Fla. program that shirked duty to help kids with brain injuries could face a costly reckoning
For years, a Florida program that pledged to pay the healthcare costs of children who suffered catastrophic brain injuries at birth has been saving millions of dollars by shifting the costs to taxpayers. The tab was supposed to be picked up by the program using a pot of money fed with fees paid by doctors and hospitals, but instead was billed to taxpayer-financed Medicaid.
Now the bill for that financial sleight-of-hand may be coming due.
The 11th U.S. Circuit Court of Appeals ruled that a whistle-blower lawsuit challenging the longtime policy of Florida’s Birth-Related Neurological Injury Compensation Association, or NICA, can move forward. A similar whistle-blower case in Virginia, the only state with a program resembling NICA, ended in victory for the whistle-blowers, resulting in tens of millions being reimbursed to Medicaid, a program serving poor and disabled people. Virginia’s program, the Birth-Related Neurological Injury Compensation Program, no longer redirects client families to Medicaid.
If the whistle-blowers — the same ones who filed suit in Virginia — prevail in Florida, it would constitute just the latest reform in a program that was overhauled last year by state lawmakers after an investigative series, Birth & Betrayal, was published by the Miami Herald and the nonprofit newsroom ProPublica.
NICA administrators have the right to appeal the ruling but have not yet said what they plan to do.
“The decision will be driven by what will ultimately best serve our families,” said Melissa Jaacks, NICA’s executive director.
Since NICA’s board already has voted to stop requiring families to seek Medicaid dollars before NICA will reimburse, the only real question remaining may be whether — and how much — NICA may be forced to repay the state for its previous actions.
The stakes are huge for NICA, which has almost $1.7 billion in assets.
At issue is which program — NICA or Medicaid — pays for medical care first. Both have argued it is the other agency’s responsibility, leaving families in the lurch.
If the ruling by the 11th U.S. Circuit Court of Appeals stands, then NICA administrators may be forced to repay more than $140 million, and any potential penalties, in medical expenses that Florida Medicaid has covered in the past.
The whistle-blower lawsuit, which was filed in April 2019, but unsealed in September 2020, alleges that NICA’s policy, which administrators enforced for decades, was in effect stealing from state and federal taxpayers, who fund Medicaid, and siphoning resources from a program designed for low-income and disabled Floridians.
Scott Austin, an attorney representing the family that brought the whistle-blower complaint, said in a written statement that he had not expected NICA and its board of directors to persist with the same defense after it had been rejected by the courts. The whistle-blowers who filed the complaint stand to receive about 20% of any judgment or settlement involving NICA.
NICA’s board chairman, appointed last year to spearhead a series of reforms, told NICA parents: “You have been heard.”
“We are pleased, but not surprised, by the recent 11th Circuit Opinion rejecting NICA’s legal defenses,” Austin said. “We continue to be surprised, however, by the new NICA board’s willingness to expend plan funds defending a case where four federal judges have now ruled against them. It is clear NICA is a liable third party to Medicaid.”
Jaacks said NICA has spent $958,397 in legal fees defending against the lawsuit, and that program administrators were not expecting the appeals court to reject NICA’s defense that it is an “arm of the state” and therefore immune from the lawsuit, despite a similar ruling rejecting that argument in September 2020 by U.S. District Judge William Dimitrouleas in Fort Lauderdale.
“We were certainly surprised that the court rejected the argument that NICA is immune from the lawsuit,” Jaacks said in an email. “We will be pursuing further appellate review of the matter.”
NICA’s reliance on Medicaid, which long has been so underfunded that services are rationed, was highlighted in Birth & Betrayal. The series said NICA had amassed a fortune in assets while arbitrarily denying and delaying care to parents, some of whom said they were pushed to the brink caring for profoundly disabled children.
Florida legislators responded with an overhaul of the program, dramatically improving benefits for children and their families, and adding to NICA’s board for the first time a seat to be filled by the parent of a child in the program and a second chair for an advocate for people with disabilities. Every member of NICA’s board also stepped down, and the executive director resigned after 20 years leading the program.
In siding with Dimitrouleas, the three-judge panel of the 11th Circuit in Atlanta found that NICA operates the fund independent of Florida — administering the plan, deciding whether to pay claims, and managing its funds without the need of state approval.
But the “most important” test establishing NICA’s independence of Florida, and its ability to sue and be sued, is that the state treasury would not have to step in if the program were to become insolvent as NICA’s attorneys had alleged.
“NICA’s argument that the state treasury would have to step in if the judgment is large enough is too speculative,” the court wrote. “That contention ignores NICA’s very solvent position. Indeed, it’s unlikely that the judgments would ever be high enough to drain all NICA’s funds.
“But perhaps even more significantly, we don’t even know whether the state would pay the judgments if NICA didn’t have enough money. Based on the information submitted by the parties, it’s just as likely that the Legislature would let NICA go insolvent and abandon the whole program.”
From its inception in 1988, NICA had a Medicaid-pays-first policy. Only after Medicaid denied a claim and appeals were exhausted — a process that could drag on for weeks or months — would NICA consider covering the cost. Parents told the Herald seeking care sometimes became a nightmare, with multiple rejections required before NICA would consider stepping in.
But Florida lawmakers adopted a bill last year that ended NICA’s reliance on Medicaid, the safety net program for impoverished or disabled Floridians. The state Agency for Health Care Administration (AHCA), which oversees Medicaid, spent more than $140 million over the past 33 years to cover hospital stays, home nursing and other medical needs for children in the program, according to a recent report by AHCA administrators.
NICA’s new board reversed that policy in October, adopting new rules that put NICA first in line to pay for medical care for those individuals who are covered by both NICA and Medicaid — about 125 of the 224 people currently in the program. That will make it much easier for parents to get care and equipment for their children.
But the policy change applies only to Medicaid-covered expenses incurred after the legislative reforms were signed into law in June 2021. Whether AHCA will attempt to claw back some or all of the more than $140 million Medicaid has spent in the past is uncertain.
The whistle-blower lawsuit was filed by the family of a severely disabled Virginia boy named Cody Arven. In July 2015, the family challenged the policies of the Virginia Birth-Related Neurological Injury Compensation Program. It was the model for Florida.
In their lawsuit, Veronica and Theodore Arven, the latter now deceased, accused Virginia’s birth injury fund of dumping its costs on Medicaid, which is against the law. Cody Arven was accepted into Virginia’s program after he was severely injured during his 2003 birth.
In 2018, the Virginia program settled the lawsuit by paying $20.7 million to the U.S. government and agreeing to stop shifting costs to Medicaid. The Arvens received $4.1 million of the settlement for filing the lawsuit.
That same month, Virginia’s program started buying private health insurance for all of its covered children who had relied primarily on Medicaid, said George Deebo, the director. Deebo said the change caused about a 20% increase in spending for the program.
Jaacks said Florida NICA is following a similar path as Virginia once again, choosing to pay for private health insurance coverage for people in the program. She said program administrators are working with AHCA to ensure a “smooth transition” as NICA assumes primary responsibility for paying medical care before Medicaid.
“Our focus is to ensure that this transition is as easy as possible for our families,” Jaacks said.
This story was originally published April 27, 2022 at 11:37 AM.
