Full Opinion

FIRST DISTRICT COURT OF APPEAL STATE OF FLORIDA _____________________________ No. 1D18-4833 _____________________________ STATE OF FLORIDA, Appellant, v. RACHEL LYNN SCHARLEPP, Appellee. _____________________________ On appeal from the Circuit Court for Leon County. Martin A. Fitzpatrick, Judge. March 24, 2020 M.K. THOMAS, J. The State appeals the dismissal of criminal charges filed against Rachel Scharlepp. The trial court dismissed the charges after finding section 409.920(2)(a)2., Florida Statutes (2015), unconstitutional as applied. The statute penalizes individuals who “[k]nowingly make, cause to be made, or aid and abet in the making of a claim for items or services that are not authorized to be reimbursed by the Medicaid program.” § 409.920(2)(a)2., Fla. Stat. (2015). The State asserts the trial court erred in finding the statute unconstitutional as an invalid delegation of legislative authority and a violation of due process for vagueness. We agree and reverse. Facts Ms. Scharlepp—a targeted case management (TCM) services supervisor and owner of PlayBig Therapy & Recreation Zone LLC—was charged by information with seven counts of felony Medicaid Provider Fraud and one count of felony Racketeering after being investigated by the Medicaid Control Unit (MCU) of the Department of Legal Affairs. The State contends that between March 2015 and April 2016, Ms. Scharlepp knowingly made or abetted in the making of several reimbursement claims for items or services that are not authorized to be reimbursed by the Medicaid program. Specifically, the State contends that Ms. Scharlepp “knowingly” submitted claims for services provided by employees who were not qualified, to recipients who did not meet the qualifications, and which were categorically non-reimbursable in violation of section 895.02, Florida Statutes (Racketeering), and sections 409.920(2)(a)2. and 409.920(2)(b)1.a., Florida Statutes (Medicaid Provider Fraud). Ms. Scharlepp moved to dismiss all eight counts, claiming there was no statutory guidance in section 409.906(5), Florida Statutes, or in federal law as to how to define key terms such as “services” or “eligible” and no federal regulation that addressed qualifications or credentials for those persons providing services. The thrust of the argument to dismiss was that the prosecution was improperly based on administrative rules, rather than Florida Statutes, and that the vague statutes failed to give her fair warning that her conduct would subject her to criminal punishment, violating her due process rights. The trial court agreed and granted the motion, finding that, as applied here, criminalization of the conduct at issue amounted to an improper delegation of legislative authority to the Florida Agency for Healthcare Administration (AHCA). Specifically, the trial court determined that the general rulemaking authority provided for in the controlling statutes insufficiently defined the scope of proper qualification for TCM services, and that the subsequent criminalization of rules violations upset principles of the Florida Constitution regarding nondelegation and due process. 2 Legal Analysis The trial court’s interpretation of section 409.920(2)(a)2. and its conclusion that the statute unconstitutionally delegates to an administrative agency the power to define a crime raise pure legal issues that are reviewed de novo. See Payton v. State, 239 So. 3d 129, 131 (Fla. 1st DCA 2018) (noting that a lower court’s interpretation of statute and applicable case law is reviewed de novo). Here, we confront the long-standing question of how much of a role an administrative agency may play in establishing the elements of a crime. Section 409.920(2)(b), Florida Statutes, grants the State the authority to punish those who commit Medicaid fraud. The statute states that a person may not “[k]nowingly make, cause to be made, or aid and abet in the making of a claim for items or services that are not authorized to be reimbursed by the Medicaid program.” § 409.920(2)(a)2., Fla. Stat. (2015). “Knowingly” means the act was done voluntarily and intentionally and not because of mistake or accident. As used in this section, the term “knowingly” also includes the word “willfully” or “willful” which, as used in this section, means that an act was committed voluntarily and purposely, with the specific intent to do something that the law forbids, and that the act was committed with bad purpose, either to disobey or disregard the law. § 409.920(1)(d), Fla. Stat. (2015). Ms. Scharlepp claims the statute is unconstitutional as applied because it violates the nondelegation doctrine and her due process rights. A. Nondelegation Doctrine Under the nondelegation doctrine established by the Florida Constitution, members of one branch of government are expressly prohibited from delegating its powers to another branch of government. See Avatar Dev. Corp. v. State, 723 So. 2d 199, 201 (Fla. 1998) (citing Art. I, § 18, Fla. Const.). There must be a strict separation of the three branches of government. Art. II, § 3, Fla. Const.; Art. I, § 18, Fla. Const. (“No administrative agency shall 3 impose a sentence of imprisonment, nor shall it impose any other penalty except as provided by law.”); Avatar Dev. Corp., 723 So. 2d at 201 (citing Askew v. Cross Key Waterways, 372 So. 2d 913, 924 (Fla. 1978)). The doctrine is difficult to police. As recognized by the Florida Supreme Court, “[i]t clearly is impossible to adopt a single bright- line test to apply to all alleged violations of the nondelegation doctrine.” B.H. v. State, 645 So. 2d 987, 993 (Fla. 1994). “The term ‘legislative power’ as used in Article III most particularly embraces statutes defining criminal offenses; and in the field of criminal law, the concept of separation of powers is directly linked to the Constitutional guarantee of due process.” Id. at 992. The Florida Supreme Court has held: Under [the non-delegation] doctrine fundamental and primary policy decisions shall be made by members of the legislature who are elected to perform those tasks, and administration of legislative programs must be pursuant to some minimal standards and guidelines ascertainable by reference to the enactment establishing the program. Askew, 372 So. 2d at 925 (emphasis added). Only “[w]hen legislation is so lacking in guidelines that neither the agency nor the courts can determine whether the agency is carrying out the intent of the legislature in its conduct, then, in fact, the agency becomes the lawgiver rather than the administrator of the law.” Id. at 918-19. Furthermore, “specificity of the guidelines will depend on the complexity of the subject and the ‘degree of difficulty involved in articulating finite standards.’” Brown v. Apalachee Reg’l Planning Council, 560 So. 2d 782, 784 (Fla. 1990) (quoting Askew, 372 So. 2d at 918). With these tools in hand, we begin with an inspection of the multiple statutes and administrative rules applicable here. The state agency responsible for administering the Medicaid program is AHCA. § 409.901(2), Fla. Stat. (2015). Section 409.906, Florida Statutes, empowers AHCA to make reimbursement payments for certain “optional Medicaid services.” Section 409.919, Florida Statutes, grants broad rulemaking authority to AHCA as follows: “The agency shall adopt any rules necessary to comply with or administer ss. 409.901-409.920 and all rules necessary to comply 4 with federal requirements.” (Emphasis added.) It is under this rulemaking authority that AHCA adopted Florida Administrative Code Rule 59G-4.199, which states “[a]ll Medicaid-enrolled mental health targeted case management providers must be in compliance with the Florida Medicaid Mental Health Targeted Case Management Coverage and Limitations Handbook . . . .” Fla. Admin. Code R. 59G-4.199(2). The Florida Medicaid Mental Health Targeted Case Management Coverage and Limitations Handbook (Handbook) describes the purpose and goal of TCM services and the regulations defining specifically which services are reimbursable by AHCA pursuant to 409.906(5), including standards governing recipient eligibility, qualifications required of TCM providers, and certain restrictions on activities eligible for reimbursement. As a Medicaid-enrolled TCM provider, Ms. Scharlepp’s company is governed by the Handbook. The Handbook requires that employees providing TCM services must have certain bachelor’s degrees with specific majors and the equivalent of one year’s experience working with children suffering from serious emotional disturbances, or a bachelor’s degree in any discipline with the equivalent of three years’ experience. The Handbook does not criminalize any conduct. The State is prosecuting Ms. Scharlepp under the criminal statute, section 409.920(2)(b), for knowingly disregarding the standards set forth in the Handbook when submitting certain TCM reimbursement claims. Relying on B.H. v. State, 645 So. 2d 987 (Fla. 1994), the trial court granted Ms. Scharlepp’s motion to dismiss, finding that section 409.920(2)(a)2. violated the nondelegation doctrine. In B.H., the court examined a statute that rendered an escape from juvenile detention facilities having certain restrictiveness levels a third-degree felony. Id. at 989. The statute in question further provided that restrictiveness levels referred to “broad custody categories for committed children” and that placement in restrictiveness levels depended upon the risk and needs of the child. Id. The Legislature delegated the exact structuring of levels to agency rulemaking and limited only the number of levels. Id. at 989-90. The Florida Supreme Court ultimately found the statute 5 to be unconstitutional as violating due process because it did not give adequate notice on its face as to what conduct was prohibited; and, that separation of powers was violated because the agency had been granted the power to define a crime and such an open- ended, broad delegation effectively left with the agency the power to make policy decisions. Id. at 993. Finding the statute insufficiently defined “escape,” the court noted that the agency could have effectively eliminated escape as a crime by only establishing detention facilities marked level four and below, and could have likewise made any act of leaving a detention facility a crime by only establishing levels higher than four. Id. at 994. Thus, the agency was “improperly delegated and improperly assumed authority to declare what constituted the crime of juvenile escape, without limit.” Id. 1 In B.H., the statute failed to promulgate a legislative policy to be implemented by the agency—a fatal flaw for “delegations in the criminal context.” Id. The supreme court specifically determined as follows: At the very least, all challenged delegations in the criminal context must expressly or tacitly rest on a legislatively determined fundamental policy; and the delegations also must expressly articulate reasonably definite standards of implementation that do not merely 1 The trial court also relied on State v. Watso, 788 So. 2d 1026 (Fla. 2d DCA 2001), in support of dismissal. However, we find Watso readily distinguishable. Watso involved a statute which criminalized the providing of false information on an FDLE form. Id. at 1028. The lower court’s dismissal of the prosecution was affirmed on appeal because the question on the form (which was allegedly falsely answered) asked for information which was not included in an exhaustive list promulgated in the statute itself. Id. at 1029. Thus, FDLE unconstitutionally exercised a lawmaking function when it essentially expanded the scope of the crime. Id. Here, the trial court incorrectly reasoned that AHCA similarly expanded the scope of the crime. The promulgation of qualification rules by AHCA falls within the policy directives of section 409.920, rather than an agency’s improper expansion of the statute. 6 grant open-ended authority, but that impose an actual limit—both minimum and maximum—on what the agency may do. Id. at 994 (citing Art. II, § 3, Fla. Const.). The State contends that the trial court erred in relying on B.H. and that Avatar Development Corporation v. State, 723 So. 2d 199 (Fla. 1998), is controlling instead. Avatar involved a misdemeanor prosecution based on Avatar’s alleged failure to comply with special environmental conditions expressly set out in a dredging permit issued by the Department of Environmental Protection (DEP). Id. at 200. The statute created a first-degree misdemeanor for individuals who willfully “violate or fail to comply with any rule, regulation, order, permit, or certification adopted or issued by [DEP] pursuant to its lawful authority.” Id. at 201 (quoting § 403.161(1)(b), Fla. Stat. (1993)). Avatar argued, because the statute granted DEP “unfettered discretion” to determine conditions to which criminal penalties would attach if violated, the delegation was unconstitutional. Id. at 202-03. However, the supreme court rejected the argument and distinguished B.H., finding the statutory scheme in Avatar involved an agency simply setting the environmental regulations and conditions as opposed to a delegation of any actual power to “pick and choose which rule, regulation, or permit condition shall be prosecuted upon its violation” through rulemaking. Id. at 204. Thus, the delegation of authority to DEP to determine specific standards to protect from pollution remained valid even after criminal penalties were attached because the criminal statute only operates as an enforcement tool to ensure compliance. Id. Although Avatar did not expressly overturn any portion of B.H., we note the inherent tension between the two decisions. The take away of B.H. is, for a statute attempting to delegate some measure of authority to an agency to define standards on which a crime may lie, sufficient guidance within the language of the statute itself defining the boundaries of the agency’s authority is required. Avatar, however, appears to retreat slightly from the more rigid standard expressed in B.H. Avatar instructs that even general policy goals lacking any specific limits on agency rulemaking can provide enough guidance for an agency to create 7 rules or regulations which one may not willfully violate or face criminal penalties. But, what is enough? Where B.H emphasizes the question of whether the statutory language reflects a policy decision with bracketed guidance to the agency to implement it without the agency making its own policy determinations, Avatar targets whether the statute purports to grant the agency authority allowing it to control whether a crime exists for certain activity by virtue of its rulemaking. To assist in addressing whether a statute provides enough guidance on general policy for an agency to create rules or regulations establishing criminal liability without violating the nondelegation doctrine, the supreme court in Avatar applied the following standard—a nondelegation violation should be found “only ‘[w]hen legislation is so lacking in guidelines that neither the agency nor the courts can determine whether the agency is carrying out the intent of the legislature in its conduct.’” 723 So. 2d at 202 (quoting Askew, 372 So. 2d at 918-19). Additionally, the court emphasized its prior recognition that “specificity of the guidelines will depend on the complexity of the subject and the ‘degree of difficulty involved in articulating finite standards.’” Id. (quoting Brown, 560 So. 2d at 784). Here, we acknowledge the complexities of administering the Medicaid program, a task assigned to AHCA by the Legislature. See § 409.901(2), Fla. Stat. In a fashion nearly analogous to that considered in Avatar, the Legislature here defined the crime in section 409.920(2)(a)2. as one who “knowingly make[s], cause[s] to be made, or aid[s] and abet[s] in the making of a claim” for services not authorized by the Medicaid program. Section 409.919 instructs “[t]he agency shall adopt any rules necessary to comply with or administer ss. 409.901- 409.920 and all rules necessary to comply with federal requirements.” AHCA’s power, through its rulemaking authority, is limited to those rules necessary and that comply with funding and federal guidelines. See § 409.906(5), Fla. Stat. To require the Legislature to enact such rules, regulations, and procedures in the complex Medicaid system would be an insurmountable task. The Legislature has recognized that AHCA, a specialized agency, is best suited to articulate standards for application of the Medicaid system. It is the Legislature, and not AHCA, that has declared 8 violation of those standards as unlawful. Thus, we find section 409.920(2)(a)2. does not violate the nondelegation doctrine. B. Due Process Finding section 409.920(2)(a)2. does not violate the nondelegation doctrine, we now analyze whether the statute is so vague it violates Ms. Scharlepp’s due process rights. A penal statute is void for vagueness only if it does not 1) define the criminal offense with “sufficient definiteness that ordinary people can understand what conduct is prohibited”; and 2) define it in a “manner that does not encourage arbitrary and discriminatory enforcement.” Skilling v. United States, 561 U.S. 358, 402–03 (2010) (quoting Kolender v. Lawson, 461 U.S. 352, 357 (1983)). If a statute “conveys a sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices, it is not unconstitutionally vague.” Jordan v. De George, 341 U.S. 223, 231–32 (1951). “Impossible standards of specificity are not required.” Id. at 231. Here, the trial court determined that the applicable statutes are devoid of the necessary definitions to accomplish the task of placing an ordinary person on notice of the prohibited activities. Specifically, it found the statutes are vague for the following reasons: no guidance is found in section 409.906(5) or in the applicable federal law as to how to define “services”; there was no federal regulation that addressed qualifications or credentials for those providing the TCM services; neither the federal law nor section 409.906(5) defines “eligibility”; and the Handbook does not define the terms “equivalent experience” or “serious emotional disturbances.” The trial court reasoned the prosecution deprived Ms. Scharlepp of due process because she was not given “fair warning” that her behavior would subject her to criminal punishments, and these undefined terms form the basis for this criminal prosecution. 2 2 Ms. Scharlepp further argues that under the current version of section 394.4573(2), Florida Statutes (2016), the case managers would have six months to become eligible. Thus, she asserts she is being prosecuted for acts that now would be lawful, constituting a due process violation. We disagree. The amended language 9 We find that section 409.920(2)(a)2. clearly provides notice such that an ordinary person may understand the acts prohibited. As in Avatar, the statute here clearly prohibited the willful violation of the rules, regulations, and conditions as set forth in the Handbook and that such violation could result in criminal charges. The Handbook informed Ms. Scharlepp that claims submitted by her must be performed by a certified provider and provided to qualifying individuals in the TCM specialty. By enrolling as a Medicaid provider, Ms. Scharlepp acknowledged that she understood that false claims may be prosecuted under applicable state laws. She further submitted an Agency Certification for Child Mental Health Targeted Case Management, which avowed that she “[i]s knowledgeable of and agrees to comply with the statutes, rules and policies that affect the target population” and “[w]ill ensure that case managers are certified within three months from their date of hire.” We find the relationship between criminal penalties and agency rules identical to the statutory scheme in Avatar, where willful violation of any agency rule promulgated pursuant to its mission could entail criminal penalties. The statutory scheme here leaves no authority to AHCA to pick and choose which rule violation could result in criminal penalties. Thus, section 409.920(2)(a)2. properly operates as an enforcement tool to ensure compliance with AHCA rules and sufficiently sets out, on its face, the policy decision that knowing noncompliance with AHCA rules is to be deemed a felony in this context. The Handbook does not form the basis for the criminal charge. It is, however, relevant in determining whether Ms. Scharlepp knew or should have known that she was submitting claims that were not reimbursable because the persons hired as TCM managers and providing the services did not have the required qualifications. In section evidences an intent to vest in a different body the credentialing power at issue here. Because there is no indication of the Legislature’s express intent to apply the statute retroactively, the prior legislative scheme granting AHCA the power to administer TCM payments controls. See Port Cove Holdings, Inc. v. Old Port Cove Condo. Ass’n One, 986 So. 2d 1279, 1284 (Fla. 2008). The statutory change was not effective until July 1, 2016, which predated the conduct alleged as criminal here. 10 409.902(2)(a)2., the Legislature defined the crime (violation of a regulation or rule) and its degree (felony). The State determines whether to prosecute the violation, acting through one of its elected state attorneys, not AHCA. 3 As alleged in the Information, the criminal acts charged here are utilizing unqualified individuals to act as targeted case managers or having them provide unqualified services to individuals who were not eligible to receive them. The criminal acts occur if one submits the claims knowing that the TCM managers and services were unqualified and that the recipients were ineligible. Thus, even in comparison to Avatar and the ad hoc permit conditions given by DEP after a permit was sought, an applicant seeking to enroll as a Medicaid provider knows in advance the requirements of the Medicaid program (through regulations promulgated by AHCA) and must certify knowledge and compliance with the Handbook. Thus, this statutory scheme prescribes a general policy goal of making available the possibility of payment for TCM services and a level of guidance as to the conditions under which TCM should be payable, allowing AHCA to sufficiently “determine whether [it] is carrying out the intent of the legislature in its conduct” and avoid becoming a “lawmaker” as required by Avatar. Further, because both statutes criminalized knowing or willful violations of the agency rules in a similar way, there is no more of a potential power on the part of AHCA to alter 3 On appeal, Ms. Scharlepp argues for the first time that the State failed to claim that the alleged violations were “material to the government’s decision to pay.” She asserts that because AHCA continued to make payments during the relevant time period, the State cannot show the required materiality, and because of AHCA’s continued payment to her, it should be estopped from bringing these charges. We reject this contention as it was not preserved for appeal. However, even if properly preserved, we agree with the State that AHCA is separate and apart from the Medicaid Fraud Control Unit of the Department of Legal Affairs and, thus, is not privy to its investigative information until charges are filed. 11 which acts would be criminal under the statutory scheme than existed in Avatar. Conclusion Section 409.920(2)(a)2. satisfies the required balance between the Legislature’s function in establishing fundamental policy and an administrative agency’s promulgation of administrative rules and regulations to fulfill it. Because we find this case indistinguishable from Avatar, the trial court’s dismissal is REVERSED, and the case REMANDED for further proceedings. REVERSED and REMANDED. B.L. THOMAS and BILBREY, JJ., concur. _____________________________ Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331. _____________________________ Ashley Moody, Attorney General, and Thomas H. Duffy, Assistant Attorney General, Tallahassee, for Appellant. Thomas M. Findley of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Tallahassee, for Appellee. 12