Healthcare Law Update: June 2017

Nathan Adams IV and Shannon Hartsfield Salimone are Partners and Eddie Williams III is Senior Counsel in the Tallahassee office

David Glynn is a Partner in the Boston office

Medicaid

Florida's Medicaid Third-Party Liability Act Pre-empted by Federal Law

By Eddie Williams

In Gallardo v. Dudek, Sec. of Florida Agency for Health Care Administration, No. 4:16cv116-MW/CAS, 2017 WL 1405166 (N.D Fla. April 18, 2017), the federal district court, by order on summary judgment, declared that the Medicaid Act prohibits the Florida Agency for Health Care Administration (AHCA) from seeking reimbursement of past Medicaid payments from portions of a recipient's settlement funds that represent future medical expenses. In addition, the court declared that the Medicaid Act prohibits AHCA from requiring a Medicaid recipient to affirmatively disprove the formula-based allocation under §409.910(17)(b), Florida Statutes, with clear and convincing evidence in order to successfully overcome the allocation. Although the plaintiff's lawsuit was valued at approximately $20 million, the case eventually settled for $800,000. AHCA asserted a lien against that cause of action for the amount it had expended for the plaintiff's past medical expenses: $862,688.77. Pursuant to the formula-based allocation under Florida's Medicaid Third-Party Liability Act, AHCA sought to recover approximately $300,000 from the settlement funds that represented both past and future medical expenses. The court ruled that the federal Medicaid Act, particularly the anti-lien and anti-recovery provisions, limits a state's powers to pursue recovery of funds paid on the recipient's behalf. Further, the limited exceptions to these provisions only allow AHCA to satisfy its lien from the portion of settlement that represents compensation for past medical expenses. The plaintiff also argued that Florida's Medicaid Third-Party Liability Act conflicts with and is pre-empted by federal law. The court agreed with this argument where Medicaid recipients are required to affirmatively disprove the formula-based allocation with clear and convincing evidence to successfully overcome it. The court ruled that "an irrebuttable, one-size-fits-all statutory presumption that a pre-determined percentage of the recipient's recovery constitutes payment for medical care" does not comply with the federal Medicaid Act.

Enforcement

Drug Manufacturer's Alleged Misrepresentations Not Material to Public Payment

By Nathan Adams

In United States ex rel. Petratos v. Genentech, Inc., 855 F. 3d 481 (3d Cir. 2017), the court of appeals ruled that a qui tam relator failed sufficiently to allege that a drug manufacturer made misrepresentations that were material to the government's payment decision, as required to state a False Claims Act (FCA) claim. Relator Gerasimos Petratos was head of...