Gallardo ex rel. Vassallo v. Dudek
263 F. Supp. 3d 1247
N.D. Fla.2017Background
- In 2008, 13‑year‑old Gianinna Gallardo suffered catastrophic injuries; Medicaid paid ~$862,689 for her care. Gallardo (by guardians) sued and settled the case for $800,000.
- Under Florida Statute § 409.910, AHCA asserted a lien and, using a statutory formula (25% attorney fee deduction, then AHCA receives half of remaining), calculated reimbursement of $323,508.29.
- Gallardo notified AHCA that only a small portion of the settlement represented past medical expenses and contested the formula administratively by depositing the statutory amount and filing a petition.
- Florida’s statute permits AHCA to recover from amounts allocated to past and future medical expenses and requires the recipient to overcome the formula by clear and convincing evidence in a Leon County administrative hearing.
- Gallardo sued in federal court seeking declaratory and injunctive relief, arguing the Florida statute is preempted by federal Medicaid provisions and violates due process; cross motions for summary judgment were filed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AHCA may recover past Medicaid payments from portions of a settlement allocated to future medical expenses | Federal Medicaid law limits state recovery to the portion of a recovery allocated to medical expenses paid (past); AHCA cannot reach funds designated for future care | Florida statute and AHCA argue recovery may come from amounts allocated to medical expenses generally, including future medical expenses | Court: Preempted — AHCA cannot satisfy its lien from settlement amounts representing future medical expenses; federal law limits recovery to amounts for past medical care paid by Medicaid |
| Whether Florida’s one‑size‑fits‑all statutory allocation (25% attorney fee then half of remainder to AHCA) is permissible | The formula is arbitrary; when coupled with a high rebuttal burden (clear and convincing), it operates as a quasi‑irrebuttable presumption and is preempted | AHCA defends the formula and the statutory rebuttal process as valid state procedures to implement recovery | Court: Preempted — a formula that is effectively irrebuttable (or extremely difficult to rebut) conflicts with Ahlborn/Wos and is invalid when not shown reasonable or tied to case‑specific facts |
| Whether shifting the burden to recipients to disprove the statutory allocation by clear and convincing evidence violates due process | The heightened burden and procedural hurdles deprive recipients of property without adequate process and make the post‑deprivation remedy illusory | AHCA points to notice and administrative process; contends burden is permissible and statute is rebuttable | Court: Did not decide a broad due process prohibition but held that where the allocation is arbitrary and there is no evidence it yields reasonable results, requiring clear and convincing proof to overcome it is preempted by federal law |
| Whether Florida can apply its statutory allocation even when a judicial or stipulated allocation exists | Plaintiff: Judicial allocations should control and protect recipient’s interest; statute cannot override court‑approved allocations | AHCA: Statute applies to judgments, awards, and settlements generally | Court: Notes problem — under Wos, a judicial finding/approval of allocation is conclusive; Florida’s statute applying its formula even after judicial allocation is inconsistent with federal law |
Key Cases Cited
- Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (holds state recovery limited to portion of tort recovery allocated to medical expenses)
- Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627 (rejects irrebuttable one‑size‑fits‑all presumption; requires reasonableness and ability to determine allocation case‑by‑case)
- Cooper v. Oklahoma, 517 U.S. 348 (discusses limits on imposing heightened burdens where fundamental fairness requires otherwise)
- Alexander v. Choate, 469 U.S. 287 (states participating in Medicaid must comply with federal requirements)
- Schweiker v. Gray Panthers, 453 U.S. 34 (describes Medicaid’s complexity; quoted regarding statutory interpretation)