Goheagan v. Perkins

• Decision Date: 20 July 2016
• Docket Number: No. 4D14–4843.,4D14–4843.
• Citation: 197 So.3d 112
• Parties: Olive GOHEAGAN, as Personal Representative of the Estate of Molly Swaby, deceased, Appellant, v. John PERKINS and Agency for Health Care Administration, Appellees.
• Court: Florida District Court of Appeals

197 So.3d 112

Olive GOHEAGAN, as Personal Representative of the Estate of Molly Swaby, deceased, Appellant,

v.John PERKINS and Agency for Health Care Administration, Appellees.

No. 4D14–4843.

District Court of Appeal of Florida, Fourth District.

July 20, 2016.

Bard D. Rockenbach and Nichole J. Segal of Burlington & Rockenbach, P.A., West Palm Beach, and Richard D. Schuler of Schuler, Halvorson, Weisser, Zoeller & Overbeck, P.A., West Palm Beach, for appellant.

Alexander R. Boler, Tallahassee, for appellee Agency for Health Care Administration.

KLINGENSMITH, J.

Olive Goheagan, as Personal Representative for the Estate of Molly Swaby (“the Estate”), appeals from a final order denying the Estate's motion for equitable distribution, and ordering the Estate to reimburse the Florida Agency for Health Care Administration (“AHCA”) in the full amount of its Medicaid lien. At issue is whether the trial court erred by applying section 409.910(11)(f), Florida Statutes (2014), in refusing to reduce the Medicaid lien to an amount equal to the amount recovered by the Estate for past medical expenses. We hold that section 409.910(11)(f) of Florida's Medicaid Third–Party Liability Act (the “Florida Medicaid Act”) is not preempted by the anti-lien provision of federal Medicaid law in wrongful death actions.

This case comes to us under a tragic set of facts. In February 2007 Molly Swaby was severely injured in a car accident after being struck from behind by another driver traveling at a high rate of speed. She suffered a spinal cord injury and was in a coma for approximately three months before passing away in May 2007. Swaby's medical expenses totaled $970,179.97, of which Medicaid paid $95,476.60. The Estate brought a wrongful death action against the driver, resulting in a multi-million dollar verdict at trial. After final judgment was entered against the driver, the Estate brought a third-party bad faith claim against the driver's automobile insurance carrier, eventually settling the case for $1,000,000. AHCA then asserted a lien for $95,476.60 against the settlement proceeds of the bad faith claim based on section 409.910(11)(f).

The Estate moved for equitable distribution to reduce the Medicaid lien, arguing that section 409.910(11)(f) was preempted by federal law to prevent the state from being reimbursed from monies recovered by a beneficiary for any category of damages other than past medical expenses. Although AHCA expended $95,476.60 on Swaby's medical expenses, the Estate argued that this sum amounted to only 3.5% of the jury's verdict. As such, the Estate asserted that the lien should be reduced to an amount equal to 3.5% of the actual settlement proceeds, after subtracting attorney's fees and costs.¹

The trial judge held a hearing to allow Swaby's beneficiaries the opportunity to rebut the statutory formula under section 409.910(11)(f), and to contest AHCA's entitlement to the full amount of the lien pursuant to section 409.910(17)(b), Florida Statutes. In its order, the court ruled that the formula under section 409.910(11)(f) applied in wrongful death cases, not the anti-lien provision of the federal Medicaid statute. It denied the Estate's motion to reduce the lien and ordered the Estate to reimburse AHCA $95,476.60 in full satisfaction of its Medicaid lien for benefits paid on behalf of Swaby. This timely appeal followed.

As this appeal involves both the interpretation and application of section 409.910(11)(f), as well as a question of federal preemption of that statute, we review the trial court's order under a de novo standard of review. Fla. Dep't of Agric. & Consumer Servs. v. Mendez, 98 So.3d 604, 607 (Fla. 4th DCA 2012) (“Statutory interpretation is reviewed de novo. ”); 770 PPR, LLC v. TJCV Land Trust, 30 So.3d 613, 616 (Fla. 4th DCA 2010) (“When faced with questions of statutory application and federal preemption, we apply a de novo standard of review.” (quoting Marcy v. DaimlerChrysler Corp., 921 So.2d 781, 783 (Fla. 5th DCA 2006) )).

a. Federal Social Security Act—Medicaid Provisions

“Medicaid is a cooperative federal-state welfare program providing medical assistance to needy people.” Roberts v. Albertson's Inc., 119 So.3d 457, 458 (Fla. 4th DCA 2012) (quoting Agency for Health Care Admin. v. Estabrook, 711 So.2d 161, 163 (Fla. 4th DCA 1998) ). Under this program, the federal government reimburses a portion of the states' expenses, requiring the states to comply with the applicable federal rules and regulations. See Ark. Dep't of Health & Human Servs. v. Ahlborn,

547 U.S. 268, 275, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006) (stating that “[s]tates are not required to participate in Medicaid, but all of them do. The program is a cooperative one; the Federal Government pays between 50% and 83% of the costs the State incurs for patient care, and, in return, the State pays its portion of the costs and complies with certain statutory requirements for making eligibility determinations, collecting and maintaining information, and administering the program.” (footnote omitted)). “Even though state participation in the program is voluntary, once a state elects to participate, the state must comply with federal Medicaid statutes.” Roberts, 119 So.3d at 458.

To assist in preserving the long-term sustainability of the program and provide a mechanism to recover public funds spent on care, federal law requires that:

[T]he State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties (including ... parties that are ... legally responsible for payment of a claim for a health care item or service) to pay for care and services available under the plan....

42 U.S.C. § 1396a(a)(25)(A) (2012).

To the extent a state Medicaid program has provided medical assistance to a recipient, federal law also provides that a state has the right to reimbursement from any third parties found legally liable for causing those expenditures, and must have laws in place providing the state with the rights to reimbursement:

[T]o the extent that payment has been made under the State plan for medical assistance in any case where a third party has a legal liability to make payment for such assistance, the State has in effect laws under which, to the extent that payment has been made under the State plan for medical assistance for 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[.]

Id. § 1396a(a)(25)(H).

Where such a legal liability is found after medical assistance has been obtained, “the State or local agency will seek reimbursement for such assistance to the extent of such legal liability.” Id. § 1396a(a)(25)(B).

Any amount collected by the state “shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual ... and the remainder of such amount collected shall be paid to such individual.” 42 U.S.C. § 1396k(b) (2012). In furtherance of obtaining these reimbursements, federal law requires that Medicaid recipients must assign their rights to claims against third-parties as a condition of eligibility for medical assistance under the state plan. Id. § 1396k(a)(1)(A).

To protect the Medicaid recipient from additional liability, the state's reimbursement is limited to the amount actually paid by the Medicaid program: “any amount collected by the State ... shall be retained by the State as is necessary to reimburse it for medical assistance payments made on behalf of an individual ... and the remainder of such amount collected shall be paid to such individual.” Id. § 1396k(b).

As additional protection for the recipient, under section 1396p(a)(1) (the “anti-lien statute”), “[n]o 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 under limited circumstances. 42 U.S.C. § 1396p(a)(1) (2012) (emphasis added). Moreover, section 1396p(b)(1) (the “anti-recovery statute”), provides that “[n]o adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made,” except in certain circumstances not applicable to this case. Id. § 1396p(b)(1).

The United States Court of Appeals for the Third Circuit explained the purpose of these provisions in Tristani ex rel. Karnes v. Richman, 652 F.3d 360, 374 (3d Cir.2011) :

The anti-lien and anti-recovery provisions evince congressional intent to protect the assets of Medicaid recipients, and to ensure that beneficiaries are not forced to personally bear the costs of their medical care. Meanwhile, the reimbursement and forced assignment provisions require states to recover the costs of medical assistance payments despite the apparent prohibition against seeking recovery of medical assistance payments.

The Supreme Court has ruled that the anti-lien statute prohibits states from placing a lien upon settlement proceeds which are not “designated as payments for medical care,” as those non-medical proceeds qualify as a recipient's property. See Ahlborn, 547 U.S. at 283–86, 126 S.Ct. 1752. Therefore, the federal anti-lien statute would prohibit a state from seeking reimbursement from the non-medical expense portion of a recipient's recovery, while the anti-recovery statute prohibits a state from obtaining reimbursement for an amount that is more than the total amount of medical assistance provided.

b. Florida's Medicaid Third Party Liability Act

In accordance with the federal mandate to recover money for both the state and the federal government, Florida enacted section 409.910, the Florida Medicaid Act. See, e.g., Englich v. Agency for Healthcare Admin., 916 So.2d 994, 995 n. 2 (Fla. 4th DCA 2005). The statute provides a clear expression of the legislature's intent, as follows:

(1) It is the

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