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In re Estate of Martin

Court of Appeals of Arkansas, Division III

March 27, 2019

IN THE MATTER OF THE ESTATE OF KHYREE MARTIN, A MINOR
v.
ARKANSAS DEPARTMENT OF HUMAN SERVICES APPELLEE GEORGE PRANGE, AS VICE PRESIDENT AND TRUST OFFICER OF BANK OF THE OZARKS AND GUARDIAN OF THE ESTATE OF KHYREE MARTIN, A MINOR, AND THE ESTATE OF KHYREE MARTIN APPELLANTS

          APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, SEVENTEENTH DIVISION [NO. 60PR-17-903] HONORABLE MACKIE M. PIERCE, JUDGE

          The Brad Hendricks Law Firm, P.A., by: George R. Wise; and Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks, for appellants.

          Shanice Johnson, Office of Chief Counsel, for appellee.

          ROBERT J. GLADWIN, JUDGE

         Appellants, George Prange, as vice president and trust officer of Bank of the Ozarks and guardian of the estate of Khyree Martin, a minor, and the estate of Khyree Martin (collectively, the Estate) appeal the March 28, 2018 order of the Pulaski County Circuit Court awarding full reimbursement of the Medicaid lien in the sum of $260, 209.99 in favor of appellee Arkansas Department of Human Services (DHS). The Estate argues that the circuit court erred in its determination of what portion of a tort settlement for the injured minor should be available to satisfy DHS's lien for past medical expenses consistent with the holdings in Arkansas Department of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006), and Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627 (2013), and pursuant to Arkansas Code Annotated section 20-77-315(a) and (b) (Repl. 2014). We affirm.

         I. Facts and Procedural History

         It is undisputed that Khyree was profoundly brain injured at birth. Through his mother, he sued the doctor and the hospital for negligently causing his injuries and reached separate compromised settlements with both the doctor and the hospital totaling $4, 450, 000.[1]

         DHS sought to enforce the full amount of an undisputed $260, 209.99 lien[2] for past medical expenses that it had paid on Khyree's behalf against the proceeds of the settlement, but the Estate sought to have the lien reduced proportionally to be consistent with the percentage the settlement represented Khyree's alleged total damages. The Estate requested that the circuit court allocate or apportion the settlement funds and hear evidence and argument regarding both parties' positions, which DHS opposed.

         A hearing was held by the circuit court during which testimony was taken and documents were introduced setting forth what the Estate considered to be Khyree's full damages. The evidence indicated that Khyree is profoundly brain damaged and suffers from a form of cerebral palsy. He is unable to walk, talk, or see, and he is fed through a feeding tube. Khyree is unable to tend to any of his own needs and likely will require twenty-four-hour-a-day care for the rest of his life. The Estate introduced what it claims is the minimum cost to provide future care for Khyree, reduced to present value, of $25, 382, 130.72.[3] Evidence was also introduced as to the Estate's estimate for the minimum loss of capacity to work and of fringe benefits to Khyree, reduced to a present value, of $795, 753.52. The Estate submitted that a reasonable jury verdict in favor of Khyree for other damages including pain and suffering and mental anguish is $6, 000, 000. Evidence was also submitted that Medicaid, through DHS, paid $260, 209.99 for past medical expenses for Khyree and that the amount of that undisputed lien would have been presented as evidence of past medical expenses if the case had proceeded to trial. Accordingly, the Estate submitted that the total damages suffered by Khyree are, at minimum and reduced to present value where appropriate, $32, 438, 094.23; but there was no stipulation by the parties with respect to that amount or evidence as to an allocation of the $4, 450, 000 settlement.

         The Estate noted that it settled the case for roughly 13 percent of its estimated value of the total damages in order to avoid the risk of (1) a defense verdict or a verdict lower than the estimated damages and (2) the larger portion of fault potentially being allocated to the physician who was sued[4] rather than the hospital. The Estate asked DHS to compromise by reducing its lien to the same percentage, and when it would not, the Estate asked the circuit court to direct DHS to do so.

         The circuit court denied the Estate's request and enforced DHS's lien in full in its order filed on March 28, 2018. According to the circuit court, the value of the Estate's cause of action is $4, 450, 000, the amount the Estate chose to settle the case for, rather than the $32, 428, 094.23 that the Estate speculated are the actual damages suffered by Khyree and the likely jury verdict had Khyree prevailed at trial. The potential value of the case as explained by the Estate was deemed "not reliable" by the circuit court and was not accepted. The circuit court found that the Estate had failed to meet its "burden of showing the amounts recovered by way of settlement were for damages other than the medical care already received by Khyree." The Estate filed a timely notice of appeal on April 4, 2018.

         II. Standard of Review

         The parties have acknowledged that the Ahlborn and Wos cases allow, but do not require, a ratio-based determination of the lien amount to be paid as reimbursement to Medicaid. Accordingly, we hold that the issue before us-whether the circuit court's factual findings of the ultimate value of the case and how much to reimburse Medicaid for past medical expenses-is a question of fact subject to clear-error review. See Hartness v. Nuckles, 2015 Ark. 444, at 4, 475 S.W.3d 558, 562 (citing Ark. R. Civ. P. (52)(a)). A finding is clearly erroneous when, "although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed." Middleton v. Ark. Dep't of Human Servs., 2019 Ark.App. ...


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