Florida's Third District Court of Appeal has held that
Florida's Agency for Health Care Administration (AHCA) properly
exercised its discretion in denying a home health agency Change of
Ownership application (CHOW) on the grounds that the new 100%
shareholder previously worked for another home health agency that
had been terminated by Medicare in 2006. This unprecedented
decision could have broad implications for healthcare companies and
investors, as well as lawyers representing them.
The case involved Roberto Marrero's purchase of 100% of the
stock of Trust Care Health Services, a home health agency in
Virginia Gardens, Florida. As the transaction involved a transfer
of 100% of Trust Care's outstanding stock, the company was
required to file a CHOW application to inform AHCA of the change
and to obtain a new license. AHCA denied the application on the
grounds that Mr. Marrero previously served as administrator of All
Med Network Corp., a home health agency terminated by Medicare in
2006, and because AHCA determined the CHOW application did not
correctly disclose certain information concerning Mr. Marrero's
prior role. Mr. Marrero appealed AHCA's decision and argued
that although Medicare terminated his former employer, he never was
sanctioned personally by Medicare or AHCA. The court's
two-judge majority – relying in part on AHCA's
regulatory role in safeguarding public health – held that
AHCA did not abuse its discretion in denying the CHOW application
and license. The dissenting judge opined that although in theory it
might be good public policy for AHCA to deny CHOW licenses in these
circumstances, AHCA's interpretation of the applicable Florida
statute was clearly erroneous in his view. It is unclear at this
time whether the appellant will try to seek further review by the
Florida Supreme Court.
The Florida law at issue in the case is a general healthcare
facility licensing statute that is not limited to home health
agencies. Consequently, healthcare companies, investors, and their
counsel must use caution when analyzing (1) who can be owners or
have a controlling interest in a licensed healthcare facility in
Florida, and (2) what information is required to be disclosed when
completing an AHCA licensure application.
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