Florida Pharmacy Ass'n v. Williams

871 F. Supp. 1441, 1993 U.S. Dist. LEXIS 20769, 1993 WL 761302
CourtDistrict Court, N.D. Florida
DecidedNovember 8, 1993
DocketNo. TCA 92-40142-MMP
StatusPublished
Cited by1 cases

This text of 871 F. Supp. 1441 (Florida Pharmacy Ass'n v. Williams) is published on Counsel Stack Legal Research, covering District Court, N.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Florida Pharmacy Ass'n v. Williams, 871 F. Supp. 1441, 1993 U.S. Dist. LEXIS 20769, 1993 WL 761302 (N.D. Fla. 1993).

Opinion

ORDER

PAUL, Chief Judge.

This cause is before the Court on cross-motions for summary judgment (doc. 21 & doc. 25). For the reasons stated below, summary judgment is GRANTED in favor of Defendants.

BACKGROUND

The Medical Assistance Program (Medicaid) established by Title XIX of the Social Security Act is a cooperative program in which the federal government works with state governments to assist low-income individuals in attaining health care. 42 U.S.C. § 1396 et seq. The program is jointly financed by the federal and state governments and is administered by the states. Participation is voluntary. If a state chooses to participate in the Medicaid program, it submits a “state plan” for approval by the Department of Health and Human Services (“HHS”). When the plan is approved, the state is eligible for federal reimbursement, or “federal financial participation.”

The part of the Medicaid program involved in this matter is the prescription drug program. In this program, a Medicaid recipient is required to obtain his prescription drugs from a provider pharmacy; that is, a pharmacy that participates in the Medicaid program. The pharmacy fills the prescription at no charge to the recipient and sends a voucher to the state for reimbursement. The federal regulations set limits for these reimbursements. Under 42 C.F.R. § 447.331(b), the level of' payment for single-source drugs may not exceed the lower of (1) the state’s best estimate of the price generally and currently paid by providers for a particular drug, plus a reasonable dispensing fee; or (2) the provider’s usual and customary charges to the general public.

On November 5, 1990, Congress enacted Omnibus Budget Reconciliation Act of 1990 (OBRA) which added inter alia, to the Social Security Act a provision imposing a four-year moratorium on any reduction in drug reimbursement limits by either the HHS or any state participant. The relevant provision provides:

(f) Pharmacy reimbursement
(1) No reductions in reimbursement limits
(A) During the period of time beginning on January 1, 1991, and ending on December 31,1994, the Secretary may not modify by regulation the formula used to determine reimbursement limits described in the regulations under 42 CFR 447.331 through 42 CFR 447.334 (as in effect on November 5, 1990) to reduce such limits for covered outpatient drugs.
(B) During the period of time described in subparagraph (A), any State that was in compliance with the regulations described in subparagraph (A) may not reduce the limits for covered outpatient drugs described in subparagraph (A) of dispensing fees for such drugs.

42 U.S.C. § 1396r-8(f).

After the effective date of OBRA, the Florida legislature passed an appropriations bill that, among others, directed the Department of Health and Rehabilitative Services (HRS) to implement a co-payment program for the Medicaid prescription drug program. 1992 Fla.Laws ch. 92-5. Pursuant to this mandate, HRS passed Emergency Rule 10CER92-4 (Rule). The Rule requires a Medicaid recipient to pay a one dollar co-payment directly to the provider pharmacy for each prescription reimbursed by Medicaid, subject to certain defined exclusions. Emergency Rule 10CER92-4(6)(f). The rate of reimbursement was not changed under this Rule; however, the State now automatically deducts the co-payment from the calculated reimbursement total. Id.

Even though the Rule requires a Medicaid recipient to pay a co-payment, the federal regulations forbid the provider pharmacy from denying services to a recipient who is financially unable to pay the co-payment. 42 U.S.C. § 1396o(e). Thus, the Rule provides that “[a] provider must determine a recipient’s ability to pay the co-payment based on the recipient’s reply to the request for payment, the recipient’s past purchase history with that provider, and the recipient’s recent [1443]*1443purchases of non-essential items.” Rule § 16(b). A provider pharmacy cannot refuse to fill the prescription to a recipient because of an inability to pay the co-payment. Id. § 16(c).

The Florida Pharmacy Association brought this suit to challenge the provisions of Florida appropriation bill, Chapter 92-5, which direct HRS to implement the co-payment program, and the Rule, which implements the legislative mandate. The plaintiffs’ main contention is that, because it mandates an automatic one dollar deduction from the reimbursement total for every prescription, the Rule conflicts with the four year moratorium on state reductions in reimbursement totals imposed by OBRA, and should be stricken as such.

DISCUSSION

The Medicaid program is a voluntary program. States are not required to participate in the program. King v. Smith, 392 U.S. 309, 316-18, 88 S.Ct. 2128, 2133, 20 L.Ed.2d 1118 (1968). Once it chooses to participate, however, it must abide by those obligations imposed by the Medicaid program. Harris v. McRae, 448 U.S. 297, 300-03, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784 (1980). Otherwise, the state would not receive financial assistance from the federal government. Pennhurst State School v. Halderman, 451 U.S. 1, 17-19, 101 S.Ct. 1531, 1540, 67 L.Ed.2d 694 (1981). Thus, by choosing to participate in the Medicaid program, the state affirmatively takes the duty of abiding by federally imposed obligations in return for federal funds. Id. The Supreme Court in Pennhurst likened this relation to a contractual relation. Id. The Court stated, in dictum, that in order for a federal duty to exist in this context, it must be set forth clearly and unambiguously. Id. Therefore, this Court must construe strictly when deciding whether the Medicaid program imposes a certain duty on participating states. Id.

I. Violation of OBRA ’90

Plaintiffs challenge the Florida’s one dollar co-payment program on the theory that it conflicts with the moratorium imposed by OBRA, which prohibits reduction in Medicaid reimbursement limits on prescription drugs. This is not the case. Under the Medicaid program, participant states are authorized to institute a co-payment program. 42 U.S.C. § 1396a(a)(14) (1992); 42 C.F.R. § 447.53 (1992). A co-payment simply means that the Medicaid recipient pays a part of the cost of the drugs.

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871 F. Supp. 1441, 1993 U.S. Dist. LEXIS 20769, 1993 WL 761302, Counsel Stack Legal Research, https://law.counselstack.com/opinion/florida-pharmacy-assn-v-williams-flnd-1993.