A pair of legislative and judicial developments in the last month has the potential to significantly impact healthcare providers doing business in Florida. Until some of the uncertainty is resolved, healthcare providers would be well-advised to steer clear of any arrangements that might trigger scrutiny under the state’s Patient Brokering Act. And, failing that, providers might consider these changes to be the catalyst for seeking declaratory judgments and advisory opinions from state regulators.    

Historical Background

Florida, like many other states, has a broad statutory prohibition against patient brokering and splitting of fees in the healthcare context. The state’s Patient Brokering Act, Florida Statute § 817.505, criminalizes any “offer or pay[ment of] any commission, bonus, rebate, kickback, or bribe … to induce the referral of patients or patronage to or from a health care provider or health care facility.” At first blush, the statute appears to track the federal Anti-Kickback Statute and seems to limit nothing more than what is already proscribed at the federal level. 

Even the exemptions in the state statute seemingly track the federal Anti-Kickback Statute.  For example, until earlier this summer, the state statute explicitly exempted “[a]ny discount, payment, waiver of payment, or payment practice not prohibited by 42 U.S.C. § 1320a-7b(b) [the Anti-Kickback Statute] or regulations promulgated thereunder.” Therefore, conduct which fell under federal “safe harbors” was not criminalized under the state statute. 

Thus, for all practical purposes, healthcare providers in Florida could simply follow federal anti-kickback guidance to steer clear of additional Florida regulatory scrutiny. That understanding, however, may no longer be applicable for at least two reasons. 

Recent Legislative Changes

First, earlier this summer, the Florida legislature modified the statute, in response to a broader crackdown on improper arrangements related to the opioid crisis, to limit the scope of exceptions. Now, the above exemption has been narrowed to only exempt practices “expressly authorized by 42 U.S.C. § 1320a-7b(b) or regulations adopted thereunder.” Put another way, the statute now only exempts those practices “expressly authorized” as opposed to those “not prohibited.” 

While this change might seem immaterial, the potential legal ramifications are significant. In particular, the federal Anti-Kickback Statute does not “expressly authorize” practices or arrangements. Rather, the federal statute simply provides “safe harbors” defining conduct that was not prohibited. 

It is unclear whether the state legislature was aware of this potential impact at the time of the amendment’s passage. While the law was amended to bolster enforcement efforts by state prosecutors, the unintended consequences may have a chilling effect on healthcare providers doing business in Florida. 

Recent Judicial Decision

The second change might prove even more meaningful. Shortly after the legislative amendment, an appellate court in Florida interpreted the same patient brokering statute. And the court’s decision in State of Florida v. James Francis Kigar will likely have even more chilling effects. As explained below, the appellate court effectively removes the ability of healthcare providers to rely on the “advice of counsel” defense as a bar to enforcement proceedings.

In Kigar, a defendant was charged with over 100 counts of patient brokering. On the eve of trial, the government moved to exclude any evidence of an “advice of counsel” defense. The government argued that the patient brokering law was one of general intent, not specific intent, and as such the government suggested that there was no room for an “advice of counsel” defense. 

The appellate court, in a matter of first impression, agreed with the government. The court found that in prosecuting a patient brokering act case the government was not required to prove the defendant had a specific improper intent to violate the statute. Put another way, the court held that prosecutors need not prove a “heightened or particularized intent beyond the mere intent to commit the act itself.” Given this finding—that the patient brokering act is a general intent statute—the court followed long-standing judicial principles to find the “advice of counsel” defense to be inapplicable. As such, the appellate court granted the government’s motion to exclude any advice of counsel defense. 

Until Kigar, a bedrock principle was that faithfully soliciting—and following—legal advice was a bar to any kickback prosecution. Kigar significantly casts that principle into doubt. 

Practical Advice Following Amendments and Kigar

At the moment it is unclear whether the Florida legislature will revisit the statutory changes or whether other courts will follow the opinion in Kigar. However, until the issues are revisited, healthcare providers doing business in Florida would be well-served to tread lightly. We offer a few practical tips for clients contending with this new paradigm:

• Now is a good time to carefully review all arrangements, contracts, and relationships that involve financial payments (including policies related to the collection or waiver of co-pays) related to healthcare services. What was once defensible as fitting within the safe harbors may no longer be defensible today. Therefore, a global review of all financial arrangements may be beneficial.
• While Kigar has seemingly blunted the impact of an “advice of counsel” defense, an actionable patient brokering act case still may only be brought when the government can show an improper intent (albeit a generalized intent rather than a specific intent to violate the act). Therefore, practitioners are advised to contemporaneously document their intentions and purposes before entering into new financial arrangements or transactions. This contemporaneous documentation is powerful evidence to negate prosecutors’ theories of improper intent. 
• Finally, the State of Florida has a process whereby practitioners can petition for declaratory statements and other prospective guidance prior to entering into financial transactions. Clients may wish to consider taking this approach in certain contexts in light of these new developments. 

Most healthcare clients understand the perilous regulatory climate—and the significant consequences for even inadvertent mistakes. Unfortunately, the regulatory environment in Florida has become even murkier in light of these recent developments. Treading carefully while the law continues to develop is strongly advised. And prospectively seeking guidance from state regulators is more advisable than ever. Indeed, as the old adage goes, an ounce of prevention is worth a pound of cure.