Brandon L. Eady v. State of Florida, Agency For Health Care Administration ( 2019 )

FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D18-1852
_____________________________
BRANDON L. EADY,
Appellant,
v.
STATE OF FLORIDA, AGENCY FOR
HEALTH CARE ADMINISTRATION,
Appellee.
_____________________________
On appeal from a Final Order of the Agency for Health Care
Administration.
Lynne A. Quimby-Pennock, Administrative Law Judge.
September 12, 2019
JAY, J.
In Arkansas Department of Health & Human Services v.
Ahlborn, 547 U.S. 268 (2006), the United States Supreme Court
ruled that the federal Medicaid Act’s anti-lien provision preempts
a State’s effort to take any portion of a Medicaid recipient’s tort
judgment or settlement not “designated as payments for medical
care.” Id. at 284. What the Supreme Court in Ahlborn did not have
occasion to answer, however, was “how to determine what portion
of a settlement represents payment for medical care.” Wos v.
E.M.A., 568 U.S. 627, 634 (2013). Instead, the Court “anticipated
that a judicial or administrative proceeding” would resolve the
dispute. Id. at 638-39. In Florida, section 409.910(17)(b), Florida
Statutes (2016) 1, permits a Medicaid recipient to file a petition
under chapter 120, Florida Statutes, with the Division of
Administrative Hearings (“DOAH”) to prove “that Medicaid
provided a lesser amount of medical assistance than that asserted
by” the Agency for Health Care Administration. § 409.910(17)(b),
Fla. Stat. The question expressly presented by this appeal is
whether the evidence adduced by the Medicaid recipient
constituted competent, substantial evidence sufficient to carry his
burden of proof.
BACKGROUND
On July 6, 2011, Appellant, Brandon Eady, suffered a
catastrophic injury to his spinal cord when the car in which he was
a passenger swerved to avoid hitting an animal, rolled, and ended
upside down in a ditch less than forty yards from his home. The
accident rendered him an incomplete quadriplegic—meaning, he
is profoundly impaired with very limited use of his arms and
hands. Florida’s Medicaid program paid $177,747.91 for
Appellant’s medical care.
Appellant brought a personal injury action against the driver
of the car, the owner of the car, and the insurance carrier that
provided uninsured/underinsured motorist insurance coverage.
The Agency for Health Care Administration (“AHCA”) was notified
of the action and, in turn, notified Appellant’s attorney that it had
filed a preliminary lien of $177,747.91 against any damages
Appellant might recover from the third-party tortfeasors.
Appellant later entered into a series of confidential settlement
agreements with the defendants totaling $1,000,000. AHCA did
not participate in the settlement negotiations. Appellant’s grave
condition and his need for a life-care plan was not in dispute.
Appellant filed with DOAH a “Petition to Determine Amount
Payable to Agency for Health Care Administration in Satisfaction
1 All references to section 409.910 will be to the 2016 version,
the version in effect when the settlement was executed. Suarez v.
Port Charlotte HMA, 171 So. 3d 740 (Fla. 2d DCA 2015). Moreover,
the parties stipulated at the hearing that the 2016 version of the
statute controlled.
2
of Medicaid Lien.” He and AHCA filed a Joint Pre-hearing
Stipulation with the administrative law judge (“ALJ”) in which
they agreed that Appellant’s burden of proof would not be the
“clear and convincing evidence” standard in section 409.910(17)(b),
but the default, lesser standard of proof of a “preponderance of the
evidence” found in section 120.57(1)(j), Florida Statutes—an
unmistakable nod to the decision in Gallardo v. Dudek, 263 F.
Supp. 3d 1247 (N.D. Fla. 2017). 2 The final hearing occurred in
Tallahassee on January 4, 2018, through a videoconference call
from Tampa where Appellant and one of his witnesses reside.
At the hearing, Appellant’s counsel called two attorneys as
witnesses, each of whom was accepted as an expert in the
valuation of damages. The first witness to testify was Ralph M.
Guito, III. Mr. Guito is Appellant’s stepfather. He also assisted in
representing Appellant in each of the settlement negotiations. Mr.
Guito came to the hearing with twenty-nine years of experience as
a member of the Florida Bar, and testified to having practiced
primarily in the areas of medical malpractice, personal injury, and
catastrophic injury cases. He had experience representing
individuals who suffered spinal cord injuries “on numerous
occasions.” In addition to representing his own clients, Mr. Guito
felt it was important to stay abreast of the types of damages other
juries were awarding, particularly in catastrophic injury cases. As
a routine part of his practice, Mr. Guito would make assessments
of the overall damages suffered by his clients, oftentimes hiring
experts to make those evaluations, followed by round-table
discussions of damages with the other attorneys in his firm.
2 In Gallardo, the federal district court ruled that Florida’s
Medicaid reimbursement statute’s “clear and convincing burden—
when coupled with a formula-based baseline wholly divorced from
reality and a requirement that the recipient affirmatively disprove
that baseline to successfully rebut it—is in direct conflict with the
Medicaid statute’s anti-lien and anti-recovery provisions,” and is,
therefore, “preempted by federal law.” 263 F. Supp. 3d at 1260.
AHCA has appealed that ruling. Gallardo v. Mayhew, No. 17-
13693 (11th Cir. Aug. 17, 2017).
3
In the course of his assisting in the representation of
Appellant, Mr. Guito reviewed Appellant’s extensive medical
records and considered how Appellant’s treatment would project
into the future as part of a life care plan. He explained that, as a
result of the accident, Appellant suffers from “quadriparesis,”
which means he is not a complete quadriplegic, but has very
limited movement in his arms and limited use of his hands. His
prognosis is poor and as he ages, he will become completely
dependent on a caregiver.
Mr. Guito acknowledged that Appellant’s past medical
expenses approximated $177,000, but he emphasized that
Appellant also would have been entitled to recover damages for
future medical expenses, future pain and suffering, future loss of
enjoyment of life, future lost wages, and mental anguish—all
reasonable elements of a potential jury verdict. Based on his
training and experience, as well as his knowledge of Appellant’s
medical condition and the life care plan prepared for him, Mr.
Guito “conservatively” projected the value of Appellant’s damages
to be in excess of $15,000,000, “just looking at the future medical
expenses and the economic damages associated with his life care
plan.” The life care plan itself, however, did not include dollar
figures or a final dollar amount.
As for non-economic damages, Mr. Guito explained: “[T]hose
are harder to quantify, obviously, because we don’t have a
calculator to determine how this has effected [sic] somebody’s life,
and how you can compensate them for all of the losses of being able
to walk down a beach or walk up a flight of stairs, or play with your
child.” (Appellant has a daughter who was then six years old.) He
referred to the non-economic damages as “subjective,” but
appointed them an estimated value of $25 to $40 million.
Based on his conservative valuation of Appellant’s damages at
$15,000,000—and over AHCA’s objection that he had not been
accepted as an expert on allocation of damages—Mr. Guito was
permitted to testify as to his calculation that the $1,000,000
settlement represented approximately 6.66% of the value of
Appellant’s total estimated damages. Applying that same
percentage difference to the $177,747.91 in past medical expenses
claimed by AHCA, Mr. Guito testified that $11,838 would be a
4
reasonable allocation of the confidential settlement agreement for
past medical expenses. In other words, the $11,838 represented a
pro rata share of the million dollar settlement.
AHCA’s attorney conducted what can only be described as a
tepid cross-examination of Mr. Guito that lasted only a matter of
moments. It did nothing to impeach Mr. Guito’s testimony on
valuation or allocation; neither did it impugn Mr. Guito’s
credentials and experience.
Appellant’s next witness was attorney R. Vinson Barrett, a
forty-two-year member of the Florida Bar whose practice had dealt
almost exclusively with personal injury litigation representing
plaintiffs who had suffered catastrophic and spinal cord injuries.
Mr. Barrett had reviewed Appellant’s files for purposes of
testifying at the hearing. He concluded that Appellant’s “pure
damages” were conservatively placed at $15,000,000, but he would
have “place[d] the case at a minimum . . . of 25 or 35 million
dollars.” Mr. Barrett “paid most attention” to the life care plan,
opining that in his experience, life care plans for quadriplegics are
“above 10 million dollars,” while noting that Appellant was “not
the worst quadriplegic” he had seen. It was a routine part of his
practice to assess the value of damages suffered by a client, and he
was familiar with both jury verdicts and settling cases, although
he testified that the great majority of his cases settled at some
point in the process. Based on his knowledge of Appellant’s medical
records and the extent of his injuries, Mr. Barrett was of the
opinion that an estimated $15,000,000 in damages was “extremely
conservative.” He would have placed the case “at a minimum . . .
of $25 or $30 million dollars,” but was willing to accept the more
conservative amount for purposes of valuation.
Again, over AHCA’s objection, the ALJ allowed Mr. Barrett to
testify that the $1,000,000 settlement fairly represented 6.66% of
the estimated $15,000,000 recovery. Mr. Barrett also agreed that
if Appellant recovered only 6.66% of the full value of his case, that
same percentage should be allocated to past medical expenses
recoverable by AHCA. Furthermore, he added that applying that
ratio was not only reasonable, but was common practice in the
legal proceedings with which he historically had been associated.
Again, Mr. Barrett approved of the notion that applying a pro rata
5
formula to the settlement amount would result in $11,838
allocated to past medical expenses.
As before with Mr. Guito, AHCA’s half-hearted cross-
examination of Mr. Barrett did nothing to impeach his opinions.
For its part, AHCA did not put on any evidence at the hearing
regarding the fairness or reasonableness of the 6.66% allocation of
the settlement for Appellant’s past medical expenses.
THE FINAL ORDER
In her final order, the ALJ dismissed Messrs. Guito and
Barrett’s testimony, finding that they “spoke in generalities,
speculations, and reasonableness as to the settlement in relation
to the Medicaid lien.” Consequently, she concluded that Appellant
“did not prove, by a preponderance of the evidence, that a lesser
portion of the total recovery should be allocated as reimbursement
for past medical expenses.” Important to our analysis, the ALJ
found:
39. To be clear, section 409.910(17)(b) clearly affords
Petitioner a procedure for establishing that the amount
of AHCA’s lien should be reduced from the full amount
claimed so that it would not be paid from portions of the
settlement recovery other than the portion allocated to
past medical expenses (applying the gloss to account for
the federal decisions), contrary to the federal Medicaid
anti-lien law and the federal decisions interpreting it. . .
. Neither the statutes nor the courts have provided clear
guidance on how to determine the proper allocation.
However, the lack of certain information, shielded from
the undersigned via the confidential settlements, thwarts
Petitioner’s position and his ability to prove via the
preponderance of evidence standard that the lesser
amount is warranted.
....
41. Petitioner has demonstrated by a preponderance
of the evidence that he recovered $1,000,000 pursuant to
the confidential settlement agreement. However,
Petitioner failed to prove by a preponderance of the
6
evidence that those settlement agreements provided that
the recovery represented 6.66 percent of his total past
medical expenses, or that he should reimburse Medicaid
the lower amount.
(Emphasis added.) As a result, the ALJ ruled that AHCA was
entitled to be reimbursed the full $177,747.91 from the settlement
in satisfaction of its Medicaid lien.
ANALYSIS
1. Standard of Review
An ALJ’s findings of fact are reviewed to determine if they are
supported by competent, substantial evidence. § 120.68(7)(a) &
(10), Fla. Stat. Competent, substantial evidence is evidence that
establishes “‘a substantial basis of fact from which the fact at issue
can be reasonably inferred or such evidence as is sufficiently
relevant and material that a reasonable mind would accept it as
adequate to support the conclusion reached.’” Mobley v. State, 181
So. 3d 1233, 1236 (Fla. 1st DCA 2015) (quoting Bill Salter Advert.,
Inc. v. Dep’t of Transp., 974 So. 2d 548, 550-51 (Fla. 1st DCA
2008)). An ALJ’s conclusions of law are reviewed de novo. J.S. v.
C.M., 135 So. 3d 312, 315 (Fla. 1st DCA 2012); Sw. Fla. Water
Mgmt. Dist. v. Save the Manatee Club, Inc., 773 So. 2d 594, 597
(Fla. 1st DCA 2000).
2. The Law
Under Florida’s Medicaid Third Party Liability Act, AHCA is
responsible for administering Florida’s Medicaid program. §
409.902, Fla. Stat. Florida grants AHCA the right to be fully
reimbursed for Medicaid payments made to a recipient who
receives a personal injury judgment, award or settlement. §
409.910(1), Fla. Stat. To fulfill the legislative intent in section
409.910, AHCA holds a lien, as well as subrogation and
assignment rights when it “provides, pays for, or becomes liable for
medical care under the Medicaid program.” § 409.910(6), Fla. Stat.
When there is a recovery in a tort action, AHCA’s reimbursement
is determined by a statutory formula set forth in section
409.910(11)(f), Florida Statutes. However, the paragraph (11)(f)
allocation is merely a default allocation so as not to run afoul of
7
the federal Medicaid anti-lien provision, if, for example, the
majority of an award (after attorney’s fees and costs) is not
allocable to medical expenses. As recently explained by the Florida
Supreme Court in Giraldo v. Agency for Health Care
Administration, 248 So. 3d 53 (Fla. 2018) (“Giraldo II”):
Medicaid is a joint federal-state cooperative program that
helps participating states provide medical services to
residents who cannot afford treatment. Arkansas Dep’t of
Health & Human Servs. v. Ahlborn, 547 U.S. 268 . . .
(2006). The federal Medicaid Act—title XIX of the Social
Security Act—governs regulation of the program, and it
mandates that participating states follow the Medicaid
Act by “compl[ying] with certain statutory requirements
for making eligibility determinations, collecting and
maintaining information, and administering the
program.” Ahlborn, 547 U.S. at 275 . . . . Significantly, the
Act contains a general anti-lien provision protecting
Medicaid recipients by broadly prohibiting state
Medicaid agencies from imposing liens against any of a
recipient’s property. 42 U.S.C. § 1396p(a)(1) (2012).
However, the Act contains a narrow exception to the anti-
lien prohibition requiring states to seek reimbursement
for their Medicaid expenditures by pursuing payment
from third parties legally liable for the recipients’ medical
expenses. Ahlborn, 547 U.S. at 284–85 . . . . These
provisions “pre-empt[ ] a State’s effort to take any portion
of a Medicaid beneficiary’s tort judgment or settlement
not ‘designated as payments for medical care,’” Wos v.
E.M.A., 568 U.S. 627 . . . (2013) (quoting Ahlborn, 547
U.S. at 284 . . .), and set “a ceiling on a State’s potential
share of a beneficiary’s tort recovery,” id. at 633 . . . .
Id. at 55. The supreme court continued:
The portion of the Medicaid Act defining the
“ceiling”—the limitation on what portion of a recipient’s
tort recovery a state can be subject to a lien—reads in
relevant part:
[T]o the extent that payment has been made
under the State plan for medical assistance for
8
health care items or services furnished to an
individual, the State is considered to have
acquired the rights of such individual to
payment by any other party for such health care
items or services.
42 U.S.C. § 1396a(a)(25)(H) (2012) (emphasis added).
“Such health care items or services” is most naturally and
reasonably read as referring to those “health care items
or services” already “furnished” and for which “payment
has been made under the State plan.” Id. Those are the
health care items and services for which “the State is
considered to have acquired . . . rights” by assignment “to
any payments by any other party,” id., and they are past
medical expenses only. We see no reasonable way to read
this language as giving states a right to assignment of
that portion of a tort recovery from which the injured
party will be expected to pay his or her anticipated
medical expenses in the future, without aid from the
government.
Id. at 56.
Following the United States Supreme Court’s decision in Wos,
our supreme court accepted AHCA’s concession that Wos afforded
a plaintiff “the opportunity to demonstrate that a Medicaid lien
exceeds the amount recovered by the plaintiff for medical
expenses.” Garcon v. Fla. Agency for Health Care Admin., 150 So.
3d 1101 (Fla. 2014) (Mem.). “[I]n compliance with Wos, the Florida
Legislature passed section 409.910(17)(b), which provides that a
Medicaid recipient can rebut the result of the [(11)(f)] formula.”
Mobley 181 So. 3d at 1235. The 2016 version of section
409.910(17)(b) provides two methods by which a Medicaid
recipient can “successfully challenge the amount payable to
[AHCA].” A recipient may prove by clear and convincing evidence
that either (1) “a lesser portion of the total recovery should be
allocated as reimbursement for past and future medical expenses
than the amount calculated by” the paragraph (11)(f) formula; or
(2) “Medicaid provided a lesser amount of medical assistance than
that asserted by [AHCA].” § 409.910(17)(b), Fla. Stat. Relevant to
the issue presented in this appeal, “when AHCA has not
9
participated in or approved a settlement, the administrative
procedure created by section 409.910(17)(b) . . . serves as a means
for determining whether a lesser portion of a total recovery should
be allocated as reimbursement for medical expenses in lieu of the
amount calculated by application of the formula in section
409.910(11)(f).” Delgado v. Agency for Health Care Admin., 237 So.
3d 432, 435 (Fla. 1st DCA 2018) (bracketed language omitted).
When the Medicaid recipient settles with the tortfeasor or
tortfeasors and the settlement, similar to the present one, does not
include itemized allocations for damages, proving what portion of
the settlement was allocated to past medical expenses is
challenging. Wos, 568 U.S. at 634. Even if the damages
represented in the settlement proceeds have been allocated by the
parties, there is always the distinct possibility “that Medicaid
beneficiaries and tortfeasors might collaborate to allocate an
artificially low portion of a settlement to medical expenses.” Id.;
see also Ahlborn, 547 U.S. at 288 (expressing the Supreme Court’s
concern over “the risk that parties to a tort suit will allocate away
the State’s interest.”). Further complicating matters is when the
settlement agreements are confidential, like the ones in the
instant case. Revealing the terms of the agreements in this latter
instance risks piercing any number of privileges and, potentially,
opens a pandora’s box of possible sanctions against the parties and
their attorneys. The answer to this dilemma has been for Medicaid
recipients to utilize a pro rata allocation methodology, which has
been met with decidedly mixed reviews.
The Supreme Court in Wos acknowledged that when a
judgment or stipulation does not exist that allocates the plaintiff’s
tort recovery among the existing claims, “a fair allocation of such
a settlement may be difficult to determine,” but went on to observe
that “[t]rial judges and trial lawyers . . . can find objective
benchmarks to make projections of the damages the plaintiff likely
could have proved had the case gone to trial.” 568 U.S. at 640. Yet,
on the whole, since Ahlborn and Wos were decided, there has been
no national consensus as to how a Medicaid recipient can prove by
what amount the lien should be reduced. Compare State of Colo.
Dep’t of Health Care Policy & Fin. v. S.P., 356 P.3d 1033 (Colo. Ct.
App. 2015) (holding that under a “proportionate allocation”
formula to determine what percentage of the recipient’s $1 million
10
lump-sum settlement should be allocated to past medical
expenses, for purposes of the Department’s statutory lien, it was
appropriate for the trial court to use the amount Medicaid actually
paid rather than amounts billed by health care providers, in
proportion to the stipulated value of the tort claim of $4.9 million);
and In re E.B., 729 S.E.2d 270 (W. Va. 2012) (holding that the ratio
formula was a permissible method for calculating the amount of
the settlement to the recipient’s medical expenses, for purposes of
determining the Department’s subrogation lien interest); with
Matter of Estate of Martin v. Ark. Dep’t of Human Servs., 574
S.W.3d 693 (Ark. Ct. App. 2019) (criticizing the proportional
approach for “overlook[ing] the certainty and objectivity of past
medical damages” and “ignor[ing] the policy considerations
inherent in Medicaid’s recovery laws, which are based on the
complementary premises that (1) a tortfeasor (and no other party)
should be liable for paying for the harm that the tortfeasor caused,
and (2) Medicaid is the payer of last resort”); and Neal v. Detroit
Receiving Hosp., 903 N.W.2d 832, 842 (Mich. Ct. App. 2017)
(reversing and remanding to the trial court, in part, “because []
there is no indication in the record that the trial court reviewed
the confidential settlement and found it reasonable, fair, and
proper regarding the different categories of plaintiff’s claimed
damages”).
In Willoughby v. Agency for Health Care Administration, 212
So. 3d 516 (Fla. 2d DCA 2017) approved, Giraldo v. Agency for
Health Care Adnim., 248 So. 3d 53 (Fla. 2018), the Medicaid
recipient, Mr. Willoughby, and various defendants settled his tort
claim for $4,000,000. AHCA sought to recover from the settlement
proceeds the approximately $148,000 it had expended through
Medicaid. Mr. Willoughby filed a petition with the DOAH seeking
to decrease AHCA’s lien amount. Prior to the hearing, Mr.
Willoughby and AHCA proactively stipulated that the value of Mr.
Willoughby’s personal injury damages was at least $10,000,000;
that he suffered at least $23,800 in lost wages, and a loss of future
earning capacity between nearly $800,000 and $2,000,000; his past
medical expenses paid by Medicaid were almost $148,000; and his
future medical expenses would exceed $5,000,000. Finally, AHCA
and Mr. Willoughby stipulated that his past noneconomic damages
exceeded $1,000,000. Notably, the parties stipulated that, under
11
the settlement, Mr. Willoughby recovered less than the
$147,019.61 lien as payment for his past medical expenses.
To prevail on his petition to decrease AHCA’s presumptive
lien amount, Mr. Willoughby utilized the same pro rata allocation
methodology as was urged on the ALJ by Appellant, below. Even
so, the Second District considered that methodology with mixed
emotions:
We do not condemn this approach; we recognize that
ALJs frequently resort to this methodology in calculating
amounts available to satisfy Medicaid liens. See Osmond
v. Agency for Health Care Admin., Case No. 16–3408MTR
(Fla. DOAH Hrgs. Sept. 8, 2016); Bryant v. Agency for
Health Care Admin., Case No. 15–4651MTR (Fla. DOAH
Feb. 12, 2016). But we also acknowledge that the U.S.
Supreme Court has not explicitly endorsed this method.
The Supreme Court “in no way adopted the formula as a
required or sanctioned method to determine the medical
expense portion of an overall settlement amount.” Smith
v. Agency for Health Care Admin., 24 So. 3d 590, 591 (Fla.
5th DCA 2009). We remain mindful, though, that “[a]n
irrebuttable, one-size-fits-all statutory presumption is
incompatible with the Medicaid Act’s clear mandate that
a State may not demand any portion of a beneficiary’s tort
recovery except the share that is attributable to medical
expenses.” Wos, 133 S. Ct. at 1399. . . .
212 So. 3d at 522-23.
The Fifth District, on the other hand, repudiated a similar
methodology propounded in Smith, cited above in Willoughby. It
reasoned:
[T]he formula used by the Ahlborn parties is problematic
in that it assumes the Medicaid lien amount to be the only
medical expense included by the plaintiff as part of his or
her overall damage claim, which is not a reasonable
assumption. Stated another way, without knowing how
much of a plaintiff’s total damage claim is comprised of
medical expenses, there is no way to calculate the medical
12
expense portion of a settlement by simply comparing the
damage claim to the ultimate settlement amount.
24 So. 3d at 591.
Later, in Davis v. Roberts, 130 So. 3d 264 (Fla. 5th DCA 2013),
the Fifth District applied its holding in Smith to a case in which
the parties entered into settlement negotiations, ultimately
agreeing that $1,000,000 would go to the Medicaid recipient. The
parties agreed that the $1,000,000 settlement represented 10% of
the total value of the recipient’s damages, including her past
medical expenses. Consequently, the settlement agreement
allocated $23,926.88 toward her past medical expenses.
The appellants in Davis—the parents and natural guardians
of the recipient—petitioned the trial court to approve the
settlement and argued that AHCA’s lien for past medical expenses
should be correspondingly reduced. At the evidentiary hearing, the
appellants put on evidence that the $1,000,000 settlement was in
their child’s best interest and that the allocation to compensate her
for past medical expenses was fair and reasonable. AHCA did not
put on any evidence regarding the fairness or reasonableness of
the settlement amount or the allocation. Instead, it argued that
section 409.910 controlled and “no legal authority authorized
Florida courts to allow Medicaid recipients to prove that some
smaller portion of their settlement was comprised of medical
expenses.” Id. at 267. The trial court agreed and awarded AHCA
its full lien amount, assuming that the language of section
409.910(11)(f) was mandatory and precluded it from considering
evidence to support limiting payment of the lien. Id.The Fifth District reversed. It acknowledged it had been
presented a similar set of facts in Smith, and AHCA correctly
argued that it had held in Smith that section 409.910(11)(f) had to
be used to determine the amount payable to AHCA in that case.
But, the Fifth District went on to clarify why it held as it did in
Smith:
[W]e did not do so because we determined the language
in the statute was mandatory; rather, we determined the
formula had to be used because there was no allocation in
the settlement agreement and the plaintiff proffered no
13
evidence at the hearing from which the trial court could
determine how much of the damages represented medical
expenses.
Id. at 268 (emphasis added) (footnote omitted). In fact, it agreed
with the Fourth District’s conclusion in Roberts v. Albertson’s Inc.,
119 So. 3d 457 (Fla. 4th DCA 2013) (as modified on rehearing),
“that section 409.910(11)(f) is a ‘default allocation.’” Id. at 270
(citing Roberts, 119 So. 3d at 465). Accordingly, it reiterated its
holding in Smith, “that a Medicaid recipient ‘should be afforded
the opportunity to seek the reduction of a Medicaid lien amount by
demonstrating, with evidence, that the lien amount [established
by section 409.910(11)(f)] exceeds the amount recovered for
medical expenses.’” Id. (quoting Smith, 24 So. 3d at 592). The Fifth
District concluded that the trial court erred in believing it was
“‘hamstrung by section 409.910’ and without discretion to reduce
the lien.” Id. It held: “This was error because our decision in Smith
gave the trial court the authority to reduce the lien if there was
sufficient evidence introduced to support the reduction.” Id.(emphasis added). It stressed that, to the extent it was unclear in
Smith, Wos and Roberts “expressly authorize a plaintiff to seek, by
way of an evidentiary hearing, the reduction of the Medicaid lien
amount established by the statutory allocation.” Id.Recently, in Gray v. State, No. 1D17-355 (Fla. 1st DCA Sept.
3, 2019), this Court affirmed the ALJ’s rejection of Gray’s claim
that AHCA’s Medicaid lien should have been reduced by using a
pro rata formula, rather than the formula provided in section
409.910(11)(f). As we observed, the evidence offered by Gray
“consisted of the verdict form, the final judgment, and letters
providing the amount of the liens imposed by Florida’s Medicaid
Program, Georgia’s Medicaid Program, and Florida’s Brain and
Spinal Cord Injury Program.” Slip op. at 5. We held that “[n]one
of these records showed that the $10,000 recovery was allocated in
any way between different categories of damages, costs, or
attorney’s fees.” Id. Although the hearing proceeded under the
more burdensome clear and convincing standard of proof, we also
held that “Gray could not show—even by a preponderance of the
evidence—that an amount other than the total recovery of $10,000
should be considered when applying the statutory formula to
determine the amount of the Medicaid lien.” Id. We concluded that
14
“in situations such as this case, when the plaintiff fails to produce
evidence or present testimony showing that the lien amount
should be reduced, the plain language of section 409.910(11)(f)
requires the ALJ to apply the statutory formula.” Id. at 6.
Here, we do not read Gray, Willoughby, Smith, or Davis as
condoning the ALJ’s wholesale rejection of Appellant’s evidence on
the basis that the pro rata formula was speculative and that
Appellant’s case was “flawed” due to the confidential nature of the
settlement agreement. To conclude otherwise would be to ignore
the assurance expressed in those decisions that under
409.910(17)(b), a Medicaid recipient is entitled to put on evidence
to prove that he is entitled to a reduction of the Medicaid lien. Nor
did the instant case suffer the same evidentiary infirmities
suffered in Smith and Gray. In this case, Appellant presented
expert testimony directed towards the appropriate share of the
settlement funds to be allocated to past medical expenses. AHCA
did not present any evidence to refute the experts’ opinions. Under
our facts, there was no competent, substantial evidence to support
the ALJ’s findings or conclusions. Consequently, we hold the
supreme court’s decision in Giraldo II is decisive.
In Giraldo II, the supreme court emphasized that the
Medicaid recipient, utilizing a pro rata allocation identical to the
allocation advanced in the present case, presented “uncontested
expert testimony establishing that only $13,881.79 of the
[unallocated] $1 million tort recovery represented compensation
for [the recipient’s] past medical expenses.” Giraldo II, 248 So. 3d
at 54. It went on to decree:
Because we hold that the federal Medicaid Act prohibits
AHCA from placing a lien on the future medical expenses
portion of a Medicaid recipient’s tort recovery, we remand
with instructions that the First District direct the ALJ to
reduce AHCA’s lien amount to $13,881.79. Although a
factfinder may reject “uncontradicted testimony,” there
must be a “reasonable basis in the evidence” for the
rejection. Wald v. Grainger, 64 So. 3d 1201, 1205–06 (Fla.
2011). Here, [the Medicaid recipient] presented
uncontradicted evidence establishing $13,881.79 as the
settlement portion properly allocated to his past medical
15
expenses, and there is no reasonable basis in this record
to reject [his] evidence.
Id. at 56. For that reason, the court concluded there was no further
factfinding required. Id.
CONCLUSION
In the present case, as in Giraldo II, Appellant presented
competent, substantial, and uncontradicted evidence establishing
$11,838.01 as the settlement portion properly allocated to past
medical expenses. Because we hold there was no reasonable basis
in the record to reject that evidence, the ALJ erred as a matter of
law in concluding that Appellant failed to prove his case by a
preponderance of the evidence. Accordingly, as did the supreme
court in Giraldo II, we, too, remand the cause to DOAH for the ALJ
to reduce AHCA’s lien to $11,838.01, without conducting further
factfinding.
REVERSED and REMANDED with instructions.
RAY, C.J., and BILBREY, J., concur.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
Floyd Faglie of Staunton & Faglie, PL, Monticello, for Appellant.
Alexander R. Boler, Tallahassee, for Appellee.
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