Third District Court of Appeal Affirms Lower Court Ruling Holding
Florida's Medicaid Fraud Statute 409.920 Unconstitutional

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Press Release

THIRD DISTRICT COURT OF APPEAL AFFIRMS LOWER COURT RULING HOLDING Florida's Medicaid Fraud STATUTE 409.920 Unconstitutional

Court Decision on Florida's Medicaid Fraud Statute 409.920

The Third District Court of Appeal, Affirmed Judge David Miller's decision to find Florida's Medicaid Fraud Law, Florida Statute 409.920 unconstitutional for the first time since its enactment in 1991. In a carefully reasoned decision, the panel also affirmed Judge Miller's dismissal of all charges against all 9 defendants in the case of State of Florida vs. Gabriel R. Harden , (Case No. S00-38785) as well as 3 dentists -Edward Polsky, D.D.S., Maria Rodriguez, D.D.S., Elsa Cottoreal. D.D.S., and others.

The District Court of Appeal Affirmed that the State's theory of criminal liability was preempted by Federal law, encompassed constitutionally protected conduct (employees' solicitation of Medicaid recipients) and was unconstitutionally vague. The District Court of Appeal also Affirmed that the intent or “knowingly” standard in the statute is unconstitutional under principles of preemption.

Defense Counsel

Anthony C. Vitale, Esq., of the Law Offices of Anthony C. Vitale, P.A., and Richard Strafer, Esq., argued the case.

Facts

The case arose from the Florida Attorney General's investigation of dental facilities throughout Broward, Miami-Dade and Palm Beach Counties named “Operation Tooth Decay” which resulted in over 112 arrests. Operation Tooth Decay was a crackdown on the practice of dental offices employing drivers to solicit and transport children for Medicaid reimbursable dental services.

According to the State, it was unlawful to use employees of a dental facility or dentist to solicit individuals to become patients of a dental facility or dentist. In December 2000, Gabriel Harden and nine other defendants were arrested for Racketeering, Conspiracy to Commit Racketeering and 7 Counts of Medicaid Fraud. In a 21 page carefully reasoned opinion issued by Circuit Court Judge David Miller dismissed the charges and found Florida Statute 409.920 unconstitutional.

The State of Florida appealed Judge Miller's decision to the Third District Court of Appeal. Briefs were filed and Oral Arguments were heard.

Third District Court of Appeal Decision

The District Court of Appeal closely examined the differences between the Federal Anti-kickback Statute and Florida's Anti-kickback Statute and found that the state statute lacked the important elements contained in the Federal Statute, e.g. the Safe Harbors afforded by the Federal Statute and the “knowing and Willful” mens rea requirement of the Federal Statute.

The Court further reasoned that “the Florida anti-kickback statute without any “safe harbor' provisions criminalizes certain activity that is protected under the federal anti-kickback statute and stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”

In regard to the “knowing and willful mens rea requirement of the federal anti-kickback statutue, the Court found that the “Florida anti-kickback statutue only requires that the defendant act 'knowingly'. . . which would include 'mere negligence' thereby criminalizing activity that the Federal statutue is intended to protect.”

Finally, the District Court of Appeal found that “the trial court properly found that there was implied conflict preemption and declared section 409.920, Florida Statutues (2000) unconstitutional.”

Lower Court Decision

The Information in this case charged the defendants with nine counts. Counts 3-9 of the Information alleged that the defendants made certain payments that constituted "unlawful remuneration" or kickbacks in violation of Section 409.920(2)(e). Each of these counts contains the identical language defining the "payments" in question:

[The defendants] ... did pay ... a per head fee [to the drivers] based upon Medicaid eligibility for solicitation and transportation of Medicaid recipient(s) to dental facilities for treatment which was paid for by the State of Florida or its fiscal agent under the Medicaid Program....

According to the State's theory of prosecution, Section 409.920(2)(e) prohibits, within its definition of "unlawful "remuneration," a Medicaid provider (Dental Express) from paying wages, at least in the form of commissions (the "per head fees") to its employees (the drivers) for the purposes of soliciting business and transporting patients to the facilities for treatment.

The remaining two counts, Counts 1 and 2 also incorporated this theory of prosecution. Counts 1 and 2 charged the defendants with racketeering and conspiracy to commit racketeering, in alleged violation of Fla. Stat. §§ 895.03(3) and (4). Both counts, however, incorporated as the predicate criminal "incidents" the employer-employee payments charged as "kickbacks" in Counts 3-9. Accordingly, if the State's theory of prosecution is defective, all nine counts of the Information are dismissed.

The Circuit Court found:

1. That the State's attempt to prosecute, as a category of unlawful "remuneration" barred by Section 409.920(2), the wages paid by Harden's dental management company, Dental Express, Inc., (i.e., an employer) to certain of its employees for the purposes of soliciting business and transporting Medicaid-eligible patients to the dental practice was preempted by both an express provision of the federal Medicaid Act, 42 U.S.C. § 1320a-7b(b)(3), as well as a parallel administrative "safe-harbor," 42 C.F.R. § 1001.952(i). Accordingly, the Court held that Section 409.920(2) was unconstitutional as applied by the State in this case under the "Supremacy Clause," Article VI, Clause 2, of the United States Constitution.
2. That a second aspect Florida's Medicaid fraud statute, the mens rea requirement in Fla. Stat. § 409.920(1)(d), was preempted by federal law and was unconstitutional on its face under the Supremacy Clause.
3. That the State's attempted application of Section 409.920(2) was also unconstitutional on first Amendment grounds. Under the State's construction of Fla. Stat. § 409.920(2)(e), it would be a felony in the State of Florida for an employer to pay an employee to "solicit" legitimate Medicaid business even when the solicitation was conduct without an "intent to defraud" the Medicaid program. Such a construction of Fla. Stat. § 409.920(2)(e), however, rendered it unconstitutional under the First Amendment to the United States Constitution, as construed by the Supreme Court of Florida in State v. Cronin, 801 So.2d 94 (Fla. 2001), and State v. Bradford, 787 So.2d 811 (Fla. 2001).
4. The undefined term "unlawful remuneration" in Fla. Stat. § 409.920(2)(e) is unconstitutionally vague under the due processes clauses of the federal and state constitutions.

Effect of the Third District Court of Appeal Decision

The decision of the Third District Court of Appeal may affect hundreds of pending cases under the statute, prior convictions, guilty pleas, and the legal foundation supporting “Operation Tooth Decay” prosecutions.

The Health Law Offices of Anthony C. Vitale, P.A., concentrates in criminal, civil, administrative and licensure representation of health care professionals and institutions.

Anthony C. Vitale is the President of the law firm bearing his name. The firm was established in 1982 and is recognized statewide as a leader in health care law and consultation. The firm is located in Miami, Florida, with offices in Tampa, Florida. The firm concentrates in criminal, civil and administrative representation of health care providers, including physicians, dentists, other licensees, pharmacies, clinics, home health agencies, laboratories, durable medical equipment suppliers, CORF, CMHC/PHP, billing agents and other health care providers.

Mr. Vitale has represented clients under investigation by the Office of the Inspector General, the Department of Justice, Office of the Attorney General Statewide Prosecutor and Medicaid Fraud Control Unit, and other investigatory bodies. His representation also includes defense services to clients facing allegations of fraud and abuse, compliance counseling and the defense of civil, administrative and criminal health care fraud, including internal/defense investigations; False Claims Act litigation; Settlement Negotiations; Withholding of Medicaid/Medicare Payments; Overpayments; Exclusion From Participation in Medicare/Medicaid Programs; Licensure and Certification; Anti-kickback violations; Medical Necessity Issues; Qui Tam Investigations, Prosecutions and Defense; Health Care Contracts, physician self-referral (Stark) and Safe Harbor issues.

For Additional Information including copies of the Motion to Dismiss and Court Order contact:

Anthony C. Vitale or Robert S. Bluni
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Suite 700
Miami, Florida 33131
(305) 358-4500 Office
(305) 358-5113 Fax
avitale@vitalehealthlaw.com
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