United States: Thoughts On Recent Amendments To The Florida Patient Brokering Act

The Sky Is Not Falling

Michael R. Manthei is a Partner in our Boston office.

The Florida Legislature recently amended the Florida Patient Brokering Act (PBA), effective July 1, 2019. Since then, a raft of articles have argued that long-standing arrangements between healthcare providers and potential referral sources now are illegal and that your attorney might even go to jail for aiding and abetting. Respectfully, this is largely nonsense, and everyone needs to take a deep breath.

Prior to the recent amendment, the PBA made it a felony to offer, pay, solicit or receive remuneration to induce the referral of, or in return for referring, a patient or patronage to or from a healthcare provider or healthcare facility. §817.505(1), Florida Statutes. After the amendment, the PBA prohibits ... the exact same thing. If an arrangement did not violate the PBA before the amendment, it does not violate the PBA now.

What the Legislature did change is an exception to the above prohibition. House Bill 369 amended subsection 817.505(3)(a) of the Florida Statutes to provide that the PBA does not apply to "any discount, payment, waiver of payment, or payment practice expressly authorized by [exceptions to the federal Anti-Kickback Statute (AKS)] or regulations adopted thereunder," i.e., the safe harbor regulations found at 42 C.F.R. §1001.952. See Chapter 2019-159, Laws of Florida. The old language provided instead that the PBA would not apply to "any discount, payment, waiver of payment or payment practice not prohibited by" the AKS or the safe harbor regulations.

The old language was a train wreck of double negatives that lawyers sometimes argued made the PBA inapplicable to any arrangements not involving federal healthcare programs. The logic went like this: The AKS applies only to payment practices that involve federal healthcare program reimbursement, which means that the AKS "does not prohibit" any arrangement involving private insurance; therefore, the PBA does not apply to arrangements involving private insurance. Of course, this makes no sense because it would render the PBA meaningless.

The issue came to a head when a state trial court concluded, on its own accord and without prompting from either party, that the old language incorporates the entire AKS, which could include its limitation to federal healthcare programs. State of Florida v. Kigar, Case No. 2016CF010364, Order Denying State's Motion in Limine, Filing No. 84305522 (Fla 15th Cir. Feb. 1, 2019), rev'd Case No. D19-0600 (Fla. 4th DCA Aug. 7, 2019). In response, the recent amendment sought to "clarify" that the PBA incorporates only the AKS exceptions and safe harbors. Therefore, an arrangement impacting only private insurance could violate the PBA even though it would not violate the AKS.

If clarification was the intent, the amendment misses the mark by a wide margin. First, the AKS is a criminal statute and, like all criminal statutes, it does not "expressly authorize" anything. It prohibits the offer, payment, solicitation and receipt of remuneration in exchange for federal healthcare program referrals. Exceptions in the statute, together with the safe harbor regulations, go on to identify payment practices that will not be treated as criminal offenses.

It might be a matter of semantics, but it seems logical that if a payment practice is not treated as a criminal offense, it is, in some sense, "authorized." Regardless of whether one agrees with this interpretation, one thing is certain. The amended language does not mean, as some commentators have asserted, that an arrangement must qualify for safe harbor protection under the AKS to be legal under Florida law.

Every healthcare attorney knows that not many arrangements actually fit within a safe harbor. And, mere noncompliance with a safe harbor never has meant that an arrangement is per se illegal. This is one of the first lessons taught to young healthcare attorneys.

Absent a safe harbor, federal enforcement authorities look to whether there is an "improper nexus" between a payment and referrals of federal healthcare business. The key question becomes one of intent. That is, whether the arrangement is intended to reward or induce referrals. Although state prosecutors may not have adopted exactly the same "nexus analysis" rubric, the underlying question is identical: What is the intent of the arrangement?

This leads to another issue that has been the subject of much commentary. In a recent decision, the Florida Fourth District Court of Appeal (DCA) confirmed what has been evident on the face of the PBA from Day One. The PBA is a "general intent" statute, meaning that one need only have the intent to engage in the prohibited act in order to violate the statute (e.g., paying for referrals). See State of Florida v. Kigar, Case No. D19-0600 (Fla. 4th DCA Aug. 7, 2019). It is not necessary that an individual have the intent specifically to violate the PBA, or that he or she even know that the statute exists. Id.

This is important because "advice of counsel" is not a defense to the alleged violation of a general intent statute. Id. Some commentators have taken this to mean that clients no longer can rely on their attorneys' PBA advice or that attorneys rendering such advice could be prosecuted under the PBA's aiding and abetting provisions. This view, however, goes too far.

The limitation on the advice of counsel defense has been a feature of Florida criminal law for decades. Moreover, even when allowed, advice of counsel is a notoriously difficult defense to prove. The point is that nothing has been lost by the Fourth DCA's decision acknowledging what has long been understood by criminal lawyers, if not by healthcare lawyers.

Whether this rule is "fair" when applied to the PBA depends on your point of view. If you're a prosecutor, maybe it doesn't seem incongruous at all. If you happen to be a healthcare attorney advising clients how best to structure complex arrangements, it probably seems like an affront.

Either way, lawyers advising participants in highly regulated industries such as healthcare always have faced this problem. And don't expect healthcare lawyers to throw up their hands and turn away clients. Indeed, most of the articles being circulated suggest without irony that the reader contact the author for advice.

In short, the recent amendment to the PBA does not purport to do anything other than to overrule an improvident trial court decision. It does not turn preexisting legal arrangements into illegal arrangements. It does not render legal advice worthless or criminal (thankfully on both counts).

That said, the PBA still is a confusing and poorly written statute. The recent amendment was thrown together in a matter of days and was passed as part of a much larger bill. The amendment therefore got little attention until passage of the host bill was a foregone conclusion.

Those who are calling for a thorough and thoughtful rewrite of the PBA are on target. Any such effort should address at least the following issues:

  1. Clarify that incorporation of the federal exceptions and safe harbors protects arrangements under the PBA regardless of payer. The state always has agreed that this is the case, but some commentators have expressed concern that the current language does not make this point clear.
  2. Add language stating that obtaining a favorable advisory opinion from the U.S. Department of Health and Human Services Office of the Inspector General will shelter the arrangement under the PBA as well as under the AKS.
  3. Add an advisory opinion provision to the PBA itself.
  4. Add "knowingly and willfully" to the operative language in order to bring the PBA more in line with the AKS.
  5. Add language to overrule Florida decisional law and make advice of counsel a defense to an alleged PBA violation.

If you have any questions, please contact the author.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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