Court: Florida can’t claw back payments for preapproved hospital care for undocumented immigrants

Florida's 1st District Court of Appeal

In a ruling that could have widespread ripple effects for hospitals across the state, a Tallahassee appeals court has blocked the state from clawing back Medicaid payments from hospitals that provided state pre-authorized emergency health care to undocumented immigrants.

The ruling upholds a previous decision on clawbacks the court made in 2019 in a case known as Gulf Coast Medical Center v. the Agency for Health Care Administration. The hospital is part of the Lee Memorial Health System. A 2020 legislative staff analysis suggests the ruling would require the state to drop 42 Medicaid fraud cases against hospitals and result in the loss of nearly $13.5 million to the state at that time.

A three-Judge panel of the Florida 1st District Court of Appeal had ruled that the state cannot retroactively audit hospitals for providing emergency care to undocumented citizens that the state initially approved.

The state started conducting retroactive audits of prior-approved care for undocumented citizens following a U.S. Department of Health and Human Services Office of Inspector General audit of Medicaid payments for emergency care. Subsequent retroactive audits were conducted by the state’s Bureau of Medicaid Program Integrity (MPI), a fraud detection unit, under an initiative called the “alien audit program.”

A legislative analysis shows that since the state launched the audit program in 2010 it had closed 668 cases and collected $57,056,455.79. The analysis did not say whether it recouped that amount exclusively from hospitals.

But the audits, the appellate court ruled in Gulf Coast, ran afoul of a Medicaid statute that banned the state from conducting retroactive audits for state-authorized care. The provision was included in a law that authorized the state to implement prior authorization requirements as a way to bring down Medicaid costs.

Undocumented citizens are barred from enrolling in Medicaid. But federal law requires states to authorize limited Medicaid coverage for migrants facing medical emergencies, including dialysis, delivering a baby, or trauma.

Change in the law

Following the 2019 ruling, the DeSantis administration pushed the Legislature to modify the Medicaid statutes. The change, contained in HB 731, amended the prior authorization program, adding that nothing can be “construed to prevent the agency from conducting retrospective reviews under (Medicaid fraud statutes) including but not limited to, reviews in which an overpayment is suspected due to a mistake or submission of an improper claim or for other reasons that do not rise to the level of fraud or abuse.”

The 2020 bill also amended the law to say the change “confirms and clarifies existing law.”

A First District panel ruled this week, though, that the 2020 law did not abrogate the 2019 ruling.

“In short, if the legislature meant to overrule Gulf Coast through its 2020 amendments, it should have been far more direct and clear in doing so. We cannot be left to guess what the legislature intended but did not say,” the court said.

Additionally, the court noted that the 2020 changes were made to the prior authorization provisions in Medicaid law, contained in Section 409.905 of the Florida Statutes, and that the bill didn’t change law regarding what constitutes overpayments, which is contained in Section 409.913.

“At no time before or after the 2020 amendment has section 409.913 authorized the Agency to conduct carte blanche general retrospective audits of any claims, let alone pre-authorized claims,” the opinion says. “In Gulf Coast, we made clear that while section 409.913 does allow retrospective audits, it is only under listed circumstances; i.e., claims not previously reviewed (not a pre-authorized claim) where fraudulent acts are suspected, among other reasons.”

What’s next

The ruling sends the underlying case back to Leon County trial court, where Circuit Judge Angela Dempsey had denied a motion to certify the hospital’s challenge as a class action. She dismissed a motion from the North Broward Hospital District that contended the state had breached its contract with the facility.

“We intend to renew our motion for class certification,” said Julian A. Jackson-Fannin, a partner with the Duane Morris law firm who represents North Broward Hospital District.

North Broward is run by Gov. Ron DeSantis’ former Chief of Staff, Shane Strum. The health system sued the state for breach of contract for allegedly unlawfully and improperly recouping “overpayments.” The complaint cited the Gulf Coast decision.

Jackson-Fannin, the attorney representing North Broward, called this week’s ruling significant.

“It affects millions of dollars of reimbursements to the purported class of providers, and it’s an important decision concerning the effect of an appellate court’s prior rulings and how legislative history can be used to explain a statute.”

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Christine Sexton reporting. Florida Phoenix is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Florida Phoenix maintains editorial independence. Contact Editor Diane Rado for questions: [email protected]. Follow Florida Phoenix on Facebook and Twitter.