stipulated that

7 Stipulation, p. 7.

8 Total billed past medical expenses equaled about $1.383 milli on, consisting of the following items: the

regional hospital -- $66,000; the air ambulance -- $53,000; the University of Kentucky med ical center --

$206,000; miscellaneous Kentucky medical services -- $29,000; and Jackson Memorial Hospital --

$1.029 million.

Petitioner's life expectancy will be " significantly " shortened, 9 as explained in

the Conclusions of Law, the loss of future earnings or earning capacity is

determined by using the life expectancy im me diately prior to the actionable

injury, so the terms of the economist's calculations were proper.

1 6 . Notwithstanding persuasive evidence to the contrary in the record, the

findings are controlled by the parties' stipulation that Petitioner likely will

ne ver work again . 10 T he economist assumed as much based on the report of a

"vocational expert," who issued an "employability evaluation" on February 12,

2019, determining that Petitioner was permanently totally disabled in terms

of future employment. The e mp loyability evaluation consisted of an interview

with Petitioner, vocational testing, and a review of background information,

which did not include the deposition of Petitioner's Program surgeon, as it

took place later in the same year. Although the stipu la tion renders the

employability evaluation irrelevant as to the issue of Petitioner's ability to

return to gainful employment, the employability evaluation is useful in

assessing Petitioner's claim for pain and suffering damages.

1 7 . In the interview, whi ch took place about one month prior to the

issuance o f the report or just over two years after the intestinal - transplant

surgery, Petitioner reported that she could drive for one to two hours, but

experience d pain and had to stop to use the restroom, which s he invariably

had to use while and after eating. Petitioner stated that, daily, she had to use

the restroom six to ten times and experienced pain in her stomach and low er

back . Petitioner also reported anxiety, depression, dehydration, chronic

weakness, fa tigue , and cognitive difficulties, including brain fog, difficulty

concentrating and memory problems.

1 8 . Petitioner stated that she could not lift any weight, was unable to sit

for more than three hours or stand for more than one hour, and could walk

on ly short distances. Petitioner denied that a course of physical therapy had

9 See footnote 5.

produced any relief. Believing that her condition was not improving ,

Petitioner opined that she could not perform any work due to pain and the

need to use the restroom, although , l at er contradicting herself, she testified

that she had thought about going into nursing.

19 . T he evaluator interpreted a series of ability and aptitude tests to

mean that, without regard to any physical disability, Petitioner could return

to the "semi - ski ll ed" work that she had performed since graduating from high

school, but failed to address her suitability for a nursing program . After

considering Petitioner's physical disability, the evaluator concluded that

Petitioner was precluded from further employm en t , even though he lack ed

any apparent basis for inferring that Petitioner had reached maximum

medical improvement .

2 0 . Petitioner filed portions of the transcript of her deposition, which was

taken on October 26 , 2018 -- ten months after the transplant su rg ery .

Petitioner testified that she was receiving disability benefits from the Social

Security Administration. She understandably did not recall much of March

2017 , but she failed to describe her daily activities or her condition, such as

her cognitive fu nc tion, fatigue, and level of pain, prior to moving to south

Florida for one year for the transplant surgery, during the year in south

Florida, and after her return to Kentucky. She and her husband divorced

sometime after the March 2017 surgery , but Petiti on er had been dating

someone for the three months preceding her deposition.

2 1 . As of the time of her deposition, Petitioner testified that she was

always tired, never wanted to do anything, and would not go out due to fear

that, in an immunocompromised s ta te, she would contract a disease.

Petitioner explained that she could not swim or go barefoot due to the

possibility of infection, and she had to wear a mask wherever she went

outside of her home during the flu season. However, Petitioner had

10 See footnote 5.

undergone B ot ox treatments to her forehead , most recently about one month

prior to her deposition.

2 2 . Petitioner stated that w alking was difficult. The "few times" that she

had gone to Disney World , Petitioner had had to use a wheelchair to navigate

the park . Petit io ner testified that her Program medications produced side

effects, such as headaches , and admitted that she drank a lot of carbonated

beverages rather than water, which made her nauseous.

2 3 . Toward the end of her deposition, Petitioner testified that her p rimary

Program surgeon had advised her some time ago not to return to work, but

she had not asked him lately "because I want to go back to work." 11 At his

deposition, the Program surgeon testified that presently there were no

restrictions on Petitioner's ac tivities. I n response to a question based on

Petitioner's reported fatigue, the surgeon stated that generally Program

physicians expected full recoveries from their patients ; patients obtained a

good quality of life, even if they suffered from fatigue ; a nd the one - year point

after surgery was an important milestone in a patient's recovery , which

underscored the fact that Petitioner's deposition likely took place too early for

her testimony to serve as a good measure of where she was in her recovery by

the t ime of the settlement, which took place just over one year after her

deposition .

24. The most prominent restriction recognized by the Program surgeon

was pregnancy. He recommended that Petitioner not become pregnant for the

"first few years" after the tr an splant surgery, until her immune system

reestablishes itself. Additionally, the anti - rejection drugs are strong and can

produce neurological side effects, so a transplant patient who became

pregnant would need to be closely monitored.

25. The Program sur ge on emphasized the importance of proper hydration

through the drinking of water. The surgeon explained that the large intestine

absorbs fluids . Because Petitioner lacks much of her large intestine, it was

even more important to overcome fatigue and preser ve kidney function for

Petitioner to remain hydrated -- not just now, but for the next "10, 15, 20

years , " according to the surgeon.

26. The surgeon testified that Petitioner could eat whatever food she

wished, although she would learn which foods caused dia rr hea, which is a

side effect of Petitioner's surgeries . At the time of the deposition, Program

physicians were monitoring monthly lab work and seeing Petitioner every six

months, which eventually would be reduced to every year.

27. Petitioner's trial att or ney referred to the testimony of a Dr. Gore, "the

leading bariatric radiologist in the country," who reportedly testified that he

did not share the Program surgeon's optimism, and Petitioner could never

bear children, work, or lead the active life of a y ou ng person. Petitioner did

not explain why she did not file in this proceeding the original testimony of

Dr. Gore, so the administrative law judge could assess, among other things,

the bases for such testimony by a radiologist, whose involvement with

tran sp lant patients would seem not to be as comprehensive or extended as

the involvement of a Program surgeon. The reported testimony of Dr. Gore is

disregarded.

28. The trial attorney broke down the true value of the damages as

follows: the loss of future ear ni ngs -- $1.6 million; paid past medical expenses --

$578,000; and $8 million in noneconomic damages. In support of a true value

of $10 million, t he trial attorney testified that his law firm had obtained $11

million from a surgeon in a bariatric case brought by the estate of a deceased

patient, who had resided in a nearby city. But the trial attorney provided no

other details about that case to allow its use as a comparator.

29 . The putative true value is properly based on the loss of future

earnings and paid pa st medical expenses, but not the $8 million in

noneconomic damages, nearly all of which is pain and suffering. The

stipulation to a " significantly " shortened life expectancy provides no basis for

11 Petitioner Exhibit 15, p. 99.

calculating a reasonable term of future pain and suffering . The record is not

especially detailed as to pain and suffering at and before the time of the

settlement . Petitioner's description of the limitations upon her life pertained

to a point relatively early in the recovery process, only ten months following

th e transplant surgery, and a little over one year prior to the relevant point,

which is the time of the settlement.

30. T he deposition of the Program surgeon, which took place only four

months prior to the settlement, is entitled to greater weight in terms o f its

closer proximity to the settlement date . Addressing a typical patient, t he

Program surgeon portray ed a life of relatively few restrictions -- provided the

transplant patient takes care of her crucial need for hydration, which

Petitioner had not . The Pr ogram surgeon did not detail any setbacks

experienced by Petitioner, which her trial attorney who took the deposition

would have developed, if they had existed .

31. Doubtlessly, Petitioner has suffered a considerable diminution in the

quality of her life , extensive inconvenience, and periods of intense pain , but,

balancing Petitioner's somewhat generalized description of these elements

and the Program surgeon's more upbeat description of the typical transplant

patient, as well as Petitioner, the relations hi p of Petitioner's pain and

suffering to money supports an award of no more than $2 million. 12

12 This finding of $2 million in pain and suffering is supported by the facts of the administrative law

judge’s two Medicaid recovery cases immediately preceding the present case. These cases in volved

personal injury actions in south and central Florida, not eastern Kentucky, where jury verdicts may run

higher or lower . B ut these cases include $5 - $10 million of pain and suffering , and Petitioner's case does

not.

In DOAH Case 20 - 2038MTR, the r ecipient's attorney sought noneconomic damages of only $5 million

for catastrophic brain injuries to a five - year - old child, which left her cognitively intact, but unable to

express herself in any fashion and subject to contracture of the limbs, painful spa sms, and a shortened lifetime of inability to self - ambulate, feed, bathe, or clothe herself -- with a major impact on her parents a nd

siblings, who were caring for her at home. The true value of the noneconomic damages was closer to

$10 million for reasons u nique to that case, in which a summary jury trial had returned this damages

component in a highly abbreviated proceeding designed to facilitate settlement by addressing primarily

liability.

32. A dding noneconomic damages of $2 million to the paid past medical

expenses of $578,000 and loss of future earnings of $1.6 million yields a true

value of $ 4. 2 million. A settlement of $1.4 million represent s a recovery of

33 .3% of the true value. Applying this settlement recovery percentage to the

total paid past medical expenses , the proportional reduction method would

allocate about $ 193 ,000 of the settlemen t proceeds to total paid past medical

expenses. Applying this settlement recovery percentage to the past medical

expenses paid by Respondent, the proportional reduction method would

allocate about $ 75,000 of the settlement proceeds to Respondent's Medicaid

p ayments. A s explained in the Conclusions of Law, Respondent's tentative

recovery is $193,000 b ecause Petitioner has failed to prove the extent to

which, if any, that the $354,000 of past medical expenses paid by a payor

other than Respondent is subject t o a Medicaid recovery claim.

3 3 . Petitioner agreed to pay costs, which were $41,000, and one - third of

any recovery , which is $466,000, so her total obligation to the law firm is

$507,000 . The record provides no basis for finding that this obligation is

un re asonable in amount or was not reasonably expended to produce the

settlement. On these facts , a failure to require Respondent's recovery to bear

its pro rata share of this obligation would allow Respondent's recovery to

reach a portion of the settlement p ro ceeds not allocable to paid past medical

expenses.

34 . Without regard to the fees and costs, the gross settlement proceeds are

tentatively allocated as follows: $ 193 ,000 to Respondent and $1. 207 million to

Petitioner . Applying to 13.8% of the gross sett le ment proceeds , Respondent's

In DOAH Case 19 - 5547MTR, the recipient's attorney sought none conomic damages of $10 million for

catastrophic injuries to an 11 - year - old child that left her in a vegetative state, incapable o f speech or other

expression, incapable of walking or assisting with the transfer into a wheelchair , and incapable of assisting

with feeding, except to open her mouth at the sight of a spoon, for the remainder of her injury - shortened

life, during which tim e she too was cared for by her parents at home.

If the administrative law judge lacks the authority to find pain and suffe ring damages, the administrative

law judge rejects the proof of noneconomic damages in its entirety.

lie n must bear 13.8%, or $70,000, of the $507,000 in fees and costs that

produced the settlement. Respondent's net recovery is thus $123,000.

C ONCLUSIONS O F L AW

3 5 . DOAH has jurisdiction over 17b proceedings . §§ 120.569, 12 0. 57(1),

and 409.910(17)(b); Giraldo v. Ag. for Health Care Admin. , 248 So. 3d 53 (Fla.

2018).

3 6 . Respondent is obligated by statute to obtain reimbursement of medical

assistance expenditures from judgment or settlement proceeds obtained by a

Medicaid re ci pient 13 from a third party whose negligence or other wrongdoing

neces sitated the Medicaid payments. To effect this recovery, Respondent is

subrogated to the recipient's rights to any proceeds derived from a third

part y , the recipient assigns to Respondent i ts rights to any such proceeds,

and Respondent has a lien against any such proceeds. 14

3 7 . In Department of Health & Human Services v. Ahlborn , 547 U.S. 268

(2006), the Supreme Court ruled that the imposition of a state Medicaid agency's lien on the full am ount of settlement proceeds conflicts with the

Anti - Lien Statute to the extent that the encumbered proceeds include

"medical expenses,"

15 because the Anti - Lien Statute reserves to the recipient

the portion of the proceeds allocable to medical expenses. 16 T o determine the

agency's allowable recovery, the Court applied the stipulation of the parties

that, if the Court ruled for the recipient, the agency's lien would undergo a

13 A "recipient" is the p erson on whose behalf the state Medicaid agency expe nds medical assistance. All

references to "recipient" are to the recipient and its legal representative.

14 § 409.910(6).

15 The Court has never indicated whether "medical expenses" includes future medica l

expenses or only past medical expenses, but, as noted below, the Florida supreme court in

Giraldo has held that "medical expe nses" is limited to past medical expenses.

16 The Court impliedly invoked the Supremacy Clause of the U.S. Constitution in holdin g

that the Arkansas statute was unenforceable to the extent that it authorized a lien on the

medical expenses of settlement pro ceeds.

proportional reduction. The agency had paid about $216,000 in medical

assistance and t he recipient had obtained settlement proceeds of $550,000

that were unallocated as to medical expenses and other damages components. The parties had stipulated that the true value of the case was about

$3 million, the true value ratio -- i.e., the settleme nt divided by the true value -

- was about 1:6, and one - sixth of the Medicaid payments was about $36,000,

which represented the agency's recovery, once the recipient prevailed on the issue presented to the Court.

3 8 . In Wos v. E.M.A. , 568 U.S. 627, 638 (2013 ), the Supreme Court

invoked the Supremacy Clause to set aside a state statute that applied a

formula to settlement proceeds to determine the state Medicaid agency's

recovery -- without providing the recipient an opportunity to show that the

statutory recove ry would violate the Anti - Lien Statute. An expert witness

estimated the true value of the recipient's medical malpractice action to be

over $42 million in economic damages, including over $37 million of future

medical expenses in the form of skilled home c ar e. The state Medicaid agency

expended about $1.9 million in medical assistance, and the recipient settled

for $2.8 million. The settlement did not allocate the proceeds among the

various damages components, and the relatively low settlement recovery

perc en tage was driven largely by the defendants' policy limits. In declining to

allow the agency to recover $933,333

17 of the $2.8 million settlement without

a hearing to determine the portion of the settlement proceeds allocable to

past medical expenses, the C ou rt rejected the state's argument that

ascertaining the true value of a case was impossible and instead exhorted

trial judges and lawyers to find "objective benchmarks" to project the

damages that the recipient would have been able to prove, if its case h ad gone

to trial.

17 The amount is one - third of the gross proceeds, as confirmed in E.M.A. v. Cansler , 674 F.3d

290, 294 (4th Cir. 2012), af f'd sub nom. , Wos v. E.M.A. , 568 U.S. 627 (2013).

3 9 . Responding to Wos , 18 the Florida legislature enacted

section 409.910(17)(b), which authorizes a recipient to commence a

17b proceeding to prove that the portion of Respondent's recovery that

"should be allocated as past and future medi ca l expenses" is less than its

recovery under section 409.910(11)(f), which is an allocation formula not

much different from the North Carolina statutory formula at issue in Wos . 19

Construing 17b in conjunction with the Anti - Lien Statute and relevant case

l aw , the Giraldo court held that Respondent's recovery is limited to

settlement proceeds properly allocable to past medical expenses only .

40. When the settlement amount and true value are supported by the

evidence, there is no reason not to apply the same s ettlement recovery

percentage to the past medical expenses or past medical expenses paid by

Respondent, as applicable, to determine the maximum recovery that

Respondent may obtain without violating the Anti - Lien Statute. Although

neither Ahlborn nor Wos ma ndates a method for making this determination,

each decision requires analysis of the settlement proceeds in terms of the

relationship of the relevant medical expenses to the other damages

components. A proportional reduction of each damages component -- i f each

18 A few months after the Wos decision, the legislature passed and the Govern or signed into

law two slightly different bills: chapter 2013 - 48, sections 6 and 14, and chapter 2013 - 150,

sections 2 and 7, Laws of Florida.

19 Section 409.910(11)(f) (11f) sets Respondent's recovery as the lesser of its medical

assistance expenditures or the amount produced by a formula that allocates to Respondent

one - half of the net settlement or judgment proceeds remaining afte r the reduction of the

gross proceeds by 25% for attorneys' fees and by taxable costs. This statutory formula is

irrelevant to the present case because Respondent's medical assistance expenditures are less

than the amount derived by the formula. As the sta tute states, u nder no circumstances may

Respondent's recovery ever exceed its total medical assistance expenditures ; thus , in t his

case, Respondent's maximum recovery is $224,000, not its 11f recovery.

damages component is similarly supported by the evidence -- is uniquely

suitable because a proportion is inherently comparative. 20

41. As a general matter, Petitioner's acceptance of $1.4 million for a case

with a putative true value of $10 million ma y be explained, as to the hospital,

on the basis of very weak liability, but this accounts for only $400,000 of the

settlement. The question is why Petitioner would accept a large settlement

discount as to the radiologist, whose liability was clear. Policy l imits may be

part of the explanation, assuming that the radiologist could not satisfy a

personal judgment against him of several million dollars. But factors other

than weakness in damages do not fully justify the large settlement discount.

42. The loss of earning capacity escapes reduction solely due to

Respondent's stipulation that it is likely that Petitioner will never return to

work, even though, based on the record, it is likely that she will, if she has

not already. The vagueness of the stipulation a s to a shortened life

expectancy, but not by how much, is irrelevant to this damages component

because the loss of earning capacity is calculated based on the life expectancy

of the claimant immediately before the injury at issue. Estrada v. Mercy

Hosp., I nc . , 121 So. 3d 51 (Fla. 3d DCA 2013).

43. However, Petitioner's claim of about $8 million in pain and suffering is

inflated. Petitioner's proof of pain and suffering damages was inadequate to

support more than $2 million of such noneconomic damages. Wit h this

adjustment , the new true value supports the proportional reduction

undertaken in the Findings of Fact that results in the tentative recovery of

$193,000 .

4 4 . This case presents four noteworthy legal issues . First, this case

represents the principl e that stipulations have consequences. Delgado v. Ag.

20 T hree definitions in Webster's online dictionary are: 2.a. "proper or equal share//each did

her proportion of the work"; 2.b. "quota, percentage"; and 3. "the relation of one par t to

another or to the whole with respect to magnitude, quantity, or degree : ratio."

https://www.merriam - webster.com/dictionary/pr oportion.

for Health Care Admin. , 237 So. 3d 432 (Fla. 1st DCA 2018) . Delgado and

similar decisions should serve as a warning to parties contemplating the

execution of a stipulation that they may anticipate its u ny ielding

enforcement , even if contrary to the underlying facts , because , in this matter,

Florida courts insist that the administration of justice is served by

expedience, even at the expense of informed decisionmaking.

45. Second, this case requires a de te rmination of the nature of the

factfinding responsibility of the administrative law judge with respect to

noneconomic damages. The Florida supreme court's Model Form of Verdict

for Personal Injury Damages 21 details the elements of pain and suffering,

whic h is typically the most prominent element of noneconomic damages :

What is the total amount of (claimant’s) damages

for pain and suffering, disability, physical impairment, disfigurement, mental anguish, inconvenience, aggravation of a disease or physical d ef ect (list any other noneconomic damages) and

loss of capacity for the enjoyment of life sustained in the past and to be sustained in the future?

46. Noneconomic damages are determined by the factfinder -- usually, a

jury -- based on a few basic principles t ha t are entirely accessible to

nonexperts . In Braddock v. Seaboard Air Line Railroad Co. , 80 So. 2d 662,

667 - 68 (Fla. 1955), the court cited, with approval, an earlier decision setting

forth the jury charge for measuring pain and suffering and discussed

ge ne rally the means by which the factfinder determines damages for pain

and suffering :

"As to pain and suffering the law declares that there is no standard by which to measure it except the enlightened conscience of impartial jurors . . ..

It would be your d ut y to determine from the

evidence what sort of injuries the plaintiff received,

if any, their character as producing or not

producing pain, the mildness or intensity of the pain; its probable duration, and allow such sum as

21 https://jury.flcourts.org/civil - jury - instructions - home/civil - instructions/#model .

would f airly compensate her for h er pain and

suffering, if any, such sum as would receive the

approval of the enlightened conscience of each of

you." [citation omitted] . . .

The rule does not seek to instruct the jury in the

process by which they shall determine the amount

of damages fo r pain and suffering. Jurors know the

nature of pain, embarrassment and inconvenience,

and they also know the nature of money. Their

problem of equating the two to afford reasonable

and just compensation calls for a high order of

human judgment, and the la w has provided no

better yardstick for their guidance than their

enlightened conscience. Their problem . . . involves

an exercise of their sound judgment of what is fair and right.

47. At trial, the role of expert testimony in the determination of pain an d

suffering is diffic ult to define, as reflected in Angrand v. Key , 657 So. 2d 1146

(Fla. 1995), in which the justices wrote four different opinions as to whether

an expert witness may testify on the narrow issue of grief. The difficulty

arises because, in general, the determination of damages for pain and

suffering is well - suited for a layperson , who has the means to relate the

nature of money to the nature of pain, embarrassment, inconvenience,

disability, physical impairment, disfigurement, mental angu is h, and loss of

capacity for the enjoyment of life -- both in the past and to be experienced in

the future.

48. Allowing a n expert witness to intervene in this factfinding process by

testifying generally to the value of pain and suffering raises the twin i ss ues of

whether the witness is (or could be) an expert and whether the witness has

invaded the province of the factfinder. These related issues were addressed

directly in Mills v. Redwing Carriers, Inc. , 127 So. 2d 453, 456 - 57 (Fla. 2d

DCA 1961):

An obser ve r is qualified to testify usually because

he has firsthand knowledge which the jury does not

have of the situation or transaction at issue. The

expert, however, has something different to contribute. This is a power to draw inferences from

the facts whic h a jury would not be competent to

draw. To warrant the use of testimony from a

qualified expert, then, two elements are required.

First, the subject of the inference must be so

distinctively related to some science, profession,

business or occupation as t o be beyond the ken of

the average layman, and second, the witness must

have such skill, knowledge or experience in that

field or calling as to make it appear that his opinion

or inference will probably aid the trier of facts in its

search for truth. McCor mi ck, Handbook of the Law

of Evidence, 1954, page 28 and authorities collected therein. Moreover, where the opinion is nothing more than the speculation of an admitted

non - expert on the issue involved, to that extent it

does invade the province of the jury , which is

equally competent to reach such a conclusion upon

the same physical facts observed by the witness

and made known to the jury by exhibits and

testimony. There would appear therefore to be no

material conflict between the basis for the objection b y defendant to the evidence in the instant case

[ the failure of the witness to have been qualified as

an expert] and the ground asserted by the court in

granting the new trial [the witness invaded the

province of the jury].

49. Stating the issue somewhat di fferently, the court in Summers v. A.L.

Gilbert Co., 82 Cal. Rptr. 2d 162, 178 (Cal. App. 5th Dist. 1999) explained :

Expert opinions which invade the province of the

jury are not excluded because they embrace an

ultimate issue, but because they are not he lpful (or

perhaps too helpful). “[T]he rationale for admitting opinion testimony is that it will assist the jury in

reaching a conclusion called for by the case. ‘Where

the jury is just as competent as the expert to

consider and weigh the evidence and dr aw the

necessary conclusions, then the need for expert

testimony evaporates.’ [Citation omitted .]” ( People

v. Torres (1995) 33 Cal.App.4th 37, 47, 39

Cal.Rptr.2d 103; see 1 McCormick on Evidence,

supra , § 12, p. 49, fn. 11 [“The fact that an opinion

or inf er ence is not objectionable because it

embraces an ultimate issue does not mean,

however, that all opinions embracing the ultimate

issue are admissible… . Thus, an opinion that

plaintiff should win is rejected as not helpful.”].) In

other words, when an ex pe rt's opinion amounts to

nothing more than an expression of his or her belief

on how a case should be decided, it does not aid the

jurors, it supplants them.

50. O bviously, this decisional law appl ies directly to a personal injury

trial . It remains to be s een how Florida courts will allow the parties in a

17b proceeding to prove pain and suffering for the purpose of determining the

true value of a recipient's case. At least one court has stated that a trial

lawyer in a 17b proceeding testifies merely as a f act witness about facts from

the personal injury action known to the lawyer from the preparation and

settlement of the case.

22 I f a trial lawyer is able to provide useful testimony

in a 17b proceeding by identifying jury verdicts awarding specific sums fo r

pain and suffering on comparable facts, such testimony may meet the

evidentiary standard for admissibility in a chapter 120 proceeding, which is "evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs." § 12 0. 569(2)(g). But such testimony would be to

inform, not supplant, the administrative law judge in find ing a reasonable

value for pain and suffering in order to determine a reasonable true value, so

as to be able to perform a sound proportional reduction of t he past medical

expenses. If the administrative law judge were to lack such factfinding

authority, the administrative law judge would be equally unable to correct an

22 Ag. for Health Care Admin. v . Rodriguez , 294 So. 3d 441, 44 3 (Fla. 1st DCA 2020). But see Giraldo , 248

So. 3d at 56: " Although a factfinder may reject ' uncontr adicted testimony, ' there must be a ' reasonable basis

in the evidence ' for the rejection. Wald v. Grainger , 64 So.3d 1201, 12 05 – 06 (Fla. 2011). " The Grainger

case stands for the principle stated by the court, but as to the testimony of an expert witness, n ot a fact

witness, so Giraldo implies that the trial lawyer testifying in a 17b proceeding appears as an expert witness.

overstatement of the pain and suffering by $40 as by $8 million, leaving it to

Petitione r' s trial lawyer effectively to dictate Respondent's recovery .

5 1 . Third , th is case presents the question as to whether, under the

proportional reduction method, Respondent's recovery is based on the portion

of settlement proceeds allocable to the total pa id 23 past medical expenses, not

merely the past medical expenses paid by Respondent. This issue is not

present in many cases, in which Respondent's Medicaid payments equal the

past medical expenses. Where Respondent's Medicaid payments are less than

the tot al past medical expenses, 17 b, which addresses "past . . . medical

expenses," not past medical expenses paid by or presented for reimbursement

to Respondent , 24 seems to favor calculating the recovery based on the portion

of settlement proceeds allocable to th e total past medical expenses, not

merely the past medical expenses paid by Respondent. But a hard - and - fast

rule will violate the Anti - Lien Statute in some cases .

5 2 . As noted above, 25 if the settlement recovery percentage of 33 .3% is

applied to the tota l past medical expenses of $578,000 , Respondent recovers

$ 193 ,000. But i f the settlement recovery percentage of 33 .3% is applied only

to the past medical expenses paid by Respondent, Respondent would recover

only $ 75 ,000 of its Medicaid payments .

53 . The pr oblem with applying the settlement recovery percentage to the

total past medical expenses of $578,000 emerges clearly, if we assume that the payor of the additional $354,000 was a Medicaid payor and that the payor

has imposed a lien against the settlemen t proceeds to recovery the entirety of

23 T he Petition seemed to raise the issue of whether paid or billed past medical expenses is the correct

measure, but the parties have settled correctly on the use of paid past medical expenses, rather than the

higher billed past medical expenses, which would tend to increase Respondent's recovery. A useful

discussion of why paid, not billed, past medical expenses is the proper measure is found in Department of

Health Care Policy & Financing v. S.P. , 356 P.3d 1033, 1039 - 40 (Colo. App. 2015) ( the court warned ,

t hough, th at unspecified different factual situations could justify the use of billed past medical expenses).

24 rward, the final order will no longer refer to "paid" past medical expenses, even though From this point fo

all past medical expenses discussed in the remainder of this final order are paid.

25 See p aragraph 3 2.

its medical assistance expenditures. The proportional reduction method has

allocated $ 193 ,000 of the settlement proceeds to past medical expenses, so

the total recovery by the two Medicaid agencies may not exceed this s um. I f

the settlement recovery percentage of 33 .3% is applied to the total past

medical expenses, the other Medicaid payor w ould recover $ 193 ,000, and the

total recovery of the two Medicaid payors would be $ 386 ,000, which would

violate the Anti - Lien Stat ut e because $ 193 ,000 of the payors' recoveries

would be from settlement proceeds not allocable to past medical expenses. On

the other hand, if the settlement recovery percentage of 33 .3% is applied to

the past medical expenses paid by the other Medicaid pa yo r , it w ould recover

only $ 118 ,000, and the total recovery of the two payors would be $ 193,000 ,

which is, of course, a recovery of the entirety of the portion of the settlement

proceeds allocable to past medical expenses , but no more .

54. The application o f the settlement recovery percentage to the past

medical expenses paid by the state Medicaid agency is not unprecedented in

the case law. See, e.g. , Doe v. Vt. Office of Health Access , 54 A.3d 474, 482 (Vt.

2012) (construing the Vermont reimbursement sta tu te, the court held that

the Medicaid lien attached only to the extent of Medicaid payments made by

the agency) . Compare Aguilera v. Loma Linda University Medical Center , 185

Cal. Rptr. 3d 699 (Cal. 4th DCA 2015) (in a jurisdiction allowing the state

Medi ca id agency to recover from settlement proceeds allocable to past and

future medical expenses, the Medicaid lien attached only to future medical

expenses likely to be paid by the agency) .

55. Florida courts have tended to regard the role of the 17b procee di ng as

identify ing the portion of settlement proceeds allocable to the total past

medical expenses , even where Respondent's Medicaid payments are less than

this amount, and allow ing Respondent to recover its Medicaid payments up

to the portion of the sett le ment proceeds allocable to the total past medical

expenses. For instance, i n Bryan v. Agency for Health Care Administration ,

291 So. 3d 1033 (Fla. 2020), Respondent paid 99.6% of the past medical

expenses. The settlement recovery percentage was 10%, whic h the court

applied against the total past medical expenses, not merely the past medical

expenses paid by Respondent, although the difference amounted to about

$200 in recovery amounts , so the economic impact of the court's choice was

negligible .

56. The e co nomic impact of the court's choice is not negligible where

Respondent's Medicaid payments are small er fractions of th e total past

medical expenses, as in Mojica v. Agency for Health Care Administration , 285

So. 3d 393 (Fla. 1st DCA 2019) . Here, the sett l ement recovery percentage was

35.2% , and t otal Medicaid payments were about $595,000, of which

Respondent had paid about $322,000, or 54% , and the remaining 46% had

been paid by two other Medicaid payors . The recipient argued that

Respondent's recovery wa s about $113,000 : $595,000 x 35.2% x 54%. This is

another way of applying the proportional reduction to Respondent's payment

of past medical expenses, rather than to the total past medical expenses. The

administrative law judge rejected the proportional re d uction -- i.e., the 35.2% --

as unsupported by the evidence. Reversing, the court sustained the 35.2%

settlement recovery percentage , but failed to address the second proportional

reduction to reflect that Respondent had paid only 54% of the total past

medica l expenses. On remand, though, the administrative law judge

performed the second proportional reduction, so that Respondent recovered

about $113,000; otherwise, the administrative law judge noted, the recoveries

of the other two Medicaid payors, when combi n ed with Respondent's

recovery, would have exceeded 35.2% of $595,000 in violation of the Anti - Lien

Statute . 26 The holding of Mojica is thus at least consistent with the

proposition that Respondent's recovery from settlement proceeds that have

undergone a p r oportional reduction must be limited to the past medical

expenses paid by Respondent, if the proportional reduction is to serve the

purpose of limiting Respondent's recovery to the portion of the settlement

proceeds allocable to past medical expenses -- at l east where all of the

remaining past medical expenses also represent Medicaid payments.

57. T he recipient in a 17b proceeding bears the burden of proof , so, i f

Respondent's Medicaid payments are less than the total past medical

expenses, the recipient mus t prove that all or part of the total past medical

expenses in excess of Respondent's Medicaid payments were also Medicaid

payments . A bsent such proof, Respondent's recovery is based on the

settlement recovery percentage of the total past medical expenses, not merely

Respondent's Medicaid payments. T he present record contains no evidence of

the source or sources of the additional $354,000 in past medical expenses .

Therefore, the settlement recovery percentage is applied to the total past

medical expenses, no t t he past medical expenses paid by Respondent , so that

Respondent's tentative recovery is $ 193 ,000, not $ 75 ,000.

58. Fourth, this case raises the issue of whether Respondent's recovery

must be further reduced by its proportionate share of attorneys' fees and

costs imposed on the gross settlement. Respondent's recovery of $ 193 ,000 is

tentative because it must be undergo this reduction. As noted in the Findings

of Fact, Respondent's recovery after reduction for its proportionate share of

attorneys' fees and cos ts is $1 2 3,000.

59. The half million dollars of attorneys' fees and costs paid out of the

gross settlement proceeds did not represent the payment of some personal or

extraneous obligation of Petitioner , such that it must be allocated entirely to

Petitio ner 's share of the gross proceeds . These legal expenses produced the

settlement against which Respondent has imposed its lien. In no real sense

did the settlement proceeds ever amount to $1.4 million -- due to this cost - of -

goods - sold expenditure of a hal f mi llion dollars to produce th e settlement.

Because the net settlement proceeds are the real settlement proceeds,

relieving Respondent's recovery from its proportional share of this integral

26 https://www.doah.state.fl.us/ROS/2017/17001966.2.pdf .

financial obligation essentially allows Respondent to recover fr om p ortions of

the settlement allocable to components other than the past medical expenses.

O RDER

I t is

O RDERED that Respondent shall recover $1 23,00 0 from Petitioner's

$1.4 million settlement in full satisfaction of its Medicaid lien .

D ONE A ND O RDERED th is 6 th day of August , 2020 , in Tallahassee, Leon

County, Florida.

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Fili ng ( 850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of August, 2020.

C OPIES F URNISHED :

Alexander R. Boler, Esquire

2073 Summit Lake Drive , Suite 3 3 0

Tallahassee, Florida 32317

(eServed)

D avid H. Charlip, B.C.S., Esquire

Charlip Law Group, L . C .

999 Brickell Avenue, Suite 840

Miami, Florida 33131

(eServed)

Shena Grantham, Esquire

Agency for Health Care Administration

Building 3, Room 3407 B

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed )

Thoma s M. Hoeler, 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)

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

Tallahas see, Flo rida 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 enti tled to judicial

review pursuant to section 120.68, Florida Statutes. Review proceedings are

governed by the Florida Rules of A ppellate Procedure. Such proceedings are

commenced by filing the original notice of administrative appeal with the agency clerk o f the Division of Administrative Hearings within 30 days of

rendition of the order to be reviewed, and a copy of the notice, ac companied

by any filing fees prescribed by law, with the clerk of the d istrict c ourt of

a ppeal in the appellate district where th e agency maintains its headquarters

or where a party resides or as otherwise provided by law.