Opposition Brief — Florida v. Harden (No. 06-770)

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No. 06-770

IN THE a

Supreme Court of the United State

STATE OF FLORIDA,

Petitioner,

v.

GABRIEL HARDEN, et al.,

Respondents.

On PETITION FOR A Writ oF CERTIORARI TO THE

FLORIDA SuPREME CouRT

BRIEF IN OPPOSITION FOR RESPONDENT

GABRIEL HARDEN

ANTHONY C. VITALE G. RICHARD STRAFER

THe HEALTH Law OFFices OF G. RICHARD STRAFER, P.A.

ANTHONY C. VITALE 2400 South Dixie Highway

799 Brickell Plaza Suite 200

Suite 700 Miami, FL 33133

Miami, FL 33131 (305) 857-9090

(305) 358-4500

Attorneys for Respondent

Gabriel Harden

|

207399 $

COUNSEL PRESS

(800) 274-3321 ¢ (800) 359-6859

i

QUESTION PRESENTED

The restated question presented is:

Whether the Supremacy Clause bars states from

criminalizing as Medicaid fraud conduct that falls

within the safe harbor exceptions to the Federal

Anti-Kickback Statute (a provider paying its

employees to solicit and transport Medicaid

eligible children for dental services) and which,

therefore, would not be deemed criminal under

federal law?

ii

INTERESTED PARTIES

Additional parties below, co-defendants in the state

criminal proceedings, were:

Vonshella Carter

Elsa Cortorreal

Herbert Goss

Flora Johnson

Billy Madison

Edward Polsky

Maria Rodriguez

Bruce Smith

(Co-defendant Victor Rivera pled guilty and was not a party

in the court below.) (Pet. App. G, 67a).

ili

TABLE OF CONTENTS

SOO THOUNNNE 6.5 so Shacks ieee ete tian

Te rest cies ckaas

Rs DUR 660 465 6 tv de eesh eee

B. The Medicaid Program in Florida .........

GRRE Gi ch iccctoawusatacuves

D. The Preemption Litigation ..............

Reasons for Denying the Petition ...............

I. The Florida Supreme Court Properly Applied

the “Implied Cosifizet Preemption” Doctrine

eeseeoeeeseeoeee ere weteeveeweeeseeseeeeeeeeeeee

A. The “Implied Conflict-Preemption”

SD 5:5 408k 6caeeeres soars

B. Conflict Preemption and the Medicaid

a errr eer ety Per ra cor

iv

Contents

C. The Employer-Employee Exception and

8 SEA A rr errr

D. Harden was Correctly Decided ......

1. The Exceptions and Safe Harbors ...

2. Negligence vs. Willfulness .......

Il. Congress Did Not Intend to Criminalize

Marketing, Advertising or Assistance Given

to Medicaid-Eligible Patients To Receive

Medical Services That States are Required To

Provide Under Federal Law .............

SS SPL AY ROLE LR aS ER PI Ma pS aE Ee

PE <cc cares sient ks ie eels saan awet ees

TABLE OF CITED AUTHORITIES

Page

Cases:

Antrican v. Odom, 290 F.3d 178 (4th Cir. 2002) ... = 13

Bodimetric Health Servs. v. Aetna Life & Cas.,

ie ee ee 1 a |) rae renee 22

Bryan vy. United States, 524 U.S. 184 (1998) ...... 23

Bryan v. Moore, 528 U.S. 1133 (2000) .......... 24

Buckman Co. v. Plaintiffs’ Legal Comm.,

ER Shas Re CE 4 5545 KEE LK ORT ARES 21

Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)

Cae OS bao Ee ee Eel eee 11

Congress of California Servs. v. Catholic Healthcare

West, 87 Cal. App. 4th 491 (Cal. App. 2d 2001)

Cte Laed ROA eR LAE ee 22

Crosby v. Nat’l Foreign Trade Council,

Dae We ee CED sh oe 6 oe Betan ocean 12, 20, 21

Dalton y. Little Rock Family Planning Servs.,

PU Gia TRIO! a ckck dee den eaenueeees 12

Fidelity Fed. Sav. & Loan Ass’n v. De la Cuesta,

Se Gis SOR CAOEE 4.6 5 bb aS wEeera wee eS 11

vi

Cited Authorities

Page

Fireman's Fund Ins. Co. v. City of Lodi,

302 F.34¢:928 (Sth Cir. 2002) 0... ccc cccccees 24

Florida Pediatric Society v. Levine, S.D. Fla. Case

No. 05-23037-Civ-Jordan (pending) .......... 4

Gade v. Nat'l Solid Wastes Mgmt. Assoc.,

gs Me Tl +: ree ree a 11, 12

Geier v. Am. Honda Motor Co., Inc.,

fF KO. Sa eee cre ee 12

Lawrence Co. v. Lead-Deadwood Sch.

Dist. No. 40-1, 469 U.S. 256 (1985) .......... 23

Marin v. HEW, Health Care Fin.,

aie fo. fo |.) 22

Martin v. State, 642 N.W.2d 1 (Minn. 2002) ...... 13

McCall v. Pacificare of Cal., Inc., 25 Cal. 4th 412,

21 P.3d 1189, 106 Cal. Rptr. 2d 271 (2001) ..... 21

McCulloch v. Maryland,

17 U.S. (4 Wheat) 316 (1819) ............... 11

Midland Psych. Assoc., Inc. v. United States,

145 F.3d 1000 (8th Cir. 1998) ............... 22

Nathan Kimmel, Inc. v. Dowelanco,

pe, Re EE. 4. to Se) eee 21

vil

Cited Authorities

Page

New Boston Gen. Hosp., Inc. v. Texas Workforce

Comm., 47 §.W.3d 34 (Tex. App. 2001) ....... 28

Olszewski v. Scripps Health, 30 Cal. 4th 798,

Set ee Ce & cdo aeunes Weve uy sutures 13

Planned Parenthood Affiliates v. Engler,

Fa Re Ore CEU, LDPE) ocvcccccccescccns 13

Public Health Trust v. Jackson Mem. Hosp., 693

So. 2d 562 (Fla. 3d Dist. Ct. App. 1996) ....... 13

Randall v. Lukhard, 709 F.2d 257 (4th Cir. 1983),

aff ‘din part 729 F.2d 966 (4th Cir. 1984) (en banc)

cialaa Sed iW aU E EON Cn ae lh Meee et Owe 13, 24

Sanks v. Georgia, 401 U.S. 144(1971) .......... 24

Schweiker v. Gray Panthers, 453 U.S. 34 (1981) .. 22

Smith v. Travelers Indemnity Co.,

763 F. Supp. 554 (M.D. Fla. 1989) ........... 13

United States v. Starks, 157 F.3d 833 (11th Cir. 1998)

bSianic OV EKa dead wakes Ca eae es 26

United States ex rel. ObertitHong v. Advocate Health

Care, 211 F. Supp. 2d 1045 (N.D. Il. 2002) ... 27, 28

vill

Cited Authorities

Page

Wilder v. Virginia Hosp. Assoc.,

GPO Sick, SOC EPOED 6 5 c.cdicenakeensne teen 3

Wilson v. Chestnut Hill Healthcare,

Civ. A. No. 99-CV-1468, 2000 U.S. Dist. LEXIS

1440 (E.D. Pa., Feb. 10, 2000) ............... 22

Constitutional Provisions

Aut. V5 G8: 2 Wie COE, 3S sso oe bo ha ces ye

An, 35, Fe CE. hk eae 6

Statutes and Rules

EUSA. O Taser | inks 6455 dseee 2

42 U.S.C. § 1320a-7(a)(1) and (b)(1) ......... 1, 15, 20

GF U.S.C. © TR xcs vecn cc dataoevers 14, 19, 20

42 U.S.C. § 1320a-7b(b)(1) and (2) ............. l

423 U.S.C, 8 ERAS) 6 oceds Casio, 15

42: U.S.C. GISZOi TORS). 6 n.oessewieichnneans ]

G2 USS. 4 TSG MONSS 6604046 cere 3,27

Si UBL. § T2GGA 60 cia ekwtoe ck eooeeeae 18

ix

Cited Authorities

Page

ites @ LP OMEMILEGD ¢ ccctccvevecceveceess 3

OE i 3

ET CE RUEND op cocnovescccveseveesesess 14

Pe PCE TOD FO BONE. ccc cecccccccevccees 5

ON PURE MGR Bie Ble ccc cccccccccseceees 6,9

§ 409.920(2)(e), Fla. Stat. .....cceeccess 2,5, 6, 9, 23

§§:501.201-501.203, Fla-Stat. .......cccccccees 22

RT TE sdb edeccncebpecevedteceas 2

es DE PUGE OME) cv eccccvcevecens 1, 16, 17, 25

Other

56 Fed. Reg. 35952 (July 29, 1991) ............ 17, 19

Florida Form 416, Federal Centers for Medicare and

IS Clete ebb ess vkcbedeeceeedeeeae 4

H.R. Rep. No. 92-231 (May 26, 1971) ........... 19

H.R. Rep. No. 96-1167, reprinted in 1980

RT SEED boccerecvecoveccoveveses 15

x

Cited Authorities

Page

OIG Report No. OEI-09-93-00240, April 1, 1996 .... 4

Pub. L. No. 92-603, § 242(b), (c), 86 Stat. 1419 ..... 14

, SRS Ts &~ 8 yg, Peer 15

ih TS SE 6 o aid oO bald de wis ta ebce ne een 1S

S. Rep. No. 100-109, reprinted in 1987 U.S.C.C.A.N.

SEE aa dtcerutcuaeckceeesdere earners bes 16

l

STATEMENT

A. INTRODUCTION

Title XIX of the Social Security Act (“the Medicaid Act”)

requires states that receive federal funding for health care to

provide, inter alia, routine dental care to the poor. The Act

bars Medicaid providers from making payments or

“kickbacks” to third parties in exchange for patient referrals.

In addition to punishing such payments as felonies, the Act

“excludes” from the Medicaid program (and, indeed, from

all federal health care programs) any provider convicted of

a federal or state crime committed in connection with the

program. See 42 U.S.C. § 1320a-7(a)(1) and (b)(1).

As a counterweight to the breadth of the federal anti-

kickback provisions and severity of the sanctions, Congress

created nine exceptions to the definition of a “kickback,”

and authorized the Secretary of the Department of Health

and Human Services (“HHS”) to create additional “safe

harbors.” One such exception, 42 U.S.C. § 1320a-7b(3)(B)

(Pet. at 4), as well as one of the now twenty-two safe harbors,

42 C.F.R. § 1001.952(i) (Pet. at 6), expressly immunizes the

payments a Medicaid provider makes to his own employees

from being either prosecuted as “kickbacks” or used as the

basis for “exclusion” from the Medicare or Medicaid

programs. Furthermore, the Act requires proof that a provider

acted “knowingly and willfully” in prosecutions for violations

of the “anti-kickback” provisions. See 42 U.S.C. § 1320a-

7b(b)(1) and (2).

Respondent Gabriel Harden operated a dental clinic in

Miami, Florida. Through a staff of paid employees, he

solicited Medicaid-eligible patients and provided them with

2

assistance in traveling to his dental care center for routine

dental services. Under its contract with Medicaid, the State

of Florida was required to provide these services. Harden

accurately billed the services to Medicaid, and the services

were, in fact, performed. Florida prosecutors nonetheless

levied criminal charges against him and nine co-defendants,

under a state anti-kickback statute, FLA. Star. § 409.920(2)(e)

(“the Florida Medicaid Anti-Kickback Law’) (see Pet. at 4-

5), which omitted a// of the nine federal exceptions and

twenty-two safe harbors, while authorizing prosecutions for

mere negligence. (See Pet. App. 4a). However, the charges

were dismissed, a ruling that was upheld by the Florida

District Court of Appeal and the Florida Supreme Court,

which agreed that the Florida statute was preempted by

federal law. The courts below applied well-established

precedents of this Court defining the “conflict preemption”

doctrine. Moreover, the Florida Supreme Court’s decision

did not contradict the will of the Florida Legislature. Under

a more specific “anti-kickback” statute, FLA. Srar.

§ 817.505, which was enacted after the Florida Medicaid

Anti-Kickback Law and became effective in 1996, the Florida

Legislature criminalized “kickbacks” for patient referrals but,

in concert with the Federal Anti-Kickback statute and

regulations, expressly excluded from prosecution “[a]ny . . .

payment practice not prohibited by 42 U.S.C. § 1320a-7b(b)

or regulations promulgated thereunder.”' And, in 2004, in

response to the District Court of Appeal decision in this case,

the Florida Legislature amended section 409.920(2)(e) to

1. This later enacted statute is consistent with the decision of

the Florida Supreme Court and with the enactment of state anti-

kickback statutes in 26 other states, many of which passed legislation

after the development of the Federal Anti-Kickback Statute “safe

harbor” regwiations in 1991 to conform to the federal statutory and

regulatory «@ heme. See Appendix, infra.

3

permit prosecutions only for “willful” violations, consistent

with federal law. (See Pet. App. at 4a, and n. 2). Accordingly,

the State has overstated the import of the decision below,

and the Petition should be denied.

B. THe MEDICAID PROGRAM IN FLORIDA

The Medicaid Program is a “cooperative federal-state

program” through which Congress provides financial

assistance to the states so that they may furnish medical care

to the poor. See Wilder v. Virginia Hosp. Assoc., 496 U.S.

498, 503 (1990). Although participation in the program is

“voluntary,” participating states “must comply with certain

requirements imposed by the Act and regulations

promulgated by the Secretary of Health and Human Services

(Secretary).” Jd. Florida has elected to participate in the

Program and the federal government currently pays close to

60 percent of all Florida expenditures for services

administered under the Medicaid Act.

Routine dental care is one of the mandatory services

Congress requires states to provide as a condition of receiving

federal funds. See 42 U.S.C. §§ 1396d(k)(3); 1396d(a)(10);

1396a(a)(43). In addition to requiring states to provide the

actual services, the Medicaid Act requires states to “inform[]

all persons in the State who are under the age of 21 and who

have been determined to be eligible for medical assistance

... of the availability of [required] services as described in

section 1396d(r) of this title” and the “arranging for (directly

or through referral to appropriate agencies, organizations,

or individuals)” all necessary treatment. 42 U.S.C.

§ 1396a(a)(43) (emphasis supplied).

Despite these requirements, Florida’s own statistics

reflect that between 1999-2004 more than 75% of Florida’s

4

Medicaid-enrolled children were furnished no dental care

whatsoever. See Florida Form 416, Federal Centers for Medicare

and Medicaid. Indeed, according to a comprehensive 1996 report

issued by HHS, Office of Inspector General, no state provided

more than 50 percent of the services required by the Medicaid

program. See OIG Report No. OEI-09-93-00240, April 1, 1996.

The Report found several reasons for the lack of responsibility

by the states, including that Medicaid-eligible families tended

to give dental care a low priority and were “unwilling to wait

for appointments or make necessary travel or child care

arrangements which increases the likelihood of missed

appointments and failure to seek services.” Jd. at 2, 6. In 2005,

this history of neglect resulted in a class action lawsuit against

the Florida agency in charge of administering the Medicaid

program, charging Florida officials with systematically violating

the rights of Florida children by refusing to provide mandatory

services, specifically including dental services, as well as failing

to provide basic outreach and information to the plaintiff class,

as required by § 1396a(a)(43). That lawsuit is ongoing.

See Florida Pediatric Society v. Levine, 8.D. Fla. Case No. 05-

23037-Civ-Jordan.

C. Tue PRosecuTIon

Gabriel Harden earned a Bachelor’s Degree in Business

Administration and Health Care Management from the

University of Colorado. He returned to his native Miami

and, in 1997, opened Dental Express, Inc., a management

company that operated a turnkey dental facility with the latest

dental technology and equipment, office space, administrative

staff, inventory and supplies, computers, services, marketing,

advertising, accounting, taxes, billing and collections services.

His goal was to provide a full range of dental care to inner city

children.

5

By early 1998, after contracting with a group of licensed

dentists and dental assistants, Harden had begun providing

dental services to inner city youth through contracts with

Dade County Head Start, approximately 150 day care centers

in Dade and Broward Counties, some twenty-two schools,

and numerous school boards. Harden transported the

necessary dental equipment to the day care centers and

schools, and provided basic dental services on site. However,

later that same year, the Florida Legislature banned the use

of mobile dental units, which had been providing such

services in cooperation with school systems around the state

(FLA. Star. § 409.906(1), (6)), and then notified Harden that

his portable services fell within the ban. Since Harden could

no longer bring the dentists to the children, he sought to bring

the children to the dentists. Accordingly, in December 1998,

he began employing staff to market his services and transport

Medicaid-eligible patients to his facilities.

Two years later, the state of Florida filed criminal charges

against Harden and his co-defendants. (Pet. App. N at 98a-

113a) (Information) The State did not allege that there was

anything fraudulent about the services Harden billed to

Medicaid. Rather, the State alleged that the wages Harden

paid to his own staff to solicit Medicaid-eligible patients for

services later properly billed to Medicaid constituted illegal

“kickbacks” under Florida’s Medicaid fraud statute, section

409.920(2)(e), Fla. Stat. (See Pet. App. N). That statute,

among other things, made it unlawful to “knowingly . . . pay

... any remuneration . . . in return for referring an individual

to a person for the furnishing or arranging for the furnishing

of any. . . service for which payrsvent may be made. . . under

the Medicaid program.”

6

Although modeled after the federal anti-kickback statute,

section 409.920(2)(e) failed to exclude from prosecution the

payment practices—the nine statutory exceptions and twenty-

two regulatory “safe harbors”—that Congress and HHS have

deemed lawful under the Federal Anti-Kickback Statute.’

Moreover, the 2000 version of the Florida statute defined

the term “knowingly” in a manner that included merely

negligent conduct: “‘Knowingly’ means done by a person

who is aware or should be aware of the nature of his or her

conduct and that his or her conduct is substantially certain

to cause the intended result.” Fia. Star. § 409.920(1)(d)

(emphasis supplied). However, as noted above, and as

acknowledged by Petitioner (Pet. at 14; Pet. App. at 4a), in

2004 the Florida Legislature amended the definition to

eliminate the highlighted language and to define “knowingly”

as “willfully.” Accordingly, Florida’s mens rea requirement

now matches federal law. See p. 15 infra.’

D. THe PREEMPTION LITIGATION

Harden moved to dismiss the Information (Pet. App. H,

pp. 76a-85a), arguing that a Medicaid provider’s payment

of wages to its employees for the “solicitation and

transportation” of Medicaid-eligible children “to dental

facilities for treatment” was expressly protected by federal

statutes and regulations, that apply to the Medicare and

2. Indeed, as discussed infra, Congress sought, in part, to

encourage the payment practices covered by the exceptions and safe

harbors.

3. Petitioner correctly notes that the amendment does not moot

this case. (Pet. at 14). See Fia. Const. art. 10, § 9 (“Repeal or

amendment of a criminal statute shall not affect prosecution or

punishment for any crime previously committed.”).

7

Medicaid programs, and that the State’s attempt to criminally

prosecute this federally-protected activity was

unconstitutional under the Supremacy Clause. See U.S.

Const. art. VI, cl. 2. Although the State conceded that the

defendants were scrupulous in treating only Medicaid-

eligible patients, it nonetheless argued that the Florida

Legislature was free to ban all payments made, even to

employees, for the solicitation of patients. Indeed, during a

hearing on Harden’s motion to dismiss, the State contended

that patient solicitation was a crime under state law even if

done through conventional forms of advertising:

MR. COBB: [Blut the point is, what they’re

paid to do is to go out and find patients. In other

words, these aren’t patients that are waiting

somewhere to just go pick up and [bring] back,

that the doctors have arranged to have waiting.

They’re going out in the neighborhoods, they are

going up to people, finding people. They’re going

out and finding Medicaid eligible recipients,

individually —- speaking to them.... The

remuneration to the patients it’s not really the issue

here. It’s the remuneration to the drivers to do this,

all right. And they are only paid, they’re paid per

capita for each person they go out and find that’s

Medicaid eligible and bring them in. The method

of bringing them in could be any way. Okay, so

they’re bringing them in by buses, so what.

The transportation is not the issue here.* The

issue is that they’re going out and finding people

4. In the courts below the State argued that a Medicaid provider

could pay ne wages of any kind to employees, if the purpose for the

wages was for the “solicitation” of Medicaid-eligible patients.

(Cont’d)

8

on an individual basis, right to Medicaid eligible

recipient[s]. Are you Medicaid eligible, fine, come

with me and they’re bringing them in and they’re

getting paid per head to do that. That is a crime.

THE COURT: Jf they were to go out and put

a flyer on every door on a block and then somehow

arrange to pick up the people that raised their

hands, I want to do that, would that be a problem

for the State?

MR. COBB: /f It might be, yes. If. And if

the way they were paid. Were they paid to go out

and just hand out flyers, probably not, but if they

were paid on a per capita basis for the number of

patients that they directly brought in, I think it

would be... .

R2-274-275. (emphasis supplied).

As the hearing evolved so did the State’s position on

what conduct would be considered legal under the Medicaid

program. Thus, the State argued that it was legal to solicit

Medicaid eligible patients from a location “say a nursing

home that has Medicaid patients ... already there and you

solicit that nursing home... that is okay .. . [b]ecause you

are not really having any impact on the number of people

(Cont’d)

In this Court, the State has changed its position, arguing that the

factor that made the payments abusive was that the cmployces were

supplying transportation to the patients. (See Pet. at 10). But, as

previously noted, transportation was a service the State itself was

required to provide under the Medicaid Act, but was not doing so,

according to a pending class action lawsuit. See pp. 3-4, supra.

9

who are potentially eligible for Medicaid that come into the

system, you see.” (R2-275-276.) However, the State

contended that the same type of solicitations would be

criminal if the targeted population was not already enrolled

in the Medicaid program:

MR. COBB: [I]n other words, those [nursing

home] people already exist. They’re already an

expended [sic] group. You’re just getting people

who have expanded [sic] groups to come to a

particular place. That has been ruled to be okay.°

What is not okay is to go out and try to find people

who aren’t already coming in somewhere,

grabbing them, and having them come in directly

and being paid per head for that: That is exactly

the method of payment and that’s really is the crux

of this whole case. What is in a nutshell what we

say is being done wrong here and it violates the

law and violates the statute. That is it.

(R2-276).

The trial Court granted Harden’s motion to dismiss, in a

lengthy Order (Pet. App. D, pp. 35a-58a), agreeing that

section 409.920(2)(e) was preempted by federal law and,

therefore, was unconstitutional as applied under the

Supremacy Clause. The court further held that the mens rea

requirement of section 409.920(1)(d) was preempted by

federal law and was also unconstitutional under the

Supremacy Clause. (Pet. App. D, pp. 52-53). On appeal, both

the Third District Court of Appeal and the Florida Supreme

5. The State has never identified any “ruling” that permits the

solicitation of patients already receiving Medicaid benefits while

banning the solicitation of new patients.

10

Court affirmed the trial court’s rulings. See Pet. App. A

(Supreme Court), B (Order denying rehearing), C (Third

District Court of Appeal).

REASONS FOR DENYING THE PETITION

The state of Florida seeks review of two distinct aspects

of the decision by the Florida Supreme Court. First, it argues

that the Florida courts misapplied this Court’s Supremacy

Clause precedents and that states shouldbe free to ban

Medicaid providers from engaging in Medicaid payment

practices that Congress and HHS have expressly declared

are permissible under the Medicaid program. Second, it

argues that the decision misapplied the statutory exception

- and administrative safe harbor for “employer-employee”

payments. According to Petitioner, the only wages that fall

within the exception and safe harbor are those paid to medical

employees who provide services that can themselves be billed

to Medicaid. See Pet. at 5-20. In other words, it is Petitioner’s

contention that while it would be legal for a dentist to pay a

duly licensed medical assistant to clean his patients’ teeth

(since teeth cleaning is a “covered service’), it would be a

criminal “kickback” for the dentist to pay the receptionist

who made the appointments (since the receptionist’s wages

cannot be billed to Medicaid). Neither of the State’s

arguments warrants this Court’s review.

1]

I,

THE FLORIDA SuPREME Court PROPERLY APPLIED THE

“IMPLIED CONFLICT PREEMPTION” DOCTRINE

A. Tue “IMPLIED CONFLICT-PREEMPTION” DOCTRINE

The Supremacy Clause of the Constitution provides that

the “Laws of the United States . . . shall be the supreme Law

of the Land; and the Judges in every State shall be bound

thereby, any Thing in the Constitution or Laws of any State

to the Contrary notwithstanding.” U.S. Const., art. VI, cl. 2.

Since McCulloch v. Maryland, 17 U.S. (4 Wheat) 316, 427

(1819), “it has been settled that state law that conflicts with

federal law is ‘without effect.”” Cipollone v. Liggett Group,

Inc. , 505 U.S. 504, 516 (1992) (citation omitted). Both federal

statutes and regulations can have preemptive effect. See

Fidelity Fed. Sav. & Loan Ass’n v. De la Cuesta, 458 U.S.

141, 153 (1982) (“[flederal regulations have no less pre-

emptive effect than federal statutes”).

The Court has recognized three discrete categories of

preemption: (1) express preemption, where a federal statute

contains “explicit preemptive language;” (2) field

preemption, in which the federal regulatory scheme is “so

pervasive as to make reasonable the inference that Congress

left no room for States to supplement it;” and (3) implied

conflict preemption, in which compliance with both federal

and state law “stands as an obstacle to the accomplishment

and execution of the full purposes and objectives of

Congress.” Gade v. Nat'l Solid Wastes Mgmt. Assoc., 505

U.S. 88, 98 (1992) (quotations and citations omitted).

12

In determining whether state law is preempted by

implication, the Court’s ultimate task is “to determine

whether state regulation is consistent with the structure and

purpose” of the federal regulatory scheme “as a whole.”

Gade, 505 U.S. at 98; accord Crosby v. Nat'l Foreign Trade

Council, 530 U.S. 363 (2000); Dalton v. Little Rock Family

Planning Servs., 516 U.S. 474, 476 (1996). The touchstone

is Congressional intent. See Gade, 505 U.S. at 96. Thus, state

law will be preempted by implication where, “under the

circumstances of th[{e] particular case,” the state law “stands

as an obstacle to the accomplishment and execution of the

full purposes and objectives of Congress—whether that

‘obstacle’ goes by the name of conflicting; contrary to;...

repugnance; difference; irreconcilability; inconsistency;

violation; curtailment; ... interference, or the like.” Geier

v. Am. Honda Motor Co., Inc., 529 U.S. 861, 873 (2000)

(internal quotations omitted).

B. CONFLICT PREEMPTION AND THE MEDICAID PROGRAM

Petitioner contends that the application of conflict-

preemption principles to void state statutes affecting the

Medicaid program is contrary to congressional intent, and

that “no court has previously accorded” the federal anti-

kickback statute “preemptive effect.” (Pet. at 7). While it

may be true that no other court has addressed the preemptive

effect of the anti-kickback provisions of the Medicaid Act,

this Court, in Dalton v. Little Rock Family Planning Servs.,

516 U.S. 474, 478 (1996), remanded for the entry of an

injunction against the enforcement of a state law relating to

abortion services to the extent that it conflicted with the

Medicaid Act. Numerous other federal and state courts have

likewise held that various state laws were preempted by the

13

Medicaid Act and its regulations.° The State cites no authority

to the contrary.

Petitioner’s contention that the decision below violated

conflict preemption principles rests on a central but false

premise. According to Petitioner, the structure and history

of the federal scheme contemplates not only state

involvement in the prosecution and punishment of conduct

that falls outside the payment practices permitted under the

6. See e.g., Antrican v. Odom, 290 F.3d 178 (4th Cir. 2002)

(applied federal preemption principles to the dentistry requirements

of the Medicaid program and holding that North Carolina’s plan

violated and was preempted by more expansive federal dentistry

standards); Planned Parenthood Affiliates v. Engler, 73 F.3d 634,

637 (6th Cir. 1996) (holding that a provision of Michigan law was

invalid under the Supremacy Clause becavse it conflicted with the

Medicaid Act); Randall v. Lukhard, 709 F.2d 257 (4th Cir. 1983)

(holding that a Virginia rule was invalid because it conflicted with a

provision of the Medicaid Act), aff'd in part, 729 F.2d 966 (4th Cir.

1984) (en banc), cert. denied, 469 U.S. 872 (1984); Smith v. Travelers

Indemnity Co., 763 F. Supp. 554, 558 (M.D. Fla. 1989) (because

Florida’s “collateral source rule permits private automobile liability

insurers to become secondary sources of recovery behind Medicare,

Florida’s collateral source rule obstructs the Congressional purpose”

behind the Medicare Act and, therefore, is preempted) (citation

omitted); Olszewski v. Scripps Health, 30 Cal. 4th 798, 69 P.3d 927

(2003) (holding that federal Medicaid statutes and regulations

preempted lien provisions of California plan); Martin v. State, 642

N.W.2d 1, 34-36 (Minn. 2002) (Minnesota law allowing the state to

assert a subrogation right to personal injury awards preempted by

anti-lien provision of federal Medicaid Act because “the federal law

prohibits exactly what the state law allows”); Public Health Trust v.

Jackson Mem. Hosp., 693 So. 2d 562 (Fla. 3d Dist. Ct. App. 1996)

(holding that federal law preempted a Florida regulation that allowed

hospitals to hold third parties liable for patient services in excess of

the amounts paid by the Medicaid program).

14

federal anti-kickback statute and regulatory “safe harbors,”

but also permits states to expand the categories of prohibited

conduct to include payment practices that fali squarely within

the protections of federal law. See Pet. at 19-20. However,

as demonstrated below, Congress’ objective in enacting and

amending the federal anti-kickback statute was to establish

a uniform system providing certainty for providers about what

financial practices were legal. While Congress welcomed

state involvement as a partner in investigating and penalizing

practices that were forbidden under federal law, Congress

never envisioned that states would criminalize practices that

Congress and the federal agencies overseeing the Medicare

and Medicaid programs have expressly deemed permissible.

Such a scheme would create chaos in the medical industry,

particularly for providers operating in multiple states. Thus,

the Florida Supreme Court correctly reasoned that a Florida

statute that sought to do just that stood as an “obstacle” to

congressional objectives and improperly prevented the

payment of acceptable Medicaid claims.

C. Tue EmpLoyver-Emp.Loyvere Exception AND SAFE HARBOR

Both the Medicare and Medicaid programs are subject

to the terms of the federal anti-kickback statute, 42 U.S.C.

§ 1320a-7b, which prohibits certain conduct and payment of

claims therefore. When Congress initially enacted these

provisions in 1972, they were much narrower than the present

form, as they only prohibited the solicitation or offering of a

“kickback, bribe or rebate,” and only punished a violation

as a misdemeanor. See Pub. L. No. 92-603, § 242(b), (c), 86

Stat. 1419 (codified at 42 U.S.C. § 1396h(b)).

In 1977, Congress elevated the penalty te a felony and

broadened the scope of the prohibition to include “any

15

remuneration,” but then carved out an express statutory

exception for “any amount paid by an employer to an

employee (who has a bona fide employment relationship

with such employer) for employment in the provision of

covered items or services.” Pub. L. 95-142 (Oct. 25, 1977).

See 42 U.S.C. § 1320a-7b(b)(3). However, by !980, Congress

recognized that the statute was so broad that it created

uncertainty for healthcare providers and, accordingly,

upgraded the mens rea to “knowingly and willfully.” The

legislative history of the amendment indicates that the intent

behind the amendment was to clarify what conduct was

criminal and when it could be prosecuted: “The Committee

is concerned that criminal penalties may be imposed under

current law to an individual whose conduct, while improper,

was inadvertent. Accordingly, Title VIII clarifies present law

to assure that only persons who knowingly and willfully

engage in the proscribed conduct are to be subject to criminal

sanctions.” H.R. Rep. No. 96-1167, p. 202, reprinted in 1980

U.S.C.C.A.N. 5526, 5572 (emphasis supplied).

In 1987, in response to concerns over fraud in federal

health care programs, as well as continuing complaints from

the health care industry about the overbreadth of the statute,

Congress enacted a comprehensive series of amendments.

See Pub. L. No. 100-93. To address the former concern,

Congress expanded the types of offenses that would result

in a provider’s exclusion from participation in the Medicare

or Medicaid program to specifically include convictions

under either federal or state law “in connection with the

delivery of a health care item or service ... of a criminal

offense relating to fraud, theft, embezzlement, breach of

fiduciary responsibility, or other financial misconduct.” See

42 U.S.C. § 1320a-7(a)(1) and (b)(1).

16

Congress simultaneously amended the anti-kickback

provision, authorizing the Secretary of the Department of

Health and Human Resources (“HHS”) to promulgate “safe

harbors” for permissible financial relationships. In granting

HHS the authority to create new exceptions to what would

otherwise constitute illegal remunerations or kickbacks, the

Senate Report specifically recognized:

It is the understanding of the [Finance] Committee

that the breadth of this statutory language has

created uncertainty among health care providers

as to which commercial arrangements are

legitimate, and which are proscribed. The

Committee bill therefore directs the Secretary, in

consultation with the Attorney General, to

promulgate regulations specifying payment

practices [1] that will not be subject to criminal

prosecution under the new section 1128B(b) and

[2] that will not provide a basis for exclusion from

participation in Medicare or the State health care

programs under the new section 1128(b)(7).

S. Rep. No. 100-109, reprinted in 1987 U.S.C.C.A.N. 682,

707-708 (emphasis and numbering supplied).

Not satisfied with only the statutory exception for

“employer-employee” payments, in 1991, final rules were

promulgated creating a parallel administrative “safe harbor”

for employer-employee relationships. The rule, now codified

at 42 C.F.R. § 1001.952(1), also not only barred such

payments from being “treated as a criminal offense” but also

prevented such payments from serving “as the basis for an

exclusion.” Thus, the safe harbor regulation provides in

pertinent part:

17

§ 1001.952 Exceptions.

The following payment practices [1] shail not

be treated as a criminal offense under‘section

1128B of the Act and [2] shall not serve as the

basis for an exclusion: .

(i) Employees. As used in section 1128B of the

Act, “remuneration” does not include any amount

paid by an employer to an employee, who has a

bona fide employment relationship with the

employer, for employment in the furnishing of any

item or service for which payment may be made

in whole or in part under Medicare, Medicaid or

other Federal health care programs. For purposes

of paragraph (i) of this section, the term employee

has the same meaning as it does for purposes of

26 U.S.C. § 3121(d)(2).

(emphasis and numbering supplied).

The employee “safe harbor” also was intended to be

expansive and to give every benefit of the doubt to the

employer. As OIG explained in issuing section 1001.952(1)

as a final rule for the first time in 1991: “The proposed

exception for employees permitted an employer to pay an

employee in whatever manner he or she chose for having

that employee assist in the solicitation of program

business. ...” Final Rule, Medicare and State Health Care

Programs: Fraud and Abuse; OIG Anti-Kickback Provisions,

56 Fed. Reg. 35952 (July 29, 1991) (Proposed Safe Harbors)

(emphasis supplied). And, the scope of the safe harbors was

18

to prevent the criminal prosecution of a Medicaid employer

for paying wages to its employees by characterizing the wages

as unlawful “kickbacks.” See Id. (General Comments

Response No. |: “If a person participates in an arrangement

that fully complies with a given provision, he or she will be

assured of not being prosecuted criminally or civilly for the

arrangement that is the subject of the provision”); id.

(Response No. 9: “The clear congressional intent behind the

development of these safe harbor provisions is to define

innocuous arrangements that should not be prosecuted,

including the statutory exceptions”).

D. HARDEN WAS CORRECTLY DECIDED

1. The Exceptions and Safe Harbors

In support of its contention that Congress intended for

state legislatures to have the discretion to criminalize

precisely the same payment practices that Congress (in

statutory exceptions) and HHS (through twenty-two duly

promulgated rues) declared to be lawful, Petitioner relies,

not on the language or history of the anti-kickback statute,

but on an entirely different statute, 42 U.S.C. § 1396b(q)(3).”

See Pet. at 19. Section 1396b(q)(3) authorizes states to create

“medicaid fraud unit[s]” to “prosecute individuals for

criminal violations” under state law and/or to refer “suspected

criminal violations relating to the program ... to the

appropriate” federal authorities. Petitioner strains to construe

a snippet of language in this subsection— encouraging states

to utilize “all applicable State laws regarding any and all

aspects of fraud in connection with” federal health care

programs—as an expression of congressional intent to allow

states to enact laws criminalizing conduct that would

otherwise satisfy a federal statutory exception or safe harbor.

19

However, nothing in that language, or in any other federal

statute, suggests that Congress intended that states were free

to define as “fraudulent” the conduct that Congress and HHS

expressly stated was lawful.

To find any expression of such a goal in the legislative

history of the anti-kickback statute, Petitioner reaches back

over 35 years, citing language from a committee report

relating to the 1972 legislation, stating that the anti-kickback

penalties “would be in addition to and not in lieu of any other

penalty provisions of state or federal law.” H.R. Rep. No.

92-231, 5094 (May 26, 1971). While this language suggests

that states were free at the time to impose penalties greater

than those imposed by federal anti-kickback statute, nothing

in the report suggested that Congress intended to allow states

to prohibit conduct that Congress expressly determined was

permitted. Indeed, Congress did not recognize the need for

exceptions and administrative safe harbors until nearly twenty

years later. See p. 14-16 supra.

The only direct support for Petitioner’s construction of

Congressional intent is language from an HHS commentary

in response to comments received in connection with

additional safe harbors promulgated in 1991. See Pet. at 9,

19.’ However, there is no indication that HHS undertook any

sort of_ preemption analysis when it drafted this response.

Additionally, the provisions of the federal anti-kickback

statute at issue here, 42 U.S.C. § 1320a-7b, were not

promulgated by HHS as rules, but instead were enacted as

7. See Medicare & State Health Care Programs: Fraud & Abuse,

OIG Anti-Kickback Provisions, Final Rule, 56 Fed. Reg. 35952,

35957 (July 29, 1991) (stating that “conduct that is lawful under

federal anti-kickback statute or regulation may still be illegal under

State law’).

20

statutes by Congress. Congress’ intent was set forth in the

Senate Committee Report which, as previously stated,

indicates that Congress’ objective in requiring safe harbors

was to provide certainty to providers by describing specific

payment practices that would “not provide the basis” for

either “criminal prosecution” or “exclusion” from the

program. See p. 16 supra. The Senate Report plainly takes

precedence over any conflicting interpretation of

Congressional intent regarding preemption offered by HHS.

Indeed, Petitioner’s construction of the federal

exceptions and safe harbors directly conflicts with the Senate

Report. As previously noted, in 42 U.S.C. § 1320a-7(a)(1)

and (b)(1), Congress has mandated that even a successful

state prosecution of a provider will result in the automatic

exclusion of that provider from not only Medicaid but from

all federal health care programs. However, the Senate Report

expressly stated that freedom from “exclusion” was one of

the principal objectives of the 1987 amendments that created

the safe harbors. Surely Congress did not intend to protect

the payment practices set forth in the safe harbors from being

used as the basis for exclusion only if the conduct was

prosecuted federally, while requiring exclusion if the same

conduct was prosecuted under state statutes. On the contrary,

allowing states to penalize conduct that Congress and HHS

went to so much trouble to protect would stand as an

“obstacle” to Congress’ stated objectives.

Nor is the Medicaid Act unique in preempting state

prosecutions for conduct protected by federal law. In Crosby

v. Nat’l Foreign Trade Council, 530 U.S. 363, 364-65 (2000),

the Court held that a state statute penalizing individuals and

conduct that Congress explicitly exempted from sanctions

was preempted by federal law: “sanctions are drawn not only

21

to bar what they prohibit but to allow what they permit. . .”

Id. at 366. The Court recognized that the fact that the statutes

were aimed at a common end “hardly neutralizes conflicting

means.” Jd. at 365. Likewise, the fact that Florida and federal

law are both aimed at preventing fraud does not give Florida

the power to criminalize conduct that federal law explicitly

permits. See id. at 366.

Defining “fraud,” especially in connection with the

operation of a federally funded program, is not “a field which

States have traditionally occupied.” Buckman Co. v.

Plaintiffs’ Legal Comm., 531 U.S. 341, 347 (2001). Buckman

concluded that a state cause of action seeking damages for

injuries allegedly caused by bone screws that had been

approved by Food and Drug Administration (FDA),

predicated on a “fraud-on-the-FDA” theory, was preempted

by federal statutes. The Court reasoned that “[p]olicing fraud

against federal agencies is hardly ‘a field which the States

have traditionally occupied,’ such as to warrant a presumption

against finding federal pre-emption of a state-law cause of

action.” Buckman, 531 U.S. at 348 (internal citation omitted).

See also Nathan Kimmel, Inc. v. Dowelanco, 275 F.3d 1199,

1205 (9th Cir. 2002) (plaintiff's state law tort of intentional

interference with prospective business advantage based on a

“fraud against the [Environmental Protection Agency]”

theory was preempted by standards in the Federal Insecticide,

Fungicide, and Rodenticide Act); cf’ McCall v. Pacificare of

Cal., Inc., 25 Cal. 4th 412, 426, 21 P.3d 1189, 1200, 106

Cal. Rptr. 2d 271 (2001) (“[t]o the extent that the [plaintiff's]

complaint alleges fraud on the HCFA, defendants may, on

remand, assert it is preempted under the rule in Buckman’’).°

8. Numerous courts have held that state law tort claims are

preempted by the Medicaid Act, where the claims are based, in whole

(Cont’d)

22

Similarly, the State’s construction of the interplay

between federal and state law would undermine Congress’

stated goal of eliminating “uncertainty among health care

providers as to which commercial arrangements are

legitimate, and which are proscribed.” See p. 16, supra. This

Court has already characterized the Medicaid Act as “among

the most intricate ever drafted Fk, Congress” with a

“Byzantine construction.” Schweiker v. Gray Panthers, 453

U.S. 34, 43-44 (1981). Allowing each state legislature to

determine the legality of payment practices described by

Congress or HHS as legal under the Medicaid program would

effectively Balkanize the program into as many as

50 subdivisions with potentially different or conflicting

standards.° Large multi-state providers, in particular, will not

know whether their claims for services will be rejected or

subject them to civil or criminal penalties. It strains credulity

to suggest that Congress intended to allow states to determine

the validity of claims paid by the federal government.

(Cont'd)

or in part, on a theory that the torts arose from an improper denial of

benefits under the Medicaid Act. See, e.g., Midland Psych. Assoc.,

Inc. v. United States, 145 F.3d 1000 (8th Cir. 1998); Bodimetric

Health Servs. v. Aetna Life & Cas., 903 F.2d 480 (7th Cir. 1990);

Marin v. HEW, Health Care Fin., 769 F.2d 590 (9th Cir. 1985).

See also Wilson v. Chestnut Hill Healthcare, Civ. A. No. 99-CV-

1468, 2000 U.S. Dist. LEXIS 1440 (E.D. Pa., Feb. 10, 2000) (“courts

must discount any ‘creative pleading’ which may transform Medicare

disputes into mere state law claims, and painstakingly determine

whether such claims are ultimately Medicare disputes”).

9. For example, Petitioner could try to apply Florida’s Unfair

and Deceptive Trade Practices Act, Fa. Stat. §§ 501.201-501.203

(2003). Cf Congress of Cal. Servs. v. Catholic Healthcare West, 87

Cal. App. 4th 491, 510 (Cal. App. 2d 2001) (holding an unfair

business practices claim preempted by Medicare).

23

Compare Lawrence Co. v. Lead-Deadwood Sch. Dist. No.

40-1, 469 U.S. 256, 270 (1985) (holding a state statute

placing additional limits on federal funds disbursed by

Congress to local governments was preempted).

Finally, Petitioner contends that the decision below

would “cali[] into question” the constitutionality of statutes

from other states. See Pet. at 22. But Petitioner fails to identify

a single reported case—other than this one—where a state

prosecuted a defendant for conduct falling within a federal

exception or safe harbor. This case was an anomaly, and the

decision below properly found the prosecution to be

impermissible.

2. Negligence vs. Willfulness

The Florida Supreme Court also correctly ruled that the

Florida Legislature’s initial attempt to dilute the mens rea

requirement for proving kickback violations—from the

federal “willfulness” requirement to a negligence standard—

constituted a separate violation of the Supremacy Clause.

As previously discussed, Congress’ decision to elevate the

mens rea from “knowledge” to “willfulness” in 1980 was

intentional, and guided by policy concerns over the breadth

of the federal statute. See p. 15, supra. At the very least, the

term “willfulness” means “that the defendant acted with an

evil-meaning mind, that is to say, that he acted with

knowledge that his conduct was unlawful.” Bryan v. United

States, 524 U.S. 184, 193 (1998). By criminalizing the

“accidental” or “negligent” (i.e., non-willful) payment of

allegedly unlawful “remunerations”—under circumstances

where the Florida Legislature did not even attempt to define

the operative term “remuneration” to exclude conduct that

is lawful under federal law—section 409.920(2)(e), as

24

originally enacted, stood as an “obstacle” to the achievement

of Congress’ stated objectives. Cf Fireman’s Fund Ins. Co.

v. City of Lodi, 302 F.3d 928 (9th Cir. 2002) (holding invalid

under the Supremacy Clause a City ordinance that required

companies suspected of committing hazardous waste

contamination to prove by “clear and convincing evidence”

that others were responsible for the contamination, rather

than by a preponderance of the evidence, as required by

federal law, 42 U.S.C. §§ 9601-9675), cert. denied, 538 U.S.

961 (2003); Lukhard, 709 F.2d at 267 (holding that Virginia’s

burden of proof provisions in its transfer of assets rule under

the Medicaid Act were invalid in light of less restrictive

federal requirements), modified in part, 729 F.2d 966 (4th

Cir. 1984) (en banc) (construing Virginia’s burden of proof

provision so as not to conflict with federal standard).

In any event, the Florida Legislature amended the statute

in 2004, eliminating the discrepancy between state and

federal standards. Accordingly, this issue—although not

jurisdictionally “moot” as to the Respondents’ case—is no

longer a controversy in Florida and, therefore, does not

present a sufficiently concrete dispute to warrant granting

the Petition. See Sanks v. Georgia, 401 U.S. 144 (1971)

(dismissing appeal after oral argument because new factual

and legal developments, including new state legislation, made

it inappropriate to decide the original issue); Bryan v. Moore,

528 U.S. 1133 (2000) (dismissing a writ of certiorari as

improvidently granted due to intervening amendments by the

Florida Legislature to death penalty statute at issue).

25

Il.

Concress Dip Nor INTEND TO CRIMINALIZE MARKETING,

ADVERTISING OR ASSISTANCE GIVEN TO MEDICAID-ELIGIBLE

PATIENTS TO RECEIVE MEDICAL SERVICES THAT STATES ARE

ReEQuIRED To PROVIDE UNDER FEDERAL LAw

While Petitioner contends that the Florida Supreme Court

misapplied the Supremacy Clause by engrafting the federal

“employer-employee” exception and safe harbor onto section

409.920, the Petition primarily focuses on the exception and

safe harbor. According to Petitioner, the wages a Medicaid

provider pays to its employees are protected from prosecution

as kickbacks only if the employees are medical personnel—

presumably the doctors, dentists, nurses and licensed

technicians—who are being paid to dispense services that

can themselves be billed to Medicaid. For example, under

the State’s construction of the exception and safe harbor,

while it is lawful for a provider to pay a dental technician to

x-ray and clean a child’s teeth, it is a crime for the dentist to

pay a receptionist to telephone the child’s parents to schedule

the next appointment, since Medicaid will not reimburse the

provider for the time expended in “soliciting” the patient.

Indeed, under Petitioner’s proposed construction, all forms

of marketing would be illegal. In addition to its absurdity,

there are numerous flaws in the State’s argument.

.First, Petitioner’s construction is not compelled by the

plain meaning of the employer-employee safe harbor

language. Title 42 C.F.R. section 1001.952 immunizes

payments for all those “employ[ed] in the furnishing of any

item or service for which payment may be made in whole or

in part under Medicare, Medicaid or other Federal health care

programs.” (emphasis supplied) Any bon. fide employee of

26

a dental pr. ..:e is “employed” in the “furnishing” of

services, whe... the employee is a dentist, a dental assistant,

bookkeeper, receptionist or advertiser.

Second, the only case Petitioner cites in support of its

construction, United States v. Starks, 157 F.3d 833 (11th Cir.

1998) (Pet. at 17-18), is inapposite. In Starks, a corporation

that operated a drug treatment program gave kickbacks

(essentially bribes) to two employees of the State of Florida

Department of Health and Rehabilitation Services (“HRS”)

to refer patients to the corporation. 157 F.3d at 835-836. The

defendants argued that the federal anti-kickback statute was

unconstitutionally vague, claiming that “ordinary people in

their position might reasonably have thought” that the two

HRS “employees” qualified for the statutory exception and

safe harbor for employer-employee relationships. Jd. at 839.

The Eleventh Circuit soundly rejected this argument for the

obvious reason that the recipients of the kickbacks were not

bona fide employees of the corporation, but rather were

government HRS employees. /d. In dicta, the Eleventh Circuit

added that the defendants also provided no “covered items”

or “legitimate service for which the Hospital received any

Medicare reimbursement.” Jd. This dictum, however, cannot

be divorced from the principal holding (that the defendants

were not corporate employees) or the facts of the case—the

defendants were corrupt government HRS workers misusing

their public offices for private gain. Nothing of the sort took

place here.

Third, if the Court were to adopt the State’s radical

construction, then a// forms of Medicaid marketing would

be criminalized, from the “flyers” discussed during the trial

court oral argument, to television or internet advertising.

However, not a whiff of such a purpose can be found in either

27

the Act’s legislative history or HHS commentary. Indeed, the

Act itself contemplates outreach to “inform” the eligible

population of the “availability” of basic services and the

“arranging” of treatment. See 42 U.S.C. § 1396a(a)(43). In light

of the serious First Amendment ramifications of criminalizing

ordinary marketing for medical services, the Court should not

assume that Congress intended that anomalous result.

Fourth, the Petition addresses the method of payment by a

provider, contending that a Medicaid employer may perhaps

pay salaries to employees but that commission-based wages

are illegal. While Congress or HHS could arguably create such

a distinction, to date neither has chosen to do so. All Petitioner

can point to for the creation of this distinction is an “advisory”

opinion—not a duly promulgated rule—issued by HHS in 1996.

See Pet. at 10. The criminal charges at issue in this case require

far more notice than that under the Due Process Clauses of the

Fifth and Fourteenth Amendments. Indeed, it was for that reason

that the trial court in this case also ruled that section 409.920

was unconstitutional as applied. See Pet. App. D, pp. 56a-57a.

Moreover, what scarce precedent exists in this area contradicts

the State’s argument.

For example, in United States ex rel. Obert-Hong v.

Advocate Health Care, 211 F. Supp. 2d 1045 (N.D. Ill. 2002),

the court dismissed a qui tam fraud action brought against a

hospital. The hospital had entered into contracts with doctors,

whereby the hospital would purchase the doctors’ practices,

transform the doctors into hospital employees and, in return,

require the doctors to refer patients to the hospital as a condition

of their employment. The opinion makes clear that the amounts

paid to the doctors under the employment aspect of the contracts

were expressly based on “a percentage of fees collected for

referred patients.” 211 F. Supp. at 1047. The doctors were paid

28

on a commission basis, similar to the manner in which Harden

paid the drivers in this case. See also New Boston Gen. Hosp.,

Inc. v. Texas Workforce Comm., 47 S.W.3d 34 (Tex. App. 2001)

(contract between hospitals and recruiter was not voidable as

in violation of the anti-kickback provision of the Medicaid Act

because the recruiter was an “employee” under “safe harbor”

provisions of the Act). The decision below properly relied upon

Obert-Hong and New Boston General in concluding that there,

as here, payments to bona fide employees were within the federal

safe harbor, and therefore legal. See Pet. App. A, p. 23a.

CONCLUSION

The decision below correctly held that the Florida anti-

kickback statute is preempted by the Federal Anti-Kickback

Statute and corresponding regulatory exceptions, barring

respondents’ prosecution. The decisfon does not conflict with

this Court’s precedents, and the fact that the Florida statute has

been amended to comport with federal law eliminates any future

uncertainty about the preemption question. For the foregoing

reasons, the petition for wnt of certiorari should be denied.

Respectfully submitted,

ANTHONY C. VITALE G. RICHARD STRAFER

THE HEALTH LAW OFFICES OF G. RICHARD StrarFer, P.A.

ANTHONY C. VITALE 2400 South Dixie Highway

799 Brickell Plaza Suite 200

Suite 700 Miami, FL 33133

Miami, FL 33131 (305) 857-9090

(305) 358-4500

Attorneys for Respondent

Gabriel Harden

APPENDIX

la

APPENDIX

ALA. Cope § 22-1-11; Ariz. Rev. Star. § 13-3713; Ark. Cope

ANN. §§ 5-55-111, 20-77-902; CaL. WEL. & Inst. CoDE

§ 14107.2; Coto. Rev. Star. § 25.5-4-305; Conn. GEN. Stat.

§ 53a-161c; DEL. Cope ANN. tit. 31, § 1005; 305 ILL. Comp.

StaT. § 5/8A-3; Kan. Stat. ANN. § 21-3847; Ky. Rev. Stat.

Ann. §§ 216.2950, 205.8461; La. Rev. Star. ANN. §§ 14:70.5,

46:438.2; Mass. GEN Laws ch. 1L8E, § 41; Minn. Star.

§ 62J.23; Mo. Rev. Star. §§ 191.905, 198.151, 376.823;

Mont. Cope ANN. § 45-6-313; Nev. Rev. Stat. § 422.560;

N.J. Stat. ANN. § 30:4D-17; N.M. Stat. Ann. §§ 30-41-1-3,

30-44-7; N.Y. Soc. Serv. §§ 366-d, 366-f; Oxia. STAT. tit.

56, § 1005 & Oxta. Stat. tit. 63 § 1-742; R.I. Gen. Laws

§§ 5-48.1-3, 40-8.2-3; S.D. Copiriep Laws § 22-45-4; Tex.

Hum. Res. Cope § 32.039; Va. Cope Ann. § 32.1-315; WAsu.

Rev. Cope § 74.09.240; Wis. Stat. § 49.49. The states who

acted in a similar fashion as the State of Florida (See Fia.

Stat. § 817.505), thereby adopting the federal statutory and

regulatory exceptions under the Federal Anti-Kickback

Statute, include Arkansas, Connecticut, Kentucky, Missouri,

Montana, New York, Oklahoma, Rhode Island, Texas, and

Virginia. Ark. Cope Ann. §§ 5-55-111, 20-77-902; Conn.

Gen. Stat. § 53a -161c; Ky. Rev. Stat. Ann. §§ 216.2950,

205.8461; Mo. Rev. Star. §§ 191.905, 198.151, 376.823;

Mont. Cope Ann. § 45-6-313; N.Y. Soc. Serv. §§ 366-d, 366-

f; OKLA. Star. tit. 56, § 1005 & Oxxa. Star. tit. 63 § 1-742;

R.I. Gen. Laws §§ 5-48.1-3, 40-8.2-3; Tex. Hum. Res. Cope

§ 32.039; Va. Cope ANN. § 32.1-315. Of the remaining states,

12 have enacted anti-kickback statutes with no exceptions

(D.C. Cope Ann. § 4-802; Fra. Star. § 409.920; IND. Cope

§ 12-17.6-6-12; Mp. Cope Ann., Crim. Law § 8-511; Micu.

Comp. Laws § 400.604; Miss. Cope Ann. § 43-13-207; N.H.

REv. Stat. ANN. § 167:61-a; On10 REv. Cope ANN. § 2913.40;

2a

Appendix

Pa. STAT. ANN. tit. 62, § 1407; S.C. Cope Ann. § 44-113-60;

UtaH Cove ANN. § 26-20-4; W. Va. Cope § 9-7-5), and 13

have never enacted any such statute. Furthermore, Petitioner

states that “two states, Missouri and New Mexico, have a

mix of laws with and without safe harbors” (Pet. at 22);

however, this is inaccurate. Missouri has enacted three anti-

kickback statutes which all have “safe harbor” exceptions,

and New Mexico has enacted three anti-kickback statutes

two of which have “safe harbor” exceptions. Mo. Rev. Stat.

§§ 191.905, 198.151, 376.823; N.M. Star. Ann. §§ 30-41-

1-3, 30-44-7.