New Florida Law Cracks Down on Patient Brokering by Drug Treatment Providers

Effective July 1, drug treatment providers in Florida must comply with stringent new regulations designed to crackdown on corruption within the industry.

Late last month, Governor Rick Scott signed into law HB 807, commonly referred to as the “Practices of Substance Abuse Service Providers Act.†The new law provides state regulators with broader powers as it pertains to treatment and recovery residence communities.

The crackdown comes amid mounting evidence of fraud and abuse in the industry as outlined in a recent New York Times article.

The bill is sweeping in scope. It targets questionable referral and deceptive marketing practices and patient brokering, tightens background screenings and licensing requirements, and creates enhanced penalties – including fines and prison time – for those who violate the law.

The bill cracks down on marketing practices and bans service providers, operators of recovery residences, and third parties who provides any form of advertising or marketing services to a provider or operator of a recovery residence from taking part in the following marketing practices:

• Knowingly and willfully making a materially false or misleading statement or providing false or misleading information about the identity, products, goods, services, or geographical location of a licensed service provider, as defined in chapter 397, F.S., in marketing, advertising materials, or other media or on a website with the intent to induce another person to seek treatment with that service provider.
• Including on its website, false information or electronic links, coding, or activation that provides false information or that surreptitiously directs the reader to another website.

Third parties must provide marketing services in accordance with s. 397.55, F.S., and be licensed by the Florida’s Division of Consumer Services under the Florida Telemarketing Act. These entities must pay a $1,500 licensure fee. However, the bill exempts them from the bond, line of credit, and certificate of deposit requirement.

The legislation targets patient brokering and referrals in that it prohibits:

• Soliciting, receiving, or making an attempt to solicit or receive a commission, benefit, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or engaging or making an attempt to engage in a split-fee arrangement in return for a referral or an acceptance or acknowledgment of treatment from a service provider or recovery residence.
• Entering into a contract with a marketing provider who agrees to generate referrals or leads for the placement of patients with a service provider or in a recovery residence through a call center or a web-based presence, unless the service provider or the operator of the recovery residence discloses the referral to the prospective patient so that the patient can make an informed healthcare decision.

The bill adds patient brokering to the offenses that can be investigated and prosecuted by the Office of Statewide Prosecution and to the crimes that constitute racketeering activities.

The bill creates a $50,000 fine for patient brokering. Additionally, it creates enhanced penalties for higher volumes of patient brokering. For brokering of 10 to 19 patients, the crime is a second-degree felony punishable as provided in ss. 775.082 or 775.084, F.S., and includes a $100,000 fine. For brokering of 20 or more patients, the crime is a first-degree felony punishable as provided in ss. 775.082 or 775.084, F.S., and includes a $500,000 fine.

The bill also adds patient brokering into the offense severity ranking chart. This dictates the number of points to be added to an offender’s scoresheet for sentencing purposes.

The bill only subjects entities, and not individuals, to licensure. However, they will be regulated and subject to discipline in the same way as commercial telephone sellers, in addition to any civil or criminal penalties for fraudulent or deceptive practices under current law, and will subject them to licensure discipline for such actions.

The legislation also includes changes to the DCF licensing process and notes that DCF will significantly increase licensure fees. It addresses the need for background screenings and makes it a third-degree felony, punishable by up to five years in prison, for operating without a license.

The bill authorizes DCF to inspect providers by arriving either announced or unannounced to see if minimum requirements are met, and expands DCF’s authority to take action against a service provider.

It allows for each day a violation occurs to be considered a separate violation.

The bill authorizes use of corrective action plans; allows moratoria or immediate license suspensions for client health, safety or welfare; requires visible posting of notice of a moratorium or suspension; and allows DCF to deny, suspend, or revoke a license due to: false representation; an act affecting client health or safety; a violation of statute or rule; a demonstrated pattern of deficient performance; or failure to remove personnel failing background screening.

Current law prohibits referrals by licensed service providers to uncertified recovery residences. The new law prohibits referrals by uncertified recovery residences to licensed service providers.

Based on the comprehensive scope of the new law, it is clear that Florida will no longer tolerate misconduct within the drug treatment industry.

The Health Law Offices of Anthony C. Vitale represents drug treatment providers and can advise you about each of the provisions within the new law and how to comply. Give us a call at 305-358-4500 or send an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.