In re Estate of Martin

          Rehearing Denied April 24, 2019

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          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., Little Rock, 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.

         OPINION

         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. 68, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006), and Wos v. E.M.A. ex rel. Johnson, 568 U.S. 627, 133 S.Ct. 1391, 185 L.Ed.2d 471 (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

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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 ...