Roberts v. Albertson's Inc.

119 So.3d 457

Alan ROBERTS, Appellant,

v.ALBERTSON'S INC., B.H.A., L.L.C., and Sebastian Rapisarda, Appellees.

No. 4D10–2313.

District Court of Appeal of Florida, Fourth District.

Oct. 24, 2012.

Rehearing and Rehearing En Banc Denied June 26, 2013.

Bard D. Rockenbach of Burlington & Rockenbach, P.A., West Palm Beach, and Harry A. Shevin of Domnick & Shevin, PL, Palm Beach Gardens, for appellant.

Kenneth W. Sukhia of Sukhia Law Group, PLC, and James H.K. Bruner Sr. of Affiliated Computer Services, Inc., Tallahassee, for appellees.

CONNER, J.

In this appeal, we decide whether Florida law precludes the recipient of Medicaid benefits from seeking a judicial determination of what portion of a personal injury settlement is subject to a Medicaid lien and reimbursement to the state. Adhering to federal appellate precedent, we hold that a Medicaid recipient has the right to seek a judicial determination.

Factual Background and Trial Proceedings

Appellant, Alan Roberts (“Roberts”), was hit by a side view mirror of a dry cleaning van while walking. As a result, he was rendered a quadriplegic. Medicaid paid for all of Roberts' medical care associated with the accident, which totaled $343,452.83. Roberts brought actions against four defendants, including Albertson's, Inc., for compensation of his injuries. Florida Agency for Health Care Administration (“AHCA”), the Medicaid administrator for Florida, filed a lien against the third-party benefits paid in settlement by the tortfeasors.

All parties, except Albertson's, settled for their insurance policy limits. After asserting multiple defenses, Albertson's settled for $2,735,000. The Albertson's settlement agreement did not contain any allocation between medical expenses, other economic losses, or non-economic losses. AHCA did not participate in the settlement agreement.

Roberts filed a Motion to Determine Equitable Medicaid Lien Amount, asking the court to determine the amount of the settlement that was comprised of medical expenses and to limit recoupment of the Medicaid lien to that amount. Roberts claimed the true value of damages was $44.8 million. His expert submitted an affidavit claiming economic damages totaling $11.8 million, past non-economic damages in the amount of $8 million, and future human damages of $25 million. AHCA filed a response opposing a hearing because section 409.910(11)(f), Florida Statutes (2010), provides the statutory formula to determine what portion of a personal injury settlement is subject to a Medicaid lien.

The trial court agreed to bifurcate consideration of the motion by first conducting a hearing on the legal issue of whether Roberts was entitled to an evidentiary hearing. The order on appeal determined that Roberts was not entitled to an evidentiary hearing, citing Russell v. Agency for Health Care Administration, 23 So.3d 1266 (Fla. 2d DCA 2010). Based on the formula set forth in section 409.910(11)(f), the trial court ordered that AHCA was entitled to a Medicaid lien for the full amount of Medicaid benefits provided to Roberts.

Appellate Analysis

“Medicaid is a cooperative federal-state welfare program providing medical assistance to needy people.” Agency for Health Care Admin. v. Estabrook, 711 So.2d 161, 163 (Fla. 4th DCA 1998) (citations omitted). Even though state participation in the program is voluntary, once a state elects to participate, the state must comply with federal Medicaid statutes.¹Id.; see Wilder v. Virginia Hosp. Assn., 496 U.S. 498, 501, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Nonetheless, “[e]ach state has considerable discretion in designing the contours of its program within the guidelines established by 42 U.S.C. s 1396a.” Englich v. Agency for Healthcare Admin., 916 So.2d 994, 996 (Fla. 4th DCA 2005).

To better understand the issue we resolve in this appeal, a brief discussion of the history of some of the federal Medicaid statutes is needed.

The Federal Medicaid Anti–Lien and Anti–Recovery Statutes

In the early years of the Medicaid Program, Congress adopted 42 U.S.C. § 1396p(a)(1) of the Medicaid Act:Liens, adjustments and recoveries, and transfers of assets

(a) Imposition of lien against property of an individual on account of medical assistance rendered to him under a State plan

(1) No 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, except-

(A) pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual, or

(B) in the case of the real property of an individual-[who is in a nursing home and required by law to spend his own income on those expenses, and who cannot reasonably be expected to return home.]

This provision is known as the “anti-lien” provision of the Medicaid Act. Of equal importance to this appeal is 42 U.S.C. § 1396p(b)(1), known as the “anti-recovery provision:” “[n]o adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made, except [in limited circumstances not at issue in this case].”

The anti-lien and anti-recovery provisions were intended to ensure that Medicaid recipients were not forced to directly bear the costs of their medical care during their lifetime. Tristani v. Richman, 652 F.3d 360, 370 (3d Cir.2011). Those provisions were brought forward from similar provisions of the Social Security Act adopted in 1960. Id. at 371. By enacting these provisions, Congress was concerned about protecting a Medicaid recipient's personal assets, but not the recipient's interest in recovering from third parties medical costs paid on his or her behalf. Id. at 372.

To keep the Medicaid program viable, Congress recognized that it is necessary to obtain reimbursement when a third party makes payment to the Medicaid beneficiary for medical care already paid for by Medicaid.

Federal Statutory Authority for Medicaid Liens

The first reimbursement provision of the Medicaid Act was enacted in 1967, several years after the adoption of the anti-lien and anti-recovery provisions. Id. It required states to “take all reasonable measures to ascertain the legal liability of third parties to pay for care and services” and “to seek reimbursement.” Id. The goal was to protect tax dollars while preventing Medicaid beneficiaries from receiving a windfall. Id. at 373. In 1977, Congress added a forced assignment provision to the Medicaid Act which required Medicaid recipients, as a requirement of eligibility, to assign to the Medicaid state agency the recipient's rights to payment for medical care from third parties. Id. By conferring upon the states the right to forced assignment of medical care cost paid by third-parties, Congress intended to ensure that Medicaid recipients do not receive a windfall by recovering medical costs they did not pay. Id.

Florida's Medicaid Third–Party Liability Act

The federal Medicaid program requires every participating state to implement a “third party liability” provision which requires the state to seek reimbursement for Medicaid expenditures from third parties who are liable for medical treatment provided to a Medicaid recipient. See § 42 U.S.C. 1396a(a)(25). To comply with federal mandate, Florida has enacted the Medicaid Third–Party Liability Act (“MTPLA”). See§ 409.910, Fla. Stat. (2010).

MTPLA expressly states that Medicaid shall be “the payor of last resort.” § 409.910(1), Fla. Stat. To assure that, the act provides:

If benefits of a liable third party are discovered or become available after medical assistance has been provided by Medicaid, it is the intent of the Legislature that Medicaid be repaid in full and prior to any other person, program, or entity. Medicaid is to be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid.

Id. The act gives AHCA at least three mechanisms to recoup expenditures from third parties: (1) an automatic lien “upon the collateral, as defined in s. 409.901” for the full amount of medical assistance provided by Medicaid; (2) automatic subrogation to any rights of a recipient to third-party benefits; and (3) an automatic assignment of the recipient's rights to any third-party benefits. 409.910(6)(a)-(c), Fla. Stat. (2010)Section 409.901(7)(b), Florida Statutes (2010) defines “collateral” as “[a]ll judgments, settlements and settlement agreements rendered or entered into and related to such causes of action [related to a covered injury necessitating Medicaid payments].” (emphasis added). “Third-party benefits” are defined by section 409.901(28), Florida Statutes (2010), to include “collateral.” Thus, settlements are clearly subject to Medicaid liens in Florida.

Section 409.910(11)(e), Florida Statutes (2010) states that the entire amount of any settlement is subject to a Medicaid claim for reimbursement limited to the amount of Medicaid assistance provided. However, section 409.910(11)(f), the section which is at the heart of this appeal, further limits the amount of reimbursement using a formula:

(f) 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 the agency 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...