Reimbursing Florida Medicaid (AHCA) From Third Party Personal Injury Proceeds

us supreme court.jpgNot infrequently, Medicaid will step up and cover the medical expenses of persons severely injured in accidents before other sources do so. This is commendable. However, where the Medicaid recipient is subsequently compensated by a third party for damages sustained in the accident, Florida Statute 409.910 says that Medicaid must be reimbursed from the proceeds.

How the statutory formula is applied has been the subject of appeals both in Florida and in other states (other states have similar statutory provisions). The many opinions have created some confusion. This blog attempts to clarify the law in Florida.

First, a basic understanding of the Medicaid system is in order. A good explanation comes by way of EMA ex rel. Plyler v. Cansler, 674 F. 3d 290 – Court of Appeals, 4th Circuit 2012.

The Medicaid program, launched in 1965 with the enactment of Title XIX of the Social Security Act, as added, 79 Stat. 343, 42 U.S.C. §§ 1396-1396v, is a cooperative program by which the federal government pays a percentage of the costs a state incurs for medical care for individuals who cannot afford to pay their own medical costs. [Arkansas Dept. of Health and Human Servs.] v. Ahlborn, 547 U.S. at 275, 126 S.Ct. 1752. Although states are not required to provide Medicaid assistance, all 50 states currently do. Id. In exchange for receiving federal financial support for state-run Medicaid programs, states must comply with federal Medicaid laws, including statutory third-party liability requirements, 42 U.S.C. §§ 1396a(a)(25)(A), (B), (H); 1396k, and anti-lien provisions, id. §§ 1396a(a)(18), 1396p.

States providing Medicaid assistance must comply with several provisions concerning third-party liability. For instance, states are required to “take all reasonable measures to ascertain the legal liability of third parties … to pay for care and services available under the [State’s Medicaid] plan.” 42 U.S.C. § 1396a(a)(25)(A). In addition to this identification requirement, the state agency administering the Medicaid program … must seek reimbursement for medical assistance to the extent of such legal liability. Id. § 1396a(a)(25)(B). In order to secure its reimbursement from liable third parties, the state must,


Here’s another explanation, from Roberts v. Albertson’s Inc., Fla: Dist. Court of Appeals, 4th Dist. 2012:

“Medicaid is a cooperative federal-state welfare program providing medical assistance to needy people.” Agency for Healthcare 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.[1] Id.; see Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498, 501 (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).

Although participating states are required under federal Medicaid law to seek recovery from liable third parties, as set forth above, “the federal statute places express limits on the State’s powers to pursue recovery of funds it paid on the recipient’s behalf.” Ahlborn, 547 U.S. at 283, 126 S.Ct. 1752. These limitations are contained in 42 U.S.C. §§ 1396a(a)(18) and 1396p. (In Ahlborn, the Supreme Court framed the issue to be decided as “whether [Medicaid] can lay claim to more than the portion of Ahlborn’s settlement that represents medical expenses.” Id. at 280. The Court determined that the federal third-party liability provisions require an assignment of no more than the right to recover that portion of a settlement which represents payments for medical care. Id. at 282.)

Under Florida law, a person injured through negligence may seek compensation from the at-fault party for the damages he or she sustained in the accident. (An exception is where workers’ compensation immunity applies. See Florida Statute 440.11.)

Under Florida’s personal injury system, damages fall into two main categories: Economic and non-economic. Economic damages include past and future lost wages and past and future medical expenses. Generally, non-economic damages are for pain and suffering.

The federal laws and Florida Statute 409.910 limit the Medicaid reimbursement to money received from the third party for past medical expenses. Medicaid is not to be reimbursed from the proceeds allocated to past and future lost wages, future medical expenses, and pain and suffering damages.

Florida personal injury cases are resolved by settlement or trial. When by settlement, how much is paid for a particular measure of damages is rarely indicated. Rather, a lump sum is paid without a breakdown. The opposite typically holds true in cases resolved by trial. The jury verdict form, which is to be completed by the jury, will contain lines for each category of loss including past medical expenses. There are exceptions to both scenarios.

Because Medicaid may only recover from third party proceeds for monies paid for past medical expenses, in settled cases, including those where the parties have allocated amounts, a battle rages in Florida over how the determination is made over what has been paid for past medical expenses. The problem is similar where jury verdict forms fail to provide a breakdown.

If the plaintiff and Medicaid cannot agree on a number, the sensible solution is to let a judge decide after taking evidence based on a “proportionality” formula (i.e., the amount of the settlement in proportion to the actual value of the case). (In cases settled during suit, the judge assigned to the case can make the decision. In cases settled pre-suit, a dec action can be brought to invoke the jurisdiction of the court.) These are the approaches favored by The Supreme Court of the United States, where, in the Ahlborn case, it stated in dicta,

[T]he risk that parties to a tort suit will allocate away the State’s interest can be avoided either by obtaining the State’s advance agreement to an allocation or, if necessary, by submitting the matter to a court for decision. For just as there are risks in underestimating the value of readily calculable damages in settlement negotiations, so also is there a countervailing concern that a rule of absolute priority might preclude settlement in a large number of cases, and be unfair to the recipient in others.

Florida Medicaid, administered by AHCA, takes issue with this solution. Its position is that where there is no stipulation to determine the proper amount of settlement proceeds to be repaid to Medicaid, Florida Statute 409.910 allows it to satisfy its lien from the entirety of the settlement.

Florida appellate decisions go both ways. Those favoring the fair and sensible approach suggested by the United States Supreme Court: Roberts v. Albertson’s Inc., Fla: Dist. Court of Appeals, 4th Dist. 2012 and Smith v. Agency for Health Care Administration, 24 So. 3d 590 (Fla. 5th DCA 2009). Those opposed: Garcon v. Agency for Health Care Administration, 96 So. 3d 472 (Fla. 3d DCA 2012) and Russell v. Agency for Health Care Administration, 23 So. 3d 1266 (Fla. 2d DCA 2010).

Cases to watch: Davis v. AHCA and AHCA v. Riley.

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