Constitutionality of Florida's Patient Brokering Statute and Medicaid Provider Fraud Statute in Doubt

Summary

Action: A Florida trial court judge has declared Florida's Patient Brokering Statute, and its Florida Medicaid Provider Fraud Statute unconstitutional.

Impact: These decisions will have an immediate impact on investigations, administrative hearings, and legal proceedings involving these statutes in Florida.

Effective Date: Immediately.

On February 1, 2005, Judge Thomas B. Smith of the Florida Circuit Court, 9th Judicial Circuit in Orlando, Florida ("Court"), declared unconstitutional certain provisions of Florida's Patient Brokering Statute. In addition, Judge Smith declared unconstitutional portions of the Florida Medicaid Provider Fraud Statute (Florida v. Rubio, "Rubio"). While the rulings were based on technical and arcane legal arguments, they will undoubtedly have a wide ranging impact on current healthcare investigations, as well as administrative and criminal proceedings in Florida, involving either or both of these statutes. In addition, the rulings call into question Florida's strict interpretation of relationships between health care providers and practice management companies that has effectively curtailed the operation of practice management companies in Florida.

While these rulings will not open the floodgates of patient brokering or send a message condoning fraudulent billing, they could ultimately result in a change in Florida.s regulatory landscape, considered harsh by many providers. We may also see an increase in challenges to similar laws in other states.

The Court ruled on joint motions brought by five defendants to dismiss various counts of criminal indictments. Three of the five defendants are licensed dentists who own a dental practice management company. The other two defendants are the owner and an employee of a different dental practice management company.

The practice management companies received remuneration based on a percentage of the fees collected by the respective dental practices. All of the patients in question were Medicaid beneficiaries. The Court implied that the remuneration was consistent with fair market value.

The prosecution alleged, among other matters, that the defendants operated a weekend dental clinic in Orlando that lured children to the clinic by offering pizza and soda, and the defendants billed for services that were not performed. In all, 130 felony charges were brought under multiple criminal statutes. These charges were predicated upon alleged violations of Florida's...