In United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 6:09-cv-1002-Orl-31DAB (M.D. Fla. June 6, 2011), the Middle District Court of Florida denied a defendant’s motion to dismiss False Claims Act (FCA) and other federal statutory claims on grounds of Eleventh Amendment immunity. The defendant, Halifax, is a public hospital district established by the Florida legislature to provide hospital and healthcare services to state residents irrespective of ability to pay. The relator was the director of physician services at Halifax. The United States did not intervene in this case.
The relator alleged that the defendant had over-billed Medicare by admitting thousands of patients that had no medical necessity in violation of the federal FCA and had also paid excessive compensation to its physicians in violation of the Medicare Act and the Anti-Kickback Act. The defendant contended that the Eleventh Amendment immunity defense bars the present lawsuit because a hospital district, such as the defendant here, is defined under Florida law as “state agency or instrumentality,” and thus an “arm of the state.” The defendant also referred the court to state court decisions that have held that a hospital district is “subject to the rights and responsibilities of public agencies,” such as bond validation, public bidding requirements and compliance with Florida’s public records laws. The defendant further argued that the state exercised a high degree of control over its operation and fiscal life because it was overseen by a board of commissioners appointed by the state and because the state had oversight with respect to the use of all state funding received by defendant.
The court rejected the defendant’s arguments and found that hospital districts in Florida more closely resembled political subdivisions of the state, such as counties and municipalities, that do not enjoy Eleventh Amendment protection. In short, the court noted that the defendant in this case failed to demonstrate an “absence of independence” or any widespread or “unusual degree of control by the state.”