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Hospitals Challenge State Funding Cut

Larkin Community Hospital
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The Florida Channel
Larkin Community Hospital

A court battle is brewing over a legislative decision to cut Medicaid funds from two South Florida hospitals controlled by the owner of a nursing home where residents died following Hurricane Irma. 

But the move to prevent Larkin Community Hospital and Larkin Community Hospital Palm Springs from tapping into graduate medical-education funding may be about more than the 2017 tragedy at The Rehabilitation Center at Hollywood Hills nursing home. It also could be about a fight over which hospitals can tap into tens of millions of dollars the state directs to train resident physicians.

Attorneys for the Larkin hospitals filed a 23-page complaint Monday in Leon County circuit court seeking a temporary injunction to prevent the state from enforcing fine print in the new $90.89 billion budget that would bar the facilities from receiving graduate medical-education funds.

Attorneys for Larkin hospitals allege that “hundreds of medical residents and fellows in training” would have their education “needlessly disrupted” if the funding is withdrawn.

The loss also would likely “result in the closure” of the hospitals’ graduate medical-education programs, the suit alleges.

“Should this happen, the damage to the Larkin hospitals’ reputations would be irreparable,” attorneys wrote in their lawsuit. “Further, this would have a long-term negative impact on Florida and its residents. Florida is facing a physician shortage and increased access to GME (graduate medical education) funds was one of the solutions meant to help remedy this issue.”

Larkin Community Hospital in South Miami is a 147-bed facility with about 347 residents in training, according to the complaint, while Larkin Community Hospital Palm Springs is a 247-bed facility that is training about 50 residents.

Larkin Community Hospital has received $12.9 million in GME funds over the past four years, including $3.38 million in last year’s budget. Its sister facility, Larkin Community Hospital Palm Springs, has received $1.3 million during the same time, including $881,530 in last year’s budget.

The hospitals are under the controlling interest of Jack J. Michel, who also has a controlling interest in The Rehabilitation Center at Hollywood Hills.

The budget provision, which would apply only to the fiscal year starting Monday, makes clear that hospitals are banned from tapping into the graduate medical-education program if they have the same “controlling interest” as a nursing home and the state has revoked the nursing home’s license because of neglect.

The state Agency for Health Care Administration in January issued a final order revoking the nursing home’s license, following a recommended order last year by an administrative law judge. The state moved against the Broward County nursing home’s license after residents died because of sweltering conditions following Hurricane Irma. The storm knocked out the facility’s air-conditioning system.

Authorities attributed as many as 12 deaths to conditions at the facility, though Administrative Law Judge Mary Li Creasy wrote that “clear and convincing evidence” was presented during the case that nine of the 12 residents “suffered greatly from the exposure to unsafe heat in the facility.”

The nursing home is closed, but the Agency for Health Care Administration’s final order is being appealed.

Mike Haridopolos, a former state Senate president who lobbies for Larkin, said the budget “proviso” language appeared in the waning hours of budget negotiations. It did not originate from the governor’s office or the Agency for Health Care Administration. Proviso language is fine print that provides details about how the budget will be carried out.

The issue was floated by the Safety Net Hospital Alliance of Florida, which has member facilities that compete with the Larkin hospitals.

“There’s no doubt about it,” Haridopolos said, adding that by freezing Larkin facilities out of the funding, more money would be available for other hospitals.

Justin Senior, the chief executive officer of the Safety Net Hospital Alliance of Florida who also was secretary of the Agency for Health Care Administration when it went after the Broward nursing home’s license, said in a statement that the “the budget proviso speaks for itself.”

“It clearly protects patients and safeguards taxpayer dollars,” Senior said. “Beyond that, we do not comment on active litigation.”

In seeking an injunction, the Larkin hospitals are challenging the constitutionality of the proviso language. The suit alleges that the language is a so-called “special law” because it is “so narrowly tailored that it could only reasonably apply to the Larkin Hospitals.”

While the Legislature is authorized to pass special laws, it must follow a different procedure. And those rules weren’t followed when lawmakers included the ban in the budget, the attorneys argue.

Attorneys also argue that the proviso language alters the underlying laws governing graduate medical-education programs by changing the qualifications for participation. That, too, would be unconstitutional because it violates the state’s requirement that bills address a single subject, they contend.