Opinion ID: 1857114
Heading Depth: 1
Heading Rank: 1

Heading: Legislative and Case History

Text: Importantly, the underlying basis for the government's recovery of health care costs expended for its citizens did not begin with the 1994 modifications to the Act that are at issue in this proceeding. Instead, the State has been legislatively authorized to pursue such reimbursement since Medicaid was enacted in 1968. See 42 U.S.C. § 1396a(a)(25)(1994). The State originally used federal law as a basis for its actions. In 1978, however, the legislature enacted statutory authority by which the State could pursue recovery of expenditures from third parties. [2] At that point, the State was given a traditional subrogation action. [3] Such an action allowed the State to occupy the same position as a Medicaid recipient in its pursuit of third-party resources. Then, in 1990, the existing statutory authority was substantially modified with the passage of major amendments to the Act. [4] The purpose of this modification was to strengthen the State's ability to recover funds expended for Medicaid costs. The following are the 1990 modifications relevant to this case: (1) ... Medicaid is to be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid. Principles of common law and equity as to assignment, lien, and subrogation are to be abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources.... . . . . (7) When the department provides, pays for, or becomes liable for medical care under [the Medicaid program], it shall have the following rights, as to which the department may assert independent principles of law, which shall nevertheless be construed together to provide the greatest recovery from third-party benefits: . . . . (12) The department may, as a matter of right, in order to enforce its rights under this section, institute, intervene in, or join any legal proceeding in its own name in one or more of the following capacities: individually, as subrogee of the recipient, as assignee of the recipient, or as lienholder of the collateral. § 409.2665, Fla. Stat. (Supp.1990). The Act was again modified in 1994. [5] It is these amendments that are directly at issue in this case. The relevant provisions of the Act affected by the 1994 amendments, with those amendments identified by underlining or strike-through, read as follows: 409.910 Responsibility for payments on behalf of Medicaid-eligible persons when other parties are liable. (1) It is the intent of the Legislature that Medicaid be the payer of last resort for medically necessary goods and services furnished to Medicaid recipients. All other sources of payment for medical care are primary to medical assistance provided by Medicaid. If benefits of a liable third party are available discovered or become available after medical assistance has been provided by Medicaid, it is the intent of the Legislature that Medicaid be repaid in full and prior to any other person, program, or entity. Medicaid is to be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid. Principles of common law and equity as to assignment, lien and subrogation, comparative negligence, assumption of risk, and all other affirmative defenses normally available to a liable third party, are to be abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources; such principles shall apply to a recipient's right to recovery against any third party, but shall not act to reduce the recovery of the agency pursuant to this section. The concept of joint and several liability applies to any recovery on the part of the agency. It is intended that if the resources of a liable third party become available at any time, the public treasury should not bear the burden of medical assistance to the extent of such resources. Common law theories of recovery shall be liberally construed to accomplish this intent. (2) This section may be cited as the Medicaid Third-Party Liability Act. . . . . (4) After the department has provided medical assistance under the Medicaid program, it shall seek recovery of reimbursement from third-party benefits to the limit of legal liability and for the full amount of third-party benefits, but not in excess of the amount of medical assistance paid by Medicaid, as to: . . . . (b) Situations in which a third party is liable and the liability or benefits available are discovered either before or the department learns of the existance of a liable third party or in which third party benefits are discovered or become available after medical assistance has been provided by Medicaid. . . . . (6) When the department provides, pays for, or becomes liable for medical care under the Medicaid program, it has the following rights, as to which the department may assert independent principles of law, which shall nevertheless be construed together to provide the greatest recovery from third-party benefits: The agency has a cause of action against a liable third party to recover the full amount of medical assistance provided by Medicaid, and such cause of action is independent of any rights or causes of action of the recipient. . . . . (9) In the event that medical assistance has been provided by Medicaid to more than one recipient, and the agency elects to seek recovery from liable third parties due to actions by the third parties or circumstances which involve common issues of fact or law, the agency may bring an action to recover sums paid to all such recipients in one proceeding. In any action brought under this subsection, the evidence code shall be liberally construed regarding the issues of causation and of aggregate damages. The issue of causation and damages in any such action may be proven by use of statistical analysis. (a) In any action under this subsection wherein the number of recipients for which medical assistance has been provided by Medicaid is so large as to cause it to be impracticable to join or identify each claim, the agency shall not be required to so identify the individual recipients for which payment has been made, but rather can proceed to seek recovery based upon payments made on behalf of an entire class of recipients. (b) In any action brought pursuant to this subsection wherein a third party is liable due to its manufacture, sale, or distribution of a product, the agency shall be allowed to proceed under a market share theory, provided that the products involved are substantially interchangeable among brands, and that substantially similar factual or legal issues would be involved in seeking recovery against each liable third party individually. . . . . (12) (h) Except as otherwise provided in this section, actions to enforce the rights of the department under this section shall be commenced within 5 years after the date a cause of action accrues, with the period running from the later of the date of discovery by the department of a case filed by a recipient or his legal representative, or of discovery of any judgment, award, or settlement contemplated in this section, or of the provision of medical assistance to a recipient. Each item of expense provided by the agency shall be considered to constitute a separate cause of action for purposes of this subsection. The defense of statute of repose shall not apply to any action brought under this section by the agency. or of discovery of facts giving rise to a cause of action under this section. Nothing in this paragraph affects or prevents a proceeding to enforce a lien during the existence of the lien as set forth in subparagraph (6)(c)9. . . . . (19) In cases of suspected criminal violations or fraudulent activity, on the part of any person including a liable third-party, the department is authorized to take any civil action permitted at law or equity to recover the greatest possible amount, including without limitation, treble damages under s. 772.73 F.S. In any action in which the recipient has no right to intervene, or does not exercise his right to intervene, any amounts recovered under this subsection shall be the property of the agency, and the recipient shall have no right or interest in such recovery. Ch. 94-251, § 4, Laws of Fla. (emphasis added in part). Subsequent to the 1994 modifications, Governor Lawton Chiles ordered the relevant executive branch officials to pursue the recovery of Medicaid expenditures from only the tobacco industry. [6] Representatives of certain industries affected by the governor's order (Associated Industries) filed this declaratory judgment action in the Circuit Court in Leon County. The lawsuit alleged that the 1994 amendments were unconstitutional and that the Agency was structured in violation of the Florida Constitution. The trial court ruled that: (1) the Agency was in fact structured in violation of the twenty-five department limitation in article IV, section 6, of the Florida Constitution; (2) the 1994 amendments encroached upon this Court's rule-making authority and thereby violated the separation-of-powers doctrine; (3) the 1994 amendments, because they created new substantive rights, could only be applied prospectively; and (4) the attempted elimination of the statute of repose defense could not revive time-barred claims. The State has appealed all of these rulings in this action. Associated Industries has cross-appealed, raising three additional issues. It argues that: (1) the 1994 amendments violate article I, section 21, of the Florida Constitution by denying access to the courts; (2) the 1994 amendments encroach upon the separation-of-powers doctrine by prescribing relevancy and admissibility requirements for certain types of evidence; and (3) due process of law is offended by the 1994 amendments in violation of both the Florida and federal constitutions. Numerous amicus briefs have been filed. [7] Many of the challenges outlined above are redundant in the sense that they attack the same clauses of the Act with differing legal theories. We choose to organize our analysis by successively addressing the specific provisions of the Act that are challenged. We will evaluate each implicated clause and dispose of all legal challenges to that clause in the same portion of our opinion. Prior to reaching that discussion, though, it is necessary to address (1) the challenge to the Agency's constitutionality and (2) the nature and origin of the State's cause of action.