Lessons Learned from Smith, Russell & Scharba

Posted date in Jason D. Lazarus, J.D., LL.M. Ahlborn, Liens

Based upon the holdings in Smith; Russell and Scharba, it is this author’s opinion we now have a two step analysis in Florida.  The first step would be an allocation of damages in the settlement agreement and release.  That allocation would then need to be backed up by competent evidence presented in a hearing before a judge with jurisdiction over the matter to determine equitable distribution.  By proving the amount of the settlement attributable to medical expenses, the plaintiff can meet the burden of demonstrating that the AHCA lien, as asserted, extends beyond the medical damages which is limited by Ahlborn.  The first step is critically important and was overlooked in Smith, Russell and Sharba.  The plaintiff must demonstrate a factual basis for concluding that the lien asserted by AHCA extends to a portion of the settlement meant to compensate the recipient for damages distinct from medical costs.  The second step would be to prove, again with competent evidence, a percentage difference between the actual value of the claim and the settlement amount.  This would be where the Ahlborn method of reduction would be applied to the lien amount against the medical portion of the recovery. 

In summary, the Florida appellate decisions make it more complicated to apply Ahlborn in Florida.  However, if the two step analysis is utilized with appropriate evidence, the statutory formula found in 409.910(11)(F) should not be applied.  The case law that has developed to this point in Florida has had a lack of evidence presented on the amount of medical damages which absent that evidence; the courts have simply applied the statutory formula.