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Recent Appellate Case Addresses Medicaid’s Ability to File Liens on Wrongful Death Settlement Proceeds

Mar 23, 2016 in Case Law Updates by

In a recent decision in The Estate of Betsy Gladis Hernandez v. Agency for Healthcare Administration, 41 Fla. L. Weekly D424, the Third District Court of Appeal reviewed a trial court’s decision to allocate a portion of a wrongful death settlement to pay a Medicaid lien held by Agency for Health Care Administration (“AHCA”).

Betsy Hernandez was being treated at Baptist Hospital. She died from complications from a rare health condition. Her estate alleged that her death was caused by the hospital’s misdiagnosis and treatment. Prior to suit, Baptist Hospital agreed to settle any potential wrongful death claim for $700,000. The settlement agreement, however, did not apportion monies between Ms. Hernandez’ estate and her husband and child, who would have had a claim against Baptist Hospital for its purported negligence. Additionally, the settlement did not apportion monies between medical and non-medical expenses associated with her care and treatment at Baptist.

While treating at Baptist Hospital, Ms. Hernandez incurred over $400,000.00 of medical expenses, which were paid for by the Medicaid Program through the Agency for Healthcare Administration. Pursuant to the Medicaid Third Party Liability Act (Florida Statute §409.910(6)(c)), payments by Medicaid result in automatic liens on any “collateral” received for medical expenses. This would include the Estate’s settlement for $700,000.00.

In an effort to recover the expenses paid by Medicaid, the Agency for Healthcare Administration petitioned the Probate Court for repayment out of the $700,000.00 settlement pursuant to Florida’s Medicaid Third Party Liability Act. The trial court agreed without hearing and entered an order requiring Ms. Hernandez’s estate to reimburse Medicaid accordingly.

The estate argued on appeal that two evidentiary hearings should have been conducted prior to an apportionment of the settlement proceeds to determine: 1) what portion of those proceeds were for the estate or the survivor; and 2) what portion of the proceeds were for medical expenses versus non-medical expenses. Ms. Hernandez’s estate requested these hearings because it had no interest in issuing payment from the settlement not apportioned for Ms. Hernandez’s medical expenses.

Ms. Hernandez’ estate argued that the Federal Medicaid Act required the Court to conduct an evidentiary hearing to determine the amount of the proceeds allocated to medical expenses and/or allocated to non-medical expenses. However, the District Court of Appeal ruled that, based upon the plain language of the Federal Medicaid Act’s Anti-Lien Provision, no such hearing is required where the patient is deceased.

Next the estate argued that a secondary hearing would need to be held in order to determine what portion of the settlement funds should be allocated between the estate and the survivors of Ms. Hernandez. The estate, and the beneficiaries thereof, had an interest in insuring that as much money as possible avoided the Medicaid lien and did not dilute the settlement funds. However, the Court cited to long-standing authority contained within Florida’s Medicaid Third Party Liability Act, which states that Medicaid is entitled “to be re-paid in full and prior to any other person, program, or entity.” Therefore, the Court determined that no evidentiary hearing needed to be held to determine what portion of the settlement proceeds went to the estate as opposed to the survivors. In fact, the Court determined that the trial court was initially correct in that the entirety of the settlement proceeds need not be applied to Medicaid’s lien without any additional inquiry as to the apportionment of the proceeds.

The Court’s lengthy opinion gives guidance to those attempting to negotiate wrongful death claims and address the impact of Medicaid liens on wrongful death proceeds attributable to survivors.

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