Federal judge denies bid to keep Florida HIV clinics open over fraud concerns

WASHINGTON (CN) — A federal judge won't unfreeze federal funding for two Florida-based pharmacies that provide free HIV treatment to homeless and low-income patients in the state on Friday, citing the pharmacies' possibly fraudulent practice over-ordering medication.

U.S. District Judge Trevor McFadden acknowledged that his decision would have real-life impacts on the employees of the clinics and their patients, but said that the pharmaceutical companies had failed to provide enough evidence for him to release nearly $6 million in frozen funding as they requested.

The Donald Trump appointee’s decision comes after he previously denied a request for a temporary restraining order by Turner Drugs on March 26, where the company argued that without the funds, it would have to lay off staff and potentially dissolve.

In the two weeks since that decision, McFadden noted, the company had only laid off 25% of its staff and had not closed its clinics throughout Northern and Central Florida. He pointed to an ongoing audit that is set to finish by the end of June that will determine whether the company had committed fraud as part of his reasoning. 

“I agree with the defendant that this is a suspension, not a termination,” McFadden said.

In February, Turner began participating in a U.S. Department of Health and Human Services program intended to make the drug commonly known as PrEP more readily available to at-risk populations. Pre-exposure prophylaxis can be taken by pill or by injection and can reduce the risk of contracting HIV via sex by about 99% when taken daily. 

But the department suddenly denied the company’s prescriptions requests on March 12, freezing over $3 million in payments owed to the company for 1,488 prescriptions, Turner Drugs said in its suit. 

According to Mercalis Inc., the company that administers the Ready, Set PrEP program on behalf of department and a co-defendant in the case, Turner Drugs raised a number of red flags when it filled nearly 1,500 prescriptions for PrEP between February and March — well above the average of five the company normally saw each month.

Representing Mercalis, Brian Iverson of the firm Bass Berry argued on Friday that Turner’s breach of contract suit wrongfully identified Mercalis as a defendant, explaining that the company was not party to the agreement. Rather, Mercalis was an assignee to the agreement, working as a contractor for Health and Human Services, and could not be held liable for the frozen funds. 

In the intervening weeks, a second company, Luxe Health Pharmacy, filed a similar suit after $2.5 million meant to cover PrEP prescriptions were suddenly frozen. Luxe requested McFadden issue a temporary restraining order, which he also denied Friday. 

During Friday’s proceedings, Phil Neuman — managing director of the board for Advancing Health Access, the company that operates the free clinics and owns both Turner and Luxe — testified that if the preliminary injunction was not granted, the clinics’ patients would be at risk. 

“If our clinic disappears … people are going to die,” Neuman said. 

He presented a 2-minute video detailing the clinic's daily work, educating people on the streets, transporting them to the clinics and conducting comprehensive blood work and treatment for HIV and other sexually transmitted diseases.

As he passed down his decision, McFadden apologized to Neuman, acknowledging the disappointing decision, but said that he had not been convinced their patients would find it impossible to find care at another clinic in Florida.

According to a 2020 Centers for Disease Control and Prevention analysis, Florida faces the fourth-highest rate of new HIV infections, at 18.2 infections per 100,000 people.  

Central Florida, and Orlando in particular, has an acute struggle with the disease. Orlando sees higher rate of HIV-postive residents than the state average, and nearly double the national average, according to a Nov. 14, 2023, report by AIDSVu. The report used 2021 data from state and city health departments and was completed by researchers at the Emory University Rollins School of Public Health. 

The Department of Health and Human Services launched the Ready, Set, PrEP in February 2019 with the aim of ending the HIV epidemic and reducing new infections by 75% in five years and 90% in 10 years. 

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