Dear Health Law Section Members:

Below are updates on significant developments in the health law arena that may be of interest to you in your practice.  These summaries are presented for general information only as a courtesy to section members and do not constitute legal advice from The Florida Bar or its Health Law Section.  On behalf of the Section, I extend my deepest appreciation to the volunteers who have generously donated their time to prepare these summaries for your review.

Thank you,

Malinda R. Lugo

You can download a copy of this month’s update using the links below or read the updates in this article.

October-November 2013 Health Law Monthly Updates (DOC)

October-November 2013 Health Law Monthly Updates (PDF) 

October-November 2013 Health Law Monthly Updates

The following are brief summaries prepared by section volunteers of new developments in Florida and Federal health care law that may be of interest to members of the Health Law Section. The summaries are presented for general information only as a courtesy to section members and do not constitute legal advice from The Florida Bar or its Health Law Section.      


The Centers for Medicare and Medicaid Services (“CMS”) issued a Q & A on November 4, 2013, pertaining to third party payments of premiums for qualified health plans in the marketplaces.  Specifically, the question posed was whether or not third party payors are permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals.  CMS responded that it discourages the practice of hospitals, other healthcare providers, and other commercial entities supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the marketplace because it could skew the insurance pool and create an un-level field in the marketplaces.  The complete Q & A can be found at:

Reported by: Joy Easterwood


The U.S. Office of Inspector General Published an Unfavorable Response to a Proposed Arrangement Involving a Parent Company’s Issuance of Equity Interests to a Subsidiary Group Purchasing Organization.

The Office of Inspector General (“OIG”) issued an unfavorable Advisory Opinion No. 13-09 regarding a proposed arrangement whereby members of a group purchasing organization (“GPO”) would be offered an equity interest in the GPO’s parent organization on certain conditions. The Requestor, a publicly traded company, through its wholly owned subsidiary, operated the GPO. The GPO served a variety of provider types, but its largest members were hospital systems and integrated delivery systems.

The proposed arrangement contemplated that the Requestor would offer certain current and prospective GPO members an equity interest in the Requestor through a private placement or a secondary public offering that would require stockholder approval. In exchange for the equity interest, the GPO member would extend its current (or a new member would enter into a new) GPO agreement for a term of five to seven years. In addition to agreeing to a new five to seven-year contract term, a member accepting the equity interest in the Requestor would be required to commit to maintain the volume of its purchases through the GPO and not decrease said volume. Historical purchases made by the member would be the litmus test used to determine the purchase volume. Those members that elect to accept the equity interest would be rewarded by not having to pay a portion of administrative fees that otherwise would have been passed through to them. The Requestor would offer three possible options: (1) maintain status quo; (2) keep 66% of the current shareback, and receive an amount of equity roughly equivalent to the market value of the forfeited shareback; or (3) keep 33% of the current shareback, and receive an amount of equity roughly equivalent to the market value of the forfeited shareback.

OIG’s legal analysis focused on the application of the federal Anti-Kickback Statute; more specifically on two of its safe harbors – the GPO safe harbor and the discount safe harbor. When evaluating the risky nature of the proposed arrangement, the OIG observed that the arrangement would allow the Requestor to: (i) give remuneration to GPO members so as to reward past referrals and (ii) induce them to continue purchasing items, including those reimbursable by federal healthcare programs, at equal or higher volume as in the past through the GPO, for an extended period of time. The OIG concluded that this presented a more than minimal risk of fraud and abuse.

The full text of the OIG Advisory Opinion No. 13-09 can be accessed here:

Reported by: Elena Kohn, Shumaker, Loop & Kendrick, LLP


Healthcare Clinic Registration

The 11th U.S. Circuit Court of Appeals issued an opinion upholding a district-court ruling against Silver Star Health and Rehab, an Orlando medical clinic which had collected more than $151,000 from State Farm between May 2008 and December 2009 and billed the insurer for another $86,000 between December 2009 and March 2010 that was not paid. State Farm filed the lawsuit because it argued Silver Star did not comply with the Florida Health Care Clinic Act (Part X of Chapter 400, Florida Statutes) that requires medical clinics to be licensed, unless they are wholly owned by health-care practitioners. State Farm contended that Silver Star concealed the actual ownership interest of a person who was not a health-care practitioner and inappropriately held itself out as being exempt from clinic licensure requirements because it was wholly owned by one or more health care practitioners. State Farm argued that it should not have to pay the $86,000 in unpaid claims and that it was entitled to damages for “unjust enrichment” because of the more than $151,000 it had already paid. In a per curiam opinion the 11th Circuit Court held that under Florida law State Farm was entitled to seek a judicial remedy to recover the amounts it paid Silver Star and to obtain a declaratory judgment that it is not required to pay Silver Star the amount of the outstanding bills. This puts some rather large teeth in the statutory provisions regarding health care clinic licensure and the ability of third party payors to recoup payments to unlicensed healthcare clinics that do not fall within the licensure exemptions provided in Florida law.

(P.S. Dennis LaRosa, the long-time Chief of the Health Care Clinic Unit at AHCA has left the agency and is now practicing law in Deerfield Beach.)

Submitted by Allen R. Grossman and Michael L. Smith


1Fourth DCA Remands Permanent License Revocation By Board Of Nursing

In August the Fourth DCA remanded a case to the Board of Nursing for a second time again directing the Board of Nursing to reconsider because the discipline imposed was based upon an aggravating factor that was not supported by the record. Fernandez v. Department of Health, 4D12-3431 (Fla. 4th DCA Aug. 14, 2013). On January 5, 2011, the Board permanently revoked the nurse’s license, but that revocation was reversed and remanded by the Fourth DCA to reconsider the penalty imposed by the Board. Fernandez v. Dept. of Health, 82 So. 3d 1202, 1204 (Fla. 4th DCA 2012). According to the Fourth DCA, the permanent revocation imposed by the Board exceeded the penalty guidelines in place for Count I of the Administrative Complaint and there were no penalty guidelines in place for Count II of the Administrative Complaint.

On June 7, 2012, the Board again reviewed the matter and once again permanently revoked the nurse’s license. The Board relied upon five aggravating factors for the increased penalty. The nurse appealed claiming that there was no competent substantial evidence in the record to support the Board’s action. The Fourth DCA found that four of the aggravating factors relied upon by the Board were supported by competent substantial evidence. Fernandez v. Department of Health, 4D12-3431 (Fla. 4th DCA Aug. 14, 2013). The Fourth DCA agreed with the nurse that one of the aggravating factors, harm to the patient, was not supported by competent substantial evidence requiring the case be remanded again. Id.

The complaint was based upon an incident at Miramar Memorial Hospital. The nurse was visiting a friend who was a patient at the hospital. The nurse was not an employee of the hospital and had no right or authority to practice nursing at that hospital. The nurse was an employee of a home health agency. The patient was experiencing discomfort so the nurse retrieved Heparin from his car and administered the Heparin to the patient. The nurse admitted that he administered heparin to the patient when confronted by the hospital. At the time of providing this update, the case has not yet been reconsidered by the Board of Nursing.

Submitted by Allen R. Grossman and Michael L. Smith


Lost in the discussion of the Affordable Care Act has been the significant impact the law may have upon providers of substance abuse treatment services in Florida.  The state, recognized nationally as being one of the major market centers for the provision of such services, has had a difficult time regulating such providers to the extent these facilities do not fall under the guise of ACHA or DOH but rather the Department of Children and Families and the statutes found at Chapter 397, Florida Statutes and regulations within 65D-30, FAC.  Notwithstanding, these providers have all of the trappings of being health care providers as many are mandated to have a medical director; a clinical director, and most bill insurance companies for services. 

Aside from the treatment that many in substance abuse centers receive from retained psychiatrists for co-occurring disorders (such as anxiety, depression, bipolar disorder, etc.), many providers utilize clinical lab services for the collection and analysis of urine for the presence of banned substances of their patients, which has recently been the subject of a lawsuit in New Jersey between Blue Cross Horizon Blue Cross Blue Shield of New Jersey  and Avee Laboratories, Alere Toxicology, Laurie Deerfield, DO, and Leading Edge Recovery Center, a substance abuse treatment center, for $36 million in damages and penalties related to the submission of false and fraudulent claims for urine toxicology testing (Horizon claims Avee used false and deceptive marketing materials and offered illegal inducements to convince health care providers to perform medically unnecessary point of care urine toxicology tests and then send the samples to Avee for unnecessary confirmatory testing).

While all such providers fall within the criminal regulations relating to patient brokering (s. 817.505, Fla. Stat.), anti-kickback laws, the Stark laws as well as false insurance claims prohibitions of s. 817.234, Fla. Stat., many substance abuse treatment providers are either ignorant of these laws or have effectively “learned on the street” that the regulators are asleep at the wheel in enforcing these laws against such providers.

What is most concerning, therefore, is the impact the ACA will have upon this underground Florida economy as allegedly 32 million more Americans are going to be covered by health insurance and all Americans will receive coverage for mental health and substance abuse benefits as part of the required “Essential Health Benefits” which must be covered in all insurance plans.  When read together with the Mental Health Parity Act now named the Health Parity and Addiction Equity Act of 2008, health insurance carriers will be required to pay for services on par with equivalent inpatient and outpatient physical ailments,, which provides fertile ground for more abuses (whether intentional, unintentional, or otherwise) within the substance abuse health care arena.

Going forward, the Florida Bar Health Law Section will be monitoring the impact substance abuse treatment providers have upon the legal landscape of Florida health care as well as discussions relating to whether the state should be taking a more active role in regulating these providers within the jurisdiction of the State Department of Health.

Submitted by Jeffrey C. Lynne, Esq.

Report on Legal Considerations in Electronic Laboratory Reporting

The Council of State and Territorial Epidemiologists (CSTE) and CDC have published “Legal Considerations in Electronic Laboratory Reporting: A report of the CSTE-CDC Electronic Laboratory Reporting Task Force Legal Considerations Workgroup,” by Frederic E. Shaw, M.D., J.D. and Molly R. Berkery, J.D., M.P.H. Find more information and access the report  [PDF – 358KB].

Radiation and Public Health Legal Considerations

The National Alliance for Radiation Readiness (NARR) hosted a webinar on Wednesday, September 18, 2013, discussing the radiation legal preparedness project assessing state and local legal authorities related to the response to and recovery from a radiation incident. Learn more about radiation readiness and access the archived the webinar on the NARR clearinghouse.

Malaria Cases in U.S. Hit 40-Year High

CDC’s latest malaria surveillance summary report shows that approximately 2,000 cases of malaria were diagnosed and treated in the United States in 2011—almost all were acquired overseas in regions with malaria transmission. This is the largest number reported since 1971. Among the people who had malaria five died.

Every year, millions of U.S. residents travel to countries where malaria is transmitted. Most travelers who contract malaria either did not take an antimalarial drug to prevent the illness or did not take the appropriate drug or dose.

Most of the cases were in people who had been in sub-Saharan Africa.  Although India is often perceived as a place with low risk of malaria for travelers, for the first time, it is the individual country from which the most cases were imported into the United States. However, all travelers to countries where malaria is present may be at risk for infection.

Submitted by Rodney M. Johnson