With Settlement Reached, Florida Medicaid Entitled to Reimbursement Pursuant to State Formula

On April 30, 2021, the State of Florida, Division of Administrative Hearings published its decision on Angela D. Sharpe, as Personal Representative of the Estate of Thomas Kenneth Sharpe, Deceased v. Agency for Health Care Administration, finding that the applicable law dictates that pursuant to section 409.910(11)(f), AHCA is entitled to recover $ 29,353.30 in third-party benefits Medicaid paid resulting from medical care related to the auto claim and $100,000 settlement agreed upon by the parties.

Facts of the Case

On June 23, 2016, Mr. Sharpe was operating a motor scooter and was seriously injured after he had a collision with an automobile. Mr. Sharpe died on July 17, 2019. Mr. Sharpe was survived by his wife, Angela D. Sharpe.

Medicaid, through the Florida Agency for Healthcare Administration (AHCA), paid Mr. Sharpe's medical care, related to the injuries, in the amount of $ 119,687.65.

Mrs. Sharpe was appointed Personal Representative of the Estate of Thomas Kenneth Sharpe. As the Personal Representative of the Estate, she brought a wrongful death action to recover both the individual statutory damages of Mr. Sharpe's surviving spouse, as well as the individual statutory damages of the Estate and a survival claim against the operator of the automobile.

The case was settled in the amount of $ 100,000.00 after Mr. Sharpe had passed away from his injuries related to the automobile accident. During the pendency of the action, AHCA was notified of the action and AHCA asserted a $119,687.65 Medicaid lien against the Estate's cause of action and settlement of that action.
 By letter, AHCA was notified of the settlement.

AHCA calculated its payment pursuant to the section 409.910(11)(f), Fla. Stat. formula based on the gross $ 100,000.00 settlement, under which AHCA demanded $ 29,353.30.

Florida’s Medicaid Reimbursement Law

Section 409.910(11)(f) states that 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, after 25% attorney's fees and taxable costs, one-half of the remaining recovery shall be paid to the agency up to the total amount of medical assistance provided by Medicaid.

Following the United States Supreme Court's decision in Wos v. E.M.A., 568 U.S. 627, 633 (2013), the Florida Legislature created an administrative process to challenge and determine what portion of a judgment, award, or settlement in a tort action is properly allocable to medical expenses and, thus, what portion of a petitioner's settlement may be recovered to reimburse the Medicaid lien held by AHCA. In simple terms, Section 409.910(17)(b), Fla. Stat. indicate that if a qualified Petitioner can demonstrate that the portion of a settlement fairly allocable as payment for past medical expenses is less than the amount the Agency seeks, then the amount Petitioner is obligated to pay to AHCA for its lien would be reduced.

Final Hearing

A final hearing was held on March 9, 2021, At the final hearing, Sharpe presented expert testimony from several attorneys who either represented Mr. Sharpe for his claims, defended the opposing party defendant, or reviewed the file and case documents in preparation for the hearing. The thrust of this testimony was to establish an evidentiary basis to justify the application of the pro rata or proportionality test--one method frequently utilized by litigants to reduce AHCA's lien.

Federal law requires that participating states seek reimbursement for medical expenses incurred on behalf of Medicaid recipients who later recover from legally-liable third parties. Under the United States Supreme Court's reasoning in Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006), the federal Medicaid "anti-lien" provisions at 42 U.S.C. § 1396p(a)(1) generally prohibit a Medicaid lien on any proceeds from a Medicaid recipient's tort settlement. However, the provisions requiring states to seek reimbursement of their Medicaid expenditures from liable third parties, create an express exception to the "anti-lien" law and authorize states to seek reimbursement from the medical expense portion of the recipient's tort recovery.

Giraldo and Cabrera

As noted, the Federal Medicaid Act limits a state's recovery to certain portions of the settlement funds received by the Medicaid recipient. In Florida, this has been recently interpreted by the Florida Supreme Court to be the amount in a personal injury settlement which is fairly allocable to past (not future) medical expenses. Giraldo v. Agency for Health Care Administration, 248 So. 3d 53, 56 (Fla. 2018). In this case, Sharpe settled the personal injury/wrongful death claim against a third party who was liable for Mr. Sharpe's damages related to AHCA's Medicaid lien, and for Mrs. Sharpe's damages. Therefore, AHCA's lien may be enforced against Sharpe's tort settlement.

Florida case law addressing the interplay between this federal anti-lien statute and section 409.910 has consistently held that in cases where the Medicaid recipient dies before the settlement of an action for third-party benefits, the federal anti-lien statute does not operate to preempt or negate the applicability of section 409.910(11)(f). In those cases, the formula under section 409.910(11)(f) governs the distribution of benefits recovered from a third-party.

This principle of Medicaid recovery law was recently reaffirmed by the First District Court of Appeal in Cabrera v. State of Florida, Agency for Health Care Administration, 2021 WL 1152328 (Mar. 26, 2021). Under very similar facts involving a tragic accident where the victim died before the underlying wrongful death case was settled, the court announced Medicaid was entitled to reimbursement based on the State formula.

Conclusion

Here, because this case involves the recovery and settlement of third-party benefits after the death of the Medicaid recipient, Mr. Sharpe, section 409.910(17)(b) does not afford Mrs. Sharpe, the personal representative of the Estate, the right to challenge the State’s recovery pursuant to the formula in section 409.910(11)(f), Fla. Stat.

Therefore, the applicable law dictates that pursuant to section 409.910(11)(f), AHCA is entitled to recover $ 29,353.30 in third-party benefits Medicaid paid resulting from medical care related to the claim and $100,000 settlement agreed upon by the parties.

By Rafael Gonzalez, Esq.

Rafael is a partner in Cattie & Gonzalez, PLLC, a national law firm focusing its practice on federal Medicare/Medicaid secondary payer compliance and legal issues. In addition to assisting clients with Medicare mandatory reporting, conditional payments, and set asides issues, he helps clients with Medicaid third party liability liens and Medicaid special needs trusts issues. He has over 35 years experience in the liability, no-fault, and work comp insurance industry. You can connect with him on LinkedIn, Twitter, Facebook, and YouTube, or reach him at rgonzalez@cattielaw.com, 844.546.3500, or www.cattielaw.com.

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