Estate of Hernandez v. Agency for Health Care Admin.

• Decision Date: 17 February 2016
• Docket Number: No. 3D14–2115.,3D14–2115.
• Citation: 190 So.3d 139
• Parties: The ESTATE OF Betsy Gladis HERNANDEZ, Appellant, v. AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.
• Court: Florida District Court of Appeals

190 So.3d 139

The ESTATE OF Betsy Gladis HERNANDEZ, Appellant,
v.
AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.

No. 3D14–2115.

District Court of Appeal of Florida, Third District.

Feb. 17, 2016.
Rehearing Denied April 20, 2016.

Marlene S. Reiss, for appellant.

Alexander R. Boler, Tallahassee, for appellee.

Before SUAREZ, C.J., and LAGOA and LOGUE, JJ.

LOGUE, J.

The Estate of Betsy Gladis Hernandez appeals an order allocating a portion of proceeds from a wrongful death settlement to pay the Medicaid lien held by the Agency for Health Care Administration. The trial court apportioned the settlement amount based on the formula in Florida's Medicaid Third–Party Liability Act. See § 409.910(11)(f), Fla. Stat. (2012). We affirm.

FACTS AND PROCEDURAL HISTORY

In 2010, Ms. Hernandez died from complications from a rare condition. She was survived by her husband and child. Her death was allegedly caused by Baptist Hospital physicians' misdiagnosis and treatment of her condition. Prior to the Estate filing suit, Baptist Hospital agreed to settle any wrongful death claims against it for $700,000. It is undisputed that the written settlement agreement did not apportion the monies between the Estate and survivors.¹

Due to Florida's participation in the Medicaid program, the Agency had paid $409,676.36 of Ms. Hernandez's medical expenses. These payments resulted in an automatic lien on “collateral” for medical expenses paid on Ms. Hernandez's behalf. See § 409.910(6)(c), Fla. Stat. “Collateral” includes wrongful death settlements. See §§ 409.910(6)(c) & 409.901(7)(b), Fla. Stat. (2012).

In 2012, the Estate filed a petition in probate court to determine the Agency's lien. The petition requested that of the $700,000 settlement amount, $500,000 be apportioned to cover the survivors' wrongful death statutory damages. The remaining $200,000 would be apportioned for the Medicaid lien and other economic damages incurred by the Estate, including attorney's fees. In response, the Agency argued that, under the formula in Florida's Medicaid Third–Party Liability Act, it was entitled to $262,500 prior to any wrongful death apportionment. See § 409.910(11)(f). The Estate disagreed. Citing to Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), it contended that the federal Medicaid Act's anti-lien provision, 42 U.S.C. § 1396p(a)(1), preempts Florida's Medicaid Third–Party Liability Act. The Estate explained that the Agency sought monies allocated to the survivors and that, under Ahlborn 's interpretation of the anti-lien provision, the provision bars states from asserting a lien on the portions of a settlement not allocated to medical expenses.

Prior to any ruling on the petition, the United States Supreme Court issued its decision in Wos v. E.M.A., ––– U.S. ––––, 133 S.Ct. 1391, 185 L.Ed.2d 471 (2013). The Estate then moved for an evidentiary hearing, arguing that Wos required an evidentiary hearing to determine what portion of the settlement qualifies as medical expenses. The Agency disagreed and argued that Ahlborn and Wos are inapplicable

190 So.3d 141

where the Medicaid recipient is deceased. Thus, the Agency reasoned that an evidentiary hearing was unnecessary because the petition turned on a straightforward application of the formula in Florida's Medicaid Third–Party Liability Act.

The trial court ultimately agreed with the Agency and denied the Estate's motion for an evidentiary hearing. It entered an order requiring the Estate to reimburse the Agency $262,500 from the $700,000 wrongful death settlement. The Estate moved for rehearing, which was denied, and then filed its notice of appeal in this court. The Florida Supreme Court subsequently issued its opinion in Garcon v. Florida Agency for Health Care Administration, 150 So.3d 1101 (Fla.2014), essentially recognizing that Florida courts must apply Wos.

ANALYSIS

The Estate argues that the trial court erred in one of two ways. First, citing to Ahlborn, Wos, and Garcon, the Estate contends that Florida's Medicaid Third–Party Liability Act is preempted by federal law which requires an evidentiary hearing to determine what portion of the settlement qualifies as medical expenses. In the alternative, the Estate argues that an evidentiary hearing is necessary because Florida's Wrongful Death Act prohibits the Agency from asserting a Medicaid lien on the portions of the settlement allocated to Ms. Hernandez's survivors. We will address each issue in turn.²

I. No Federal Preemption

The first issue involves the interplay between Florida and federal law. In 1965, Congress created the Medicaid program to provide joint federal and state funding of medical care for individuals who cannot afford to pay their own medical costs. See 42 U.S.C. § 1396 et seq. State participation in the program is voluntary. However, once a state elects to participate, like Florida, the state must comply with certain requirements imposed by federal Medicaid statutes. Pub. Health Trust of Dade Cty., Fla. v. Dade Cty. Sch. Bd., 693 So.2d 562, 564 (Fla. 3d DCA 1996).

In the early years of the program, Congress adopted the anti-lien provision. It provides:

(a) Imposition of lien against property of an individual on account of medical assistance rendered to him under a State plan

(1) No lien may be imposed against the property of any individual prior to his death on account of medical assistance paid or to be paid on his behalf under the State plan, except-

(A) pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual, or

(B) in the case of the real property of an individual-[who is in a nursing home and required by law to spend his own income on those expenses, and who cannot reasonably be expected to return home.]

42 U.S.C. § 1396p(a)(1) (emphasis added).

The Medicaid program is a cooperative one. The Federal Government pays between 50% and 83% of the costs a state incurs for patient care. Ahlborn, 547 U.S. at 275, 126 S.Ct. 1752. “[I]n return, the State pays its portion of the costs and

190 So.3d 142

complies with certain statutory requirements for making eligibility determinations, collecting and maintaining information, and administering the program.” Id. (citing 42 U.S.C. § 1396a ). One such requirement is that each participating state “implement a ‘third party liability’ provision which requires the state to seek reimbursement for Medicaid expenditures from third parties who are liable for medical treatment provided to a Medicaid recipient.” Roberts v. Albertson's Inc., 119 So.3d 457, 459 (Fla. 4th DCA 2012) (citing § 42 U.S.C. 1396a(a)(25)).

To comply with this federal mandate, Florida enacted the Medicaid Third–Party Liability Act. It provides the Agency with three ways to recover expenses from third parties: (1) automatic subrogation to any rights of a Medicaid recipient to third-party benefits; (2) automatic assignment of the recipient's rights to any third-party benefits; or (3) automatic lien on “collateral.” § 409.910(6)(a)-(c), Fla. Stat. “Collateral” and “third-party benefits” include “[a]ll judgments, settlements and settlement agreements rendered or entered into and related to such causes of action [related to a covered injury necessitating Medicaid payments].” § 409.901(7)(b) & (28), Fla. Stat.

Although the entire amount of any settlement may be subject to a Medicaid lien, the amount of recovery is limited by the amount of Medicaid assistance provided. § 409.910(11)(e), Fla. Stat. It is also limited by a statutory formula. § 409.910(11)(f), Fla. Stat.

A body of law has developed which further limits the Agency's ability to assert a lien on portions of settlements. In Ahlborn, a case arising out of a personal injury lawsuit, the federal Medicaid Act's anti-lien provision preempted a state law which automatically imposed a lien on tort settlement proceeds obtained by the Medicaid recipient. In that case, the settlement apportioned the recovery between medical and non-medical expenses. The United States Supreme Court held that the anti-lien provision barred the state from asserting a lien on the portions of the settlement not allocated to medical expenses. Ahlborn, 547 U.S. at 284, 126 S.Ct. 1752.

In Wos, the Court went a step further in a case arising out of a medical malpractice settlement which did not divide the recovery between medical and non-medical expenses. The Court analyzed a state statute which could be interpreted as creating a conclusive presumption that one-third of a Medicaid beneficiary's tort recovery represented compensation for...