          Supreme Court of Florida
                                   ____________

                                   No. SC17-297
                                   ____________

                       MARIA ISABEL GIRALDO, et al.,
                                Petitioners,

                                         vs.

            AGENCY FOR HEALTH CARE ADMINISTRATION,
                           Respondent.

                                   [July 5, 2018]

LAWSON, J.

      We accepted review of the decision of the First District Court of Appeal in

Giraldo v. Agency for Health Care Administration, 208 So. 3d 244 (Fla. 1st DCA

2016), on the ground that it expressly and directly conflicts with the Second

District Court of Appeal’s decision in Willoughby v. Agency for Health Care

Administration, 212 So. 3d 516 (Fla. 2d DCA 2017), regarding whether the

Agency for Health Care Administration (AHCA) may lien the future medical

expenses portion of a Florida Medicaid recipient’s tort recovery. We have

jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the reasons that follow, we hold

that under federal law AHCA may only reach the past medical expenses portion of
a Medicaid recipient’s tort recovery to satisfy its Medicaid lien. Because the First

District held otherwise, we quash the decision below, approve the Second

District’s decision, and remand with instructions that the First District direct the

administrative law judge (ALJ) to reduce AHCA’s lien amount in this case to

$13,881.79.

                                  BACKGROUND

      After Juan L. Villa suffered extreme injuries in an all-terrain vehicle

accident, Florida’s Medicaid program (administered by AHCA) paid $322,222.27

for Villa’s medical care. Villa later settled with one of multiple alleged tortfeasors

for $1 million. Claims against other alleged tortfeasers were still pending. Using

the formula outlined in section 409.910(11)(f), Florida Statutes (2015), AHCA

calculated the presumptively appropriate amount of its lien at $321,720.16, and

asserted a lien in that amount against Villa’s settlement. Section 409.910(17)(b)

authorizes Medicaid recipients to contest the amount of a Medicaid lien at a

hearing before the Division of Administrative Hearings (DOAH), by proving that

“a lesser portion of the total recovery should be allocated as reimbursement for

past and future medical expenses than the amount calculated by the agency

pursuant to the formula set forth in paragraph (11)(f).” § 409.910(17)(b), Fla. Stat.

(2015). Villa timely petitioned for this hearing.




                                         -2-
      At the DOAH hearing, Villa presented uncontested expert testimony

establishing that only $13,881.79 of the $1 million tort recovery represented

compensation for Villa’s past medical expenses and argued that AHCA’s lien

should be limited to this amount. AHCA argued that the law authorizes recovery

of Medicaid expenditures from third-party payments for past medical expenses and

reasonably anticipated future medical expenses. Because Villa had the burden of

rebutting the lien amount derived from the statutory formula—and put on no

evidence to show that the lien exceeded the amount of his recovery properly

allocated to his anticipated future medical expenses—AHCA argued that it should

recover in the full amount of its lien.

      Villa unexpectedly died weeks after the hearing, and his parents, as personal

representatives of his estate, were properly substituted into this case as Petitioners.

The ALJ’s final order affirmed AHCA’s lien amount and determined that Villa had

failed to rebut the statutory formula because he did not establish that the lien

exceeded the portion of his recovery allocated to future medical expenses.

Petitioners appealed, and the First District affirmed the ALJ’s final order, holding

that Florida law1 and the federal Medicaid Act allow AHCA to secure


       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

                                          -3-
reimbursement for its Medicaid expenditures from the portions of Villa’s third-

party settlement recovery allocated to both past and future medical expenses. The

Second District later reached the opposite conclusion in Willoughby, holding that

the federal Medicaid Act prohibits AHCA from placing a lien on the future

medical expenses portions of a recipient’s recovery.

                                   ANALYSIS

      This case concerns interpretation of the federal Medicaid Act. Questions of

statutory interpretation are reviewed de novo. See Borden v. East-European Ins.

Co., 921 So. 2d 587, 591 (Fla. 2006).

                                   I. Overview

      Medicaid is a joint federal-state cooperative program that helps participating

states provide medical services to residents who cannot afford treatment. Arkansas

Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006). The

federal Medicaid Act—title XIX of the Social Security Act—governs regulation of

the program, and it mandates that participating states follow the Medicaid Act by

“compl[ying] with certain statutory requirements for making eligibility

determinations, collecting and maintaining information, and administering the

program.” Ahlborn, 547 U.S. at 275. Significantly, the Act contains a general



because states participating in the Medicaid program must follow federal law,
resolution of the conflict question is ultimately governed by federal law. Id.


                                        -4-
anti-lien provision protecting Medicaid recipients by broadly prohibiting state

Medicaid agencies from imposing liens against any of a recipient’s property. 42

U.S.C. § 1396p(a)(1) (2012). However, the Act contains a narrow exception to the

anti-lien prohibition requiring states to seek reimbursement for their Medicaid

expenditures by pursuing payment from third parties legally liable for the

recipients’ medical expenses. Ahlborn, 547 U.S. at 284-85. These provisions

“pre-empt[] a State’s effort to take any portion of a Medicaid beneficiary’s tort

judgment or settlement not ‘designated as payments for medical care,’ ” Wos v.

E.M.A., 568 U.S. 627, 630 (2013) (quoting Ahlborn, 547 U.S. at 284), and set “a

ceiling on a State’s potential share of a beneficiary’s tort recovery,” id. at 633.

                         II. Construing the Medicaid Act

      We first examine the Act’s plain language, applying the principle that

“[w]hen the language of the statute is clear and unambiguous and conveys a clear

and definite meaning, . . . the statute must be given its plain and obvious meaning.”

Holly v. Auld, 450 So. 2d 217, 219 (Fla. 1984) (quoting A.R. Douglass, Inc. v.

McRainey, 137 So. 157, 159 (Fla. 1931)).

      The portion of the Medicaid Act defining the “ceiling”—the limitation on

what portion of a recipient’s tort recovery a state can be subject to a lien—reads in

relevant part:

      [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

                                          -5-
      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.

42 U.S.C. § 1396a(a)(25)(H) (2012) (emphasis added). “Such health care items or

services” is most naturally and reasonably read as referring to those “health care

items or services” already “furnished” and for which “payment has been made

under the State plan.” Id. Those are the health care items and services for which

“the State is considered to have acquired . . . rights” by assignment “to any

payments by any other party,” id., and they are past medical expenses only. We

see no reasonable way to read this language as giving states a right to assignment

of that portion of a tort recovery from which the injured party will be expected to

pay his or her anticipated medical expenses in the future, without aid from the

government.

      As explained by the Second District, this reading of the Act is consistent

with the “majority view that the Medicaid lien does not attach to settlement funds

allocable to future medical expenses,” Willoughby, 212 So. 3d at 524, and appears

to be compelled by Ahlborn and Wos, id. at 523-25. Even if not compelled by

Alhborn and Wos, because we read the plain language of the Medicaid Act as

limiting Florida’s assignment rights (and lien) to settlement funds fairly allocable

to past medical expenses, no further analysis is needed.




                                        -6-
                                  III. On Remand

      Because we hold that the federal Medicaid Act prohibits AHCA from

placing a lien on the future medical expenses portion of a Medicaid recipient’s tort

recovery, we remand with instructions that the First District direct the ALJ to

reduce AHCA’s lien amount to $13,881.79. Although a factfinder may reject

“uncontradicted testimony,” there must be a “reasonable basis in the evidence” for

the rejection. Wald v. Grainger, 64 So. 3d 1201, 1205-06 (Fla. 2011). Here, Villa

presented uncontradicted evidence establishing $13,881.79 as the settlement

portion properly allocated to his past medical expenses, and there is no reasonable

basis in this record to reject Villa’s evidence. For this reason, no further

factfinding is required.

                                  CONCLUSION

      We quash the decision below in Giraldo, approve Willoughby, and hold that

federal law allows AHCA to lien only the past medical expenses portion of a

Medicaid beneficiary’s third-party tort recovery to satisfy its Medicaid lien. We

remand this case to the First District with instructions to direct the ALJ to reduce

the awarded amount to $13,881.79 for satisfaction of AHCA’s lien.

      It is so ordered.

CANADY, C.J., and PARIENTE, LEWIS, QUINCE, and LABARGA, JJ., concur.
POLSTON, J., concurs specially in part and dissents in part with an opinion.




                                         -7-
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND,
IF FILED, DETERMINED.

POLSTON, J., concurring specially in part and dissenting in part.

      I agree with the majority’s conclusion that federal law only allows AHCA to

place a lien on the past medical expenses portion of a Medicaid beneficiary’s third-

party tort recovery, but I reach this conclusion for a different reason. Additionally,

I disagree with the majority’s reduction of the amount of AHCA’s lien on the

settlement without a factfinder determining the portion of the settlement properly

allocated to past medical expenses.

                                          I.

      Unlike the majority, I do not believe the federal Medicaid Act, considered as

a whole, is clear and unambiguous regarding whether AHCA can place a lien on

the portions of a settlement that represent past and future medical damages. For

example, the general anti-lien provision of the Medicaid Act uses both the past and

future tenses, while the provision requiring beneficiaries to assign to the states any

rights to third-party payments does not use either the past or future tense, while the

provision providing that states acquire rights to third-party payments uses only the

past tense. Compare 42 U.S.C. § 1396p(a)(1) (2012) (employing both the past and

future tenses when stating “paid or to be paid”), with 42 U.S.C. § 1396k(a)(1)(A)

(2012) (requiring assignment to State “to payment for medical care from any third




                                         -8-
party”), with 42 U.S.C. § 1396a(a)(25)(H) (2012) (employing only the past tense of

“has been made” along with “such health care items or services”).

      Instead, I believe the United States Supreme Court’s opinion in Arkansas

Department of Health & Human Services v. Ahlborn, 547 U.S. 268, 275 (2006),

compels our construction of the federal Medicaid Act to only allow AHCA to place

a lien on the portion of a tort recovery that represents past medical expenses. In

Ahlborn, the Medicaid beneficiary sought damages from a third party “not only for

past medical costs, but also for permanent physical injury; future medical

expenses; past and future pain, suffering, and mental anguish; past lost earnings

and working time; and permanent impairment of the ability to earn in the future.”

547 U.S. at 273. “[T]he case was settled out of court . . . for a total of $550,000[,

but t]he parties did not allocate the settlement between categories of damages.” Id.

at 274. The state agency asserted a lien against the settlement “in the amount of

$215,645.30—the total cost of payments made . . . for Ahlborn’s care.” Id.

Thereafter, Ahlborn sought

      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.

                                         -9-
Id. (emphasis added). To be clear, the parties only stipulated that $35,581.47

would be the correct figure “for medical payments made” if “Ahlborn’s

construction of federal law was correct.” Id. And Ahlborn’s argument construed

the federal Medicaid law to only allow the State to recover the portion of the

settlement representing past medical expenses. Id.

      In the end, the United States Supreme Court held that “[f]ederal Medicaid

law does not authorize [the state agency] to assert a lien on Ahlborn’s settlement in

an amount exceeding $35,581.47, and the federal anti-lien provision affirmatively

prohibits it from doing so.” Id. at 292. Therefore, because the United States

Supreme Court in Ahlborn held that, pursuant to federal law, a state agency cannot

assert a lien on a tort settlement in excess of the amount stipulated by the parties to

constitute reimbursement for past medical expenses, we are compelled to conclude

that federal law prohibits AHCA from asserting a lien in an amount exceeding the

portion of a tort settlement that constitutes reimbursement for past medical

expenses.

                                          II.

      Of course, the difference between this case and Ahlborn is that AHCA has

not stipulated to the $4,817.56 allocation for past medical expenses outlined in the

settlement at issue in this case (or to the testimony that $13,881.76 is a reasonable

allocation of past medical damages here). And the United States Supreme Court in


                                         - 10 -
Ahlborn explained that this distinction may warrant procedural safeguards: “[T]he

risk that parties to a tort suit will allocate away the State’s interest can be avoided

either by obtaining the State’s advance agreement to an allocation or, if necessary,

by submitting the matter to a court for decision.” Id. at 288. Conversely, “just as

there are risks in underestimating the value of readily calculable damages in

settlement negotiations, so also is there a countervailing concern that a rule of

absolute priority might preclude settlement in a large number of cases, and be

unfair to the recipient in others.” Id.

      To protect parties against such possible manipulation, the United States

Supreme Court’s subsequent decision in Wos v. E.M.A., 568 U.S. 627 (2013),

clarified that procedural safeguards are needed when there is no judicially

approved allocation, stipulation, or judgment. Specifically, in Wos, the United

States Supreme Court explained that “[w]hen there has been a judicial finding or

approval of an allocation between medical and nonmedical damages—in the form

of either a jury verdict, court decree, or stipulation binding on all parties—that is

the end of the matter.” 568 U.S. at 638. However, “[w]hen the State and the

beneficiary are unable to agree on an allocation, . . . the parties could ‘submi[t] the

matter to a court for decision.” Id. (quoting Ahlborn, 547 U.S. at 288). The United

States Supreme Court also mentioned the possibility of an “administrative

proceeding” to determine the proper allocation. Id. at 638-39.


                                          - 11 -
      Here, because there is no stipulation, judgment, or administrative finding

regarding the portion of the settlement that represents past medical expenses, I

dissent to the majority’s declaration on appellate review that $13,881.79 is the

proper allocation. The ALJ never found that $13,881.79 was the proper amount to

allocate as past medical expenses in the settlement, and it is not proper that this

Court do so on appellate review. While the beneficiary presented testimony of two

expert witnesses to prove the valuation of total damages was $25,000,000, and that

$13,881.79 was a reasonable allocation of past medical damages, the ALJ’s final

order noted that the testimony was questionable and based upon two-year-old

hearsay reports. Therefore, I would remand this case to the First District with

instructions that the ALJ determine the proper allocation for past medical expenses

and that this allocation be awarded for satisfaction of AHCA’s lien.2

      Accordingly, I concur specially in part and dissent in part.

Application for Review of the Decision of the District Court of Appeal – Direct
Conflict of Decisions

      First District - Case No. 1D16-392

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,

      for Petitioners



      2. AHCA stipulated that the beneficiary’s death does not affect the case.


                                        - 12 -
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,

      for Respondent

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,

      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

Nichole J. Segal of Burlington & Rockenbach, P.A., West Palm Beach, Florida,

      Amicus Curiae Florida Justice Association




                                     - 13 -
