Jeffrey P. Gale, P.A. // Florida Supreme Court Clarifies Medicaid Lien Law

In Giraldo v. AHCA, the Florida Supreme Court addressed the vexing question regarding whether the Agency for Health Care Administration (AHCA) may lien the future medical expenses portion of a Florida Medicaid recipient’s tort recovery. In an opinion favoring individuals who have sustained personal injuries through the fault of third parties, the court held that federal law allows AHCA to lien only the past medical expenses portion of a Medicaid beneficiary’s third-party tort recovery to satisfy its Medicaid lien.

Medicaid will sometimes pay the medical expenses of a Medicaid recipient who has been harmed through the negligence of a third party. In some cases, the payments are extremely sizeable. (In Giraldo, for example, Florida’s Medicaid program (administered by AHCA) paid $322,222.27 for the victim’s medical care.) Where the victim is compensated by the third party for his or her damages, either through a settlement or a court judgment, Medicaid may recoup from the victim some or all of its payments. The recovery formula is set forth in section 440.910(11)(f), Florida Statutes. Giraldo addressed Medicaid’s lien rights.

The Supreme Court accepted review of the First District Court’s decision in Giraldo, on the ground that it expressly and directly conflicted with the Second District Court of Appeal’s decision in Willoughby v. Agency for Health Care Administration. This is known as conflict jurisdiction. See art. V, sec. 3(b)(3), Fla. Const.

In Giraldo, while claims were still pending against other alleged tortfeasors, the victim settled with one tortfeasor for $1 million. Using the 409.910(11)(f) formula, AHCA asserted a $321,720.16 lien against the settlement. Pursuant to section 409.910(17)(b), the victim contested the amount of the lien before the Division of Administrative Hearings (DOAH). Section 409.910(17)(b) authorizes Medicaid recipients to contest the amount of a Medicaid lien at a hearing before the Division of Administrative Hearings (DOAH), by proving that “a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f).” Section 409.910(17)(b), Fla. Stat.  (2015).

At the DOAH hearing, the victim presented uncontested expert testimony establishing that only $13,881.79 of the $1 million tort recovery represented compensation for his past medical expenses and argued that AHCA’s lien should be limited to this amount. The Administrative Law Judge disagreed, entering an order affirming AHCA’s lien amount. On appeal, the First District Court upheld the ALJ’s final order, holding that Florida law and the federal Medicaid Act allowed AHCA to secure reimbursement for its Medicaid expenditures from the portions of the third-party settlement recovery allocated to both past and future medical expenses. The Second District later reached the opposite conclusion in Willoughby, holding that the federal Medicaid Act prohibits AHCA from placing a lien on the future medical expenses portions of a recipient’s recovery. This is the conflict that set the stage for the Florida Supreme Court’s opinion.

The Florida Supreme Court disagreed with the First District, finding in favor of the victim that the lien amount is $13,881.79. In a succinct yet thorough analysis, the court explained that the Medicaid Act, which governs regulation of the joint federal-state cooperative Medicaid program, contains clear and unambiguous language “limiting Florida’s assignment rights (and lien) to settlement funds fairly allocable to past medical expenses.”

While the Giraldo outcome creates opportunities for reasonable results for victims, their lawyers must take seriously and be prepared to present a strong case to the ALJ under the DOAH procedures outlined in Section 409.910(17)(b), Fla. Stat. These hearings can be extremely fact and expert witness sensitive with dramatic consequences.