Full Opinion

FIRST DISTRICT COURT OF APPEAL STATE OF FLORIDA _____________________________ No. 1D19-1454 _____________________________ AGENCY FOR HEALTH CARE ADMINISTRATION, Appellant, v. ABRAHAM RODRIGUEZ, Appellee. _____________________________ On appeal from the Division of Administrative Hearings. Robert E. Meale, Judge. April 17, 2020 BILBREY, J. The Agency for Health Care Administration (AHCA) appeals the final administrative order in this Medicaid Third-Party Liability reimbursement action. See § 409.910, Fla. Stat. (2018). In that order, the Administrative Law Judge (ALJ) for the Division of Administrative Hearings (DOAH) reduced AHCA’s recovery for payment of past medical expenses from its claim of $126,021.55 made under section 409.910(11)(f), to $5,800.00 pursuant to section 409.910(17)(b). We review the order pursuant to section 120.68, Florida Statutes (2018). See § 409.910(17)(d), Fla. Stat. We affirm the ALJ’s finding that Appellee, Abraham Rodriguez, proved the damages, attorney’s fees, and costs recovered from the settlement of Rodriguez’s civil lawsuit, including the portion of the settlement proceeds representing past medical expenses. The ALJ’s finding that AHCA’s recovery for past medical expenses for Rodriguez, reduced by the same proportion as the ratio of the value of the settlement to the value of the civil lawsuit, was $12,800 is also affirmed. However, the ALJ’s additional reduction of AHCA’s recovery to $5,800 because of Rodriguez’s attorney’s fees and costs incurred in the civil lawsuit was not based on a request from Rodriguez. Accordingly, this portion of the final order is set aside, and the case is remanded for an order providing that AHCA shall recover $12,800. See § 120.68(7)(d), Fla. Stat. Background The ALJ’s findings of fact were generally undisputed. As stipulated by the parties, Rodriguez was permanently injured and partially paralyzed in a motor vehicle crash on May 27, 2012. The parties agreed that AHCA paid $154,219 in Medicaid benefits for Rodriguez’s medical expenses, and this figure constituted the total past medical expenses. Rodriguez filed a products liability lawsuit against Ford Motor Company and others. Based on “the significant concern of an outright defense verdict,” his lawsuit was settled for $500,000. The settlement was not differentiated for types of damages, attorney’s fees, or cost but was a “global resolution” of the lawsuit. As mandated by section 409.910(4), AHCA sought reimbursement for its Medicaid expenditures from Rodriguez’s settlement. The formula set out in section 409.910(11)(f) would result in AHCA’s recovery of $126,021.55 from the $500,000 settlement. However, Rodriguez contested “the amount designated as recovered medical expense damages payable” to AHCA, pursuant to section 409.910(17)(b). He filed a petition with DOAH, seeking a reduction of AHCA’s reimbursement to $12,800 — the portion of his settlement he alleged was properly allocable to past medical expenses. Rodriguez arrived at his proposed recovery amount of $12,800 using a “pro rata” analysis of the value of his lawsuit compared to the settlement amount, and then 2 applying the same proportion (8.3%) to his total past medical expenses paid with Medicaid funds ($154,219). 1 The parties stipulated that Rodriguez bore the burden to prove, by a preponderance of the evidence, 2 that the portion of AHCA’s recovery allocated to Rodriguez’s past medical expenses was less than the $126,021.55 AHCA sought under section 409.910(11)(f). The evidence presented at the administrative hearing consisted of testimony by Rodriguez’s attorney, Brian Roller; documents Roller prepared for the civil lawsuit regarding the amounts of damages incurred by Rodriguez and opposing counsel’s acquiescence to the figures in exhibits A through H; and AHCA’s exhibit detailing Medicaid payments for Rodriguez’s medical expenses. Exhibit E contained a list of anticipated future medical care needed by Rodriguez, and exhibit F contained an occupational therapist’s estimates for the cost of medical care and for the anticipated reduction in Rodriguez’s earning capacity over his lifetime. All of the exhibits were admitted over AHCA’s hearsay objection. Roller testified under oath at the administrative hearing as counsel of record for Rodriguez’s civil lawsuit, without objection by counsel for AHCA. His testimony was not expert opinion testimony but rather relayed facts about Rodriguez’s civil lawsuit known to Roller from his personal experience in the preparation and eventual settlement of that case. After the hearing, the parties stipulated that Rodriguez had incurred $147,000 1 8.3% of $154,219 equals $12,800.17. 2 This stipulation to a less-stringent burden than the “clear and convincing” standard expressed in section 409.910(17)(b) avoided any conflict with overriding federal law. In Gallardo v. Senior, No. 4:16CV116-MW/CAS, 2017 WL 3081816 *7 (N.D. Fla. July 18, 2017), the federal court reiterated its declaration in an earlier stage of that proceeding, that “the [Florida] reimbursement statute’s clear and convincing burden is preempted by the federal Medicaid Act even though DOAH — not AHCA — applies that standard.” 3 attorney’s fees and $122,956 in costs in the course of the civil litigation. In the final order, the ALJ found that Rodriguez had proved the value of his civil case “was $6 million, consisting of $154,219 of past medical expenses, $2.1 million of future medical expenses, $800,000 of lost wages and loss of future earning capacity, and about $2.95 million of noneconomic damages, including pain and suffering and loss of consortium.” The ALJ further found that the settlement of $500,000 constituted a “settlement discount” of 91.7% of the $6 million value of Rodriguez’s civil case. The ALJ then calculated that “[r]educing the past medical expenses of $154,219 by 91.7% yields about $12,800,” which the ALJ accepted as AHCA’s “17b recovery.” In the final order, the ALJ also accepted the parties’ stipulation that Rodriguez had incurred $147,000 attorney’s fees and $122,956 in costs in the course of the civil litigation. The ALJ found that since Rodriguez’s fees and costs represented approximately 54% of his $500,000 settlement, AHCA’s $12,800 recovery should be further reduced by 54% resulting in $5,800 recovery for AHCA. 3 Analysis On appeal, AHCA challenges the ALJ’s use of the pro rata formula to calculate AHCA’s reduced recovery. However, AHCA did not object to this formula during the administrative hearing and did not suggest another formula as a more accurate or appropriate method for Rodriguez to rebut AHCA’s initial claim. AHCA’s challenge to the pro rata method advanced by Rodriguez and adopted by the ALJ was thus not preserved for appellate review. Furthermore, while not established as the only method, the pro rata approach has been accepted in other Florida cases where the Medicaid recipient presents competent, substantial evidence to support the allocation of a smaller portion of a settlement for past medical expenses than the portion claimed by AHCA. See Giraldo v. Agency for Health Care Admin., 248 So. 3d 3 54% of $12,800 equals $5,888. The ALJ rounded this down to $5,800. 4 53 (Fla. 2018); Mojica v. Agency for Health Care Admin., 285 So. 3d 393 (Fla. 1st DCA 2019); Eady v. State, 279 So. 3d 1249 (Fla. 1st DCA 2019). But see Willoughby v. Agency for Health Care Administration, 212 So. 3d 516 (Fla. 2d DCA 2017) (quoting Smith v. Agency for Health Care Administration, 24 So. 3d 590, 591 (Fla. 5th DCA 2009)) (explaining that the pro rata formula is not the “required or sanctioned method to determine the medical expense portion of an overall settlement amount”). AHCA also argues that the ALJ’s reduction of AHCA’s claimed reimbursement recovery by applying a pro rata formula is not supported by competent, substantial evidence. We disagree. No objection Roller’s testimony in his capacity as counsel for Rodriguez in the civil case was raised during the hearing. And although the exhibits presented by Rodriguez were admitted over AHCA’s objection to hearsay, this evidentiary ruling is not challenged on appeal. To the extent the issue was preserved, the ALJ’s determination that $12,800 of the $500,000 settlement was reasonably allocable to past medical expenses for purposes of Rodriguez’s section 409.910(17)(b) contest, was supported by a preponderance of the evidence. 4 Turning to AHCA’s challenge to the ALJ’s reduction of the $12,800 recovery down to $5,800 because of “Respondent’s share of attorney’s fees and costs,” it is well taken. Rodriguez never 4 Unlike Gray v. Agency for Health Care Administration, 288 So. 3d 95 (Fla. 1st DCA 2019), the documentary evidence admitted in this case pertained to the settlement itself. In Gray, the recipient’s lawsuit resulted in a jury verdict of over $2.8 million but he recovered only $10,000 from the defendant’s insurer. Id. at 98. There was no evidence in Gray that the insurance payout was based on anything other than the total coverage limits. In Gray, we found no ground to set aside the ALJ’s rejection of the recipient’s (17)(b) petition to reduce AHCA’s recovery. In contrast here, Rodriguez’s pre-trial settlement was based on an offer of settlement enumerating the various types of damages, admitted into evidence by the ALJ, and the defense in the civil suit accepted the plaintiff’s assertions of the various types of damages. No lump- sum insurance proceeds were at issue here. 5 requested such reduction in his petition or otherwise. It is a due process violation for a judge to grant relief not requested by the parties. See Pensacola Beach Elementary Sch. v. Moyer, 286 So. 3d 945, 946 (Fla. 1st DCA 2019); Schanck v. Gayhart, 245 So. 3d 970, 972 (Fla. 1st DCA 2018). This reduction must therefore be reversed. Conclusion Competent substantial (and unrefuted) evidence supports the ALJ’s use of a pro rata formula to determine that the portion of Rodriguez’s settlement which should be allocated as past medical expense was less than the amount calculated by AHCA under section 409.910(11)(f). Thus, we affirm the ALJ’s determination that AHCA’s recovery under section 409.910(17)(b) is $12,800. However, the ALJ’s reduction of the $12,800 for an amount relating to the attorney’s fees in the underlying civil case is reversed. The cause is remanded to DOAH to increase the amount awarded for satisfaction of AHCA’s lien to $12,800. AFFIRMED in part and REVERSED in part with instructions. ROBERTS and ROWE, JJ., concur. _____________________________ Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331. _____________________________ Alexander R. Boler, Tallahassee, for Appellant. K. Brian Roller, North Miami Beach, for Appellee. 6