Russell v. Agency for Health Care Admin.

• Decision Date: 06 January 2010
• Docket Number: No. 2D07-2691.,2D07-2691.
• Citation: 23 So.3d 1266
• Court: Florida District Court of Appeals
• Parties: Jeanie RUSSELL, as natural mother and legal guardian of Buddy Davis, Appellant, v. AGENCY FOR HEALTH CARE ADMINISTRATION; Candida Karen Reinhardt, M.D.; University Community Hospital, Inc.; and Franklin, Favata & Hulls, P.A., n/k/a Tampa Bay Emergency Physicians, Appellees.

23 So.3d 1266

Jeanie RUSSELL, as natural mother and legal guardian of Buddy Davis, Appellant, v. AGENCY FOR HEALTH CARE ADMINISTRATION; Candida Karen Reinhardt, M.D.; University Community Hospital, Inc.; and Franklin, Favata & Hulls, P.A., n/k/a Tampa Bay Emergency Physicians, Appellees.

No. 2D07-2691.

District Court of Appeal of Florida, Second District.

January 6, 2010.

Nancy A. Lauten and George A. Vaka of Vaka, Larson & Johnson, P.L., Tampa, for Appellant.

James H.K. Bruner, Sr., Tallahassee, and Kenneth W. Sukhia of Sukhia Law Group, PLC, Tallahassee, for Appellee Agency for Health Care Administration.

No appearance for Appellees Candida Karen Reinhardt; University Community Hospital, Inc.; and Franklin, Favata & Hulls, P.A., n/k/a Tampa Bay Emergency Physicians.

PER CURIAM.

Appellant, the plaintiff in a medical malpractice action brought on behalf of her son, challenges the trial court's ruling ordering full satisfaction of a Medicaid lien from the proceeds of a settlement between the appellant and the defendants in the malpractice action. For the reasons we explain, we affirm the trial court's ruling.

Florida's Medicaid Third-Party Liability Act, § 409.910, Florida Statutes (2006), provides the statutory basis for the assertion by appellee Agency for Health Care Administration (AHCA) of a lien against third-party benefits obtained by a Medicaid recipient for medical expenses. Section 409.910(6) provides that an application for Medicaid or the acceptance of Medicaid assistance operates as an automatic assignment to AHCA of third-party benefits. Section 409.910(11)(f) sets forth the rule governing the distribution of amounts recovered by or on behalf of a Medicaid recipient from a third party in any tort action "which results in a judgment, award, or settlement." The statute provides that "[a]fter attorney's fees and taxable costs ..., one-half of the remaining recovery shall be paid to [AHCA] up to the total amount of medical assistance provided by Medicaid," § 409.910(11)(f)(1), and that "[t]he remaining amount of the recovery shall be paid to the [Medicaid] recipient," § 409.910(11)(f)(2).

In the instant case, the tort action was settled for $3 million, and the lien asserted by AHCA was for $221,434.24. The settlement agreement contained no allocation of the amount recovered among the various elements of damages suffered by the recipient. Nor have the parties to the settlement or AHCA otherwise agreed to such an allocation. Since the lien amount— representing the undisputed cost of medical care provided by Medicaid—does not exceed fifty percent of the amount recovered in the settlement, AHCA is entitled to full satisfaction of its lien pursuant to section 409.910(11)(f)(1). In accordance with the statute, the trial court found "that the state of Florida's Medicaid lien is equivalent to the past medical damages portion of the parties['] undifferentiated settlement agreement" and ordered that the appellant "pay the full amount of the Medicaid lien to the state of Florida."

On appeal, the appellant argues—as she did before the trial court—that "the formula [in section 409.910] for determining the amount [AHCA] can recover on its lien from a plaintiff's tort judgment or settlement ... has been tempered by" the decision in Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), which interpreted provisions of the federal Medicaid law. The appellant contends that Ahlborn supports her claim that because the value of the medical malpractice case—as asserted in expert testimony presented by the appellant—was $30 million and the $3 million settlement constituted a recovery of only one-tenth of the actual damages suffered by the Medicaid recipient, AHCA was entitled to recover only one-tenth of its Medicaid lien. We conclude, however, that the position urged by the appellant is based on an untenable reading of Ahlborn.

In Ahlborn, the Supreme Court considered whether the Arkansas Medicaid statute, under which the state asserted—with respect to the proceeds of a tort settlement—an unqualified "right to recover the entirety of the costs it paid on the Medicaid recipient's behalf," violated the third-party liability provisions of the federal Medicaid law. Id. at 278, 126 S.Ct. 1752. The parties in Ahlborn stipulated that the entire tort claim was reasonably valued at $3,040,708.12, although the case had been settled for a total of $550,000—approximately one-sixth the value of the claim. Furthermore, the state "stipulated that only $35,581.47 of that [settlement] sum represent[ed] compensation for medical expenses," although it asserted a lien for $215,645.30. Id. at 280, 126 S.Ct. 1752. The state thus agreed that the portion of the settlement attributable to medical expenses was roughly equivalent to one-sixth of the lien amount. The state utilized a formula under which the portion of the settlement attributable to medical expenses was roughly based on the ratio of the amount recovered in the settlement to the amount of the full value of the case.

The Court rejected the state's argument that it was entitled to obtain satisfaction of its lien "out of [settlement] proceeds meant to compensate the recipient for damages distinct from medical costs—like pain and suffering, lost wages, and loss of future earnings." Id. at 272, 126 S.Ct. 1752. In brief, the court reasoned that the federal statutory provisions regarding the forced assignment of third-party benefits "require an assignment of no more than the right to recover that portion of a settlement that represents payments for medical care," id. at 282, 126 S.Ct. 1752, and that the "anti-lien provision" of federal law "precludes attachment or encumbrance of the remainder of the settlement," id. at 284, 126 S.Ct. 1752. The court thus rejected the "rule of absolute priority," id. at 288, 126 S.Ct. 1752, embodied in the Arkansas Medicaid lien provision and held that the federal Medicaid law did not authorize the state "to assert a lien on Ahlborn's settlement in an amount exceeding $35,581.47, and the federal anti-lien provision affirmatively prohibit[ed] it from doing so," id. at 292, 126 S.Ct. 1752.

Central to the Ahlborn court's reasoning was the state's stipulation concerning the portion of the settlement attributable to medical expenses. On the basis of that stipulation, the court reached its conclusion that the state's lien claim exceeded "that portion of a settlement that represent[ed] payments for medical care." Id. at 282, 126 S.Ct. 1752. In the instant case, there is no such stipulation and no similar basis for determining an allocation of the settlement proceeds. Contrary to appellant's suggestion, the Ahlborn decision does not establish as a rule of law the formula utilized by the state of Arkansas to determine the portion of the...