State v. Harden

• Decision Date: 18 May 2006
• Docket Number: No. SC04-613.,SC04-613.
• Citation: 938 So.2d 480
• Parties: STATE of Florida, Appellant, v. Gabriel HARDEN, et al., Appellees.
• Court: Florida Supreme Court

938 So.2d 480

STATE of Florida, Appellant, v. Gabriel HARDEN, et al., Appellees.

No. SC04-613.

Supreme Court of Florida.

May 18, 2006.

Rehearing Denied September 6, 2006.

Charles J. Crist, Jr., Attorney General, Christopher M. Kise, Solicitor General, Louis F. Hubener, Chief Deputy Solicitor General, Lynn C. Hearn, Deputy Solicitor General, and Jason Vail, Assistant Attorney General, Tallahassee, FL, for Appellant.

G. Richard Strafer, P.A., Anthony C. Vitale, P.A., Miami, FL, Ronald J. Manto of Manto and Kassebaum, LLP, Coconut Grove, FL, and Charles Wender, Boca Raton, FL, for Appellees.

M. Stephen Turner, P.A., Kelly A. O'Keefe and Brooke E. Lewis of Broad and Cassel, Tallahassee, FL, and Gabriel L. Imperato, P.A., of Broad and Cassel, Fort Lauderdale, FL, on behalf of DaVita, Inc., Fresenius Medical Care Holdings, Inc., and Gambro Healthcare, Inc.; Brit L. Geiger, New York, NY, Gadi Weinreich, and Howard J. Young, Washington, D.C., on behalf of Sonnenschein Nath and Rosenthal, LLP; and Max R. Price and Colleen M. Greene, Miami, FL, on behalf of Joel M. Berger, D.D.S., As Amici Curiae.

QUINCE, J.

We have on appeal a decision of the Third District Court of Appeal declaring invalid section 409.920(2)(e), Florida Statutes (2000), the "anti-kickback" provision of the Florida Medicaid fraud statute. We have jurisdiction. See art. V, § 3(b)(1), Fla. Const. For the reasons explained below, we conclude that this provision of Florida's Medicaid fraud statute is in conflict with federal law and therefore preempted by it.

FACTS AND PROCEDURAL HISTORY

In December 2000, the Office of the Statewide Prosecutor filed a nine-count information against ten individuals (Gabriel Harden, Edward Polsky, Maria Rodriguez, Bruce Eric Smith, Herbert Lee Goss, Flora Johnson, Elsa Cortorreal, Victor Rivera Billy Madison, and Von Shella Carter) associated with or "employed by" Dental Express Dentists, Dental Express, Inc., and Express Dental, Inc., three corporate entities providing dental services to children (hereinafter Dental Express). The information charged these individuals with conspiracy, racketeering, and Medicaid fraud under section 409.920(2)(e), Florida Statutes (2000). The State alleged that the defendants engaged in a "pay for patients" scheme in which individuals received "per head" payments in exchange for soliciting and driving Medicaid-eligible children for dental treatment at Dental Express.

The defendants filed motions to dismiss the information, arguing that the payment of wages by a Medicaid provider to its employees for the solicitation and transportation of Medicaid-eligible children to dental facilities for treatment was expressly protected by the federal Medicaid statute and the federal administrative regulation "safe harbor" provisions.¹ Thus, the defendants argued, the State's attempt to prosecute this federally protected activity was unconstitutional under the Supremacy Clause in article VI, clause 2 of the United States Constitution. Alternatively, the defendants argued that the undefined term "remuneration" in section 409.920(2)(e) was unconstitutionally vague as applied to employer-employee wages. They also argued that the "solicitation" of patients by employees of a legitimate Medicaid provider, when the solicitation involves no intent to defraud, is protected activity under the First Amendment of the United States Constitution and article I, section 9 of the Florida Constitution. In its response, the State conceded that the patients treated by Dental Express were Medicaid-eligible patients. However, the State asserted that the commission-based method of paying the drivers was unlawful under both federal and state law.

After hearing argument from the parties, the circuit court entered an order granting the defendants' motion to dismiss. The circuit court concluded that the State's attempt to prosecute the defendants under the unlawful remuneration provision of section 409.920(2)(e) was preempted by federal law and thus unconstitutional under the Supremacy Clause. The circuit court also held that the mens rea requirement in section 409.920(1)(d) was preempted by federal law and unconstitutional under the Supremacy Clause. Additionally, the circuit court agreed with the defendants' alternative argument that the State's construction of section 409.920(2)(e) as a criminal ban on the solicitation of commercial business would, absent an intent to defraud requirement not contained in the statute, violate the First Amendment and render the statute unconstitutionally vague as applied.

The State appealed the circuit court's ruling to the Third District. The Third District agreed with the circuit court that there is an implied conflict preemption which renders section 409.920(2)(e) unconstitutional. See State v. Harden, 873 So.2d 352 (Fla. 3d DCA 2004). In reaching this conclusion, the Third District noted two significant differences between the federal statute and the Florida statute. First, the federal statute contains "safe harbor" provisions that exclude certain types of payments from being considered "illegal remuneration," including employer-employee payments for the provision of covered items or services such as the transportation of patients for eligible dental services. Based on this distinction, the Third District concluded that Florida's anti-kickback statute criminalizes activity that is protected under the federal statute and "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," thereby resulting in implied conflict preemption. Id. at 355. Second, the federal statute contains a "knowing and willful" mens rea requirement that is not part of the Florida statute. Under federal law, the government must prove that the defendant acted with knowledge that his conduct was unlawful. In contrast, the Florida statute only requires that the defendant act knowingly.² The Florida statutory definition of "knowingly" in section 409.920(1)(d) includes mere negligence and consequently criminalizes activity that the federal statute intended to protect. Id. The Third District found these two differences to be dispositive in this case and did not address the other constitutional defects found by the circuit court. Id. at 355 n. 1. Accordingly, the Third District declared the statute unconstitutional.

The State sought review by this Court on the basis of our mandatory jurisdiction to hear appeals of district court decisions declaring a state statute invalid. The Court heard oral argument from the parties and also received several amicus briefs filed in support of the appellees, who were the defendants in the circuit court. The State raises three arguments in its appeal to this Court. The State contends that: neither the federal Medicaid anti-kickback statute nor the federal safe harbor regulations preempts section 409.920(2)(e); the safe harbor regulations do not protect a "per head" payment scheme for the solicitation and referral of eligible Medicaid patients; and section 409.920(2)(e) does not violate the First Amendment and is not constitutionally vague.

LAW AND ANALYSIS

"We review de novo a district court decision declaring a statute unconstitutional." Fla. Dep't of Children & Families v. F.L., 880 So.2d 602, 607 (Fla.2004). This case involves the confluence of federal and state Medicaid law, specifically those provisions referred to as the "anti-kickback" statutes. Both the federal and state statutes prohibit the payment, offer, solicitation, or receipt of a kickback, bribe, or rebate for referring an individual for services paid for under the Medicaid program or for arranging such services. We are asked to determine whether Florida's statute, which encompasses a wide range of remunerations within its ambit of prohibited "kickbacks," is preempted by the federal statute and thus unconstitutional under the Supremacy Clause of the United States Constitution. See U.S. Const. art. VI, cl. 2 (stating that federal law "shall be the supreme Law of the Land ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding"). In resolving this issue, we begin by reviewing the basic principles of preemption and then we examine the history and language of both the federal and state statutes.

Under the Supremacy Clause, a federal law may expressly or impliedly preempt state law. A state cannot assert jurisdiction where Congress clearly intended to preempt a field of law. See Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981). The United States Supreme Court has recognized three categories of preemption: (1) express preemption where a federal statute contains "explicit pre-emptive language"; (2) implied field preemption, where the scheme of federal regulation is "so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it"; and (3) implied conflict preemption, in which "compliance with both federal and state regulations is a physical impossibility" or where 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. Ass'n, 505 U.S. 88, 98, 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992) (plurality opinion) (explaining categories of preemption recognized in Supreme Court case law). The federal anti-kickback statute does not contain explicit preemptive language, nor does it contain such a pervasive scheme of federal regulation so as to indicate field preemption. Thus, this case involves the third category of preemption, i.e., implied conflict preemption.

In any preemption case, the court's "ultimate task ... is to determine whether state regulation is consistent with the structure and purpose of the statute as a whole." Id. (plurality opinion). This involves "looking to the provisions of the whole law, and to its object and policy." Id. (plurality opinion)...