Willoughby v. Agency for Health Care Admin.

• Decision Date: 10 March 2017
• Docket Number: Case No. 2D15–4845
• Citation: 212 So.3d 516
• Parties: Randy R. WILLOUGHBY, Appellant, v. AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.
• Court: Florida District Court of Appeals

212 So.3d 516

Randy R. WILLOUGHBY, Appellant,

v.AGENCY FOR HEALTH CARE ADMINISTRATION, Appellee.

Case No. 2D15–4845

District Court of Appeal of Florida, Second District.

Opinion filed March 10, 2017.

Brent G. Steinberg, Brandon G. Cathey, and Rachel M. Batten of Swope, Rodante P.A., Tampa, for Appellant.

Alexander R. Boler of Boler Legal, PLLC, Tallahassee, for Appellee.

LaROSE, Judge.

Randy Willoughby, a Medicaid recipient, appeals a final administrative order denying his petition to reduce the amount owed to the Agency for Health Care Administration (AHCA) to satisfy a Medicaid lien that attached to settlement proceeds he recovered in an insurance coverage dispute.¹ We have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(C). Mr. Willoughby advances two arguments. First, he maintains that the Administrative Law Judge (ALJ), in calculating the funds available to satisfy the lien, improperly included the bad-faith portion of a $4 million settlement Mr. Willoughby obtained from his uninsured motorist (UM) carrier. Second, he contends that the ALJ erred by not reducing the amount of the lien to correspond with that portion of the settlement allocable to past medical expenses. We affirm as to the first issue. Because the final order requiring reimbursement for all Medicaid–paid expenses is not supported by competent, substantial evidence, we reverse and remand as to the second issue. In doing so, we certify conflict with Giraldo v. Agency for Health Care Administration , 208 So.3d 244 (Fla. 1st DCA 2016).

Facts

Mr. Willoughby sustained serious injuries in an automobile accident. As a result, Mr. Willoughby requires assistance to perform basic activities; he no longer enjoys a normal and active life. Medicaid paid $147,019.61 for medical expenses he incurred. He is no longer eligible for Medicaid benefits. Mr. Willoughby sued the tortfeasor for damages; that lawsuit remains pending in the Thirteenth Judicial Circuit.

After the accident, Mr. Willoughby sought UM benefits from his insurer, 21st Century Centennial Insurance Company. 21st Century denied coverage and refused to pay. Mr. Willoughby sued, claiming that 21st Century acted in bad faith and engaged in unfair claims settlement practices.² 21st Century eventually settled, paying Mr. Willoughby $4 million. He also received $20,000 from Esurance Property & Casualty Insurance Company for bodily injury and UM benefits under the driver's insurance policy.

Procedural History of the Medicaid Lien

Section 409.910(6)(c), Florida Statutes (2015), imposes a lien on judgments, awards, or settlements received by an injured person in order to reimburse Medicaid for medical bills it pays on the injured person's behalf. "[AHCA] is entitled to, and has, an automatic lien for the full amount of medical assistance provided by Medicaid to or on behalf of the recipient for medical care furnished as a result of any covered injury or illness for which a third party is or may be liable ...." § 409.910(6)(c).

After Mr. Willoughby settled with 21st Century, AHCA sought to recover from the settlement proceeds the approximately $148,000 it had expended through Medicaid on his behalf. AHCA proceeded pursuant to section 409.910(11)(f), which provides as follows:

Notwithstanding any provision in this section to the contrary, in the event of an action in tort against a third party in which the recipient or his or her legal representative is a party which results in a judgment, award, or settlement from a third party, the amount recovered shall be distributed as follows:

1. After attorney's fees and taxable costs as defined by the Florida Rules of Civil Procedure, one-half of the remaining recovery shall be paid to [AHCA] up to the total amount of medical assistance provided by Medicaid.

2. The remaining amount of the recovery shall be paid to the recipient.

3. For purposes of calculating the agency's recovery of medical assistance benefits paid, the fee for services of an attorney retained by the recipient or his or her legal representative shall be calculated at 25 percent of the judgment, award, or settlement.

Mr. Willoughby filed a petition with the Department of Administrative Hearings (DOAH) seeking to decrease the lien amount. See §§ 120.569, .57(1), Fla. Stat. (2015) (stating the procedure for proceedings and petitions for hearing with an agency). Florida law allows such action:

A recipient may contest the amount designated as recovered medical expense damages payable to [AHCA] pursuant to the formula specified in paragraph (11)(f) by filing a petition under chapter 120 within 21 days after the date of payment of funds to [AHCA] or after the date of placing the full amount of the third-party benefits in the trust account for the benefit of [AHCA] ....

§ 409.910(17)(b).³ To prevail on his petition, Mr. Willoughby had to demonstrate "by clear and convincing evidence, that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated by [AHCA] pursuant to the formula." § 409.910(17)(b).

Mr. Willoughby and AHCA stipulated that the full value of Mr. Willoughby's personal injury damages was at least $10 million. They also stipulated that Mr. Willoughby suffered at least $23,800 in lost wages, and a loss of future earning capacity between nearly $800,000 and $2,000,000. The parties also agreed that his past medical expenses paid by Medicaid were almost $148,000, and that Mr. Willoughby's future medical expenses will exceed $5 million. Finally, AHCA and Mr. Willoughby stipulated that his past noneconomic damages exceed $1 million. Notably, the parties stipulated that, under the 21st Century settlement, Mr. Willoughby recovered less than $147,019.61 as payment for his past medical expenses. Nothing suggests that the parties made these stipulations in anything other than good faith arm's-length negotiations. AHCA posited that its Medicaid lien could be satisfied from settlement funds allocable to past and future medical expenses. Mr. Willoughby, on the other hand, argued that AHCA could satisfy its lien only on a portion of the settlement representing past medical expenses. Despite the parties' stipulations as to medical expenses, the ALJ concluded that the entire $4 million settlement was available to satisfy the Medicaid lien. He then denied Mr. Willoughby's petition to reduce AHCA's lien.

Standard of Review

We review the final administrative order to determine if it is supported by competent, substantial evidence. Mobley ex rel. Mobley v. Agency for Health Care Admin. , 181 So.3d 1233, 1236 (Fla. 1st DCA 2015). "If supported by competent, substantial evidence, an appellate court must accept those findings." Id. "However, if the agency's decision is not supported by substantial, competent evidence established in the record of the administrative hearing, it will be overturned." Wise v. Dep't of Mgmt. Servs., Div. of Ret. , 930 So.2d 867, 870–71 (Fla. 2d DCA 2006). "[T]his court reviews the agency's conclusions of law de novo." Peace River/Manasota Reg'l Water Supply Auth. v. IMC Phosphates Co. , 18 So.3d 1079, 1082 (Fla. 2d DCA 2009). "An appellate court may set aside an agency action where the court finds that the agency erroneously interpreted a provision of law and a correct interpretation compels a particular result." Lutheran Servs. Fla., Inc. v. Dep't of Child. & Fams. , 199 So.3d 286, 288 (Fla. 2d DCA 2015).

Analysis

Bad Faith Damages Are Subject to the Medicaid Lien

Mr. Willoughby pressed strenuously before the ALJ that $3.99 million of the $4.02 million settlement⁴ was for bad faith damages that could not be used to satisfy the Medicaid lien. He argued to the ALJ, and maintains here, that no more than $30,000, the UM policy limits, can be used to satisfy the lien. We note that AHCA and Mr. Willoughby stipulated that "[o]f the $4 million paid by 21st Century, $3.99 million was bad faith damages, paid to settle [Mr. Willoughby's] claim for damages ... on account of 21st Century's wrongful failure to pay [Mr. Willoughby's UM] claim." Mr. Willoughby argued that no part of the bad faith recovery could be allocated to his medical expenses. Apparently, he assumed that bad faith damages were exclusively a punishment for failure to settle an insurance claim properly. His assumption was misplaced. The settlement compensated Mr. Willoughby for damages he sustained in the automobile accident and was available to satisfy the Medicaid lien.

UM benefits cover a panoply of losses. See Fridman v. Safeco Ins. Co. of Ill. , 185 So.3d 1214, 1220 (Fla. 2016) ; State Farm Mut. Auto Ins. Co. v. Rutkin , 199 So.2d 705, 706 (Fla. 1967) ("[T]he insured is entitled to recover under the policy all damages he or she would have been able to recover from the offending motorist if that motorist had maintained a policy of auto liability insurance."). Section 624.155, Florida Statutes (2015), requires "an insurer to act in good faith in handling claims brought by its own insured under a UM policy and expose[s] the insurer to the consequences of failing to do so." Fridman , 185 So.3d at 1220.

We cannot agree with Mr. Willoughby's contention that bad faith damages are not subject to the Medicaid lien because they were not allocable to medical expenses. "[D]amages in first-party bad faith actions are to include the total amount of a claimant's damages , including any amount in excess of the claimant's policy limits without regard to whether the damages were caused by the insurance company." Id. at 1223 (emphasis added) (quoting State Farm Mut. Auto Ins. Co. v. Laforet , 658 So.2d 55, 60 (Fla. 1995) ). Moreover, Mr. Willoughby and 21st Century acknowledged in their settlement that "all sums set forth ... herein constitute[d] damages on account of personal injuries or sickness."

AHCA may "seek reimbursement from ‘third-party benefits,’ § 409.910(6), including those benefits received from any ‘causes of action, suits, claims, counterclaims, and demands that accrue to...