Opinion
No. 1D18-2105
12-19-2019
Angela MOJICA, a minor, BY AND THROUGH her mother and natural guardian, Glexys MOJICA, Appellant, v. State of Florida, AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.
Floyd B. Faglie of Staunton & Faglie, PL, Monticello, for Appellant. Ashley Moody, Attorney General, and Elizabeth Teegan, Senior Assistant Attorney General, Tallahassee, for Appellee.
Floyd B. Faglie of Staunton & Faglie, PL, Monticello, for Appellant.
Ashley Moody, Attorney General, and Elizabeth Teegan, Senior Assistant Attorney General, Tallahassee, for Appellee.
Ray, C.J.
This is an appeal from an amended final order entered by the Division of Administrative Hearings determining that the Agency for Healthcare Administration ("AHCA") has a right to full payment of its Medicaid lien from a medical malpractice settlement. Because the Administrative Law Judge ("ALJ") applied an incorrect standard for a Medicaid recipient to successfully challenge the amount payable to AHCA as reimbursement for past medical expenses and improperly rejected unrebutted expert testimony, we reverse.
I.
In November 2013, Angela Mojica, who was then eight years old, suffered catastrophic brain damage during a routine tonsillectomy. As a result, she cannot eat, speak, toilet, ambulate or care for herself. Her mother brought a medical malpractice action against the hospital and medical staff to recover her daughter's damages, as well as her own individual damages associated with her daughter's injuries. The lawsuit eventually settled for $8.8 million through a series of confidential settlements, and the settlement amount was approved by the court.
In the wake of Miss Mojica's medical tragedy, Medicaid paid $595,077.45 for her medical care, $322,048.83 of which was paid through AHCA. Although AHCA did not participate in the medical malpractice action or the settlement, Florida's Medicaid Third-Party Liability Act grants AHCA an automatic lien on any benefits a Medicaid recipient recovers, including a tort judgment or settlement. § 409.910(6)(c), Fla. Stat. (2016). Using the formula in paragraph (11)(f) of the statute for determining how much of Miss Mojica's recovery AHCA can claim in satisfaction of its Medicaid lien, AHCA calculated the presumptively appropriate amount of its lien at $322,048.83 and demanded payment of that amount from the settlement.
In response, Miss Mojica initiated an administrative proceeding under section 409.910(17)(b), Florida Statutes (2016), to contest the formula-based amount designated by AHCA to satisfy its Medicaid lien and to establish that a lesser portion of the total settlement should be allocated as reimbursement for past medical expenses. Miss Mojica contended that her and her mother's economic and noneconomic damages had a value in excess of $25 million, of which $595,077.45 represented the claim for past medical expenses. She argued that due to the inherent risks of litigation—e.g., disputed facts, causation, and insurance limits—she was unable to recover the full value of her damages in the settlement. And using the most conservative valuation of all damages of $25 million, the $8.8 million settlement represented a recovery of 35.2% of the total monetary value of all the damages. Miss Mojica thus submitted that she had only recovered 35.2% of her $595,077.45 claim for past medical expenses, or $209,467.26. She further contended that since the $322,048.83 in Medicaid benefits paid by AHCA only constitutes 54% of the $595,077.45 claim for past medical expenses, AHCA's lien should be limited to 54% of $209,467.26, or $113,112.33.
At the hearing, Miss Mojica presented the testimony of two experienced civil trial attorneys, both of whom the ALJ accepted as experts in the valuation of damages. They testified that based on Miss Mojica's life care plan and an economist report, valuing her damages at $25 million was very conservative. They agreed that the $8.8 million settlement did not fully compensate Miss Mojica and her mother for the full value of their damages and that the settlement amount represented a recovery of 35.2% of the value of their damages. They opined that the methodology of applying the same ratio the settlement bore to the total value of the damages to the $595,077.45 claim for past medical expenses would lead to a reasonable and conservative allocation of $209,467.26 of the settlement as reimbursement for past medical expenses.
AHCA likewise presented the testimony of an experienced civil trial attorney, although the ALJ accepted this attorney as an expert in the "settlement value" of a personal injury case. As the ALJ found, AHCA's expert did not provide an opinion on the value of Miss Mojica's damages. Instead, the expert testified that the settlement amount represents the value of the case "considering the limitations of liability, causation, the defendant's ability to pay, risk of trial, and other limiting factors."
After the final hearing, the ALJ entered an amended final order that is the subject of this appeal. The ALJ found that although Miss Mojica's experts had testified convincingly that the Mojicas' damages have a value far in excess of $25 million, Miss Mojica had not met her burden under section 409.910(17)(b) to establish the amount of damages "actually recovered" for past medical expenses. In pertinent part, the order states:
29. [Miss Mojica] did not establish the value of any element of damages other than past medical expenses. The record does not support a finding of the individual value of [her] damages for other economic damages (e.g., lost earning capacity, future medical expenses) or noneconomic damages (e.g., pain and suffering, loss of consortium).
...
31. Because the record contains no valuation of the damages other than past medical expenses, there is no evidence of the recovery for "each line item of damage"
other than past medical expenses. The record does not support a finding of how the remaining $8.5 million of the recovery was allocated among the other elements of damages.
The ALJ determined that to rebut the (11)(f) formula, Miss Mojica had to prove by the preponderance of the evidence the settlement amount "actually recovered" for past medical expenses and that she fell short of this burden. Despite the ALJ's finding that the pro rata allocation of the 35.2% recovery ratio to the $595,077.45 claim for past medical expenses resulted in $209,467.26 of the settlement representing compensation for past medical expenses, the ALJ found that Miss Mojica's expert testimony was insufficient to support a finding that the amount allocated to past medical expenses is the amount she actually recovered for past medical expenses. The ALJ reasoned that "[w]ithout a breakout of the allocation of the settlement to other elements of damage, the undersigned cannot determine that the amount allocated to past medical expenses is reasonable." Thus, the ALJ ordered Miss Mojica to reimburse AHCA the full amount of its Medicaid lien.
II.
On appeal, Miss Mojica contends the ALJ applied an incorrect standard for a Medicaid recipient to successfully challenge the amount payable to AHCA as reimbursement for past medical expenses and then improperly rejected unrebutted testimony from her expert witnesses. We review an ALJ's findings of fact for competent, substantial evidence and review conclusions of law de novo. Moreland ex rel. Moreland v. Agency for Persons with Disabilities , 19 So. 3d 1009, 1011 (Fla. 1st DCA 2009).
Our analysis in this case is guided by the Florida Supreme Court's decision in Giraldo v. Agency for Health Care Administration , 248 So. 3d 53 (Fla. 2018), and our recent decision in Eady v. State , 279 So. 3d 1249 (Fla. 1st DCA 2019). We note that the ALJ did not have the benefit of either of these opinions when deciding this difficult case.
In Giraldo , Juan Villa, a Medicaid recipient, suffered a catastrophic spinal cord injury in an all-terrain vehicle accident. 248 So. 3d at 54. He sued those allegedly responsible for his injuries, claiming both economic and noneconomic damages, and the case eventually settled for $1 million. Id. Using the (11)(f) formula, AHCA asserted a $321,720.16 lien against the settlement for Mr. Villa's medical care. Id. Mr. Villa challenged the lien amount through the administrative forum where he presented uncontested expert testimony—applying the same pro rata methodology advanced in this case —that only $13,881.79 of the $1 million tort recovery represented compensation for his past medical expenses. Id. Mr. Villa argued that AHCA's lien should be limited accordingly while AHCA contended that it was entitled to recovery of Medicaid expenditures for both past medical expenses and reasonably anticipated future medical expenses. Id. Resolving an interdistrict conflict on whether AHCA can recover settlement funds designated for future medical expenses, the Florida Supreme Court held that federal law limits "Florida's assignment rights (and lien) to settlement funds fairly allocable to past medical expenses." Id. at 56.
Of particular interest to the case before us, the court directed that, on remand, the ALJ must reduce AHCA's lien to the pro rata amount advanced by Mr. Villa. The court explained:
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, Villa presented uncontradicted evidence establishing $13,881.79 as the settlement portion properly allocated to his past medical expenses, and there is no reasonable basis in this record to reject Villa's evidence. For this reason, no further factfinding is required.
Id. at 56.
Following Giraldo , this Court considered the case of Brandon Eady. Mr. Eady, a Medicaid recipient, was rendered an incomplete quadriplegic as a result of a car accident. Eady , 279 So. 3d at 1251. He settled his lawsuit that followed through a series of confidential settlement agreements with the defendants. Id. After AHCA sought to recover from the settlement the amount it had expended through Medicaid for his past medical expenses, Mr. Eady challenged AHCA's presumptive lien amount through the administrative process afforded by section 409.910(17)(b). Id.
Using the pro rata allocation methodology, Mr. Eady's experts presented unrebutted testimony regarding the total value of his damages and the appropriate share of the settlement funds that should be allocated to past medical expenses. Id. at 1252-53. Even so, the ALJ disregarded the experts' testimony, finding that they spoke in "generalities, speculations, and reasonableness as to the settlement in relation to the Medicaid lien." Id. at 1253. The ALJ explained that the confidential nature of the settlement agreements "thwarts [Mr. Eady's] position and his ability to prove via the preponderance of the evidence standard that the lesser amount is warranted." Id. The ALJ thus concluded that Mr. Eady failed to meet his burden to prove that a "lesser portion of the total recovery should be allocated as reimbursement for past medical expenses." Id.
On appeal, we reversed the order granting AHCA reimbursement of the full amount of its lien. But we did so recognizing the inherent difficulty in determining the fair allocation of past medical expenses in such a settlement:
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 v. E.M.A. , 568 U.S. 627, 634, 133 S.Ct. 1391 (2013). 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 Arkansas Dep't of Health & Human Servs. v. Ahlborn , 547 U.S. 268, 288, 126 S.Ct. 1752 (2006) (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.
Id. at 1255-56 (cleaned up).
After a thorough examination of the evolving Florida case law on the subject, we concluded that the ALJ erred by her "wholesale rejection of [Mr. Eady's] evidence on the basis that the pro rata formula was speculative and that [his] case was ‘flawed’ due to the confidential nature of the settlement agreement." Id. at 1259. We explained that "[t]o 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." Id. Relying on Giraldo , we held that Mr. Eady met his burden by presenting uncontradicted evidence establishing the appropriate share of settlement funds properly allocated to past medical expenses. Id.
III.
Like the facts in Giraldo and Eady , Miss Mojica presented unrebutted and unimpeached expert testimony concerning the full value of her damages. Indeed, the ALJ found that Miss Mojica's experts had testified convincingly that the Mojicas' damages have a value far in excess of $25 million. And as in Giraldo and Eady , AHCA did not present any evidence contesting the pro rata methodology used to calculate the $209,467.26 allocation to past medical expenses. Finding no meaningful difference between these cases, we conclude that the ALJ erred by requiring Miss Mojica to prove the unprovable in this case—the amount "actually recovered" for past medical expenses rather than the amount "fairly allocable" to past medical expenses. See Giraldo , 248 So. 3d at 56. Because there was no reasonable basis in the evidence for the rejection of Miss Mojica's evidence, we reverse the amended final order and remand for further proceedings consistent with this opinion.
Bilbrey and Jay, JJ., concur.
Giraldo v. Agency for Healthcare Admin. , 208 So. 3d 244, 246 n.4 (Fla. 1st DCA 2017), quashed by 248 So. 3d 53 (Fla. 2018).