Court Finds Ahlborn Formula Does Not Trump Florida's Allocation Rule

A Florida appeals court finds that Ahlborn does not establish as a rule of law a formula to limit the state's recovery of a Medicaid lien from an undifferentiated medical malpractice settlement. Russell v. Agency for Health Care Administration (Fl. App., 2nd Dist., No. 2D07-2691, Jan. 6, 2010).

Jeannie Russell settled a medical malpractice action on her son's behalf for $3 million. The settlement did not allocate the amount recovered among the various elements of damages suffered, including medical expenses, pain and suffering, or attorney fees. Based on Florida's Third-Party Liability Act, which authorizes the state to recover up to half of any settlement amount, Florida's Medicaid agency sought recovery of the entire $221,434.24 it paid on behalf of Ms. Russell's son.

Ms. Russell argued that the state's ability to recover on its lien was tempered by the Supreme Court's holding in Arkansas Department of Human Services v. Ahlborn, 547 U.S. 268, (2006). She asserted that because expert testimony established that the medical malpractice case was settled for only a tenth of its value, the state's recovery was similarly limited to only a tenth of its Medicaid lien. The state argued that it was entitled to recover the entire lien and the trial court agreed. Ms. Russell appealed.

The District Court of Appeal of Florida affirms. The court distinguishes Ahlborn, which involved a stipulation concerning the portion of the settlement attributable to medical expenses, from this case, which does not. The court also finds that the Ahlborn decision does not establish as a rule of law the formula to determine the portion of a settlement allocable to medical expenses. Because the settlement in this case lacks a basis for determining an allocation of the settlement proceeds, the state was entitled to follow Florida's statutory allocation rule and recoup the entirety of its Medicaid lien.

To download the full text of this decision in PDF format, go to: https://www.2dca.org/opinions/Opinion_Pages/Opinion_Page_2010/January/January%2006,%202010/2D07-2691.pdf.
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