Poupas v. Agency for Healthcare Administration

Rafael Gonzalez, Esq., Cattie & Gonzalez, PLLC

On June 10, 2022, the United States Supreme Court published its decision on Gallardo v. Marstiller, declaring that Florida’s state Medicaid agency may recoup its lien, not just from settlement funds allocated for past medical expenses, but may also collect its lien from settlement funds allocated for future medical expenses. 

We knew the decision would create headaches, confusion, and litigation. We knew the decision would ask each state to look at their statutory provisions and decide whether Gallardo changed the way in which each state handled its Medicaid third party liability liens in liability, no-fault, and workers compensation claims.

Although we are watching very carefully for proposed federal and state legislation that may affect how states may collect its Medicaid liens after Gallardo, several states have begun to provide legal opinions on the effect of Gallardo on states’ authority, processes and procedures in chasing after reimbursement of Medicaid payments from an automobile personal injury, medical malpractice, nursing home, product liability, wrongful death, or workers compensation settlements.

Over the next several weeks, we will provide an analysis of the various decisions handed down by different courts throughout the country on state Medicaid agencies’ entitlement to reimbursement, not just from settlement monies allocated towards past medical expenses, but settlement dollars specifically allocated for future medical expenses associated with the injuries related to the specific claim. Today, we review Poupas v. Agency for Healthcare Administration.

And the Headaches, Confusion, and Litigation Continue

On August 24, 2022, the State of Florida, Division of Administrative Hearings, published its decision on Poupas v. Agency for Healthcare Administration, concluding that since Poupas proved by clear and convincing evidence that AHCA should be reimbursed the pro rata share, instead of the full amount of its Medicaid lien under section 409.910(11)(f), the court rules AHCA is only entitled to $17,679.20 in satisfaction of its Medicaid lien, instead of the $88,396 AHCA had paid, demanded, and argued.

Facts

On January 27, 2017, Darius Poupas, a 19-year-old man, was visiting a friend's apartment when he was the victim of a criminal attack. He was shot two times by an assailant, who sprayed the complex, cars, and people with more than 15 rounds of ammunition.  

Poupas was struck in the left flank, with the bullet hitting bone, and then entering his colon. He also was struck by another bullet in the right thigh. He was transported by Miami-Dade Emergency Medical Service to Memorial Regional Hospital, where he underwent an exploratory laparotomy and resections of his large and small bowels.  

The Florida Agency for Healthcare Administration (AHCA), through its Medicaid program, paid $88,396 for Poupas medical care for treatment of his attack-related injuries.  

Settlement and Medicaid Lien Asserted

On July 13, 2021, Poupas filed suit against multiple defendants, based on negligent security claims, to recover his damages related to the attack. He settled his tort action in November 2021 for $400,000.00.

AHCA asserted a lien for the full amount it paid, $88,396, against Poupas’ third-party settlement proceeds. AHCA maintains that it is entitled to application of the formula in Fla. Stat. Section 409.910(11)(f) in determining the amount to be paid in satisfaction of the lien. 

Testimony at Hearing.

The attorney who represented Poupas in his tort case against the liable third parties testified as an expert witness for Poupas regarding the valuation of his tort case. He testified that he very conservatively valued Poupas damages at $2,000,000.00. That figure primarily was based on the value of Poupas pain and suffering, disfigurement, mental anguish, and loss of quality of life. Because Poupas’ physicians had determined that there were no additional medical treatments he could undergo to repair or alleviate his injuries, this case did not involve economic damages for future medical expenses. As a result, Poupas non-economic damages were the main component of his valuation.  

Poupas’ attorney testified that, based on the $ 2,000,000.00 valuation of the case, and given that Poupas case settled for $ 400,000.00, Poupas recovered only 20% of the full value of his damages. 

Another plaintiff attorney testified as an expert regarding valuation of personal injury damages and application of the pro rata methodology to determine the apportionment of settlement proceeds. He provided specific, detailed testimony that Poupas suffered, and continues to suffer from, extensive injuries which have a damages value in excess of $ 2,000,000.00. 

He also testified that the pro rata methodology, established in, and repeatedly ratified by case law, is a fair and reasonable method for allocating the total amount of settlement proceeds to the different types of damages suffered by Poupas. He testified that applying the pro rata methodology to the settlement proceeds was a fair and reasonable method of determining Florida’s Medicaid lien in this case.

AHCA did not present any evidence to rebut Poupas’ experts testimony.  

ALJ’S Analysis

Based on the foregoing, and applying the pro rata methodology (since Poupas only received 20% of his damages, AHCA should also be limited to only 20% of its total expenses), the court finds that 20% of $88,396, or $17,679.20, is properly allocated to AHCA in satisfaction of its Medicaid lien.

The court explains that States are preempted from taking any portion of a Medicaid beneficiary's third-party tort judgment or settlement not designated for medical care.  Ark. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006); Wos v. E.M.A., 568 U.S. 627, 630 (2013). Further, the court indicates that the Act limits the portion of a recipient's tort recovery on which a state can impose a lien to medical expenses only, which includes both past and future medical expenses.  Gallardo v. Marstiller, 142 S. Ct. 1751 (2022).  

Section 409.910(11)(f) establishes a formula for determining the amount owed AHCA in satisfaction of its Medicaid lien. 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, after 25% attorney's fees and taxable costs, one-half of the remaining recovery shall be paid to the agency up to the total amount of medical assistance provided by Medicaid. The remaining amount of the recovery shall be paid to the recipient.  

Consistent with the holding in Wos that the Act's anti-lien provision preempts state statutes that create a conclusive presumption regarding the amount of medical expenses for which the state is entitled to reimbursement, the Florida Legislature enacted section 409.910(17)(b), which creates an administrative process under chapter 120 to contest the amount designated as recovered medical expense damages payable to AHCA pursuant to the formula in section 409.910(11)(f). 

Clear and Convincing Evidence.

In order to successfully challenge the amount designated as recovered medical expenses, the recipient must prove, by clear and convincing evidence, that the portion of the total recovery which should be allocated as past and future medical expenses is less than the amount calculated by the agency pursuant to the formula set forth in paragraph (11)(f). Alternatively, the recipient must prove by clear and convincing evidence that Medicaid provided a lesser amount of medical assistance than that asserted by the agency.

In Giraldo v. Agency for Health Care Administration, 248 So. 3d 53, 56 (Fla. 2018), the Florida Supreme Court held that the federal Medicaid Act prohibits AHCA from placing a Medicaid lien on the future medical expenses portion of a Medicaid recipient's tort recovery. The court also concluded, consistent with Ahlborn, that where a Medicaid recipient presents uncontroverted evidence regarding the proper allocation of the settlement proceeds pursuant to the pro rata allocation methodology, and there is no reasonable basis in the record to reject such evidence or methodology, then the pro rata allocation methodology is an appropriate means for determining the amount of the reimbursement to which AHCA is entitled.  

In Gallardo, the Supreme Court of the United States recently held that the federal Medicaid Act provision prohibiting states from placing liens against a Medicaid recipient's property to recover Medicaid expenses did not preempt provisions of Florida's Medicaid Third-Party Liability Act authorizing AHCA to seek reimbursement of its Medicaid expenses from portions of tort settlement proceeds that represented all medical expenses, both past and future. Thus, Gallardo overruled the portion of Giraldoand other Florida cases which limited AHCA's right to seek reimbursement to only the amount allocated to past medical expenses.  

However, importantly, the court here points out Gallardo did not overrule the portion of the holding in Giraldo that ratified the use of the pro rata allocation methodology in determining the amount of settlement proceeds that should be allocated to medical expenses.  

Pro Rata Share Methodology is Fair and Reasonable

Here, Poupas proved by clear and convincing evidence that AHCA should be reimbursed a lesser amount than the full amount of its Medicaid lien under section 409.910(11)(f). Specifically, the clear and convincing evidence establishes that the pro rata allocation methodology is a fair and reasonable method for allocating Poupas third-party settlement proceeds in this case, especially given the fact that the case involves no evidence of, or claim for, future medical expenses.  

AHCA did not present any countervailing evidence at the final hearing. Thus, there is no evidentiary basis in the record for rejecting Poupas evidence, showing that the pro rata allocation methodology is a fair and reasonable method for determining the amount of settlement proceeds allocated to determining the amount payable to AHCA in satisfaction of its Medicaid lien.  

The court therefore concludes it would be reversible error for the court to reject application of the pro rata allocation methodology to the third-party settlement recovery to determine the amount of his medical expenses, for purposes of satisfying AHCA’s Medicaid Lien. Therefore, the court concludes that AHCA is entitled to a payment of $17,679.20 in satisfaction of its Medicaid lien, instead of the $88,396 it had paid, demanded, and argued.

About Rafael Gonzalez

Rafael earned his Bachelors of Science degree from the University of Florida, and his Jurisprudence Doctorate degree from the Florida State University. 

Rafael has over 35 years experience in the legal and insurance industries. He is currently a partner in Cattie & Gonzalez, PLLC, a national law firm serving clients in all 50 states, focused on Medicare and Medicaid secondary payer law and compliance in auto, bodily injury, liability, mass tort, medical malpractice, nursing home, no-fault, products, workers compensation, and wrongful death claims and litigated cases.

Rafael writes and speaks about workers compensation, social security, medicare, medicaid, marketplace, mandatory insurer reporting, conditional payments resolution, set aside allocations, msa and snt administration, social determinants of health, and diversity, equity, and inclusion throughout the country.

Rafael can be reached at 844.546.3500 or at rgonzalez@cattielaw.com. You may also reach out to him on social media, as he is active on linkedin, twitter, facebook, instagram, and youtube.