Smith v. Agency for Health Care Admin.

• Court: Florida District Court of Appeals
• Writing for the Court: Lawson
• Citation: Smith v. Agency for Health Care Admin., 24 So.3d 590 (Fla. App. 2009)
• Decision Date: 23 October 2009
• Docket Number: No. 5D08-1142.,5D08-1142.
• Parties: Martha SMITH as Plenary Guardian, etc., et al., Appellant, v. AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.

24 So.3d 590

Martha SMITH as Plenary Guardian, etc., et al., Appellant, v. AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.

No. 5D08-1142.

District Court of Appeal of Florida, Fifth District.

October 23, 2009.

Rehearing Denied January 4, 2010.

Roy D. Wasson, of Wasson & Associates, Chartered, Miami, and W.M. Chanfrau, Sr., of Chanfrau & Chanfrau, P.A., Daytona Beach, for Appellants.

Sarah Lahlou-Amine and Hala A. Sandridge of Fowler White Boggs, P.A., Tampa, and James H.K. Bruner, Sr., Tallahassee, for Appellee.

LAWSON, J.

The personal injury case brought below by Martha Smith, as plenary guardian of Maurice Thomas, settled for $2,225,000.00. Smith appeals the final order denying her motion to reduce the State of Florida's Medicaid lien from $122,783.87 to $40,927.96. We affirm.

Florida's Medicaid Third-Party Liability Act, section 409.910, Florida Statutes (2007), authorizes the State to recover from a personal injury settlement or verdict money that the State paid for the plaintiff's medical care prior to the tort recovery. The statute limits the State's recovery to half of the tort recovery, after deducting attorney's fees and costs. According to the record before us, Medicaid could have recovered up to $707,778.00 in medical expenses using the formula in section 409.910. Because the State's Medicaid lien in this case totaled far less than this statutory cap, section 409.910 allowed the State to fully recover from his settlement the $122,783.87 that it paid on Thomas' behalf.

The only argument made below for reducing the State's lien was that Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), mandates "a percentage reduction [in the Medicaid lien] in the same ratio as the settlement bears to actual damages." According to Smith, the $2,225,000.00 recovery in this case represented only one third of Thomas' total damages. Both Smith and the tortfeasor agreed below that there were significant challenges in proving liability which contributed to a settlement amount far lower than Thomas' actual damages. Smith reasoned that because she settled Thomas' claim for one-third of its value, Ahlborn required the trial court to also reduce the State's Medicaid lien to one-third of the total lien amount — from $122,783.87 to $40,927.96.

Smith's argument rests on a misreading of Ahlborn, and the trial court properly rejected it. Ahlborn simply held that under federal law a state's Medicaid lien recovery is limited to the portion of a verdict or settlement representing amounts recovered by a plaintiff for medical expenses. The parties in Ahlborn had stipulated to a figure representing the total recovery for medical expenses in their case, and used the method now advanced in this case to calculate their stipulated figure. However, the court in Ahlborn simply accepted the stipulation, and in no way adopted the formula as a required or sanctioned method to determine the medical expense portion of an overall settlement amount.

Moreover, the 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 expense portion of a settlement by simply comparing the damage claim to the ultimate settlement amount. For example, the recovery in this case ($2,225,000.00) is approximately one third of the total damages claimed by Smith for Thomas ($7,000,000.00). That information, alone, tells us nothing about the amount ultimately recovered for Thomas' medical expenses — except that it is probably less than the amount he claimed for medical expenses. If we knew, for example, that the medical expense portion of the total damage claim was $600,000.00, we could reduce that figure by one third to approximate the settlement amount attributable to medical expenses.¹ But, knowing only the total damages claimed and the ultimate settlement amount simply does not allow one to reasonably estimate the medical expense portion of a settlement.

Smith and the dissent are correct that under Ahlborn a plaintiff should be afforded an opportunity to seek the reduction of a Medicaid lien amount by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses. The problem here is that instead of making that showing, Smith presented her narrow legal argument premised upon her misreading of Ahlborn and provided only the total damage figure of $7,000,000.00. Smith proffered nothing from which the trial judge could determine how much of the $7,000,000.00 in damages represented Thomas' medical expenses, and made no other showing to support her argument that the medical expense portion of the $2,225,000.00 settlement was less than $122,783.87. Without that showing, the trial court properly applied section 409.910, Florida Statutes, and allowed the State to recover the full $122,783.87.

AFFIRMED.

GRIFFIN, J., concurs.

TORPY, J., dissents, with opinion.

TORPY, J., dissenting.

Appellee and the majority acknowledge that Appellee's lien rights attach only to that portion of the recovery that represents recovered expenses for medical goods and services. This is because federal law only permits the states to assert a lien to this extent. Ark. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 292, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). Consistent with federal law, Florida's statutes only permit the Agency for Health Care Administration² to assert its lien rights to "third-party benefits," a phrase of art defined by the statute as including the component of any recovery attributable only to medical expenses. § 409.910(1), (5), (6), Fla. Stat. (2007); see § 409.901(4), (27) (defining "Benefit" and "Third-party benefit"). Appellee also concedes that had the recovery here been the product of a special interrogatory verdict wherein the jury found that total medical expenses were $122,783.87, reduced by a percentage attributable to the ward's comparative negligence, then Appellee's lien necessarily would be reduced by the same percentage.

In a case like this one, where the parties settle the dispute short of trial, Appellee and the majority take divergent paths to the same ending place. Appellee takes the view that apportionment is unnecessary. The majority acknowledges that "a plaintiff should be afforded an opportunity to seek the reduction of a Medicaid lien amount by demonstrating, with evidence, that the lien amount exceeds the amount recovered for medical expenses," but holds that Appellant did not make that showing here. I disagree with both views but only address the view expressed by the majority.

Appellant contends that, due to comparative negligence or other potential defenses, she recovered one-half or less of the actual value of her case. Therefore, she contends, Appellee's lien should be reduced by the same percentage, just as if the case had gone to trial with the same resulting recovery. The circuit judge refused to consider Appellant's evidence or methodology. Instead, he denied Appellant's request "finding that Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006) does not govern Section 409.910, Florida Statutes...."

The majority denies this appeal for two reasons, neither of which was argued by Appellee here or below. By doing so, the majority misapplies the "tipsy coachman" rule by justifying affirmance on grounds to which Appellant never had the opportunity to respond. E.K. v. Dep't of Children & Family Servs., 948 So.2d 54, 57 (Fla. 3d DCA 2007).

The first reason is based on the majority's assumption that Appellant's actual medical expenses exceeded the amount expended by Appellee, which the majority concludes is the only reasonable assumption. This was not the reason relied upon by the trial judge and was not raised by Appellee here or below because, I assume, it has no basis in fact. Even when the suggestion was raised at oral argument, Appellee made no attempt to credit the assumption after it was flatly repudiated by counsel for Appellant. The fact is that, even had Appellant incurred bills for medical services in excess of the sums paid by Medicaid, Appellant's recovery would have been limited to this amount because...