September 8, 2020Joseph Stanton and Michelle Tanzer Named Florida Trailblazers by the Daily Business Review
July 2, 2019
On June 27, 2019, Governor Ron DeSantis signed House Bill 369 (the “Bill”) into law, which became effective July 1, 2019. The Bill was drafted in response to a recommendation from State Attorney Dave Aronberg’s Sober Home Task Force. The Bill is intended to tackle the perceived, rampant fraud associated with substance abuse treatment in Florida by implementing certain requirements with respect to substance use disorder treatment providers, recovery residences, and lead generators/marketers. Nestled within the Bill is a “minor” revision to Section 817.505, Florida Statutes, known as the “Florida Patient Brokering Act,” (the “PBA”). The Summary Analysis of the Bill states that the intent of the revision is to “clarify” the application of the PBA to certain payment practices. However, what appears to be a minor revision has resulted in significant ambiguity with respect to the application of the PBA that will have implications for health care providers and health care facilities, as well as attorneys who advise them on structuring arrangements and payment practices that were once thought to be compliant under the PBA.
As background, the PBA is a criminal statute that makes it unlawful for any person, including any health care provider or health care facility, to offer or pay, or to solicit or receive, a commission, benefit, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or engage in any split-fee arrangement, in any form whatsoever, to induce the referral of, or in return for referring, a patient or patronage to or from a health care provider or health care facility. Penalties for violating the PBA can be significant, including the imposition of criminal fines, and civil and administrative actions. In addition, any person, including attorneys, who aid, abet, or otherwise participate in the prohibited conduct, are also subject to penalties under the statute.
Until July 1, 2019, the PBA contained a variety of exceptions, including, in pertinent part, the following:
(3) This section shall not apply to:
(a) Any discount, payment, waiver of payment, or payment practice not prohibited by 42 U.S.C. s. 1320a-7b(b) [the federal Antikickback Statute, (“AKS”)] or regulations promulgated thereunder.
(the “AKS Exception”). The AKS is a federal statute that similarly prohibits a person from knowingly and willfully offering or paying any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to any person to induce such person to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a federal health care program. 42 U.S.C. § 1320a-7b(b)(1)(A). The AKS regulatory “safe harbors” specifically exclude certain types of otherwise potentially improper practices and arrangements from the definition of “remuneration” for purposes of the AKS (the “AKS Safe Harbors”).
As such, the AKS Exception was a heavily relied-upon exception that allowed health care providers and facilities in Florida to structure arrangements that fit within an AKS Safe Harbor without running afoul of the PBA.
The Bill revised the AKS Exception so that the exception now applies to any payment practice “expressly authorized [versus “not prohibited”] by 42 U.S.C. s. 1320a-7b(b)(3) or regulations adopted thereunder.” However, the AKS, which is a criminal statute, does not expressly authorize any payment practice; instead, as explained above, it carves out certain payment practices that are not considered “remuneration” (and therefore not “prohibited”) for purposes of the AKS.
This revision raises significant uncertainties for health care providers and facilities who are currently operating under the assumption that a certain arrangement is compliant with the PBA because it fits within an AKS Safe Harbor. Now, however, assuming that to be the case may be dangerous, because fitting within an AKS Safe Harbor is not equivalent to being “expressly authorized” (although note that a statutory exception might be construed to be “expressly authorized”).
The legislative history associated with this amendment to the PBA raises additional concerns. Specifically, the House of Representatives Staff Analysis (the “Analysis”) references a recent decision from the Fifteenth Judicial Circuit in which a judge noted that the AKS Exception specifically references the federal AKS, and thus only applies to conduct affecting federal programs. Based on this, the Analysis questions the reach of the AKS Exception to conduct affecting private insurance, and how courts may interpret this exception in the future. If courts begin to narrow this exception to only apply to federal programs, this may also place providers at risk who relied on the AKS Exception to structure arrangements affecting conduct related to private insurance.
Further, this amendment and the apparent narrowing of the AKS Exception, coupled with the Department of Justice’s (“DOJ”) recent uses of the federal Travel Act to federally prosecute violations of state law, including the PBA, may now subject providers to an increased risk of federal prosecution if the conduct crosses state lines. Specifically, the Travel Act makes it a federal crime to travel or use the mail or any facility in interstate commerce with the intent to engage in “unlawful activity” under state law. 18 U.S.C. § 1952. The DOJ has recently begun utilizing the Travel Act as a vehicle for health care fraud enforcement, indicting providers for engaging in fraudulent health-care related schemes in contravention of state law. Under the original AKS Exception, a health care provider in Florida alleged to have violated the Travel Act based on a violation of the PBA may have been able to rely on the AKS Safe Harbors as a defense. As a result of the revision, however, health care providers who operated under the assumption that their actions were compliant with the PBA because they fit within an AKS Safe Harbor are now potentially at a greater risk for prosecution under the Travel Act if the relationships are not re-examined and possibly amended.
Although the Bill was passed with the positive intent of tackling the fraud associated with substance abuse treatment in Florida, the Bill has unintended consequences that now leave health care providers unclear as to whether or not they are operating in compliance with the law. Although it is not yet clear how this statute will be interpreted and applied, it is ambiguous enough to enable Florida prosecutors, and even federal prosecutors, to take advantage of this revised language and potentially prosecute conduct that may be permissible under an AKS Safe Harbor but is now prohibited by the PBA.
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