A Florida district court of appeals has found that the antikickback provision of the state's Medicaid Provider Fraud Statute is unconstitutional because it conflicts with the federal antikickback statute and therefore is preempted under the Supremacy Clause of the U.S. Constitution. Florida v. Harden, 873 So. 2d 352 (Fla. Dist. Ct. App. 2004). The appeals court agreed with the trial court's analysis of the statute based on provisions of the federal Medicaid Act and the antikickback safe harbor regulations.

The State charged Gabriel Harden and nine other defendants with violating Florida's antikickback statute, Fla. Stat. Ann. § 409.920(2)(e). The charges were based on payments made by three corporate entities to employed drivers for the "solicitation and transportation" of Medicaid-eligible children to the defendants' dental facilities for treatment. Harden filed a motion to dismiss, which the other defendants adopted, arguing that the payments at issue were protected by the employment safe harbor under the federal antikickback statute. Thus, the defendants argued that the State's criminal prosecution of these payments was unconstitutional under the Supremacy Clause. U.S. Const. Art. VI, cl. 2. The State, in turn, argued that the nature of the payments - "$25 to $35 cash for each Medicaid-eligible child the driver could find and bring to the clinic" - constituted the unlawful use of paid employees to recruit and solicit Medicaid patients, amounting to kickbacks for patient referrals.

The trial court, applying an implied conflict preemption analysis, found that the Florida antikickback statute barring, as unlawful, "remuneration" wages paid by an employer to its employees for the purposes of soliciting and transporting Medicaid-eligible patients, Fla. Stat. Ann. § 409.920(2)(e), was unconstitutional. The court also found that the Florida statute's mens rea requirement, as applied to the state antikickback statute, was preempted and unconstitutional. Based on this analysis, the trial court dismissed the charges against Harden and the other defendants.

On appeal, the district court of appeals disagreed with the State's argument that the Florida antikickback statute was not preempted because it did not conflict with the federal antikickback statute. The appeals court determined that the Florida statute, in not establishing safe harbor provisions, criminalizes activity protected under the safe harbor provisions of the federal antikickback statute. As such, the statute "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," thereby satisfying one prong of an implied conflict preemption analysis. Harden, 873 So. 2d at 354 (quoting Pharmaceutical Research and Mfrs. of Am. v. Meadows, 304 F.3d 1197, 1206).

The appeals court next considered the Florida antikickback statute's mens rea requirement, which provides that the defendant act "knowingly," defined to include "mere negligence." The court determined that this definition criminalizes activity protected under the "knowing and willful" intent standard of the federal antikickback statute, which has been interpreted to mean that a defendant must have acted with knowledge that his conduct was unlawful. Harden, 873 So. 2d at 355 (quoting Bryan v. United States, 524 U.S. 184, 192 (1998), Hanlester Network v. Shalala, 51 F.3d 1390, 1399, n.16 (9th Cir. 1995)). The appeals court again concluded that the Florida antikickback statute stood as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

Based on these findings, the appeals court affirmed the trial court's finding that there was implied conflict preemption and that the Florida antikickback statute was unconstitutional.