After Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006), the United States Supreme Court decision allowing for an equitable distribution argument to reduce a Medicaid lien, the law in Florida remains murky. A new decision from the 4th DCA, Roberts v. Albertson's, et al., 37 FLW D2515 (Fla. 4th DCA 2012), has certified the question to the Florida Supreme Court and provides a solid road map for the plaintiff's lawyer seeking an equitable resolution of a Medicaid lien.

Settlements, by definition, are compromises of legal disputes and compromises of the amount of damages. Because the overwhelming majority of settlements do not yield full recovery for the plaintiff, plaintiff attorneys will negotiate with lien-holders, typically third party health insurers, to reduce the amount of the lien to an equitable share. In addition to accounting for a pro rata share of attorney's fees and costs, the plaintiff's lawyer will seek a lien reduction that equitably reduces the lien in concert with the relationship between the settlement amount and "full" damages. Thus, where a settlement is only for a fraction of the plaintiff's actual damages, that same fraction should be applied to the amount of the insurance lien. For example, if a plaintiff's actual damages -- including non-economic losses, lost earnings, future medical care, and past medical expenses paid by insurance -- totaled $10 million, but the case settled for $2 million or 20% of the actual damages and the settlement amounts were not differentiated, then the insurance lien should likewise be reduced to 20% of the amount of the lien.

When dealing with Medicaid, however, Florida Statutes section 409.910(11)(f) provides a formula that, after accounting for a 25% attorney's fee, awards Medicaid one half of the remaining settlement amount up to the full amount of the lien. Medicaid, therefore, is in a special position in Florida and is, by the strict terms of the statute, capable of recovering more than its equitable share of the settlement amount. In these circumstances, the plaintiff's lawyer would seek a hearing to challenge the distribution, citing the Ahlborn decision and seeking to prove that Medicaid's lien exceeds the amount of the settlement recovered for medical expenses.

Will the Florida plaintiff's lawyer be successful? Depends on where in Florida your case is venued.

In the 2d DCA and the 3d DCA, the law precludes the plaintiff form making any showing that Medicaid's lien extends to monies over and above those recovered for medical expenses. Pursuant to 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 2009), the courts have interpreted Ahlborn to allow a statutory formula like section 409.910(11)(f) to stand without any opportunity to challenge the formula with evidence showing the lien reaching a portion of the settlement not intended to compensate for past medical expenses.

In the 4th DCA, however, pursuant to the recent decision in Roberts v. Albertson's, et al., 37 FLW D2515 (Fla. 4th DCA 2012), the plaintiff is entitled to an evidentiary hearing where the plaintiff may prove that the lien is excessive. The 4th is in agreement with Smith v. Agency for Health Care Administration, 24 So. 3d 590 (Fla. 5th DCA 2009). The Roberts opinion provides an excellent survey of the law, and it certifies the question to the Florida Supreme Court.

Practice tip: For now, the law in Florida is unsettled. No matter where your case is, you ought to pursue the matter, seek an evidentiary hearing, and preserve your client's rights until the Florida Supreme Court addresses this important issue.