21-000040MTR Maria Del Rosario Guzman As Guardian Of Gustavo Sanchez, Jr., Incompetent vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Tuesday, May 18, 2021.

Summary: Petitioner established evidentiary grounds for a proportional reduction of the portion of the settlement to which the Medicaid lien may attach, thereby limiting Respondent's recovery to 3.4% of the medical assistance provided.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

M ARIA D EL R OSARIO G UZMAN AS

G UARDIAN OF G USTAVO S ANCHEZ , J R .,

I NCOMPETENT ,

Petitioner , Case No. 2 1 - 0 040 MTR

vs.

A GENCY F OR H EALTH C ARE

A DMINISTRATION ,

Respondent .

/

F INAL O RDER

This case came before Administrative Law Judge (ÑALJÒ) John G.

Van Laningham, Division of Administrative Hearings (ÑDOAHÒ), for final

hearing by Zoom teleconference on March 1 2 , 2021.

A PPEARANCES

For Petitioner: Darryn L. Silverstein , Esquire

Gregg A. Silverstein , Esquire

Silverstein, Silverstein & Silverstein, P.A.

504 Aventura Corporate Center

20801 Biscayne Boulevard

Aventura , Florida 3 3180

For Respondent: Alexander R. Boler, Esquire

2073 Summit Lake Drive, Suite 300

Tallahassee, Florida 32317

S TATEMENT OF T HE I SSUES

The i ssues for determination are, first, whether a lesser portion of

Petitioner Ô s total recovery from a third - party tortfeasor should be designated

as recovered medical expenses than the share presumed by statute; if so,

then the amount of Petitioner Ô s recovery to which Respondent Ô s Medicaid lien

may attach must be determined .

P RELIMINARY S TATEMENT

Petitioner Maria Del Rosario Guzman ( Ñ Guzman Ò ) , as guardian of

Gustavo Sanchez, Jr. (ÑSanchezÒ), settled a personal injury action for

$ 850,000.00 . Respondent Agency for Health Care Administration (the

Ñ Agency Ò or Ñ AHCA Ò ) asserted i t s intent to enforce a Medicaid lien in the

amount of $ 253,843.04 against this recovery . The Agency relies, as is its

right, on the formula set forth in section 409.910(11)(f), Florida Statutes, to

determine that portion of the settlement which should be allocated as past

medical expense damages.

Guzman objected to this presumptive allocation of the recovery , and, on

January 6, 2021 , s he timely filed a petition with DOAH to contest the default

amount designated by statute as recovered medical expense damages payable

to the Agency .

On March 5 , 202 1 , the parties filed a Joint Pre - h earing Stipulation, which

contains a statement of facts that Ñ are admitted and will require no proof at

hearing. Ò As a result, many of the mater ial historical facts of this case are

undisputed.

At the final hearing, which took place as scheduled on March 12, 20 2 1 ,

with both parties present, Guzman called trial attorneys Darryn L.

Silverstein and Kenneth Bush as witness es , and she also presented t he

testimony of defense attorney Andrew Stone . Petitioner Ô s Exhibits 1 , 4, 6, 9,

and 10 were received in evidence without objection . The Agency rested

without offering any evidence.

The final hearing transcript was filed on April 12, 2021 . The parties

timely filed proposed final orders , which have been considered .

Unless otherwise indicated, citations to the official statute law of the state

of Florida refer to Florida Statutes 2020.

F INDINGS OF F ACT

1. On March 26, 2014, Sanchez, who was then 19 years old, suffered a

subdural hematoma while sparring at a boxing training facility, which

resulted in catastrophic brain damage . At the time of the hearing, seven

years after the injury, Sanchez remained extremely impaired . He cannot care

for himself, wi ll not be able to work again, and will most likely be

significant ly incapacitated for the rest of his life . There is no dispute that

Sanchez is permanently disabled from the severe brain trauma that occurred

while he was in the boxing ring .

2 . Sanchez Ô s i njury - related medical care was paid for by Medicaid. A

portion of his Medicaid benefits, totaling $253,843.04, was paid by AHCA . An

even larger share of SanchezÔs Medicaid benefits , $555,439.81, was paid by

Sunshine Health Plan, Inc. (ÑSunshineÒ), which op erates a Medicaid managed

care plan pursuant to a contract with AHCA . The combined amount of these

benefits, $ 809,282.85 , constitute s Sanche z Ôs entire claim for past medical

expenses.

3 . SanchezÔs mother and guardian, Guzman, brought a personal injury

lawsuit on SanchezÔs behalf (collectively, the ÑPlaintiffÒ) against the owner of

the gym (the Ñ Defendant Ò ), alleging that the Defendant was negligent in

allowing Sanchez to box . The Defendant, whose liability coverage limit was

$1,000,00 0.00, raised multiple defenses to the personal injury claims .

4 . The underlying negligence action presented a difficult case for the

P laintiff , both factually and legally, for several reasons . To begin, Sanchez

had a preexisting seizure disorder, which he apparently never disclosed to the

gym . Moreover, h e had been hospitalized previously due to seizures and

advised by his doctor to avoid contact sports . Sanchez also had executed a

waiver of liability in favor of the gym prior to training at the facility . There

was even a question of fact as to whether the injury Sanchez suffered on

March 26, 2014, resulted from a blow to the head or rather from a seizure

that would have occurred regardless of where he was at the time .

5 . In short, as a personal injury pla intiff, Sanchez faced an uphill battle ,

for the Defendant had multiple promising defenses (waiver, assumption of

the risk, comparative negligence) and strong positions on liability (duty,

causation) . Guzman candidly disclosed these issues at hearing and pr esented

a fair, balanced assessment of the strengths and weaknesses of the

P laintiffÔs case, eliciting testimony not only from the PlaintiffÔs attorney,

Mr. Silverstein, but also from the DefendantÔs counsel , Mr. S tone .

6 . The personal injury action was settled for $850,000.00, a figure which

was below the limits of available insurance , and a mere fraction of SanchezÔs

monetary damages . B oth sides were represented by experienced and

competent attorneys , and the agreed upon payment , resulting from an arms -

length negotiation, reflects the full settlement value ( ÑClai m Value Ò) of the

PlaintiffÔs tort claims . Sa nchez , in other words , reco vered 100 % of the C lai m

Value of his personal injury action against the Defe ndant .

7 . A s mentioned , however, t he P laintiff settled for a tiny portion of his

total damages ( ÑTotal V alueÒ ) . To be more precise , w h ereas Sa nchez

recovered 100% of his Claim Value, the settlement yielded h im only 3.4% of

the Total Value of his damages . This was due to the substantial risk of the

Plai ntiffÔs coming up empty - handed if the lawsuit were adjudicated . As t he

DefendantÔs counsel, Mr. Stone, explained, even if the Pl aintiff managed to

survive summary judgment, which was not a sure thing, the likelihood of a

defense verdict was high . Still, Mr. Stone agreed that the severity of

SanchezÔs disabilities would translate into enormous monetary damages if

the jury found in the PlaintiffÔs favo r . T his was the strength of the P laintiffÔs

case . A jury award could have exposed the Defendant to a catast rophic

judgment in excess of policy limits . The settlement was a prudent decision for

both sides, given the DefendantÔs potential exposure and the P laintiffÔs long

odds .

8 . AHCA was notified of the personal injury action . AHCA did not

Ñ institute, intervene in, or join in Ò the personal injury action to enforce its

rights as provided in section 409.910(11) , or participate in any aspect of the

personal injury action against the Defendant.

9. Instead, AHCA asserted a $ 253,843.04 Medicaid lien against SanchezÔs

cause of action and settlement of that action . By letter, AHCA was notified of

the settlement. AHCA has not filed a motion to set - aside, have declared void ,

or otherwise dispute d SanchezÔs settlement.

10 . The Medicaid program, through AHCA and Sunshine , spent

$ 809,282.85 on behalf of Sanchez , all of which represents expenditures paid

towards SanchezÔs past medical care and treatment . SanchezÔs taxable costs

incurred in securing the $ 850,000.00 settlement totaled $ 12,987.78 .

Application of the section 409. 910(11)(f) formula to SanchezÔs $ 850,000.00

recovery produces a statutory default allocation of $ 312,256.11 in settlement

funds to past medical expenses , which would satisfy AHCA Ô s Medicaid lien in

full and leave a balance of $58,413.07 for reimbursing Sun shine. 1 Sunshine,

however, reportedly settled with Sanchez (presumably with AHCAÔs

approval) before the hearing and agreed to accept $18,884.00, or 3.4% of its

expenditures.

11 . There is no dispute that, u nder the anti - lien provision s in the federal

Medicaid statute, the Medicaid lien attaches only to the portion of SanchezÔs

1 At the outset of the hearing, AHCAÔs counsel stipulated that there is, in effect, only one

Medicaid lien, the proceeds of which are divided between AHCA and Sunshine, presumably

pursuant to the contract between them . According to the Joint Pre - h earing Stipulation, the

allocation under section 409.910(f) is used to pay AHCA first, and, if AHCA is fully

reimbursed, then Sunshine it entit led to the remainder . Thus, even in SunshineÔs best - case

scenario, SunshineÔs recovery was capped at about 10.5% of its expenditures.

recovery attributable to past medical expenses . SanchezÔs recovery , however,

was an undifferentiated lump sum payment , meaning that the parties did not

negotiate an apportionment of the settlement proceeds as between the

several categories of damages comprising the Total Value of SanchezÔs loss.

12. Th e ultimate question presented is whether the Agency Ô s default

distribution , in the amount of $ 312,256.11 , reflects Ñ th e portion of the total

recovery which should be allocated Ò 2 to SanchezÔs recovery of past medical

damages , or whether a lesser sum , from the total settlement , Ñ should be

allocated Ò to the recovery of past medical damages . It is GuzmanÔs burden to

prove that th e statutory allocation is greater than the amount which Ñ should

be Ò distributed to the Agency, and that the default Medicaid lien amount

Ñ should be Ò adjusted to better reflect the portion of the PlaintiffÔs total

recovery attributab le to past medical expenses .

1 3 . To meet her burden , Guzman presented evidence at hearing, as is now

typically done in cases such as this, with the goal of establish ing the Ñ true

value Ò of the PlaintiffÔs damages . Usually , and again as here, this evidence

comes in the form of opinion testimony, from a trial attorney or attorneys

who specialize in personal injury law and represent plaintiffs in negligence

actions .

1 4 . Guzman called t w o experienced plaintiff Ô s personal injury lawyers, one

of w hom represented the Plaintiff in the underlying personal injury lawsuit ,

to give opinions on the valuation of his damages . Sh e presented the

testimony, as well, of the DefendantÔs counsel , whose conclusion that the fu ll

value of SanchezÔs damages ranged fr om $35 million to $40 million was

c ompelling . The undersigned finds the opinions of these attorneys on

valuation of damages to be credible and persuasive . Moreover, the Agency did

not offer any evidence to challenge GuzmanÔs proof of the full value of the

PlaintiffÔs damages. Having no evidential basis for discount ing or

2 See § 409.910(17)(b), Fla. Stat.

disregard ing the opinions of GuzmanÔs expert w itnesses, the undersigned

bases the findings on valuation that follow upon their unchallenged

testimony .

1 5 . Gu zman is requesting Ð and her expert witnesses opined that Ð the

Medicaid lien should be adjusted according to a method that will be referred

to herein as a Ñ proportional reduction. Ò A proportional reduction adjusts the

lien so that the Agency Ô s recovery is dis counted in the same measure as the

plaintiff Ô s recovery . In other words, if the plaintiff recovered 25% of the Ñ true

value Ò of his damages, then, under a proportional reduction, the Medicaid

lien is adjusted so that the Agency recover s 25% of the plaintiff Ô s recovered

past medical damages .

1 6 . The mathematical operation behind a proportional reduction is simple

and requires no expertise . Using Ñ r Ò to signify the plaintiff Ô s recovery ; Ñ v Ò to

represent the Ñ value Ò of his damage s; Ñ m Ò for past medical expenses ; and Ñ x Ò

as the variable for the adjusted lien amount, the equation is : ( r ÷ v ) × m = x .

In these cases, the only unknown number (usually) is v , i.e., the Ñ value Ò of the

plaintiff Ô s total damages.

1 7 . Ñ True value, Ò sometimes also called Ñ full value Ò or Ñ total value, Ò is an

elusive concept, given that the true value of damages w hich have not been

liquidated by a judgment is not, and cannot be, known in a case that settle s

before the entry of a judgment .

1 8 . The uncontested and unimpeached expert testimony in this case

establishes , by any standard of proo f, that the Ñtrue valueÒ of Sanchez Ô s

damages is somewhere between $35 million and $40 million, and is no less

than $ 25 million , w hich is the most conservative figure presen ted by

GuzmanÔs witnesses , Darryn Silverstein , Esquire ; Kenneth Bush, Esquire;

and Andrew Stone , Esquire . Thus, the undersigned finds as a matter of

ultimate fact that the Total Value is $25 million.

19 . It is true that, except for past medical damages, GuzmanÔs expert

witnesses did not have terribly precise numbers for SanchezÔs economic

damages such as lost wages and future medical expenses . This is immaterial

here , however, because SanchezÔs noneconomic damages for past and futur e

pain and suffering, mental anguish, loss of capacity for the enjoyment of life,

etc., so eclipse the economic damages as to make the latter a lmost a rounding

error . As a practical matter, s etting the Total Value at $25 million (instead

of, say, $35 milli on, which the evidence would also support) eliminates any

issue regarding the value of SanchezÔs economic losses . There is no getting

around the fact that the settlement is paltry in relation to SanchezÔs total

damages, at most reflecting only a few percen tage points thereof.

20 . Mr. Silverstein testified that because Sanchez recovered only 3.4 % of

the Total Value of his damages , conservatively appraised, it stands to reason

that he recovered only 3.4 % of the $ 809,282.85 in total past medical damages ,

or mo re specifically, only 3.4% of the $253,843.04 in benefits that AHCA paid .

These numbers are $27,5 15.62 and $8,630.66, respectively . Mr. Silverstein

testified that it would be reasonable to allocate $ 8,630.66 of the settlement to

AHCAÔs share of the past medical expenses . Mr. Bush, the other expert on

allocation methodology , concurred.

2 1 . A n allocation of $ 27 ,515.62 from the settlement to past medical

expenses , pursuant to the proportional reduction methodology , would be

consistent with the expert testimo ny presented in this case (and other

Medicaid lien adjustment cases ) and supported by the case law .

2 2 . Once Sanchez made a prima facie showing of Tot al Value by adducing

competent substantial evidence thereof, and offered expert testimony

regarding the p roportional reduction methodology, the Agency might have

introduce d some evidence that would have given the fact - finder an

evidentiary basis for discounting or rejecting the $25 million Total Value

f igure , or for rejecting the pro - rata allocation method . 3 The Agency , however,

3 To be clear, the undersigned is not shifting the burden of proof to the Agency . T he A gency is

not required to put on any such evidence . The Agency is free to present no evidence, rely

elected not to present evidence, preferring instead to argue that Guzman has

failed to prove that the particular medical - expense allocation s he advocates

should be made, and that, as a result , the default, statutory allocation should

b e made . As far as the evidence goes, therefore, the undersigned has no

reasonable basis for rejecting the full value figure of $ 25 million , which

GuzmanÔs witnesses established , via credibl e and compelling expert opinion ,

was a conservative appraisal of Sa nchez Ô s total damages , or for declining to

use the proportional reduction approach .

2 3 . An argument might have been made that instea d of using Total Value

as the number for the variable v in the propor tional reduction formula, the

Claim Value should be used . In this case, competent substantial evidence of a

genuine Claim Value was adduced , as underscored by the fa ct that the

P laintiff left money on the table, agreeing to accept in settlement less than

the amount of insurance available to the Defendant . O n such grounds, A HCA

might have argued that Sanchez recovered the full value of his claim , if not

the full value of his damages , a nd thus that he recovered 100% of what he

could fairly have hoped to obtain , as opposed to 3.4 % of everything he might

theoret ically have won in an alternative universe where he had an a irtight

case and the Defendant had no defenses and limitless resources . AHCA,

however, did not make this argument and, more important, did not present

any evidence to support the use of such an allocation methodology. 4

2 4 . The opinion testimony elicited at hearing, in addition to being

solely on cross - examination of the petitioner Ô s witnesses to undermine the testimony elicited

by the petitioner on direct, and then argue that the petitioner has failed to meet his burden

of proof Ð as the Agency has done in this case . If the Agency takes this approach, however, it

loses the opportunity affirmatively to prove that the Total Value is too hi gh, and it risks a

finding that the unrebutted evidence of Total Va lue is a fair reflection of the full value of the

petitionerÔs damages . If, however , the Agency presents evidence of full value, or settlement

value, or some alternative value, then the pet itioner must rebut the evidence and try to

overcome it, for the petitioner bears the ultimate burden of persuasion with regard to

establishing the value of the petitioner Ô s damages .

4 The undersigned, to be clear, is not signaling that he necessarily woul d have adopted such

an approach, but only noting that this is an alternative which he would have taken seriously,

had there been evidence in the record to support it.

unchallenged and unimpeached, is otherwise persuasive to the fact - finder

and convincingly establish es that the probable Ñ full value Ò of Sanchez Ô s

damages , i.e. , v in the proportional r eduction formula, is $ 25 million . The

unchallenged expert testimony convincingly shows, as well, that a

proportional reduction methodology appropriately identifies the Ñ portion of

the total recovery which should be allocated Ò in th is case as past medical

expense damages .

2 5 . Accordingly, the undersigned determines as a matter of ultimate fact

that the portion of Sanchez Ô s $ 850,000.00 recovery that Ñ should be allocated Ò

to past medical expenditures is $ 27,515.62 , or 3.4 % of Sanchez Ô s total past

medical expenses .

2 6 . A wrinkle here is GuzmanÔs settlement with Sunshine for $18,884.00 .

The record is silent as to the terms of this settlement, and as to whether

Guzman has paid this amount to Sunshine . Also unknown to the undersigned

is w hether AHCA and Sunshine have an agreement as to whether Sunshine

will be allocated $18,884.00 of the lien proceeds.

2 7 . The reason th ese thi ngs matter is that (unless Guzman has agreed

otherwise in her settlement with Sunshine) the Medicaid lien should at tach

only to the $27,515.62 which, the undersigned has found, Sanchez recovered

for past medical expenses . That is, $27,515.62 is the amount from which both

AHCA and Sunshine must be paid . If Guzman has already paid Sunshine

$18,884.00, then she should not be required to pay out more than an

additional $8,631.62 5 to satisfy SanchezÔs statutory obligation to reimburse

Medicaid Ð unless, that is, she agreed otherwise . If Guzman has not yet paid

Sunshine $18,884.00, then (absent an agreement otherwise) she shoul d be

required to pay only $27,515.62 to AHCA, which can then allocate to

Sunshine whatever amount AHCA owes Sunshine under the contractual

arrangements governing such transfer .

5 This figure is slightly different ( $0.96) from the number in paragraph 20 , supra , due to

rounding in the calculations . The discrepancy is obviously immaterial.

C ONCLUSIONS OF L AW

28 . The Division of Administrative Hearings has personal and subject

matter jurisdiction in this proceeding, as well as final order authority,

pursuant to section 409.910(17)(b).

29 . Section 409.910(1) provides as follows:

It is the intent of the Legislature that Medicaid be

the payor of last resort for medically necessary goods

and services furnished to Medicaid recipients. All

other sources of payment for medical care are

primary to medical assistance provided by Medicaid.

If benefits of a liable third party are discovered or

become available after medi cal assistance has been

provided by Medicaid, it is the intent of the

Legislature that Medicaid be repaid in full and prior

to any other person, program, or entity. Medicaid is

to be repaid in full from, and to the extent of, any

third - party benefits, rega rdless of whether a

recipient is made whole or other creditors paid.

Principles of common law and equity as to

assignment, lien, and subrogation are abrogated to

the extent necessary to ensure full recovery by

Medicaid from third - party resources. It is int ended

that if the resources of a liable third party become

available at any time, the public treasury should not

bear the burden of medical assistance to the extent

of such resources.

3 0 . Section 409.910(6)(c) provides , in relevant part , as follows:

The a gency is entitled to, and has, an automatic lien

for the full amount of medical assistance provided by

Medicaid to or on behalf of the recipient for medical

care furnished as a result of any covered injury or

illness for which a third party is or may be li able,

upon the collateral, as defined in s. 409.901 [, which

includes Ñ [a] ny and all causes of action, suits, claims,

counterclaims, and demands that accrue to the

recipient or to the recipient Ô s legal representative,

related to any covered injury, illness, or necessary

medical care, goods, or services that necessitated

that Medicaid provide medical assistance. Ò ]

3 1 . Section 409.910(11)(f) provides , in pertinent part , as follows:

Notwithstanding any provision in this section to the

contrary, in the event of an action in tort against a

third party in which the recipient or his or her legal

representative is a party which results in a

judgment, award, or settlement from a third party,

the amount recovered shall be distributed as follows:

1. After attorney Ô s f ees and taxable costs as defined

by the Florida Rules of Civil Procedure, one - half of

the remaining recovery shall be paid to the agency

up to the total amount of medical assistance

provided by Medicaid.

2. The remaining amount of the recovery shall be

pa id to the recipient .

3. For purposes of calculating the agency Ô s

recovery of medical assistance benefits paid, the fee

for services of an attorney retained by the recipient

or his or her legal representative shall be calculated

at 25 percent of the judgme nt, award, or settlement.

3 2 . Section 409.910(17)(b) provides as follows:

If federal law limits the agency to reimbursement

from the recovered medical expense damages, a

recipient, or his or her legal representative, may

contest the amount designated as recovered medical

expense damages payable to the agency pursuant to

the form ula specified in paragraph (11)(f) by filing a

petition under chapter 120 within 21 days after the

date of payment of funds to the agency or after the

date of placing the full amount of the third - party

benefits in the trust account for the benefit of the

a gency pursuant to paragraph (a). The petition shall

be filed with the Division of Administrative

Hearings. For purposes of chapter 120, the payment

of funds to the agency or the placement of the full

amount of the third - party benefits in the trust

account for the benefit of the agency constitutes final

agency action and notice thereof. Final order

authority for the proceedings specified in this

subsection rests with the Division of Administrative

Hearings. This procedure is the exclusive method for

challeng ing the amount of third - party benefits

payable to the agency. In order to successfully

challenge the amount designated as recovered

medical expenses, the recipient must prove, by clear

and convincing evidence, that the portion of the total

recovery which s hould be allocated as past and

future medical expenses is less than the amount

calculated by the agency pursuant to the formula set

forth in paragraph (11)(f). Alternatively, the

recipient must prove by clear and convincing

evidence that Medicaid provided a lesser amount of

medical assistance than that asserted by the agency .

3 3 . Section 409.910 provides no guidance , instructions, or criteria that the

ALJ is required to consider in determining the portion of a recipient Ô s total

recovery which Ñ should be al located Ò as medical expenses , nor does it prohibit

the ALJ from considering any specific criteria or from using any particular

methodology . This lack of specific statutory standards limiting the decision -

maker Ô s discretion extends to the recipient , as well , who must prove that

some amount less than the default allocation Ñ should be allocated Ò to medical

expense damages , without any clear statutory direction as to what must be

prove d to make the required showing.

3 4 . T he U.S. Supreme Court has interpreted the anti - lien provision in

federal Medicaid law as imposing a bar which, pursuant to the Supremacy

Clause, precludes Ñ a state from asserting a lien on the portions of a

settlement not allocated to medical expenses. Ò Se e, e.g. , Mobley v. State ,

181 So. 3d 1233, 1235 (Fla. 1st DCA 2015) .

35 . In Gallardo v. Dudek , 963 F.3d 1167 , 1181 - 82 (11 th Cir. 2020) , the

U.S. Eleventh Circuit Court of A ppeals held that Florida Ô s statutory formula

is not preempted by federal law . U nder Dudek , the Medicaid lien may attach

to all medical expenses recovered, including damages for future care and

treatment, and the standard of proof by which the recipient must rebut the

formulaic allocation is clear and convincing evidence . Id. at 1178 - 79 , 1182 .

36 . In Giraldo v. Agency for Health Care Administration , 248 So. 3d 53, 54

(Fla. 2018), however, the Florida Supreme Court ruled that , under

preemptive federal law, the state Ô s Medicaid lien may attach only to that

portion of a recipient Ô s settlement recovery attributable to past medical

expense damages . Thus, the Florida Supreme C ourt held that section

409.910(17)(b) is invalid and unenforceable to the extent it would allow the

Agency to recover from future medical expense damages . As an authoritative

decision of the state Ô s highest court , Giraldo is binding precedent on all lower

courts, which a state ALJ , applying state law, must follow . See Dudek , 963

F.3d at 1192 - 93 ( Ñ Florida Medicaid recipients will now head to state

administrative court to benefit from the Florida Supreme Court Ô s holding in

Giraldo . Ò ) (Wilson, J., concurring in part and dissenting in part).

37 . Florida state courts have not held that the clear and convincing

standard of proof as prescribed in section 409.910(17)(b) i s preempted or

otherwise unenforceable . Guzman has proved her case by clear and

convincing evidence , as required by statute .

38 . Regarding the methodology for determin ing that portion of the total

recovery w hich should be allocated to past medical expense damages, recent

appellate decisions have moved towards acceptance of the proportional

reduction as a valid , albeit nonexclusive, basis for making the required

distribution . Indeed, it is probably accurate to say that, under the present

state of the law, an ALJ is practically required to accept the use of a

proportional reduction, provided certain conditions are met, e.g., where

unrebutted expert testimony is received both as to the value of the recipientÔs

damages and as to the use of the pro rata methodolo gy . As the First District

Court of Appeal explained:

[ W ]hile no t established as the only method, the pro

rata [or proportional reduction] approac h has been

accepted in other Florida cases where the Medicaid

recipient presents competent, substantial evidenc e

to support the allocation of a smaller portion of a

settlement for past medical expenses than the

portion claimed by AHCA. See Giraldo v. Agency for

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

Mojica v. Agency for Health Care Admin. , 285 So. 3d

393 (F la. 1st DCA 2019); Eady v. State , 279 So. 3d

1249 (Fla. 1st DCA 2019). But see Willoughby v.

Agency for Health Care Administration , 212 So. 3d

516 (Fla. 2d DCA 2017) (quoting Smith v. Agency for

Health Care Administration , 24 So. 3d 590, 591 (Fla.

5th DCA 2009)) (explaining that the pro rata

formula is not the Ñ required or sanctioned method to

determine the medical expense portion of an overall

settlement amount Ò ).

Ag. for Health Care Admin. v. Rodriguez , 294 So. 3d 441 , 444 ( Fla. 1st DCA

2020) .

39 . To the cases cited by the court in Rodriguez may be added another

recent decision, Bryan v. Agency for Health Care Administration , 291 So. 3d

1033 (Fla. 1st DCA 2020) . In Bryan , the recipient settled a medical

malpractice action arising out of a catastro phic brain injury for $3,000,000 ,

and then initiated an administrative proceeding to adjust the Medicaid lien ,

which the Agency asserted should be payable in the full amount of

approximately $380 ,000 . Bryan , 291 So. 3d at 1034 . A t hearing, the recipient

Ñ offere d the testimony of two trial attorneys who were both admitted as

experts in the valuation of damages. Ò Id . The se witnesses relied upon a life

care plan and an economist Ô s report, wh ich were filed as exhibits, as well as

jury verdicts in similar cases , to support their opinion that Ñ the value of [the

recipient Ô s] damages exceeded $30 million. Ò Id .

4 0 . The Ñ experts both testified that, using the conserv ative figure

$30 million, the $3 million settlement only represented a 10% recovery, Ò and

that, Ñ based on that figure, it would be reasonable to allocate 10% of [the

recipient Ô s approximately $38 0 ,000 ] claim for past medical expenses Ð [ or,

approximately $38 ,000 ] Ð from the settlement to settle [the Agency Ô s] lien. Ò

Id . The recipient also Ñ submitted an affidavit of a former judge, Ò who

affirmed that the proportional allocation was a reasonable, rational, and

logical Ñ method of calculating the proposed allocation. Ò Id .

4 1 . Regarding the Agency Ô s case, t he court wrote:

In turn, AHCA did not: (1) call any witnesses,

(2) present any evidence as to the value of Ms.

Bryan Ô s damages, (3) propose a differing valuation of

the damages, or (4) present evidence contesting the

methodology used to calculate the $38,106.28

allocation to past medical expenses.

Id . at 1035.

4 2 . T he ALJ rejected the recipient Ô s proposed proportional reduction

methodology as a ÑÓ one size fits all Ô approach which place[s] each element of

[the recipient Ô s] damages at an equal value. Ò Id . The ALJ determined that it

was the recipient Ô s burden to Ñ prove that it was more probable than not Ò that

the parties in the personal injury action had intended to allocate only 10% of

the settlement recovery as past medical expenses , and that the recipient had

failed to do that . Id . Accordingly, the ALJ ordered the rec ipient to pay the

Medicaid lien in full . Id .

43 . The court reversed the ALJ Ô s order, explaining :

[I]n this case, [the recipient] presented unrebutted

competent substantial evidence to support that the

value of her case was at least $30 million. She also

p resented unrebutted competent substantial

evidence that her pro rata methodology did indeed

support her conclusion that $38,106.28 was a proper

allocation to her past medical expenses. Such

methodology was similar to the methodology

employed in Giraldo , Ea dy , and Mojica . [The

Agency] did not present any evidence to challenge

[the recipient Ô s] valuation, nor did it present any

alternative theories or methodologies that would

support the calculation of a different allocation

amount for past medical expenses. Without

any evidence to contradict the pro rata methodology

proposed by [the recipient] , the ALJ Ô s rejection of

that methodology was not warranted.

Id .

44 . The re are many similarities between this case and Bryan . Here, as in

Bryan , two trial attorneys gave unrebutted testimony that , using a

conservative ( and uncontested ) appraisal of the recipient Ô s case ($ 25 million ) ,

the settlement ( $ 850,000 . 00 ) represented only a small fraction ( 3.4 %) of the

recipient Ô s total damages . They expressed the opinion, as i n Bryan , that a

proportional reduction was the proper method of determining the portion of

the recipient Ô s recovery which should be allocated as past medical expe n ses .

As in Bryan , the Agency did not present testimony or other evidence as to :

(i) the value of the rec ip ient Ô s case ; (ii) an alternative appraisal of the

recipient Ô s damages ; or (iii) the weaknesses, if any, in the proportional

reduction methodology as applied to the particular facts .

45 . The undersigned concludes that Bryan is applica ble and controlling .

F ollow ing th at court Ô s lead , the undersigned accept s the premise that the

proportional reduction method ology, when established , as here, by

unrebutted, competent substantial evidence , provides a valid formula for

determining the portion of the recipient Ô s recovery which should be allocated

as past medical expense damages .

46 . Accordingly, a s found above, Guzman carried her burden, as a matter

of fact, by proving that the portion of SanchezÔs total recovery which s hould

be designated as compensation for past medical expenses is $ 27,515.62 .

D ISPOSITION

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

O RDERED that the amount payable to the Agency for Health Care

Administration in satisfaction of the Medicaid lien for medical assistance

provided to Sanchez is $ 27,515.62 , subject to the caveats stated in

paragraph 27, supra .

D ONE A ND O RDERED this 1 8 th day of May , 202 1 , in Tallahassee, Leon

County, Florida.

S

J OHN G. V AN L ANINGHAM

Administrative Law Judge

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1 8 th day of May, 2021 .

C OPIES F URNISHED :

Darryn L. Silverstein , Esquire Richard J. Shoop, Agency Clerk

Gregg A. Silverstein , Esquire Agency for Health Care Administration

Silverstein, Silverstein & Silverstein, P.A. 2727 Mahan Drive, Mail Stop 3

504 Aventura Corporate Center Tallahassee, Florida 32308

20801 Biscayne Boulevard

Aventura , Florida 3 3180 Thomas M. Hoeler, Esquire

Agency for Health Care Administration

Alexander R. Boler, Esquire 2727 Mahan Drive, Mail Stop 3

2073 Summit Lake Drive, Suite 300 Tallahassee, Florida 32308

Tallahassee, Florida 32317

Shena L. Grantham, Esquire

Simone Marstiller , Secretary Agency for Health Care Administration

Agency for Health Care Administration Building 3, Room 3407B

2727 Mahan Drive, Mail Stop 1 2727 Mahan Drive

Tallahassee, Florida 32308 Tallahassee, Florida 32308

James D. Varnado , General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

N OTICE OF R IGHT TO 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 appeal with the Clerk of the

Division of Administrative Hearings and a copy, acco mpanied by filing fees

prescribed by law, with the First District Court of Appeal in Leon County, or

with the District Court of Appeal in the Appellate District where the party

resides . The notice of appeal must be filed within 30 days of rendition of the

order to be reviewed.