United States: Florida: Changes To The State Patient Brokering Act

This is an uncomfortable summer for health care providers in Florida!  The legal landscape changed dramatically over the 4th of July holiday. Buried in Florida’s HB 369 regarding substance abuse services was a dramatic revision to the State’s decades-old Patient Brokering Act, Florida’s mini-anti-kickback statute, which, on its face, criminalizes arrangements that are not prohibited under the Federal anti-kickback statute (Federal AKS). Violating the Florida Patient Brokering Act can result in a felony conviction and penalties ranging from $50,000 to $500,000 per violation.

Further, on August 7, 2019, Florida’s Fourth District Court of Appeal held, as a matter of first impression, that “advice of counsel” is not a defense to the Patient Brokering Act because it is a general intent crime. See State v. Kigar, No. 4D19-0600 (Fla. 4th DCA Aug. 7, 2019).

What Should Providers Do?

Providers and other professionals in the health care industry, returning from summer vacation, have now been told that their longstanding professional relationships may be illegal under the revised Patient Brokering Act. 

We recommend that providers and health care professionals contact their trade associations, Boards and legislators to seek a legislative return to the language of the Act that is consistent with the Federal AKS – in other words, revise the language back to the “old” language, while also making clear that the state law exception applies to all health insurers, not just the Federal health care programs.

Foley can help with this endeavor, so please contact the authors for assistance.

What Happened to the “Old” Law?

The “old” Patient Brokering Act contains a “safe harbor” of enumerated practices that are exempt from the Act’s prohibitions; however, this exception, which references the Federal AKS, recently changed for the worse for Florida health care providers. Specifically, HB 369, which became effective July 1, 2019, changes the exception as follows:

The old language stated:

[Section 817.505] Patient brokering prohibited; exceptions; penalties. –

(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) or regulations promulgated thereunder.

The new language states:

[Section 817.505] Patient brokering prohibited; exceptions; penalties. –

(3) This section shall not apply to the following payment practices:

(a) Any discount, payment, waiver of payment, or payment practice expressly authorized by 42 U.S.C. s. 1320a-7b(b)(3) or regulations adopted thereunder.

(emphasis supplied)

In simplified analysis, the old language stated that the Patient Brokering Act did not apply to arrangements “not prohibited” under the Federal AKS. The new language requires that the arrangements meet the Federal AKS exceptions or regulatory safe harbors.

According to the Bill Analyses of HB 369, the old language created “uncertainty on whether Florida’s patient brokering statute will apply to private insurance-related patient brokering” because the Federal AKS only applies to federal health care programs. The new language fulfills the stated intention in the Bill Analyses because it is more broadly applicable to any health insurer patient brokering, not just federal health care program patient brokering.

In short, we believe that Florida’s Legislature intended to ensure that there was parity in treatment of financial relationships regardless of whether patients were commercial or federal health care program beneficiaries, but as discussed below, the unintended result is a far broader criminalization of previously accepted and commonplace arrangements that do not violate the Federal AKS. 

Why is this New Language Important?

This “new” language is a meaningful change. It appears that Florida’s Legislature swept away a generation of jurisprudence regarding the management of financial relationships among health care professionals, placing in potential jeopardy tens of thousands of innocuous and beneficial arrangements that innocent providers and experienced legal counsel developed based on federal law and the “old” exception language of the Patient Brokering Act.

Some background on the interpretation of the Federal AKS puts into context this change in State law. The Federal AKS is not a “strict liability” statute. It is a criminal statute that prohibits the direct and indirect offering, paying, soliciting, or receiving of anything of value to induce or reward referrals or recommendations of federal health care program business or to generate federal health care program business, including Medicare and Medicaid. The Federal AKS ascribes liability to both sides of an impermissible “kickback” transaction and many jurisdictions have interpreted the Federal AKS to cover any arrangement where “one purpose” of the remuneration was to obtain money for the referral of health care services or to induce further referrals of same. 

Given the potential applicability of the Federal AKS to many commonplace and desirable financial arrangements, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) issued regulatory “safe harbors” for practices that, while potentially prohibited by the Federal AKS, would not be prosecuted.

The OIG has stated that failure to meet a Federal AKS safe harbor does not render an arrangement per se illegal; rather, one must analyze the arrangement under the totality of the “facts and circumstances” to determine whether the arrangement poses a risk of fraud and abuse. 

This critical “facts and circumstances” analysis, upon which health care providers around the country rely heavily, is now in jeopardy for Florida providers.  For more than 20 years, the Florida Patient Brokering Act was harmonious with the Federal AKS, allowing the “facts and circumstances” analysis by stating that an arrangement that was “not prohibited” by the Federal AKS meets an exception to the Patient Brokering Act. Now, however, the July 2019 revision to the Florida law materially narrows the exception to require that the arrangement meet either the Federal AKS’s exceptions or the Federal AKS regulatory safe harbors. Since many financial arrangements between health care providers cannot precisely meet the Federal AKS safe harbors, providers nationwide rely on the facts and circumstances analysis to establish compliant business arrangements, yet this reliance may no longer be justified for Florida providers. 

Advice of Counsel Defense Not Available

To make matters worse for Florida health care providers, just over one month after the effective date of the revised exception to the Patient Brokering Act, Florida’s Fourth District Court of Appeal in Kigar held that violation of the Act is a general intent crime, not a specific intent crime. Kigar, No. 4D19-0600, at 9. Generally, under Florida law, conviction for specific intent crimes requires proof of a heightened or particularized intent beyond the mere intent to commit the act(s) prohibited by the criminal statute. Id. at 8. Good faith reliance on the “advice of counsel”, i.e., the Defendant having had a good faith belief, based on advice of counsel, that he had the right to act as he did, can be a defense to a specific intent crime. The “advice of counsel” defense, however, is not available for general intent crimes. Id.  Because the Kigar court held that violation of the Patient Brokering Act is a general intent crime, the advice of counsel defense is not available to those accused of patient brokering in violation of Florida Statutes Section 817.505. This decision, which will likely become final, and for which appellate jurisdiction of the Supreme Court of Florida is unlikely under Fla. R. App. P. 9.030, means that Florida health care providers can no longer simply rely upon their attorneys’ advice concerning the legality of their actions as a potential defense to prosecution under the Patient Brokering Act.

Amidst this late summer heat, Florida health care providers would do well to take careful note of, and perhaps action concerning, these equally uncomfortable changes to Florida patient brokering law.

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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