Judge questions $1 billion Medicaid contract awarded to a Miami-based healthcare company


An administrative law judge says the state should rescind a $1 billion managed care contract awarded to a Miami-based healthcare company.

In September, Prestige Health Choice won a $1 billion contract to provide Medicaid coverage in Miami-Dade and Monroe counties as part of a push to put Medicaid patients into managed care plans.

But four months later, an administrative law judge is urging the state to rescind the award.

In a non-binding recommendation, Judge John Van Laningham said Prestige should not have qualified for the contract because the Miami-based company is not technically a “provider service network.”

To be considered, Prestige would have to be controlled mostly by healthcare providers, Van Laningham said.

The state Agency for Health Care Administration has until early February to issue a final response to the recommendation. Spokeswoman Shelisha Coleman said state officials were reviewing the document.

But in an initial court filing, AHCA attorneys made the case that Prestige fits the legal definition of a provider service network.

If AHCA was to cancel its contract with Prestige, the decision would have statewide implications. Prestige holds seven other contracts to provide Medicaid coverage elsewhere in Florida that are worth millions of dollars.

The legal tussle comes as Florida works to revamp its Medicaid program by transferring about 3 million Medicaid participants to private managed-care companies.

Health plans were able to compete for the managed-care contracts last year.

Prestige, which was founded by non-profit health centers in 2006, was one of 14 companies that applied to provide service in Miami-Dade and Monroe.

It was the only provider service network that was selected. Nine HMOs also made the cut.

One of the provider service networks that did not win an award, Hallandale Beach-based Care Access PSN, filed a bid protest in October. Among other claims, Care Access argued that Prestige should not have been considered because it is controlled by the insurance company Florida Blue.

In his recommendation, Van Laningham noted that a Florida-Blue affiliated company called Florida True Health owns 40 percent of Prestige’s shares and has an option to buy the remaining 60 percent.

The judge stopped short of supporting Care Access’s claim that Florida True Health had taken over Prestige in a “virtual merger.” But he concluded that the health providers in the network did not hold 50 percent of the company.

Prestige CEO Kevin Kearns said he was “very surprised” by the judge’s recommendation.

“Claims that we are run by anyone other than providers are not true,” Kearns told The Herald/Times.

Florida Blue did not return calls seeking comment.

AHCA has the option to reject Van Laningham’s recommendation, but a legal battle is almost sure to follow.

Care Access President Jerry Sternstein said his company would continue to push the issue in court. Sternstein added that he was hopeful the state would confirm the administrative law judge’s recommended order, “which was issued after a hearing that was conducted with thousands of pages of evidence and testimony.”

But Kearns said he was confident Prestige would withstand the bid challenge.

“There was a [competitive bidding] process,” he said. “On the merits of our applications and discussions with them, AHCA thought we were the most qualified to serve the community.”

Kearns added: “We’ve been in Miami-Dade since we started. We don’t expect to go anywhere.”

Contact Kathleen McGrory at

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