Fresnius Medical Care Holdings, Inc. v. Elisabeth Tucker, M.D.

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_____________
No. 11-14192
_____________
D. C. Docket No. 4:03-cv-00411-SPM-GRJ
FRESENIUS MEDICAL CARE HOLDINGS, INC.,
a Foreign Corporation
d.b.a. Fresenius Medical Care North America,
DAVITA, INC.,
a Foreign Corporation,
Plaintiffs-Appellants,
DVA RENAL HEALTHCARE, INC.,
a Foreign Corporation
Plaintiff,
versus
ELISABETH TUCKER, M.D.,
in her official capacity as Chair of the
Florida Board of Medicine,
M. RONY FRANCOIS, MD MPHS PhD,
MAMMEN ZACHARIAH, MD,
MARK S. AVILA, MD,
H. FRANK FARMER, JR., MD, et al.,
Defendants-Appellees.
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______________
Appeal from the United States District Court
for the Northern District of Florida
______________
(January 10, 2013)
Before DUBINA, Chief Judge, CARNES and GILMAN, ∗ Circuit Judges.
DUBINA, Chief Judge:
This case involves a constitutional challenge to Florida’s “Patient Self-
Referral Act of 1992” (the “Florida Act”), FLA. STAT. § 456.053, which prohibits
Florida physicians from referring their patients for services to business entities in
which the referring physicians have a financial interest. Appellants Fresenius
Medical Care Holdings, Inc., DVA Renal Healthcare, Inc., and Davita, Inc.
(collectively “Appellants”) sued the Secretary of the Florida Department of Health,
the members of the Florida Board of Medicine, and the members of the Florida
Board of Osteopathic Medicine (collectively “Florida”) seeking declaratory and
injunctive relief. Appellants allege that the Florida Act is unconstitutional because
it is (1) preempted by federal law, (2) violative of the dormant Commerce Clause,
and (3) violative of substantive due process. The district court found no
constitutional violation and granted summary judgment in favor of Florida. After
∗
Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit, sitting
by designation.
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considering the parties’ briefs and having the benefit of oral argument, we affirm
the judgment of the district court.
I.
A. Statutory background
Federal Stark laws
In an effort to contain health care costs and reduce conflicts of interest,
Congress passed legislation in 1989 and 1993 that prohibits physicians from
referring their Medicare and Medicaid patients to business entities in which the
physicians or their immediate family members have a financial interest. See Pub.
L. No. 101-239, 103 Stat. 2106 (codified at 42 U.S.C. § 1395nn(a)); Pub. L. No.
103-66, 107 Stat. 312 (same). The laws are respectively known as “Stark I” and
“Stark II,” and we collectively refer to them as “Stark.” In promulgating
regulations to implement Stark, the Secretary of Health and Human Services (the
“Secretary”) has created various exemptions from the physician self-referral ban,
including two exemptions relevant to this case. First, Stark exempts physician
referrals to associated entities for clinical laboratory services related to the
treatment of end-stage renal disease (“ESRD”). See 42 C.F.R. § 411.351. Second,
Stark allows physician referrals for designated health services, including laboratory
services, to entities owned by a publicly traded company in which the referring
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physician is a shareholder, so long as the company has stockholder equity in excess
of $75 million. See id. § 411.356(a). All Appellants benefit from the former
exemption, and Davita and Fresenius also benefit from the latter.
The Florida Act
In 1992, the Florida Legislature enacted the challenged statute for reasons
similar to Congress’s reasons for enacting Stark, finding specifically that physician
self-referral practices “may limit or eliminate competitive alternatives in the health
care services market, may result in overutilization of health care services, may
increase costs to the health care system, and may adversely affect the quality of
health care.” FLA. STAT. § 456.053(2). Thus, the Florida Act essentially serves the
same purpose as Stark by regulating physician self-referrals. The Florida Act
makes unlawful (1) a physician’s referral of a patient to a clinical laboratory
service provider in which the physician has an ownership or other financial interest
or (2) any presentation of a claim for payment for health care services rendered in
violation of the Act. Id. § 456.053(5)(a), (c). The statute provides that violators
are subject to disciplinary action by the State of Florida and a civil penalty of not
more than $15,000 for knowing violations. Id. § 456.053(5)(e), (g). Originally,
the Florida Act, like Stark, exempted physicians in the renal dialysis industry from
the self-referral prohibition. See id. § 455.654(3)(o)3.h., 3.l. (2000).
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Most ESRD patients in Florida are covered by Medicare or Medicaid, 1 and
most qualify for benefits under Medicare’s ESRD program that reimburses dialysis
clinics for laboratory services through a bundled rate that includes payment for
dialysis care and laboratory services. Apparently, the single rate reimbursement
strongly reduces the risk of fraud or excessive costs to patients or the government.
For this reason, the Florida House of Representatives Committee on Health
Regulation in 2001 recommended against removing the physician self-referral
exemption for Florida doctors serving ESRD patients. Nevertheless, the Florida
Legislature amended the Florida Act in 2002 to repeal the ESRD exemption.
B. Facts and district court proceedings
Appellants are out-of-state corporations providing renal dialysis services in
Florida, both directly and through subsidiary corporations, to patients suffering
from ESRD. Appellants wish to use a vertically integrated business model in
Florida, referring all their ESRD patients’ blood work to associated laboratories
after providing the patients with dialysis treatment at their clinics. They contend
that this business model is more efficient and better for ESRD patients than a non-
integrated system where providers refer patients to independent laboratories for
blood work. However, keeping laboratory blood work within Appellants’ network
1
Medicare covers not only persons aged 65 and older, but also individuals of any age
“who are medically determined to have [ESRD].” 42 U.S.C. § 1395c.
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would require its employee-physicians to violate the Florida Act, as they have
financial interests in Appellants’ laboratories. According to the record and the
briefs, Appellants’ only competitor providing laboratory services to ESRD patients
is a Florida business that is not vertically integrated, and thus, it is unaffected by
the Florida Act. Appellants claim that the Florida Legislature passed the 2002
Amendments to the Florida Act to benefit their competitor.
In 2003, after passage of the 2002 Amendments, Appellants sued for
declaratory and injunctive relief pursuant to 42 U.S.C. § 1983, requesting a
declaration that the Florida Act is unconstitutional. The complaint alleges that: (1)
the Florida Act is preempted by federal law; (2) the Florida Act violates the
dormant Commerce Clause because it is protectionist and discriminatory against
only out-of-state renal dialysis providers with vertically integrated business
models; and (3) the Florida Act violates substantive due process because it was not
enacted with a legitimate purpose and because it is not rationally related to the
Florida Legislature’s stated purposes for enacting the Florida Act. The district
court stayed this case until 2006. In 2007, Appellants moved for summary
judgment, and Florida filed a cross-motion for summary judgment. Four years
later, the district court entered summary judgment in Florida’s favor. Following
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the denial of Appellants’ motion for reconsideration, Appellants timely appealed to
this court.
II.
We review the grant of summary judgment de novo, drawing all inferences
and reviewing all the evidence in the light most favorable to the non-moving party.
Curves, LLC v. Spalding Cnty., Ga., 685 F.3d 1284, 1289 (11th Cir. 2012) (per
curiam). We also review de novo the constitutionality of a challenged statute. Id.
III.
A. Preemption
The Constitution provides that “the Laws of the United States . . . shall be
the supreme Law of the Land . . . any Thing in the . . . Laws of any State to the
Contrary notwithstanding.” U.S. CONST. art. VI., cl. 2. Consequently, federal law
may preempt state law expressly or by implication. Arizona v. United States, ___
U.S. ___, 132 S. Ct. 2492, 2500–01 (2012). Although Congress’s “express
statement on pre-emption is always preferable, the lack of such a statement does
not end [the] inquiry.” PLIVA, Inc. v. Mensing, ___ U.S. ___, 131 S. Ct. 2567,
2577 n.5 (2011). State law can be impliedly preempted by federal law in cases of
field preemption and conflict preemption. Field preemption exists where Congress
determines that a certain field must be regulated exclusively by the federal
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government. Arizona, ___U.S. at___, 132 S. Ct. at 2501–02.2 Conflict
preemption, however, arises in instances where (1) “compliance with both federal
and state regulations is a physical impossibility,” or (2) “the challenged state law
stands as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.” Id. at ___, 132 S. Ct. at 2501 (internal citations and
quotation marks omitted). We use our judgment to determine when state law
creates an unconstitutional obstacle to federal law, and “this judgment is informed
by examining the federal statute as a whole and identifying its purpose and
intended effects.” Ga. Latino Alliance for Human Rights v. Governor of Ga., 691
F.3d 1250, 1263 (11th Cir. 2012) (internal quotation marks omitted) (quoting
Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 373, 120 S. Ct. 2288, 2294
(2000)).
Moreover, in conducting preemption analysis, we “should assume that the
historic police powers of the States are not superseded unless that was the clear and
manifest purpose of Congress.” Arizona, ___U.S. at___, 132 S. Ct. at 2501
(internal quotation marks omitted); see also Wyeth v. Levine, 555 U.S. 555, 565,
129 S. Ct. 1187, 1194–95 (2009) (reasoning that there are “two cornerstones of
[Supreme Court] pre-emption jurisprudence”: first, that “the purpose of Congress
2
Stark is part of the broader regulatory scheme for Medicare and Medicaid. The
Medicare and Medicaid programs are built upon the principle of federal and state cooperation;
thus, Appellants do not argue that field preemption applies in this case.
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is the ultimate touchstone;” and second, “the assumption that the historic police
powers of the States were not to be superseded” by federal law unless preemption
was clearly Congress’s purpose (internal quotation marks omitted)). The Supreme
Court has stated that these assumptions create a “high threshold” for a party
alleging conflict preemption. See, e.g., Chamber of Commerce of U.S. v. Whiting,
___ U.S. ___, 131 S. Ct. 1968, 1985 (2011) (quoting Gade v. Nat’l Solid Wastes
Mgmt. Ass’n, 505 U.S. 88, 110, 112 S. Ct. 2374, 2389 (1992) (Kennedy, J.,
concurring)).
Appellants argue that conflict preemption exists in this case because the
Florida Act improperly prohibits and penalizes what federal regulation permits,
and it contravenes Congress’s intent to benefit Medicare and Medicaid recipients,
providers, and the government, as payor, by allowing physician self-referral in the
ESRD-treatment context. The district court rejected these arguments and
concluded that Congress did not intend for Stark to preempt state laws like the
Florida Act. In the absence of express language in Stark, the district court looked
to Congress’s intent, as stated in a conference report discussing amendments to
Stark, that “[f]ederal law [should] not preempt State laws that are more restrictive.”
H.R. REP. NO. 103-213, at 1507 (1993) (Conf. Rep.). Furthermore, the district
court considered the Secretary’s regulations implementing Stark, which
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acknowledge that the regulations “do[] not provide for exceptions or immunity
from civil or criminal prosecution or other sanctions applicable under any State
laws.” 42 C.F.R. § 411.350(b). The district court also reasoned that the regulation
of medical fees was and is a typical exercise of state police power, and that the
Florida Legislature was not alone in imposing physician self-referral restrictions
that are more restrictive than federal law.
According to Appellants, the language in the House conference report
demonstrates only that Stark does not preempt state laws that are “more restrictive”
of conduct that Stark prohibits, but Stark does preempt conflicting state laws
prohibiting conduct that Stark allows. In other words, Appellants posit that Florida
may impose penalties that are more restrictive than federal law on physicians who
violate conduct prohibited by federal law, so long as Florida does not attempt to
penalize conduct that federal law permits. Appellants assert that even if their
interpretation is wrong, this court should not give much weight to the district
court’s interpretation because Congress entertained, but ultimately rejected, a draft
of a proposed anti-preemption subsection “(j)” that would have provided that Stark
“shall [not] preempt provisions of State law.” [R. 93-2 at 3.] Thus, Appellants
argue that Congress’s decision not to include this anti-preemption language reflects
the intent to preempt at least some state laws. Moreover, Appellants assert that 42
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C.F.R. § 411.350(b) shows only that the Secretary interprets Stark as not
preempting state laws imposing higher criminal penalties above Stark’s civil
penalties.
For several reasons, we are not persuaded by Appellants’ arguments.
Primarily, we do not see the existence of an actual conflict. See Geier v. Am.
Honda Motor Co., 529 U.S. 861, 884, 120 S. Ct. 1913, 1927 (2000) (“[C]onflict
pre-emption . . . turns on the identification of ‘actual conflict’ . . . .”). Any
physician employed by any of the Appellants who provides clinical care for ESRD
patients in Florida can comply with the Florida Act without neglecting any
obligations under federal law. Indeed, for several years Appellants have managed
to operate their businesses, and their physicians have served ESRD patients. Thus,
we see no “physical impossibility,” see Arizona, ___U.S. at ___, 132 S. Ct. at
2501, preventing Appellants’ compliance with both federal and state laws.
Second, we agree with the district court that the Florida Act does not
frustrate Congress’s legislative intent or the Secretary’s interpretation and
implementation of Stark. In the absence of impossibility, conflict preemption
applies in situations where state law acts as an obstacle or frustration to the
purposes of Congress. Id. at ___, 132 S. Ct. at 2501. While the Florida Act
frustrates Appellants’ vertically integrated business model, there is no evidence
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that the Florida Act frustrates the purposes of Stark. In fact, legislative history
provides evidence to the contrary. See H.R. REP. NO. 103-213, at 1507 (1993)
(Conf. Rep.) (stating that the conferees “intend that Federal law not preempt State
laws that are more restrictive”). It makes little difference to us that Congress
considered but failed to include express language stating that nothing in Stark
should preempt state law. See Schneidewind v. ANR Pipeline Co., 485 U.S. 293,
306, 108 S. Ct. 1145, 1154 (1988) (stating that the Supreme Court “generally is
reluctant to draw inferences from Congress’[s] failure to act”).
Moreover, the Secretary’s regulations implementing Stark are consistent
with the language in the House conference report. It is appropriate to consider “the
promulgating agency’s contemporaneous explanation of its objectives” as well as
“the agency’s current views of the regulation’s pre-emptive effect.” See
Williamson v. Mazda Motor of Am., Inc., ___ U.S. ___, 131 S. Ct. 1131, 1136
(2011). Upon enactment of amendments to Stark in 1993,3 as well as today, the
Secretary’s regulations implementing Stark state that the regulations “do[] not
provide for exceptions or immunity from civil or criminal prosecution or other
sanctions applicable under any State laws or under Federal law other than section
3
See Medicare Program; Physician Financial Relationships With, and Referrals to,
Health Care Entities That Furnish Clinical Laboratory Services and Financial Relationship
Reporting Requirements, 60 Fed. Reg. 41,914, 41,978 (Aug. 14, 1995) (codified at 42 C.F.R.
§ 411.350(b)).
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1877 of the Act.” 42 C.F.R. § 411.350(b). In other words, a physician who would
be civilly or criminally liable for self-referral under a state law like the Florida Act
will find no shelter in the Secretary’s federal exemption for the same conduct. The
remainder of the regulation makes the Secretary’s interpretation of the law clear.
“For example, although a particular arrangement involving a physician’s financial
relationship with an entity may not prohibit the physician from making referrals to
the entity under this subpart, the arrangement may nevertheless violate another
provision of . . . other laws administered by . . . any . . . State agency.” Id.
(emphasis added). The Florida Act is such an “other law” administered by Florida
that properly prohibits what Stark permits.
For all these reasons, we conclude that conflict preemption doctrine does not
apply, and the exemptions in federal law allowing physicians serving ESRD
patients to engage in self-referral do not preempt Florida’s more restrictive law
prohibiting such conduct.
B. Dormant Commerce Clause
The Commerce Clause empowers Congress to regulate interstate commerce.
See U.S. CONST. art. I, § 8, cl. 3. “Although the clause speaks literally only to the
powers of Congress, it is well settled that it has a ‘dormant’ aspect as well . . . .”
Bainbridge v. Turner, 311 F.3d 1104, 1108 (11th Cir. 2002). The dormant
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Commerce Clause “prohibits economic protectionism—that is, regulatory
measures designed to benefit in-state interests by burdening out-of-state
competitors.” Wyoming v. Oklahoma, 502 U.S. 437, 454, 112 S. Ct. 789, 800
(1992) (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273–74, 108
S. Ct. 1803, 1807 (1988)). To determine whether a particular state law violates the
dormant Commerce Clause, a court first determines whether the challenged law
discriminates against interstate commerce because a discriminatory law is
“virtually per se invalid.” See Ore. Waste Sys., Inc. v. Dep’t of Envtl. Quality of
Ore., 511 U.S. 93, 99, 114 S. Ct. 1345, 1350 (1994). Such a law “will survive only
if it ‘advances a legitimate local purpose that cannot be adequately served by
reasonable nondiscriminatory alternatives.’” Dep’t of Revenue of Ky. v. Davis, 553
U.S. 328, 338, 128 S. Ct. 1801, 1808 (2008) (quoting Ore. Waste, 511 U.S. at 101,
114 S. Ct. at 1351). But “[w]here [a state law] regulates even-handedly to
effectuate a legitimate local public interest, and its effects on interstate commerce
are only incidental, it will be upheld unless the burden imposed on such commerce
is clearly excessive in relation to the putative local benefits.” Pike v. Bruce
Church, Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 847 (1970).4
4
The scheme for scrutinizing alleged dormant Commerce Clause violations has also been
stated in terms of whether a state law has “direct” or “indirect” effects on commerce.
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Appellants do not argue that the Florida Act is facially discriminatory
because the Florida Act makes no distinction between in-state and out-of-state
businesses, and it does not exclude out-of-state businesses from operating in
Florida. Rather, Appellants argue that the Florida Act has the practical effect of
discriminating against out-of-state commerce. See Hunt v. Wash. Apple Adver.
Comm’n, 432 U.S. 333, 350–51, 97 S. Ct. 2434, 2445 (1977) (recognizing that a
state law may violate the dormant Commerce Clause by having the “practical
effect” of discriminating in its operation, even though the law is neutral on its
face). If Appellants are correct that the Florida Act has the practical effect of
discriminating against them, the “strictest scrutiny” applicable to a facially
discriminatory law would apply here as well. See Ore. Waste, 511 U.S. at 101, 114
S. Ct. at 1351. In that instance, we would require Florida to show that (1) the
statute has a legitimate local purpose; and (2) there are no adequate, reasonable,
nondiscriminatory alternatives. See Hunt, 432 U.S. at 353, 97 S. Ct. at 2446.
If a regulation directly regulates or discriminates against interstate commerce, or
has the effect of favoring in-state economic interests, the regulation must be
shown to advance a legitimate local purpose that cannot be adequately served by
reasonable nondiscriminatory alternatives. If a regulation has only indirect effects
on interstate commerce, we examine whether the State’s interest is legitimate and
whether the burden on interstate commerce clearly exceeds the local benefits.
Island Silver & Spice, Inc. v. Islamorada, 542 F.3d 844, 846 (11th Cir. 2008) (internal
quotations, citations, and alterations omitted).
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Appellants allege that because the Florida Act impacts only out-of-state
businesses, the district court erred in finding no discriminatory impact. Appellants
further argue that the district court failed to find that the prohibition on physician
self-referral serves no legitimate purpose in an ESRD treatment context and that
there are nondiscriminatory alternatives to the law. But because the law operates
to burden in-state and out-of-state ESRD health care providers alike, Appellants
fail to convince us that the Florida Act has the practical effect of discriminating
against interstate commerce.
The Supreme Court’s decision in Exxon Corp. v. Governor of Maryland, 437
U.S. 117, 98 S. Ct. 2207 (1978), is analogous and instructive here because it offers
an example of a state law that incidentally, but not unconstitutionally, burdened
some out-of-state businesses. In Exxon, the Maryland Legislature passed a statute
prohibiting a producer or refiner of petroleum products from operating any retail
gasoline station within the state and requiring producers and refiners to extend all
temporary price reductions to all retail stations they supplied. 437 U.S. at 119–
121, 98 S. Ct. at 2211. The Maryland Legislature passed the statute in response to
complaints about the inequitable distribution of gasoline among retail stations
during the 1973 oil shortage. Id. at 121, 98 S. Ct. at 2211. The law “was designed
to correct the inequities in the distribution and pricing of gasoline” by prohibiting
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companies from doing business in Maryland as both producers and retailers. Id. at
121, 98 S. Ct. at 2211 (internal quotation marks omitted).
Exxon and other refiners argued that the law discriminated against interstate
commerce at the retail level because the burden of divesting retail service stations
fell solely on the interstate companies, as there were no Maryland-based refiners at
that time. See id. at 125, 98 S. Ct. at 2213–14. The statute, they argued, protected
Maryland independent retailers from competition because the out-of-state refiners
and producers who previously operated gasoline stations would no longer have a
competitive advantage over the independent retailers in terms of pricing and other
special services. Id. at 125, 98 S. Ct. at 2213–14. The Supreme Court rejected the
oil refiners’ argument because the dormant Commerce Clause does not “protect[ ]
… particular structure[s] or methods of operation in a retail market.” Id. at 127, 98
S. Ct. at 2215. Instead, it “protects the interstate market, not particular interstate
firms, from prohibitive or burdensome regulations.” Id. at 127–28, 98 S. Ct. at
2215 (emphasis added). The Court reasoned: “The fact that the burden of a state
regulation falls on some interstate companies does not, by itself, establish a claim
of discrimination against interstate commerce.” Id. at 126, 98 S. Ct. at 2214. And
while oil refiners would no longer enjoy the same status in the Maryland retail
market, in-state independent retailers would not have an advantage over out-of-
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state retailers; nor were there any barriers impeding out-of-state retailers from
entering the Maryland retail market. See id. at 126, 98 S. Ct. at 2214. Thus, there
was no discriminatory effect.
Similar to the oil refiners in Exxon, Appellants feel singled out by the
Florida Act because they are out-of-state entities, and the law adversely affects
only them—but not the lone, in-state competitor providing ESRD laboratory
services. Yet the Florida Act prohibits vertical integration of renal dialysis clinics
and laboratories regardless of whether a business entity is in-state or out-of-state.
Although the burden at present falls solely on Appellants, and although they may
no longer enjoy certain competitive advantages over an in-state competitor, the
Florida Act does not inhibit the competitive, interstate market for the provision of
renal dialysis clinical and laboratory services. Out-of-state businesses may freely
enter the market to operate clinics and laboratories in Florida so long as they
comply with the Florida Act’s prohibition against physician self-referrals.
In keeping with the analysis of Hunt, Appellants further argue that the
Florida Act serves no legitimate purpose, and that there are reasonable
nondiscriminatory alternatives. However, because the Florida Act does not
discriminate in effect against interstate commerce, it is not Florida’s burden to
demonstrate the Act’s legitimate purpose or the non-existence of
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nondiscriminatory alternatives. Rather, we inquire whether the Florida Act’s
burden on interstate commerce is clearly excessive in relation to the law’s putative
benefits. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 471, 101
S. Ct. 715, 728 (1981) (citing Pike, 397 U.S. at 142, 90 S. Ct. at 847). Appellants
rest their case on the argument that the Florida Act is discriminatory in effect, and
they offer no analysis pursuant to the less stringent standard in Pike.
We hold that the district court correctly found that the Florida Act serves a
legitimate local interest—the protection of Florida patients—and that the law’s
burden on out-of-state businesses from providing ESRD care in Florida is not
excessive. Appellants allege that the Florida Legislature passed the law
haphazardly, without regard for its consequences on health care for Florida’s
ESRD patient population. We, however, agree with the district court that “[t]hese
arguments go to ‘the wisdom of the statute, not to its burden on commerce.’”
Fresenius Med. Care Holdings, Inc. v. Francois, 832 F. Supp. 2d 1364, 1369 (N.D.
Fla. 2011) (quoting Exxon, 437 U.S. at 128, 98 S. Ct. at 2215); see also Ferguson
v. Skrupa, 372 U.S. 726, 729, 83 S. Ct. 1028, 1030 (1963) (“[I]t is up to
legislatures, not courts, to decide on the wisdom and utility of legislation.”).
In summary, we conclude that the Florida Act does not discriminate against
interstate commerce, nor does it impose a burden on interstate commerce that is
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clearly excessive when compared with the law’s putative local benefits. Hence, we
conclude that the Florida Act does not violate the dormant Commerce Clause.
C. Substantive due process
We note that Count III of Appellants’ amended complaint alleges only that
the Florida Act violates “substantive due process,” making no reference to equal
protection. [R. 67 at 12–13 (alleging that because the Florida Act targets innocent
business activity, it is arbitrary and capricious and lacks a rational basis).] Florida
sought summary judgment on Count III and argued in terms of equal protection—
not substantive due process—to which Appellants responded, also arguing in terms
of equal protection. The district court then addressed substantive due process and
equal protection together because the rational basis standard applies to both types
of claims. See In re Wood, 866 F.2d 1367, 1371 (11th Cir. 1989). However, a
substantive due process claim differs from an equal protection claim, and it appears
that Appellants pled only that the Act violated their rights to due process.
Presumably, the district court addressed equal protection because the parties
argued it without pleading it. In any case, it makes no difference in our analysis
because Appellants’ substantive due process claim fails to survive rational basis
scrutiny, and an equal protection claim would as well.
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When a challenged law does not infringe upon a fundamental right, we
review substantive due process challenges under the rational basis standard. See
Locke v. Shore, 634 F.3d 1185, 1195–96 (11th Cir. 2011). Under the rational basis
standard, the law requires only that the Florida Act’s prohibition on physician self-
referrals be rationally related to the Florida Legislature’s goal of reducing conflicts
of interest, lowering health care costs, and improving the quality of health care
services. See Clover Leaf, 449 U.S. at 462–63, 101 S. Ct. at 722–23. The Act will
be upheld so long as “there is any reasonably conceivable state of facts that could
provide a rational basis for [the regulation].” FCC v. Beach Commc’ns, Inc., 508
U.S. 307, 313–15, 113 S. Ct. 2096, 2101–02 (1993). Appellants bear the burden of
demonstrating that the law lacks a rational basis. Deen v. Egleston, 597 F.3d 1223,
1230 (11th Cir. 2010). We agree with the district court that the Florida Act passes
rational basis-scrutiny because, no matter how ineffective the law might actually
be, it was not irrational for the Florida Legislature to conclude that the
amendments to the law would accomplish the legislative objectives identified in
FLA. STAT. § 456.053(2).
In their brief, Appellants assert that the Florida Legislature’s refusal to
acknowledge the findings of the 2001 House committee report shows that it was
irrational to amend the Florida Act in 2002 to remove the ESRD exemption.
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Further, they argue that “the circumstances surrounding passage of the 2002
Amendments lead to no conclusion other than that the Florida Legislature was
motivated to benefit a politically favored in-state provider.” Appellants’ Br. at 42.
But Appellants’ arguments miss the mark of a rational basis inquiry. Their
evidence casts doubt on the wisdom of the statute and suggests that perhaps a
competitor out-lobbied Appellants before the Florida Legislature, but the evidence
does not demonstrate that the Florida Legislature could not have possibly believed
that removing the ESRD exemption would reduce conflicts and improve health
care in the renal-dialysis field. Appellants fail to convince the court that the
purported reasons given for the enactment of the law “‘could not reasonably be
conceived to be true by the governmental decisionmaker.’” Clover Leaf, 449 U.S.
at 464, 101 S. Ct. at 724 (quoting Vance v. Bradley, 440 U.S. 93, 111, 99 S. Ct.
939, 949 (1979)). Because it is reasonably conceivable that Florida ESRD patients
would be better served if their physicians were prohibited from making self-
referrals to associated laboratories, we conclude that the Florida Act survives
rational basis scrutiny and that the law does not deprive Appellants of their rights
to substantive due process.
IV.
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Case: 11-14192 Date Filed: 01/10/2013 Page: 23 of 23
In conclusion, because we are persuaded that the district court properly
granted Florida’s motion for summary judgment on Appellants’ preemption,
dormant Commerce Clause, and substantive due process claims, we affirm its
judgment.
AFFIRMED.
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