Repackagers Win FL Case, Or Do They?

The Florida 1st Court of Appeals (which handles all workers' compensation appeals in the state) concluded that a drug repackager, that had an assignment of receivables from physicians it contracted with, had standing to pursue collections against carriers.

Prescription Partners had contracts with various Florida doctors in which the doctors would assign their rights to payment for drugs dispensed to injured workers to the company. In exchange, Prescription Partners would pay the doctor a percentage of the claim's value, regardless of the amount Prescription Partners would ultimately collect.

Under Florida law, with limited exception, an employer or carrier must reimburse a medical provider for the full billed value of the services rendered to an injured worker. If full payment if not tendered, the employer or carrier must issue an Explanation of Bill Review setting forth the reason why it denied, disallowed or adjusted the payment.

Between 2011 and early 2012, Prescription Partners filed numerous petitions challenging alleged underpayments for medications dispensed to workers' compensation claimants, as was its standard practice. The Office of Medical Services adjudicated some in favor of Prescription Partners, but dismissed others as untimely.

Each time a petition was dismissed, Prescription Partners would receive a notice of the dismissal stating that it had a "right to an administrative hearing concerning this proposed agency action by the department under Sections 120.569 and 120.57, Florida Statutes."

Prescription Partners filed 96 requests for administrative hearings, but the Department of Financial Services dismissed them all last February as procedurally defective.

Prescription Partners amended and refiled 35 of them, and the department consolidated them all for an informal resolution by a hearing officer, who ultimately dismissed all of them on the grounds that Prescription Partners lacked standing, finding Florida Code Section 440.13(7)(a) only allowed "health care providers, carriers or employers" to file petitions, and Prescription Partners "fits into none of those categories."

 

Further, the department ruled that Prescription Partners did not fit within the statutory definition of a "party" under Section 120.52(13), because "its only interest in this proceeding is economic, to wit: the profit it expects to make by virtue of purported assignments of collection rights from individual doctors allowing it to retain all the monies it collects on their respective claims."

The 1st DCA said both of the hearing officer's conclusions were wrong. 

Since Physician Partners had an assignment of interests from its physician clients, it is "the party with the 'personal stake' in the outcome of the proceedings," as it "arguably stands to suffer immediate and significant monetary losses."

Physician Partners may have won the battle, but it is going to lose the war. This is the kind of case that outrages the public, outrages politicians, and just about everyone else that isn't on the payroll of the company.

Seeking to enforce a legal, but morally unjustifiable, position nearly always seals the deal on ponderous regulation. 

I have no doubt that there are some legitimate reasons, albeit limited, for repackaging and physician dispensing of pharmaceuticals.

But like anything else that is taken to extremes, when profit margins exceed reasonableness, and when cost trends spike sharply due to such profiteering, eventually the long arm of the law will seek control.

And Physician Partners' profit sharing deal with its clients are the kind of financial undertakings that promote questionable behavior.

Coincidentally, the same day that the 1st DCA opinion issued the Florida House Insurance and Banking Subcommittee approved House Bill 605, filed by Rep. Matt Hudson, R-Naples.

HB 605  would cap the price of repackaged drugs dispensed to injured workers at the average wholesale price set by the original manufacturer, plus a $4.18 dispensing fee.

The bill is now heading to the House Health and Human Services Committee. Three prior attempts to pass similar measures failed under intense lobbying by the repackaged drug industry.

But the Physician Partners case may be the end of politician's patience with the industry. At some point even those easily influenced by the political pandering of special interests get squeamish when court cases, and news stories, permeate the public conscience with tales of 100% to 400% (and sometimes even 700%) markups at a time when medical inflation is a huge public policy issue.

Repackagers may have met their match - themselves.