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Michael Mobley, through his natural guardian v. State of Florida, AHCA, Case No. 1D14-2770 (1st DCA)

InMobley, the First District reversed an order of the Division of Administrative Hearings determining that AHCA was entitled to a full reimbursement of its Medicaid lien from the appellant’s personal injury settlement. The case stemmed from an incident in 2005 when the plaintiff nearly drowned at a party, and suffered permanent and irreversible anoxic brain damage leaving him unable to live independently. The total claim for past medical expenses amounted to $627,804.14, which included $515,860.29 paid by a self-funded ERISA plan and $111,943.89 paid by Medicaid. After years of litigation, the case settled for $500,000. The ERISA plan asserted a lien for its full amount of medical expenses, but accepted $120,000 in satisfaction of its lien. AHCA asserted a lien for the full amount of the Medicaid expenses. The plaintiff/appellant filed a petition pursuant to Fla. Stat. 409.910 to determine the proper amount of the Medicaid lien. The plaintiff argued that the parties, which did not include AHCA, agreed to use a proportional methodology to determine the allocation of the settlement. The parties determined that $500,000 was about 3.3% of the estimated total damages suffered by the plaintiff/appellant, and so the parties allocated 3.3% of the actual medical expenses to the Medicaid lien, which amounted to $20,717.54.

The administrative law judge ruled that the settlement allocated at least $140,717.54 towards past medical expenses, which included the $120,000 paid to the ERISA plan and the $20,717.54 to AHCA. Because the amount allocated to past medical expenses exceeded the Medicaid lien, AHCA was entitled to reimbursement of its total lien amount of over $111,000.

The First District began by explaining that Fla. Stat. 409.910 provides that Medicaid must be repaid in full and prior to any other person, program or entity if a Medicaid beneficiary receives a settlement from a liable third party. In Ahlborn v. Arkansas Department of Health, however, the United States Supreme Court held that the federal Medicaid anti-lien provision in 42 U.S.C. 1396p(a)(1) bars a state from asserting a lien on the portions of a settlement not allocated to medical expenses. The Supreme Court later, in Wos v. E.M.A., found that a Medicaid beneficiary must be given the opportunity to show that the amount apportioned for medical expenses by the parties is less than the amount of the lien asserted by the state. Florida instituted a formula for AHCA to use to determine the amount of Medicaid reimbursement, but in compliance with Wos, the Florida Legislature passed section 409.910(17)(b) which provides that a Medicaid beneficiary can rebut the result of the formula by proving by clear and convincing evidence that the lien amount exceeds the amount recovered for medical expenses.

Here, the statutory formula resulted in an amount recovered for past medical expenses greater than the total Medicaid lien. Therefore, the plaintiff/appellant sought to prove by clear and convincing evidence that a lesser portion of the total lien was allocated to medical expenses in the settlement. The administrative law judge made several findings of fact in reaching its decision. The First District found that the administrative law judge erred in adding the amount allocated for the ERISA plan and the amount allocated for the Medicaid lien together to determine the total amount of the settlement allocated to past medical expenses. “Unlike Medicaid liens, ERISA liens can be paid from any portion of the settlement.” As such, the ERISA settlement amount did not provide evidence of allocation of medical expenses. Therefore, the administrative law judge’s finding regarding allocation was not supported by competent, substantial evidence.

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