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State Seeks To Dismiss Lawsuit Over Hospital, Medicaid Money

Attorney General Ashley Moody’s office wants a judge to toss out a lawsuit challenging a legislative decision that would strip Medicaid money from two South Florida hospitals with ownership ties to a nursing home where residents died after Hurricane Irma. 

Moody’s office, representing Agency for Health Care Administration Secretary Mary Mayhew, filed a 32-page document last week arguing that a Leon County circuit judge should dismiss the lawsuit by Larkin Community Hospital and Larkin Community Hospital Palm Springs Campus, both in Miami-Dade County.

The hospitals are challenging the constitutionality of fine print, known as “proviso” language, that was tucked into this year’s state budget and would prevent the facilities from receiving Medicaid money used for training physicians. The budget fine print bars graduation-medical education money from going to hospitals “owned or operated by a controlling interest” that has had a nursing-home license revoked since Jan. 1, 2017.

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The state says the hospitals are under the controlling interest of Jack J. Michel, who also has a controlling interest in The Rehabilitation Center at Hollywood Hills, a nursing home where residents died after Hurricane Irma knocked out its air-conditioning system in September 2017.

In part, the hospitals contend that the budget proviso is unconstitutional because it revamps broader state laws about who is qualified to receive graduate-medical education money, criteria for the funding and how it is distributed. But in the document filed last week, Moody’s office argued that purposes of the graduate-medical education programs include improving quality of care for Medicaid patients and increasing the supply of highly trained physicians.

“A proviso that withholds appropriation from hospitals that have a direct connection, through a common controlling interest, to a nursing home that has been found to have intentionally or negligently harmed a resident can be considered directly and rationally related to improving the quality of care of Medicaid recipients,” the motion to dismiss the case said.

The lawsuit, which was filed in June and names Mayhew and Secretary of State Laurel Lee as defendants, also argues that the budget fine print is an unconstitutional “special” law because it improperly singles out the Larkin hospitals.

“The challenged proviso language was adopted to specifically target the Larkin hospitals, which operate their teaching hospital facilities in only one county in the state,” the lawsuit said. “Laws targeting and designed to operate upon … specific entities, providers or business owners that operate in a single county are special laws.”

But the state, in the filling last week, disputed that, saying the budget language applies to hospitals statewide and would block the physician-training money for “any such hospital fitting the proviso’s defined parameters.”

The lawsuit, which has been assigned to Leon County Circuit Judge Angela Dempsey, said the Larkin hospitals have received millions of dollars in recent years through graduate-medical education programs, including a combined $4.27 million in 2018.

But the ownership interests of Michel in the hospitals became an issue after The Rehabilitation Center at Hollywood Hills drew national attention in 2017 when patients were evacuated from the sweltering nursing home days after Hurricane Irma pounded the state.

The Agency for Health Care Administration in January issued a final order revoking the nursing home’s license, following a recommended order last year by an administrative law judge. The nursing home is closed, but AHCA’s final order is being appealed.

Authorities attributed as many as 12 deaths to conditions at the facility, though Administrative Law Judge Mary Li Creasy wrote that “clear and convincing evidence” was presented during the case that nine of the 12 residents “suffered greatly from the exposure to unsafe heat in the facility.”

The nursing home drew additional attention this week when four employees were charged with felonies in the patient deaths.

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Jim Saunders / News Service of Florida