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The Estate of Betsy Gladis Hernandez v. Agency for Health Care Administration, Case No. 3D14-2115 (Third DCA)

In Hernandez, the plaintiff appealed an order allocating a portion of the proceeds from a wrongful death settlement to pay a Medicaid lien held by ACHA. The trial court had apportioned the settlement amount based on the formula in Florida’s Medicaid Third Party Liability Act. The Third District affirmed.

In 2010, the plaintiff’s decedent passed away from complications from a rare condition. She was survived by her husband and child. The death was allegedly caused by a misdiagnosis and improper treatment at Baptist Hospital. The case settled for $700,000 before suit was filed. The settlement did not apportion the proceeds between the Estate and the survivors. Medicaid had paid over $400,000 in medical expenses for the decedent. These payments resulted in a Medicaid lien under Fla. Stat. 409.910(6)(c). The Estate later petitioned the probate court to apportion the settlement as $500,000 to cover the survivor’s wrongful death statutory damages and $200,000 to cover the Medicaid lien and other economic damages incurred by the Estate. ACHA argued that under Florida’s Medicaid Third-Party Liability Act, it was entitled to $262,500 prior to any wrongful death apportionment. The plaintiff responded arguing that Arkansas Department of Health & Human Services v. Ahlborn provides that the federal Medicaid Act’s anti-lien provision preempts Florida’s Medicaid Third-Party Liability Act. The plaintiff argued that AHCA was seeking monies allocated to survivors.

AHCA argued that Ahlborn and Wos v. E.M.A. were inapplicable where the Medicaid recipient is deceased, and that instead, Florida’s Medicaid Third-Party Liability Act provides the formula the court must use to determine the amount to be paid to cover the Medicaid lien. The trial court agreed with AHCA, and the plaintiff appealed.

On appeal, the plaintiff argued (1) that Florida’s Medicaid Third-Party Liability Act is preempted by federal which requires an evidentiary hearing to determine what portion of the settlement qualifies as medical expenses, and (2) that an evidentiary hearing is necessary because Florida’s Wrongful Death Act prohibits AHCA from asserting a Medicaid lien on the portions of the settlement allocated to the survivors. The Third District disagreed with both arguments.

First, the Third District ruled that Florida’s Medicaid Third-Party Liability Act was not preempted by federal law. The Third District explained the background and history of the federal Medicaid Act and its anti-lien provision, as well as Florida’s Medicaid Third-Party Liability Act. The Third District additionally discussed the cases of Ahlborn and Wos, which limited AHCA’s ability to assert a lien on portions of settlements. The court also explained that the Florida Supreme Court, inGarcon, recognizing that Florida courts must apply Wos, which requires an evidentiary hearing to apportion the settlement proceeds such that the recovery for medical expenses can be determined. The Third District noted that whether Ahlborn, Wos and Garcon apply in the context of a deceased Medicaid recipient is an issue of first impression in Florida. The court relied on a case from Kansas, which found that the plain language of the federal anti-lien provision suggested the decisions do not apply in the context of a deceased Medicaid recipient. The anti-lien provision provides that “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 . . . .”

The Third District agreed with the Kansas’ court’s rationale, and found it to be persuasive. The court noted, “by its express terms, the Medicaid Act’s anti-lien provision does not apply to a Medicaid lien imposed against the property of a Medicaid recipient after her death. We cannot ignore the plain meaning of this provision.” Accordingly, the Third District held that the federal Medicaid Act’s anti-lien provision does not preempt Florida’s Medicaid Third-Party Liability Act where a Medicaid lien is imposed on a wrongful death settlement.

The Third District next rejected the plaintiff’s second argument, relating to Florida’s Wrongful Death Statute. The Third District noted that the Wrongful Death Act permits a personal representative to bring a single action to recover damages for survivors and the estate. The damages recoverable by the survivors are distinct from the damages recoverable by the estate. Accordingly, certain cases have found that certain liens, such as workers’ compensation liens, do not attach to wrongful death proceeds attributable to survivors. However, cases have found that Medicaid liens attach to wrongful death proceeds attributable to survivors, because of the plain meaning of the Medicaid Third-Party Liability Act, which provides that AHCA’s lien has priority. The Third District ruled that Ahlborn, Wos and Garconhave not undermined prior District Court opinions that held that Medicaid liens may attach to wrongful death proceeds attributable to survivors, because those cases only apply to living Medicaid recipients.

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