22-000704MTR Lillian Henderson And Nicky Raines, On Behalf Of And As Parents And Natural Guardians Of J.R., A Minor vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Monday, July 11, 2022.

Summary: Petitioner failed to prove by clear and convincing evidence that AHCA's Medicaid Lien for the full amount of medical expenses paid by Medicaid should be reduced.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

L ILLIAN H ENDERSON AND N ICKY R AINES ,

O N B EHALF OF A ND AS P ARENTS A ND

N ATURAL G UARDIANS OF J.R., A M INOR ,

Petitioner s ,

vs. Case No. 22 - 0704MTR

A GENCY FOR H EALTH C ARE

A DMINISTRATION ,

Respondent.

____________________________ _______ ___/

F INAL O RDER

An administrative hearing w as held in this case on May 10, 2022 , by Zoom

conferencing , before James H. Peterson III, Administrative Law Judge with

the Division of Administrative Hearings (DOAH) .

A PPEARANCES

For Petitioner s : Jason Dean Lazarus, Esquire

Special Needs Law Firm

2420 South Lakemont Avenue , Suite 160

Orlando, Florida 32814

For Respondent: Alexander R. Boler , Esquire

2073 Summit Lake Drive , Suite 300

Tallahassee, Florida 32317

S TATEMENT OF THE I SSUE

The issue to be determined is the amount payable to the Agency for

Health Care Administration (AHCA or Respondent) towards satisfaction of

its $73,245.59 Medicaid lien asserted against personal injury settlement

proceeds received by J.R. , a minor, by and through his parents and natural

guardian s , Lillian Henderson and Nicky Raines (Petitioner s ).

P RELIMINARY S TATEMENT

On March 3, 2022 , Petitioner s filed a petition entitled Ñ Petition to

Determine MedicaidÔs Lien Amount to Satisfy Claim Against Personal Injury

Recovery by the Agency for Health Care AdministrationÒ (Petition) pursuant

to section 409.910(17)(b) , Florida Sta tutes (20 22 ) . 1 Thereafter, t he final

hearing was scheduled and held on May 10, 2022 .

At the f inal h earing, Petitioner s presented the testimony of two witnesses ,

Mark A. Avera, Esq uire, and Donald M. Hinkle , Esquire , each of whom was

accepted as an expert in valuation of damages in personal injury cases .

Petitioners Ô Exhibits P - 1 through P - 5 were received into evidence. The

partiesÔ Joint Motion for Protective Order to maintain the confidentiality of

Exhibits P - 4 and P - 5 was granted, and those exhibits were placed in an

envelope marked confidential and are not available for viewing on DOAHÔs

public website. Other than cross - examination of Petitioners Ô witness es ,

AHCA did not present testimony and did not submit any exh ibits .

The proceedings were recorded and a t ranscript was ordered. The parties

were given 10 days from the filing of the t ranscript within which to file

proposed final orders . The one - volume Transcript of the proceedings was filed

on June 13 , 2022 . Thereafter, t he parties timely filed their respective

Proposed Final Orders , both of which were considered in rendering this Final

Order.

1 Unless otherwise noted, all statutory references to section 409.910 and other statutes are to

current versions, which have not substantively changed since 2021 when Petitioners Ô medical

malpractice case settled.

F INDINGS OF F ACT 2

1. On October 23, 2019, Lillian Henderson , J.R.Ô s mother, was admitted to

North Florida Regional Medical Center in Gainesville, Florida, at more than

40 weeks pregnant for an induction of labor. After more than 24 hours in

labor, the defendant doctor attempted to deliver J.R. by forcep extraction.

Using forceps, the defendant doctor pulled on J.R.Ôs skull three times , which

failed to deliver J.R.

2. After the failed forceps delivery, J.R. was delivered via a cesarean

section. At birth, nurses noted that J.R. presented with a weak cry and poor

tone and co lor. J.R. was transferred from the normal newborn nursery to the

neonatal intensive care unit (NICU) due to indications of a skull fracture and

seizures. J.R. was noted to have a left parietal depression , indicative of a

depressed skull fracture.

3. On Oc tober 25, 2019, J.R. was transported from the NICU at North

Florida Regional Medical Center to Shands Hospital where he was diagnosed

with a skull fracture and underwent pediatric neurosurgical intervention.

4. As a result of the alleged negligence of the defendants, J.R. suffered a

depressed skull fracture, seizures , and other physically - disabling conditions.

5. In November of 2020, J.R.Ôs parents brought a medical malpractice

personal injury action to recover damages related to the alleged malpractice.

Th is action was brought against several defendants. Thereafter, a

N eurological Injury Compensation Association petition to determine

eligibility for benefits was filed in April of 2021.

6. In December of 2021, after the suit was filed, Petitioners agreed to

settle J.R.Ôs medica l malpractice claim.

7. AHCA was properly notified of J.R.Ôs lawsuit against the defendants

and indicated it had paid benefits related to the injuries from the incident in

2 Findings of Fact 1 through 11 are derived from the partiesÔ Statement of Admitted and

Stipulated Facts in their Joint Pre - Hearing Stipulation.

the amount of $73,245.59. AHCA has asserted a lien for the full amount it

paid, $73,245.59, against J.R.Ôs settlement proceeds.

8. AHCA, through its Medicaid program, provided $73,245.59 in payment

for J.R.Ôs medical care related to his injuries. This $73,245.59 represents

J.R.Ôs entire claim for past medical expenses .

9. No portion of the $73,245.59 paid through the Medicaid program on

behalf of J.R. represent s expenditures for future medical expenses, and

Medicaid did not make payments in advance for medical care.

10. Given the amount of the settlement, a pplying the statutory reduction

formula set forth in section 409.910(11)(f) to this particular settlement would

result in no reduction of the $73,245.49 Medicaid lien .

11. Petitioner s ha ve deposited the full Medi caid lien amount of $73,245.49

in an interest - bearing account for the benefit of AHCA pending an

administrative determination of AHCAÔs rights, and this constitutes Ñfinal

agency actionÒ for purposes of chapte r 120, Florida Statutes , pursuant to

section 409.910(17).

12. At the final hearing, Mark A. Avera, Es quire , who represented

Petitioners in the underlying medical malpractice actio n , and Donald M.

Hinkle, Esquire , were both accepted, without objection, as expert s in the

valuation of damages suffered by injured parties. Both Mr. Avera and

Mr. Hinkle are member s of several trial attorney associations and stay

abreast of jury verdicts relative to birth injuries, and ascertain the value of

damages suffered by injured parties as a routine part of their practice s .

13. According to both Mr. Avera and Mr. Hinkle , J.R.Ôs damages have a

value $1 , 5 00,000 .

14. AHCA did not call any witnesses, present any evidence as to the value

of Petitioners Ô claim, or propose a differing valuation of the damages. Based

upon the unrebutted evidence presented by Petitioner s Ô experts , it is found

that a reasonable value of Petitioner s Ô claim is $ 1, 500,000 .

15. Although the evidence convincingly demonstrated that the value of

Petitioner s Ô damages claim is $1,500,000 , the evidence as to what portion of

that claim represents past and future medical expenses was less than clear.

Rather than giving a particular figure for economic damages, Mr. Avera

indicated that non - economic damages were 75 to 80 percent of PetitionersÔ

claim . Mr. Hinkle indicated that non - economic damages we re in the range of

80 to 90 percent of the claim.

16. Without stating the dollar amount of PetitionersÔ settlement , 3 b oth

Mr. Avera and Mr. Hinkle testified that Petitioners Ô settlement represents

only a 16.67 percent recovery of Petitioners Ô damages.

17. Neither Mr. Avera nor Mr. Hinkle included past medical expenses in

valuing Petitioners Ô claim. If MedicaidÔs past payment of $73,245.59 is added

to 25 percent of the settlement estimated by Mr. Avera to represent the high

end of economic damages, the resul t, after reducing the amount to

16.67 percent of the value of PetitionersÔ claim, is more than sufficient to pay

AHCAÔs Medicaid lien in full , as follows: [(25% x $1,500,000) 73,245.49] x

16.67% = $74,722.52.

18. Further, a life care plan detailing the costs of J.R.Ôs medical expenses

because of his injuries was never prepared. According to Mr. Avera, the life

plan portion is 20 to 30 percent of the value of Petitioners Ô claim, for a range

of $300,000 to $450,000.

19. Even without adding past medical expenses, 1 6.67 percent of

Mr. AveraÔs estimated $300,000 to $4 50 ,000 range for future medical

expenses results in $50,010 to $ 75,015 of economic damages attributable to

future medical expenses. If past medical expenses paid by Medicaid are

added, the range for future plus past medical expenses becomes $373,245.49

to $523,245.49, which, when multiplied by 16.67 percent , results in a range of

3 While t he amount was not revealed for confidentiality purposes , the settlement amount can

be readily determine d by applying the recovery percentage to the value of the claim.

proportional sum s from $62,220.02 to $87,225.02 in settlement proceeds

available to satisfy AHCAÔs Medicaid lien .

20. In sum, t he evidence, as outlined in the Findings of Fact, above, does

not support reduction of AHCAÔs Medicaid lien.

C ONCLUSIONS OF L AW

21. DOAH has jurisdiction over the subject matter and parties in this case

pursuant to sections 120.569, 120.57(1), and 409.910(17).

22. AHCA is the agency authorized to administer FloridaÔs Medicaid

program. See § 409.902, Fla. Stat.

23. The Medicaid program Ñprovide[s] federal financial assistance to

States that choose to reimburse certain costs of medical treatment for needy

persons.Ò Harris v. McRae , 448 U.S. 297, 301 (1980). Though participation is

optional, once a state elects to part icipate in the Medicaid program, it must

comply with federal requirements governing the same. Id.

24. As a condition for receipt of federal Medicaid funds, states are

required to seek reimbursement for medical expenses incurred on behalf of

Medicaid recipi ents who later recover from legally - liable third parties. See

Ark. Dep't of Health & Human Servs. v. Ahlborn , 547 U.S. 268, 276 (2006).

25. Consistent with this federal requirement, the Florida Legislature has

enacted section 409.910, which authorizes and requires the State to be

reimbursed for Medicaid funds paid for a recipient's medical care when that

recipient later receives a personal inj ury judgment or settlement from a third

party. Smith v. Ag. for Health Care Admin ., 24 So. 3d 590 (Fla. 5th DCA

2009). The statute creates a n automatic lien on any such judgment or

settlement for the medical assistance provided by Medicaid. See

§ 409.910(6 )(c), Fla. Stat.

26. The amount to be recovered for Medicaid medical expenses from a

judgment, award, or settlement from a third party is determined by the

formula in section 409.910(11)(f) . Ag. f or Health Care Admin. v. Riley , 119 So.

3d 514, 515 n.3 (Fla. 2d DCA 2013).

27. Application of the formula in section 409.910(11)(f) to Petitioners Ô

settlement proceeds in this case requires payment to AHCA of its full

$ 73,245.49 Medicaid lien.

28. Respondent correctly asserts that it is not automatically bound by any

allocation of damages set forth in a settlement between a Medicaid recipient

and a third party that may be contrary to the f ormulaic amount, citing

section 409.910(13). See also £ 409.910(6)(c)7., Fla. Stat. (ÑNo release or

satisfaction of any . . . settlement agreement shall be valid or effectual as

against a lien created under this paragraph, unless the agency joins in the

release or satisfaction or executes a release of the li en.Ò). Rather, in cases

such as this, where Respondent has not participated in or approved the

settlement, the administrative procedure created by section 409.910(17)(b) is

the means for determining whether a lesser portion of a total recovery should

be al located as reimbursement for medical expenses in lieu of the amount

calculated by application of the formula in section 409.910(11)(f).

29. Section 409.910(17)(b) provides:

(b) If federal law limits the agency to

reimbursement from the recovered medical e xpense

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 formula specified in

paragraph (11)(f) by filing a petition under chapter

120 with in 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 agency 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

there of. Final order authority for the proceedings

specified in this subsection rests with the Division of

Administrative Hearings. This procedure is the

exclusive method for challenging the amount of

third - party benefits payable to the agency. In order

to succ essfully 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 should 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.

30. Petitioner s proved that the settlement proceeds represent only

16.67 percent of Petitioners Ô claim , which is valued at $ 1,500,000.

31. While , in the past, Medicaid recipients have successfully argue d that

the percentage reduction (in this case 16.67 percent ) should be applied only to

MedicaidÔs lien for past medical expenses, the recent United States Supreme

CourtÔs decision in Gallardo v. Marstiller , 596 U.S. , 2022 U.S. L EXIS 2683,

2022 WL 1914096 (June 6, 2022), made it clear that MedicaidÔs lien extends

to the amount of a claim attributed to past and future medical expenses.

32. In this case, e vidence that AHCAÔs Medicaid lien should be reduced

was less than clear and convincing. Rather than showing that the

pro portional sum of the value of PetitionersÔ claim to pay past and future

medical expenses was less than AHCAÔs full Medicaid lien of $73,245.49, the

evidence showed a range of $62,220.02 to $87,225.02 from settlement

proceeds available to pay the lien. The top of that range is more than

sufficient to pay the full lien and the evidence was otherwise insufficient to

demonstrate that the lien should be reduced.

33. Therefore , i t i s c on c l u d ed th a t Res p on d ent i s not ent i t l ed to less

than the full amount of $73,245.49 i n sa t i s f a c t i on of AHCAÔs M e d i c ai d li en.

O RDER

Based on the fo r ego i ng F i n d i ngs of F a c t a n d Con c l u s i ons of La w,

i t i s hereby O RDERED a nd Det ermined th a t t he Agen c y for Hea l th

C a r e A d m i n i st r a t i on i s en t i t l ed to recover 100 percent of its lien, and

is hereby awarded the full amount of $73,245.49 from Petitioners.

D ONE A ND O RDERED this 11th day of Ju ly, 2022 , in Tallahassee, Leon

County, Florida.

S

J AMES H. P ETERSON , III

Administrative Law Judge

Division of Administrative Hearings

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 11th day of J uly , 20 22 .

C OPIES F URNISHED :

Alexander R. Boler, Esquire Shena L. Grantham, Esquire

Suite 300 Agency for Health Care Administration

2073 Summit Lake Drive Building 3, Room 3407B

Tallahassee, Florida 32317 2727 Mahan Drive

Tallahassee, Florida 32308

Jason Dean Lazarus, Esquire

Special Needs Law Firm Richard J. Shoop, Agency Clerk

Suite 160 Agency for Health Care Administration

2420 South Lakemont Avenue 2727 Mahan Drive, Mail Stop 3

Orlando, Florida 32814 Tallahassee, Florida 32308

Josefina M. Tamayo , General Counsel Simone Marstiller , Secretary

Agency for Health Care Administration Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3 2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308 Tallahassee, Florida 32308

Thomas M. Hoeler, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

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

A party who is adversely affected by this Final Order is entitled to judicial

review pursuant to s ection 120.68, Florida Statutes. Review proceedings are

governed by the Florida Rules of Appellate Procedure. Such proceedings are

commenced by filing one copy of a Notice of Administrative Appeal with the

agency clerk of the Division of Administrative Hearings and a second copy,

accompanied by filing fees prescribed by law, with the District Court of

Appeal, First District, or with the District Court of Appeal in the appellate

district where the party resides. The Notice of Administrative Appeal must

be filed within 30 days of rendition of the order to be reviewed.