Farah v. Department of Medical Assistance Services

300 Va. 458

868 S.E.2d 422

Amir FARAH

v.Commonwealth of Virginia, DEPARTMENT OF MEDICAL ASSISTANCE SERVICES

Record No. 201413

Supreme Court of Virginia.

FEBRUARY 17, 2022

Jeremy Flachs on briefs, Alexandria, for appellant.

Michelle S. Kallen, Acting Solicitor General (Mark R. Herring, Attorney General; Samuel Towell, Deputy Attorney General; Brittany M. Jones, Deputy Solicitor General; Rodolfo R. Remigio, Senior Assistant Attorney General; Laurel S. Huerkamp, Assistant Attorney General; Laura H. Cahill, Assistant Attorney general, on brief), for appellee.

Amicus Curiae: Virginia Trial Lawyers Association (John E. Davidson ; Davidson & Kitzmann, Charlottesville, on brief), in support of appellant.

PRESENT: Goodwyn, C.J., Mims, Powell, Kelsey, McCullough, and Chafin, JJ., and Koontz, S.J.

OPINION BY JUSTICE STEPHEN R. McCULLOUGH

Amir Farah suffered catastrophic injuries in a car accident. The Commonwealth's Medicaid program paid for a portion of his extensive subsequent medical care. This entitles the Commonwealth to a lien on the proceeds of a verdict or settlement of claims arising out of the accident, but only on that portion of the recovery that represents his Medicaid-funded care. Farah sued the driver who caused the accident and the case settled. The Circuit Court of Fairfax County then conducted a hearing to determine what portion of the settlement is subject to the Medicaid lien. Disappointed with the result the circuit court reached, Farah appeals. For the reasons noted below, we conclude that Virginia's apportionment statute does not conflict with precedent from the United States Supreme Court, and, further, that the factual findings of the circuit court must be sustained under the applicable deferential standard of review. Accordingly, we will affirm the judgment below.

BACKGROUND

Farah, who worked as a cab driver, was gravely injured in a head-on crash. The driver who caused the collision was in the wrong lane of travel. Farah received Medicaid benefits following the crash. Farah sued the driver of the vehicle that struck him. His complaint sought $3 million in compensatory damages and $350,000 in punitive damages. The parties ultimately settled the dispute for $375,000 (the policy limits of insurance coverage plus a $25,000 personal contribution from the driver).

The Virginia Department of Medical Assistance Services ("DMAS") asserted a lien in the amount of $96,481.40 against the settlement proceeds for medical services provided to Farah. App. 189, Joint Stipulations § B,1.¹ The parties were unable to agree on the amount of a reduction for the Medicaid lien. Farah filed a motion to apportion his settlement under Code § 8.01-66.9. He requested a hearing to apportion the Medicaid lien, and the court granted him one over the Commonwealth's objection. Prior to the hearing, Farah and DMAS agreed to certain stipulations of fact.

The stipulations detail the extensive injuries Farah suffered in the accident, including fractures of the skull, face, leg, and foot bones, as well as knocked out front teeth. He underwent over 20 surgeries and was in the intensive care unit ("ICU") for over a month, followed by a period of rehabilitation. While in the ICU, Farah's jaw was wired shut and he was fed through a feeding tube in his stomach. He sustained cosmetic disfigurement from the injuries to his nose and his knocked out front teeth, which have not been corrected, and he has scars from his surgery on his legs and neck. The stipulations provide that "[t]he retail price of Mr. Farah's claimed medical expenses from the 6/17/2018 crash total[s] $591,483.71." Farah still owes over $62,000 in medical bills not reimbursed by DMAS.

At the apportionment hearing, Farah testified about the injuries he incurred, as well as the suffering he endured during his recovery and that he continues to endure, both psychological and physical. He can no longer work or care for himself. He is able to move around with the aid of a cane, but his strength and mobility are severely limited. An orthopedic surgeon testified about Farah's permanent injuries to his face, mouth, neck, teeth, left arm, left hand, hips, knees, ankles and feet.

The stipulations and evidence from the hearing also address Farah's lost earnings. He was almost 35 years old at the time of the accident. He has not worked since the accident. Farah earned approximately $27,000 per year as a cab driver and his expected work-life at the time of the crash totaled approximately 32.25 years. At the hearing, a rehabilitation counselor opined that the nature of Farah's injuries, and his background as an immigrant with limited education, likely precluded Farah from ever working again in any capacity. Farah estimated his lost wages over the course of his lifetime at $832,000.

Brien Roche, an experienced personal injury attorney, offered testimony at the hearing concerning his assessment of the value of Farah's case. He testified that a conservative valuation of Farah's case is $4 million. He based his assessment on a review of the file, including medical reports, reports concerning Farah's lost earnings, his inability to gain employment, and other documentation.

Following the hearing, the circuit court explained that it was unpersuaded by Farah's argument that certain cases from the United States Supreme Court compelled the use of a specific formula. The court acknowledged "the nature of this horrific accident and the substantial and permanent injuries sustained by this Plaintiff who by all accounts was innocent of any wrongdoing which contributed to this accident." The court reviewed in detail Farah's injuries, his pain and suffering, and his inability to work. The circuit court apportioned the $375,000 settlement as follows:

$ 85,500 to DMAS for its reduced lien;

$ 100,000 to Farah's counsel for attorney's fees;

$ 15,807 to Farah's counsel for costs advanced;

$ 173,693 to Farah.

Under the circuit court's ruling, the Medicaid lien represents approximately 23 percent of the settlement.

Farah appeals from this decision.

ANALYSIS

Medicaid is a federal-state program that provides medical assistance to residents of participating states who cannot afford medical care. See 42 U.S.C. § 1396a(a). Federal law requires States to include a provision in their Medicaid plans for recouping from liable third parties funds spent on behalf of Medicaid recipients. 42 U.S.C. § 1396a(a)(25)(A). States must take all reasonable measures to find third parties that are liable for the coverage of a Medicaid recipient's medical costs. Id. States must also include a provision that requires Medicaid participants to sign over their rights to seek and collect payment for medical care from a liable third party to the State. 42 U.S.C. § 1396a(a)(25)(H). States are required to seek reimbursement from the third party if legal liability is found, unless the cost of pursuing the reimbursement outweighs the amount of reimbursement. 42 U.S.C. § 1396a(a)(25)(B) ; see also 42 U.S.C. § 1396p(a).

Another provision, 42 U.S.C. § 1396p(a)(1), known as the "anti-lien" provision, limits a State's ability to recover the full value of their lien in certain circumstances. This statute specifies that "[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." Id.

The third-party liability requirements can operate in tension with the anti-lien strictures when a Medicaid recipient receives a tort recovery that is insufficient to both cover Medicaid's expenditures and to fully compensate the recipient for his or her other damages. In a pair of cases, the United States Supreme Court addressed the tension between these statutory commands. In Arkansas Department of Health & Human Services v. Ahlborn , 547 U.S. 268, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), the State claimed that it was entitled to "more than just that portion of a judgment or settlement that represents payment for medical expenses," i.e., that it was entitled to recover the entirety of its lien. Id. at 278, 126 S.Ct. 1752. The plaintiff was a young woman who suffered debilitating injuries in a car crash. Id. at 268, 126 S.Ct. 1752. The parties stipulated that the case was reasonably valued at approximately three million dollars. Id. at 274, 126 S.Ct. 1752. The case settled for $550,000. The State had expended approximately $215,000 and it sought "to recover the entirety of the costs it paid on the Medicaid recipient's behalf." Id. at 278, 126 S.Ct. 1752. The Supreme Court rejected that argument, concluding that the anti-lien provision limits the State to a recovery of "that portion of a settlement that represents payments for medical care." Id. at 282, 126 S.Ct. 1752. The State could not satisfy its lien by encumbering the plaintiff's other recovered damages, such as lost wages or pain and suffering. In Ahlborn , given the stipulated reasonable value of the case, the proportional amount the State could recover was approximately $35,000. Id. at 288, 126 S.Ct. 1752.

Later, in Wos v. E.M.A. ex rel. Johnson , 568 U.S. 627, 133 S.Ct. 1391, 185 L.Ed.2d 471 (2013), the Court examined whether a state could employ a lien allocation method that automatically attributed up to one-third of every judgment or settlement to its Medicaid lien. Id. at 630, 133 S.Ct. 1391. The Court concluded that picking an arbitrary number, such as one third, was not a reasonable method of allocation. Id. at 636, 133 S.Ct. 1391. The Court offered further guidance, noting that "[w]hen the State and the beneficiary are unable to agree on an allocation," the parties can "submit the matter to a court for decision." Id. at 638, 133 S.Ct. 1391. The Court observed that "States have considerable latitude to design administrative and judicial procedures to ensure a prompt and fair allocation of damages." Id. at 641, 133 S.Ct. 1391.

Virginia's apportionment statute is found in Code § 8.01-66.9. It provides in relevant...