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February 2006 - Volume 2 - Issue 8

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5TH Circuit Court of Appeal Declares Florida Medicaid Fraud Statute 409.920(2) (A) Unconstitutional

This case deals with two very important subjects: The ability of Healthcare providers to market using practice management companies as well as reaffirming the principle in Florida that one cannot be criminally liable for filing a false claim by accident , error or negligence

Facts

In 2001, two Miami dentists contracted with a dental management company to open a dental office in Orlando Florida. The management company agreed to provide a turn-key dental facility. In addition, the dental management company would manage the business and marketing aspects of the practice including marketing the dental practice to Medicaid eligible recipients. In return the management company is paid between 42% and 43% of the compensation received by the dentists for their services.

In 2003, the state filed a 130 count information against appellees Sonia Guzman and Ana Maria Mendez and three co-defendants John Rubio, Ileana Martin-Fernandez1 and Gustavo Fernandez. Counts I and 2 charged all defendants with racketeering and conspiracy to commit racketeering in violation of section 895.03, Florida Statutes. Counts 3 — 55 charged various defendants with Medicaid provider fraud in violation of section 409.920(2) (a), Florida Statutes. Counts 56 — 129 charged various defendants with patient brokering by engaging in a split-fee arrangement in violation of section 817.505, Florida Statutes. Count 130 charged all defendants with violating the White Collar Crime Victim Protection Act, section 775.0844, Florida Statutes.

On February 1, 2005 Judge Thomas B. Smith, Circuit Court Judge in Florida’s Ninth Judicial Circuit, Orange County Florida found Florida’s Patient Brokering Law 817.505, Florida Statutes unconstitutional. and declared the Medicaid Fraud statute, False Claim section 409.920(2)(a) unconstitutional, State of Florida vs. Sonia Bonilla Guzman, DDS, Ana Maria Bonilla Mendez, DDS, and John Anthony Rubio, (Case No. 48-2003-CF-13501-O).

The Patient Brokering Statute (F.S. 817.505)

The Law enacted in 1996 prohibits paying for patient referrals. However, this statute also criminalized, for the first time, "any illegal fee-split arrangement in any form whatsoever" to induce the referral of patients to a healthcare provider (previously just a medical licensure violation). The statute does not define what an illegal fee split is and is devoid of an intent standard. Patient brokering is a criminal statute carrying a potential sentence of 5 years in prison. The law was enacted in response to unnecessary referrals to costly psychiatric and substance abuse residential facilities. Nevertheless, the state used this statute in quite a different way: to target the marketing arrangement between a dental management company and their dental group employer. The state’s theory of criminal liability is that the payment from a dental group practice to a management company for business and marketing services is an illegal fee split and violates the statute when the management company fee is based in part on the referral of Medicaid patients. What the state called an illegal fee split, the defense called a legitimate dental practice management fee.

"State prosecutors cannot continue to overcharge using multiple counts of Patient Brokering and Charging Racketeering by using Patient Brokering as a predicate offense"

"This ruling has implications for all practice management companies operating or contemplating Operating on the state of Florida"

"We believe that the State abused its discretion in bringing this case under the Patient Brokering Statute." "We believe that the use of this statute to prosecute dentists for an alleged ‘illegal fee split arrangement’ is in conflict with existing dental laws and rules."

"This ruling should prompt defendants charged or convicted of Patient Brokering under this statute to file motions to dismiss or appellate remedies citing similar grounds."

Anthony C. Vitale, Esq.

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

For more information, contact Anthony C. Vitale, Esq., at (305) 358-4500 or avitale@vitalehealthlaw.com.

1 The Court also found that the State’s theory of false claim criminal liability under the Medicaid Fraud Statute (409.920) was preempted by Federal law, and that the intent or "knowingly" standard in the statuette is unconstitutional under principles of preemption because it conflicts with the willfulness standard under Federal law.

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