Last month, in the case Fresenius Medical Care Holdings, Inc. et al. vs. DVA Renal Healthcare, Inc., the 11th Circuit Court of Appeals upheld the constitutionality of the Florida Patient Self-Referral Act of 1992.

The Florida Legislature modeled the Florida Act after the federal Physician Self-Referral Prohibitions, or Stark law, that was passed in 1989.  The Stark law has gone through a number of revisions and clarifications over the last 23 years, but the Florida Legislature has not kept the Florida Act up to date with the many changes in the Stark law.  The result is that the Florida Act contains provisions that are either inconsistent with, or in some instances more burdensome than, the Stark law.  This makes it difficult for healthcare businesses to operate in Florida, as Fresenius discovered.

Fresenius and the related appellants are out-of-state corporations that provide renal dialysis services in Florida, both directly and through subsidiary corporations, to patients suffering from end stage renal disease.  Fresenius wanted to use a vertically integrated business model in Florida and refer all the patients’ blood work to associated laboratories.  Fresenius stated that such a business model would be more efficient and better for patients.  However, because the employee-physicians of Fresenius had a financial interest in the associated laboratories, they were prohibited by the Florida Act from referring their patients there for blood work.

Fresenius sued the Secretary of the Florida Department of Health and the members of the Florida Boards of Medicine and Osteopathic Medicine, arguing that the Florida Act is unconstitutional because it is (1) preempted by federal law, (2) violative of the dormant U.S. Constitution’s Commerce Clause, and (3) violative of substantive due process.

The Court of Appeals was not persuaded by any of the legal arguments made by Fresenius and upheld the constitutionality of the Florida Act.

The important take away from this case is that in Florida, as in many states, there are legal restrictions on a physician’s ability to refer patients to entities in which the physician may have an investment interest.  Compliance with the Stark law is not enough.  The Florida Act is much more restrictive.  Moreover, Florida has its own versions of the anti-kickback and the false claims statutes.  When physicians do business transactions in Florida, it is critical that all of the relevant statutes are carefully considered.