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`Supreme Court of Florida
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`____________
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`No. SC17-297
`____________
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`MARIA ISABEL GIRALDO, et al.,
`Petitioners,
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`vs.
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`AGENCY FOR HEALTH CARE ADMINISTRATION,
`Respondent.
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`[July 5, 2018]
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`LAWSON, J.
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`We accepted review of the decision of the First District Court of Appeal in
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`Giraldo v. Agency for Health Care Administration, 208 So. 3d 244 (Fla. 1st DCA
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`2016), on the ground that it expressly and directly conflicts with the Second
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`District Court of Appeal’s decision in Willoughby v. Agency for Health Care
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`Administration, 212 So. 3d 516 (Fla. 2d DCA 2017), regarding whether the
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`Agency for Health Care Administration (AHCA) may lien the future medical
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`expenses portion of a Florida Medicaid recipient’s tort recovery. We have
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`jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the reasons that follow, we hold
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`that under federal law AHCA may only reach the past medical expenses portion of
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`a Medicaid recipient’s tort recovery to satisfy its Medicaid lien. Because the First
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`District held otherwise, we quash the decision below, approve the Second
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`District’s decision, and remand with instructions that the First District direct the
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`administrative law judge (ALJ) to reduce AHCA’s lien amount in this case to
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`$13,881.79.
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`BACKGROUND
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`After Juan L. Villa suffered extreme injuries in an all-terrain vehicle
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`accident, Florida’s Medicaid program (administered by AHCA) paid $322,222.27
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`for Villa’s medical care. Villa later settled with one of multiple alleged tortfeasors
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`for $1 million. Claims against other alleged tortfeasers were still pending. Using
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`the formula outlined in section 409.910(11)(f), Florida Statutes (2015), AHCA
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`calculated the presumptively appropriate amount of its lien at $321,720.16, and
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`asserted a lien in that amount against Villa’s settlement. Section 409.910(17)(b)
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`authorizes Medicaid recipients to contest the amount of a Medicaid lien at a
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`hearing before the Division of Administrative Hearings (DOAH), by proving that
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`“a lesser portion of the total recovery should be allocated as reimbursement for
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`past and future medical expenses than the amount calculated by the agency
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`pursuant to the formula set forth in paragraph (11)(f).” § 409.910(17)(b), Fla. Stat.
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`(2015). Villa timely petitioned for this hearing.
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`At the DOAH hearing, Villa presented uncontested expert testimony
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`establishing that only $13,881.79 of the $1 million tort recovery represented
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`compensation for Villa’s past medical expenses and argued that AHCA’s lien
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`should be limited to this amount. AHCA argued that the law authorizes recovery
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`of Medicaid expenditures from third-party payments for past medical expenses and
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`reasonably anticipated future medical expenses. Because Villa had the burden of
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`rebutting the lien amount derived from the statutory formula—and put on no
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`evidence to show that the lien exceeded the amount of his recovery properly
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`allocated to his anticipated future medical expenses—AHCA argued that it should
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`recover in the full amount of its lien.
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`Villa unexpectedly died weeks after the hearing, and his parents, as personal
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`representatives of his estate, were properly substituted into this case as Petitioners.
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`The ALJ’s final order affirmed AHCA’s lien amount and determined that Villa had
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`failed to rebut the statutory formula because he did not establish that the lien
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`exceeded the portion of his recovery allocated to future medical expenses.
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`Petitioners appealed, and the First District affirmed the ALJ’s final order, holding
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`that Florida law1 and the federal Medicaid Act allow AHCA to secure
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`1. The First District correctly observed that Florida law plainly
`contemplates recoupment of AHCA’s expenditures on behalf of a Medicaid
`recipient from portions of the recipient’s tort recovery “allocated as reimbursement
`for past and future medical expenses,” Giraldo, 208 So. 3d at 249 (quoting
`§ 409.910 (17)(b), Fla. Stat. (2014) (emphasis added)), but also recognized that
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`reimbursement for its Medicaid expenditures from the portions of Villa’s third-
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`party settlement recovery allocated to both past and future medical expenses. The
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`Second District later reached the opposite conclusion in Willoughby, holding that
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`the federal Medicaid Act prohibits AHCA from placing a lien on the future
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`medical expenses portions of a recipient’s recovery.
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`ANALYSIS
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`This case concerns interpretation of the federal Medicaid Act. Questions of
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`statutory interpretation are reviewed de novo. See Borden v. East-European Ins.
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`Co., 921 So. 2d 587, 591 (Fla. 2006).
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`I. Overview
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`Medicaid is a joint federal-state cooperative program that helps participating
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`states provide medical services to residents who cannot afford treatment. Arkansas
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`Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006). The
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`federal Medicaid Act—title XIX of the Social Security Act—governs regulation of
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`the program, and it mandates that participating states follow the Medicaid Act by
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`“compl[ying] with certain statutory requirements for making eligibility
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`determinations, collecting and maintaining information, and administering the
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`program.” Ahlborn, 547 U.S. at 275. Significantly, the Act contains a general
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`because states participating in the Medicaid program must follow federal law,
`resolution of the conflict question is ultimately governed by federal law. Id.
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`anti-lien provision protecting Medicaid recipients by broadly prohibiting state
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`Medicaid agencies from imposing liens against any of a recipient’s property. 42
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`U.S.C. § 1396p(a)(1) (2012). However, the Act contains a narrow exception to the
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`anti-lien prohibition requiring states to seek reimbursement for their Medicaid
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`expenditures by pursuing payment from third parties legally liable for the
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`recipients’ medical expenses. Ahlborn, 547 U.S. at 284-85. These provisions
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`“pre-empt[] a State’s effort to take any portion of a Medicaid beneficiary’s tort
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`judgment or settlement not ‘designated as payments for medical care,’ ” Wos v.
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`E.M.A., 568 U.S. 627, 630 (2013) (quoting Ahlborn, 547 U.S. at 284), and set “a
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`ceiling on a State’s potential share of a beneficiary’s tort recovery,” id. at 633.
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`II. Construing the Medicaid Act
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`We first examine the Act’s plain language, applying the principle that
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`“[w]hen the language of the statute is clear and unambiguous and conveys a clear
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`and definite meaning, . . . the statute must be given its plain and obvious meaning.”
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`Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984) (quoting A.R. Douglass, Inc. v.
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`McRainey, 137 So. 157, 159 (Fla. 1931)).
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`The portion of the Medicaid Act defining the “ceiling”—the limitation on
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`what portion of a recipient’s tort recovery a state can be subject to a lien—reads in
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`relevant part:
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`[T]o the extent that payment has been made under the State plan for
`medical assistance for health care items or services furnished to an
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`individual, the State is considered to have acquired the rights of such
`individual to payment by any other party for such health care items or
`services.
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`42 U.S.C. § 1396a(a)(25)(H) (2012) (emphasis added). “Such health care items or
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`services” is most naturally and reasonably read as referring to those “health care
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`items or services” already “furnished” and for which “payment has been made
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`under the State plan.” Id. Those are the health care items and services for which
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`“the State is considered to have acquired . . . rights” by assignment “to any
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`payments by any other party,” id., and they are past medical expenses only. We
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`see no reasonable way to read this language as giving states a right to assignment
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`of that portion of a tort recovery from which the injured party will be expected to
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`pay his or her anticipated medical expenses in the future, without aid from the
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`government.
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`As explained by the Second District, this reading of the Act is consistent
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`with the “majority view that the Medicaid lien does not attach to settlement funds
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`allocable to future medical expenses,” Willoughby, 212 So. 3d at 524, and appears
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`to be compelled by Ahlborn and Wos, id. at 523-25. Even if not compelled by
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`Alhborn and Wos, because we read the plain language of the Medicaid Act as
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`limiting Florida’s assignment rights (and lien) to settlement funds fairly allocable
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`to past medical expenses, no further analysis is needed.
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`III. On Remand
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`Because we hold that the federal Medicaid Act prohibits AHCA from
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`placing a lien on the future medical expenses portion of a Medicaid recipient’s tort
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`recovery, we remand with instructions that the First District direct the ALJ to
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`reduce AHCA’s lien amount to $13,881.79. Although a factfinder may reject
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`“uncontradicted testimony,” there must be a “reasonable basis in the evidence” for
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`the rejection. Wald v. Grainger, 64 So. 3d 1201, 1205-06 (Fla. 2011). Here, Villa
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`presented uncontradicted evidence establishing $13,881.79 as the settlement
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`portion properly allocated to his past medical expenses, and there is no reasonable
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`basis in this record to reject Villa’s evidence. For this reason, no further
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`factfinding is required.
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`CONCLUSION
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`We quash the decision below in Giraldo, approve Willoughby, and hold that
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`federal law allows AHCA to lien only the past medical expenses portion of a
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`Medicaid beneficiary’s third-party tort recovery to satisfy its Medicaid lien. We
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`remand this case to the First District with instructions to direct the ALJ to reduce
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`the awarded amount to $13,881.79 for satisfaction of AHCA’s lien.
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`It is so ordered.
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`CANADY, C.J., and PARIENTE, LEWIS, QUINCE, and LABARGA, JJ., concur.
`POLSTON, J., concurs specially in part and dissents in part with an opinion.
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`NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND,
`IF FILED, DETERMINED.
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`POLSTON, J., concurring specially in part and dissenting in part.
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`I agree with the majority’s conclusion that federal law only allows AHCA to
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`place a lien on the past medical expenses portion of a Medicaid beneficiary’s third-
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`party tort recovery, but I reach this conclusion for a different reason. Additionally,
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`I disagree with the majority’s reduction of the amount of AHCA’s lien on the
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`settlement without a factfinder determining the portion of the settlement properly
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`allocated to past medical expenses.
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`I.
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`Unlike the majority, I do not believe the federal Medicaid Act, considered as
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`a whole, is clear and unambiguous regarding whether AHCA can place a lien on
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`the portions of a settlement that represent past and future medical damages. For
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`example, the general anti-lien provision of the Medicaid Act uses both the past and
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`future tenses, while the provision requiring beneficiaries to assign to the states any
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`rights to third-party payments does not use either the past or future tense, while the
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`provision providing that states acquire rights to third-party payments uses only the
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`past tense. Compare 42 U.S.C. § 1396p(a)(1) (2012) (employing both the past and
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`future tenses when stating “paid or to be paid”), with 42 U.S.C. § 1396k(a)(1)(A)
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`(2012) (requiring assignment to State “to payment for medical care from any third
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`party”), with 42 U.S.C. § 1396a(a)(25)(H) (2012) (employing only the past tense of
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`“has been made” along with “such health care items or services”).
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`Instead, I believe the United States Supreme Court’s opinion in Arkansas
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`Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 275 (2006),
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`compels our construction of the federal Medicaid Act to only allow AHCA to place
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`a lien on the portion of a tort recovery that represents past medical expenses. In
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`Ahlborn, the Medicaid beneficiary sought damages from a third party “not only for
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`past medical costs, but also for permanent physical injury; future medical
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`expenses; past and future pain, suffering, and mental anguish; past lost earnings
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`and working time; and permanent impairment of the ability to earn in the future.”
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`547 U.S. at 273. “[T]he case was settled out of court . . . for a total of $550,000[,
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`but t]he parties did not allocate the settlement between categories of damages.” Id.
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`at 274. The state agency asserted a lien against the settlement “in the amount of
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`$215,645.30—the total cost of payments made . . . for Ahlborn’s care.” Id.
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`Thereafter, Ahlborn sought
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`a declaration that the lien violated the federal Medicaid laws insofar
`as its satisfaction would require depletion of compensation for injuries
`other than past medical expenses. To facilitate the District Court’s
`resolution of the legal questions presented, the parties, [including the
`state agency,] stipulated that Ahlborn’s entire claim was reasonably
`valued at $3,040,708.12; that the settlement amounted to
`approximately one-sixth of that sum; and that, if Ahlborn’s
`construction of federal law was correct, ADHS would be entitled to
`only the portion of the settlement ($35,581.47) that constituted
`reimbursement for medical payments made.
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`Id. (emphasis added). To be clear, the parties only stipulated that $35,581.47
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`would be the correct figure “for medical payments made” if “Ahlborn’s
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`construction of federal law was correct.” Id. And Ahlborn’s argument construed
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`the federal Medicaid law to only allow the State to recover the portion of the
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`settlement representing past medical expenses. Id.
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`In the end, the United States Supreme Court held that “[f]ederal Medicaid
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`law does not authorize [the state agency] to assert a lien on Ahlborn’s settlement in
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`an amount exceeding $35,581.47, and the federal anti-lien provision affirmatively
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`prohibits it from doing so.” Id. at 292. Therefore, because the United States
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`Supreme Court in Ahlborn held that, pursuant to federal law, a state agency cannot
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`assert a lien on a tort settlement in excess of the amount stipulated by the parties to
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`constitute reimbursement for past medical expenses, we are compelled to conclude
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`that federal law prohibits AHCA from asserting a lien in an amount exceeding the
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`portion of a tort settlement that constitutes reimbursement for past medical
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`expenses.
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`II.
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`Of course, the difference between this case and Ahlborn is that AHCA has
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`not stipulated to the $4,817.56 allocation for past medical expenses outlined in the
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`settlement at issue in this case (or to the testimony that $13,881.76 is a reasonable
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`allocation of past medical damages here). And the United States Supreme Court in
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`Ahlborn explained that this distinction may warrant procedural safeguards: “[T]he
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`risk that parties to a tort suit will allocate away the State’s interest can be avoided
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`either by obtaining the State’s advance agreement to an allocation or, if necessary,
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`by submitting the matter to a court for decision.” Id. at 288. Conversely, “just as
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`there are risks in underestimating the value of readily calculable damages in
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`settlement negotiations, so also is there a countervailing concern that a rule of
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`absolute priority might preclude settlement in a large number of cases, and be
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`unfair to the recipient in others.” Id.
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`To protect parties against such possible manipulation, the United States
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`Supreme Court’s subsequent decision in Wos v. E.M.A., 568 U.S. 627 (2013),
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`clarified that procedural safeguards are needed when there is no judicially
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`approved allocation, stipulation, or judgment. Specifically, in Wos, the United
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`States Supreme Court explained that “[w]hen there has been a judicial finding or
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`approval of an allocation between medical and nonmedical damages—in the form
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`of either a jury verdict, court decree, or stipulation binding on all parties—that is
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`the end of the matter.” 568 U.S. at 638. However, “[w]hen the State and the
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`beneficiary are unable to agree on an allocation, . . . the parties could ‘submi[t] the
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`matter to a court for decision.” Id. (quoting Ahlborn, 547 U.S. at 288). The United
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`States Supreme Court also mentioned the possibility of an “administrative
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`proceeding” to determine the proper allocation. Id. at 638-39.
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`Here, because there is no stipulation, judgment, or administrative finding
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`regarding the portion of the settlement that represents past medical expenses, I
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`dissent to the majority’s declaration on appellate review that $13,881.79 is the
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`proper allocation. The ALJ never found that $13,881.79 was the proper amount to
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`allocate as past medical expenses in the settlement, and it is not proper that this
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`Court do so on appellate review. While the beneficiary presented testimony of two
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`expert witnesses to prove the valuation of total damages was $25,000,000, and that
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`$13,881.79 was a reasonable allocation of past medical damages, the ALJ’s final
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`order noted that the testimony was questionable and based upon two-year-old
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`hearsay reports. Therefore, I would remand this case to the First District with
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`instructions that the ALJ determine the proper allocation for past medical expenses
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`and that this allocation be awarded for satisfaction of AHCA’s lien.2
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`Accordingly, I concur specially in part and dissent in part.
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`First District - Case No. 1D16-392
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`Application for Review of the Decision of the District Court of Appeal – Direct
`Conflict of Decisions
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`
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`Celene H. Humphries, Philip J. Padovano, Maegen P. Luka, and Joseph T.
`Eagleton of Brannock & Humphries, P.A., Tampa, Florida; and Floyd Faglie of
`Staunton & Faglie, PL, Monticello, Florida,
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`for Petitioners
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`2. AHCA stipulated that the beneficiary’s death does not affect the case.
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`- 12 -
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`for Respondent
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`Pamela Jo Bondi, Attorney General, Jonathan A. Glogau, Special Counsel, and
`Elizabeth Teegen, Assistant Attorney General, Tallahassee, Florida; Stuart F.
`Williams, General Counsel, and Tracy Cooper George, Chief Appellate Counsel,
`Agency for Health Care Administration, Tallahassee, Florida,
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`
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`Twyla L. Sketchley of The Sketchley Law Firm, P.A., Tallahassee, Florida; Ellen
`S. Morris of Elder Law Associates, P.A., Boca Raton, Florida; Ron M. Landsman
`of Ron M. Landsman, P.A., Rockville, Maryland; and Jill J. Burzynski of
`Burzynski Elder Law, Naples, Florida,
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`Amici Curiae National Academy of Elder Care Law Attorneys, Academy of
`Florida Elder Law Attorneys, Special Needs Alliance, and Elder Law
`Section of The Florida Bar
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`Nichole J. Segal of Burlington & Rockenbach, P.A., West Palm Beach, Florida,
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`Amicus Curiae Florida Justice Association
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`- 13 -
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