IN THE SUPREME COURT OF FLORIDA

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, and STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION,

Appellants, Cross-Appellees,

v.

ASSOCIATED INDUSTRIES OF FLORIDA, INC., PUBLIX SUPERMARKETS, INC., NATIONAL ASSOCIATION OF CONVENIENCE STORES, INC. and PHILIP MORRIS, INC.,

Appellees, Cross-Appellants.

Case No. 86,213

APPELLEES' ANSWER AND CROSS-APPEAL BRIEF

INTRODUCTION

This appeal concerns the constitutionality and application of the 1994 Amendments to the Florida Medicaid Third-Party Liability Act, Section 4 of Chapter 94-251, Laws of Florida ("the 1994 Amendments" or "Amendments"). Plaintiffs/appellees filed suit in the Circuit Court for Leon County, seeking a declaratory judgment that the 1994 Amendments are unconstitutional and, alternatively, may be applied only prospectively.

The 1994 Amendments are an unconstitutional attempt by the State of Florida to abolish basic procedural and substantive protections against arbitrary and excessive tort liability for the sole purpose of increasing its own financial recovery in lawsuits. Before the Amendments, the State had the statutory remedies of subrogation and assignment against third-party tortfeasors who injured Medicaid recipients. Pursuant to either remedy, when the State paid for the medical care of an injured Medicaid recipient, the State stood in the shoes of the recipient and inherited any right to recover that the recipient had against a third-party tortfeasor. In such a lawsuit, the State could recover reimbursement for medical costs from the tortfeasor if, but only if, the recipient had a right to recover.

The 1994 Amendments rewrite this law from top to bottom to give the State an overwhelming and fundamentally unfair advantage in Medicaid reimbursement lawsuits. The Amendments give the Agency for Health Care Administration ("AHCA") a cause of action against "third-party" tortfeasors independent of any rights of the recipient. Then, with respect to this cause of action, the Amendments adopt a series of remarkable provisions seeking to ensure that the State prevails. The Amendments:

1. Abolish all affirmative defenses "normally available to a liable third party," including comparative fault:

2. Grant the State the right to join an unlimited number of claims in a giant class-action-like proceeding;

3. Grant the State the right to sue to recover its costs of treating Medicaid recipients without identifying the Medicaid recipients;

4. Revoke essential requirements of proximate cause and allow the State to establish causation and damages solely by statistical analysis;

5. Create a wholly new form of market share liability that violates the limitations placed on that doctrine by this Court; and

6. Require courts to construe all existing theories of recovery and the evidence code solely in the State's favor to maximize its recovery.

The central theme of the State's Initial Brief ("State Br.") is that the 1994 Amendments are constitutional, and can apply retroactively, because the Amendments merely "codify existing rights of the State" and "do not make new substantive law." State Br. at 20. But no prior version of the Florida Medicaid Third-Party Liability Act contained these one-sided provisions or expanded the State's statutory rights beyond those of subrogation or assignment against potential tortfeasors. Nor has any Florida decision ever recognized the State's wholly new versions of "restitution" and "indemnity," which the State pretends have existed for years in Florida law and have now been "codified" by the 1994 Amendments. As discussed below, the State asks this Court to revolutionize the Florida law of restitution and indemnity simply in order to uphold the 1994 Amendments.

The Circuit Court of Leon County correctly held that the 1994 Amendments violate separation of powers. The circuit court also correctly held that the Amendments create wholly new rights and burdens on the parties and therefore apply (if at all) only prospectively. Although the circuit court rejected appellees' access to courts and due ( process arguments, under well-established Florida and federal law, the Amendments, taken as a whole, violate these fundamental guarantees against arbitrary and excessive tort liability.

The circuit court also found that AHCA's structure violates Article IV, Section 6 of the Florida Constitution. Contrary to the assertions of the State and numerous amici, the invalidity of the AHCA would not impose a hardship to the State or its citizens. Under the doctrine of de facto agency, AHCA's prior actions would remain valid, but the Agency would be precluded from prosecuting any suit under the 1994 Amendments.

STATEMENT OF THE CASE AND FACTS

The State has submitted a Statement of the Case and Facts which does not conform to Rule 9.210(b)(3) of the Rules of Appellate Procedure, in that it is incomplete and contains almost no citations to the record (as required). With respect to the procedural history of the case, appellees agree with the State's Statement of the Case and Facts, so far as it goes, but submit the following supplemental points:

1. Appellees moved for summary judgment below on March 17, 1995. (R. 107.) While that motion was pending, the State moved for summary judgment against all plaintiffs except Philip Morris. (R 117.) The basis for the State's motion was Executive Order No. 95-105 (March 28, 1995), in which the Governor directed the executive branch of government to enforce the 1994 Amendments solely against the tobacco industry, notwithstanding the Amendments' clear language that they apply to all potential third-party tortfeasors. [ Executive Order 95-105 is located in the Appendix at (A.3).] In further support of its motion, the State offered to stipulate "to a permanent and legally binding Order barring all current or potential actions" against the nontobacco plaintiffs and provide them with "an absolute and permanent legal defense with respect to current or future liability." [ Defendants' Stipulation for Non-Prosecution (May 12, 1995) (R. 468-70) (A.4).] The State argued that the Executive Order and stipulation nullified the standing of all nontobacco related plaintiffs to challenge the Amendments. (R 120.) On May 23, 1995, the circuit court denied the State's motion, holding that the 1994 Amendments on their face are not limited to tobacco-related third-party defendants and therefore the nontobacco plaintiffs "have standing to pursue this action, and this Court has jurisdiction to entertain the suit." (R 476-77) (A.5). The court held that the Executive Order and the stipulation are beyond the Governor's authority because the power to limit or amend a statute is specifically reserved to the legislature. [ The State has not challenged the circuit court's May 23, 1995 Order denying defendants' motion for summary judgment.] (R. 477) (A 5)

2. On June 26, 1995, Judge Steinmeyer entered final judgment in this case. See Order (R. 754-57) (A.1). The Final Order was based on the agreement of all parties that there was no disputed issue of material fact and that the action was ripe for final adjudication on all issues. [ Order at 1 (R. 754-57) (A.1); Transcript of Hearing on Plaintiffs' Motion for Summary Judgment ("Transcript") at 103 (June 16, 1995) (A.6.)] The circuit court found that two portions of the 1994 Amendments violate the separation of powers provision of the Florida Constitution: section 409.910(9) dealing with joinder and nonidentification of injured Medicaid recipients, and sections 409.910(1) and (9) requiring the interpretation of common law theories of recovery and the evidence code in favor of the State. (R 755.) The circuit court also found that the remaining portions of the 1994 Amendments can be applied only prospectively and that the structure of AHCA violates Article IV. Section 6 of the Florida Constitution. (R. 755-57.) Finally, the circuit court held that the 1994 Amendments do not violate access to courts or due process guarantees and that the portion of section 409.910(9) dealing with the use of statistical evidence does not violate separation of powers. [ The circuit court also rejected claims that (1) the 1994 Amendments violate the title requirements for legislation under the Florida Constitution and (2) section 409.910(19) -- purporting to allow the imposition of treble damages -- is preempted by the Social Security Act. (R. 755.) Plaintiffs/appellees are not pursuing these claims in this appeal.] (R 755.)

3. The State appealed on July 17, 1995. (R. 758.) On July 21, plaintiffs cross appealed. (R 765.) The First District Court of Appeal certified the appeal directly to this Court, [ District Court of Appeal, First District, Certification of Appeal, Case No. 95-2578, (Aug. 10, 1995).] and on August 17, this Court accepted jurisdiction. [ Supreme Court of Florida, Order Accepting Jurisdiction, Case No. 86,213 (Aug. 17, 1995).]

THE 1994 AMENDMENTS AND THEIR LEGISLATIVE HISTORY

The State in its brief failed to give an adequate description of the provisions and impact of the 1994 Amendments. Before the arguments raised in the appeal and cross appeal can be evaluated, it is necessary to examine carefully the provisions of the 1994 Amendments, their legislative history, and their impact on Medicaid reimbursement lawsuits.

A. The Key Provisions of the 1994 Amendments

The 1994 Amendments comprise a series of provisions which, taken together, create a new cause of action, unprecedented in the State of Florida.

1. Independent Cause of Action. The 1994 Amendments give AHCA a "cause of action against a liable third party to recover the full amount of medical assistance provided by Medicaid." § 409.910(6)(a). This cause of action, of course, derives from injuries sustained by individual Medicaid recipients: the State is only economically "injured" because it provided medical care to physically injured recipients Yet the State's cause of action is now "independent of any rights or causes of action of the recipient." Id. AHCA thus may recover damages for injuries to individual Medicaid recipients even when the recipients themselves are not entitled to recover.

Furthermore, the 1994 Amendments apply to all Medicaid reimbursement suits brought by AHCA "against a liable third party." Id. The cause of action thus lies against all potential tortfeasors, certainly all manufacturers and suppliers of products that pose health risks. For this reason, the court below rejected the Governor's attempts to limit the 1994 Amendments to tobacco related defendants via Executive Order. [ See Order Denying Defendants' Motion for Summary Judgment as to Associated Industries of Florida, Inc., Publix Supermarkets, Inc. and National Association of Convenience Stores, Inc. (15th Cir. May 23, 1995) (R. 476-77) (A.5).]

2. Abrogation of Affirmative Defenses. The 1994 Amendments provide that "comparative negligence, assumption of risk, and all other affirmative defenses normally available to a liable third party are to be abrogated to the extent necessary to ensure full recovery." § 409.910(1). The 1994 Amendments in short allow AHCA to recover in full against a defendant even when the Medicaid recipient was grossly negligent' voluntarily assumed the risk, released the manufacturer from any existing duty, or was otherwise the primary cause of his own injuries.

3. Creation of New Joinder Rights. The 1994 Amendments provide that, if "medical assistance has been provided by Medicaid to more than one recipient . . . the agency may bring an action to recover sums paid to all such recipients in one proceeding." § 409.910(9). The sole precondition to joinder is that the claims must present "common issues of fact or law." Id. Thus, contrary to the rules of civil procedure, the 1994 Amendments give AHCA a virtually unconditional right to join an unlimited number of reimbursement claims, on behalf of an unlimited number of recipients, against a manufacturer in one proceeding. [ The 1994 Amendments also cut off joinder and intervention rights of the Medicaid recipients. See § 409.910(12)(a).]

4. Revocation of Elements of Proximate Cause. To facilitate such an unmanageable lawsuit, the 1994 Amendments provide that "causation and damages . . . may be proven by use of statistical analysis." § 409.910(9). AHCA thus need not prove that a manufacturer caused any particular recipient's injuries or that any particular injury actually occurred. Individual causation issues-such as the accuracy of a diagnosis or the existence of alternative causes - simply disappear from AHCA's case. Instead, AHCA can prove its case using probabilities and statistics.

But the 1994 Amendments go one step further. The Amendments also provide:

In any action under this subsection wherein the number of recipients for which medical assistance has been provided by Medicaid is so large as to cause it to be impracticable to join or identify each claim, the agency shall not be required to so identify the individual recipients for which payment has been made, but rather can proceed to seek recovery based upon payments made on behalf of an entire class of recipients.

§ 409.910(9)(a)

In plain language, the 1994 Amendments attempt to bar a manufacturer from discovering the most critical piece of information in a product liability case: identification of who was allegedly injured. Without this information, a manufacturer would be unable to obtain medical records or otherwise conduct discovery relating to the individual Medicaid recipients. Thus, the Amendments do not merely allow the State to prove its case through statistics; they also prevent a manufacturer from defending the case on any other basis.

5. Adoption of a New Form of Market Share. The 1994 Amendments also grant AHCA the right "to proceed under a market share theory" to establish a causal connection between a defendant's product and the claimed injuries. § 409.910(9)(b). [ To invoke market share liability under the Amendments, the State need only show that "the products involved are substantially interchangeable among brands, and that substantially similar factual or legal issues would be involved in seeking recovery against each liable third party individually." § 409.910(9)(b).] The Amendments' version of "market share liability" is wholly new.

In Conley v. Boyle Drug Co., 570 So. 2d 275 (Fla. 1990), this Court adopted a narrow version of "market share liability" for DES cases. The 1994 Amendments go far beyond Conley and would impose market share liability where Conley expressly barred its application. First, Conley held that market share liability theory applies only "where there is an inherent inability to identify the manufacturer of the product that caused the injury." Id. at 285. The 1994 Amendments contain no such requirement. The Amendments would impose market share liability on behalf of a class of injured Medicaid recipients even if each recipient could readily identify the manufacturer of each particular product that gave rise to his or her injuries. See § 409.910(9).

Second, Conley requires that a manufacturer be given a meaningful opportunity to prove that its product did not cause the specific injury alleged. 570 So. 2d at 287. But the 1994 Amendments effectively deny manufacturers this right by providing that the State need not identify the injured Medicaid recipients. Without this information, a manufacturer is unable to dispute any individual causation issue, including whether its product caused the specific injury sustained by any particular Medicaid recipient.

Third, Conley held that market share liability was to be "several" -- specifically, limited to a manufacturers presumptive or market share. Under the 1994 Amendments, however, market share liability is to be "joint and several." § 409.910(1). Thus, a manufacturer with a 1% share of the market would be held liable for 100% of the images.

6. Interference with Impartial Decision-making. The Amendments direct that existing "[c]ommon law theories of recovery shall be liberally construed to accomplish [the] intent" of the Act § 409.910(1). The "intent of the Act" is identified as being "that Medicaid be repaid in full." L. The Amendments therefore require the court to construe common law to ensure that the State recovers Medicaid costs. The Amendments similarly provide that "the evidence code shall be liberally construed regarding the issues of causation and of aggregate damages." § 409.910(9).

B. The Impact of the 1994 Amendments

Consider the fundamental unfairness of these provisions working together at trial. Suppose, hypothetically, a person developed cirrhosis of the liver allegedly from consuming scotch whiskey. If the injured person sued the whiskey manufacturer, the lawsuit would be subject to traditional tort rules that define and limit a manufacturer's liability -- rules such as proximate causation and comparative fault -- which may well result in a verdict in the manufacturer's favor. If the injured person was covered by private medical insurance, the insurer could bring a subrogation lawsuit to recover the medical expenses - but that lawsuit would involve the identical legal claims and defenses as the suit brought by the injured person.

Now suppose that the injured person's medical treatment happened to have been paid by Medicaid. The underlying facts of the lawsuit would remain the same: the same injury, the same manufacturer, the same conduct, and the same consumer. But under the 1994 Amendments the trial and the rules governing liability would be completely different. AHCA would have a right to join thousands of similar claims in the same suit - and require the manufacturer to defend against them all at the same time. At trial, the Amendments would effectively deny the manufacturer (1) the right to know (let alone cross-examine) the persons it allegedly injured, (2) the right to refute that its whiskey caused the cirrhosis of each such person, (3) the right to refute that the diagnosis of cirrhosis was correct, and (4) the right to show that some cause other than whiskey was responsible for the cirrhosis. The Amendments would also abrogate all of the manufacturer's affirmative defenses. The recipient's knowing and voluntary decision to drink in spite of the health hazards would be irrelevant in the lawsuit. Furthermore, from the very beginning, the deck would be hopelessly stacked against the manufacturer: the Amendments would require the court to interpret the rules of evidence and the common law in favor of the State. Finally, even if the manufacturer's share of the market was only 1%, under the market share/joint and several liability provisions of the Amendments, the manufacturer could be held liable for 100% of the damages.

It is difficult to conceive of a proceeding more unfair or certain to result in arbitrary and excessive liability. It is difficult to conceive of a statute more in need of this Court's constitutional scrutiny.

C. The Legislative History of the 1994 Amendments

The 1994 Amendments' one-sided provisions were the result of a last-minute manipulation of the legislative process at the end of the 1994 regular legislative session.

On February 21, 1994, a bill—S.B. 2110—was introduced into the Senate. The sole purpose of the bill was to transfer responsibility for the Medicaid fraud-control program from the Office of the Auditor General to the Office of the Attorney General. [ See Final Legislative Bill Information by the Joint Legislative Management Committee, the Journal for the Senate, (February 21, 1994) at 162 [hereinafter "Bill Information"]. The pertinent portions of the Bill Information are located at (A.7).] The bill was titled "[a]n act relating to Medicaid provider fraud." [ S.B. 2110, 1994 Reg. Sess. is located at (A.8).]

S.B. 2110 languished in the Florida Senate until April 7, 1994—one day before the scheduled adjournment of the regular legislative session. On that day, the proponents of the 1994 Amendments convinced the Senate to waive its rules and send S.B. 2110 to the floor without going through a Senate committee. [ See Bill Information at 835 (A.7).] This "fraud control bill was then amended to include the Amendments at issue here. But the text of the Amendments was never read on the Senate floor. [ See Fla. S., tape recording of proceedings (April 7, 1994) (on file with the Secretary) (transcribed discussion of S.B. 2110 is attached as (A.9)).] Nor did anyone explain that the Amendments created an independent cause of action for the State against manufacturers and abrogated affirmative defenses. Senators, believing they were voting on "an act relating to Medicaid provider fraud," passed this bill 38 to 0.

The next day, April 8, 1994, the House of Representatives took up the Senate's amended S.B. 2110 at 5:30 p.m. [ See Bill Information at 1552 (A.7).] Again, the bill was not referred to a committee and its true contents were not discussed on the floor. [ Fla. H.R., tape recording of proceedings (April 8, 1994) (on file with Clerk) (transcribed discussion of S.B. 2110 is attached at (A.10)).] S.B. 2110, as amended, passed unanimously. The regular session of the 1994 legislature adjourned six hours later. S.B. 2110 was signed into law on May 26, 1994.

Following passage of the 1994 Amendments, the Florida legislature, now informed of their contents, wasted no time repealing them. [ See S.B. 42, 1995 Reg. Sess. (A.11).] At the next regular legislative session, the House voted to repeal the Amendments by a vote of 102 to 13; the Senate voted to repeal the Amendments by a vote of 33 to 6. However, on May 23, 1995, the Governor vetoed the bill repealing the 1994 Amendments. [ See Transcript at 9 (A.6.).] The legislature has yet to consider the bill for a possible override vote.

SUMMARY OF ARGUMENT

The 1994 Amendments fundamentally change the law governing Medicaid reimbursement suits against potential third-party tortfeasors. The Amendments abrogate affirmative defenses; effectively preclude defendants from challenging elements of proximate cause; adopt joint and several "market share" liability; adopt new procedural rules; and direct the court to interpret the common law and rules of evidence solely in favor of the State. The Amendments cannot survive this Court's constitutional scrutiny.

The argument portion of this brief is divided into two sections: appeal and cross appeal. The appeal arguments relate to issues of separation of powers, nonretroactive application of the Amendments, the statute of repose, and the constitutional infirmities of AHCA. The cross-appeal arguments directly challenge the 1994 Amendments as violating appellees' constitutional rights. Pursuant to practice before this Court, the appeal arguments are treated first below.

A. Argument in Response to the State's Appeal

1. Separation of Powers. To ensure the State's recovery in Medicaid reimbursement suits, the 1994 Amendments create unique judicial procedures that overwhelmingly favor the State and invade the power of this Court to prescribe practice and procedure for judicial proceedings. Avila S. Condominium Ass'n v. Kappa Corp., 347 So. 2d 599 (Fla. 1977). First, section 409.910(9)(a) gives the State the right to join hundreds, if not thousands, of individual claims together in a single lawsuit, without even identifying the individual Medicaid recipients who received the benefits. Second, section 409.910(12)(a) bars the joinder of individual Medicaid recipients in such an action. Finally, sections 409.910(1) and (9) go so far as to require courts to construe common law and evidentiary rules solely in favor of the State. By encroaching on the exclusive power of the judiciary over such matters, these sections violate the separation of powers doctrine and are therefore invalid.

2. No Retrospective Application. In addition to supporting the draconian provisions of the 1994 Amendments, the State seeks to have them apply retroactively. But the circuit court correctly ruled that, to the extent the 1994 Amendments survive constitutional scrutiny (which they cannot), they can apply only prospectively to conduct of potential defendants that occurred after the Amendments' effective date of July 1, 1994. Prospective-only application is required both as a matter of statutory construction and due process. See Young v. Altenhaus, 472 So. 2d 1152 (Fla. 1985); Arrow Air, Inc. v. Walsh 645 So. 2d 422 (Fla. 1994); Florida Patient's Compensation Fund v. Scherer, 558 So. 2d 411 (Fla. 1990).

The State's chief argument that the 1994 Amendments merely codify existing rights (State Br. 20) is not supported by the law. No Florida court has ever applied the substance of the 1994 Amendments in a Medicaid reimbursement case. Before the Amendments, the State had two statutory remedies, subrogation and assignment. both of which were governed by traditional equity principles. See Underwood v. Department of Health and Rehabilitative Servs., 551 So. 2d 522, 526 (Fla. 2d DCA 1989), review denied, 562 So. 2d 345 (Fla. 1990). The State's reliance on the 1990 Amendments as having altered these statutory remedies is misplaced. The 1990 Amendments were enacted only to ensure that the State had first priority to funds over injured Medicaid recipients once such funds were obtained from a third-party tortfeasor. The 1990 Amendments did not change or expand in any way the State's rights as against potential third-party tortfeasors. See § 409.910, Fla. Stat. (1993) (A.13).

Nor did the 1994 Amendments simply "codify" the State's equitable rights to restitution and indemnity. The State has never asserted such a right in the Medicaid context. Further, in the non-Medicaid context, the laws of both restitution and indemnity require the party seeking repayment to show that it discharged a legal liability owed by the defendant to the injured person. Yet, that is exactly the showing that the 1994 Amendments do not require. Nor do the 1994 Amendments require the State to satisfy other critical elements of restitution or indemnity. At bottom, the State is asking this Court to expand radically the remedies of restitution and indemnity and then pretend that the 1994 Amendments "merely" codify these newly created remedies. But the issue before the Court is whether the 1994 Amendments codify pre-existing equitable right -- not whether new equitable rights should be created.

3. Statute of Repose. The trial court correctly held that the statute of repose cannot be abrogated to revive extinguished claims. Instead of challenging this holding, the State now raises a standing issue. But, as the circuit court found below, appellees have a bona fide, actual, and present need for a declaration regarding the Amendments, including the retrospective abrogation of the statute of repose. The State ignores the ample factual predicate that exists in this case for this Court to affirm the court's ruling.

4. AHCA. The circuit court was also correct in holding that AHCA violates Article IV, section 6 of the Florida Constitution. That provision requires that all functions of the executive branch be allotted among no more than 25 departments. AHCA is not a department and its function is not allotted to a department. AHCA's structure therefore is unconstitutional. Contrary to the exaggerated assertions of the State and amici, invalidating AHCA would not produce harsh or absurd results. Under the de facto agency doctrine, AHCA's past actions would continue to be valid, although AHCA would be unable to prosecute any lawsuit under the Florida Medicaid Third-Party Liability Act.

B. Arguments on Cross Appeal

1. Access to Courts. Section 409.910(1) of the 1994 Amendments expressly abrogates "comparative fault, assumption of risk, and all other affirmative defenses normally available to a liable third party." It is well established, however, that the right to access to courts of Article I, Section 21 of the Florida Constitution protects the right to assert both traditional "claims and defenses." Psychiatric Assoc. v. Siegel, 610 So. 2d 419, 424 (Fla. 1992) (emphasis added). It is difficult to imagine a statutory provision that violates the right to assert traditional defenses more completely -- or more unequivocally -- than the 1994 Amendments.

The 1994 Amendments also violate access to courts by creating barriers to the ability of manufacturers to assert defenses. The Amendments deny manufacturers access to critical information needed to defend any case: the identity of who was allegedly injured. Without this information, a manufacturer would be unable to challenge critical elements of proximate cause. The Amendments also erect barriers by imposing joint and several liability based on a market share theory without giving manufacturers any right to limit liability in proportion to market share.

2. Separation of Powers. To further ensure the State's success, section 409.910(9) of the 1994 Amendments directs the courts to allow the State to prove causation and damages solely by statistical analysis. This section violates the separation of powers doctrine because it is the province and duty of the courts, not the legislature, to determine the relevancy and admissibility of evidence.

3. Due Process. Finally, the 1994 Amendments violate due process guarantees. The 1994 Amendments violate due process by creating unconstitutional irrebuttable presumptions. Straughn v. K&K Land Management, Inc., 326 So. 2d 421 (Fla. 1976). The Amendments' unique version of market share liability irrebuttably presumes that each manufacturer caused all the injury attributable to an entire industry. Furthermore, by allowing the State to prove its case statistically and denying manufacturers discovery of individuals who were allegedly injured, the 1994 Amendments presume proximate cause from statistics alone and provide manufacturers with no meaningful opportunity for rebuttal on any other basis. The 1994 Amendments also violate due process by abolishing common law protections against arbitrary and excessive liability and by creating an institutional bias in favor of the State.

ARGUMENT ON APPEAL

I.

THE 1994 AMENDMENTS ENCROACH UPON THE JUDICIARY IN VIOLATION OF THE SEPARATION OF POWERS DOCTRINE

The Separation of Powers provision in Article II, Section 3, of the Florida Constitution forbids one branch of state government from encroaching on the powers of another. [ Article II, Section 3 provides that "[t]he powers of the state government shall be divided into legislative, executive and judicial branches. No person belonging to one branch shall exercise any powers appertaining to either of the other branches unless expressly provided herein." Article V, Section 2(a) provides that "[t]he supreme court shall adopt rules for the practice and procedure in all courts…"] Pursuant to this provision, the judiciary has exclusive power to regulate and prescribe practice and procedure for judicial proceedings. Haven Fed. Sav. & Loan Ass'n v. Kirian, 579 So. 2d 730, 732 (Fla. 1991). This Court has described the boundaries of the judiciary's exclusive authority:

[P]ractice and procedure "encompass the course, form, manner, means, method, mode, order, process or steps by which a party enforces substantive rights or obtains redress for their invasion. 'Practice and procedure' may be described as the machinery of the judicial process as opposed to the product thereof." It is the method of conducting litigation involving rights and corresponding defenses.

Id. (citations omitted). The circuit court properly held that the 1994 Amendments violate the separation of powers doctrine by (1) nullifying rules of joinder and (2) requiring the courts to interpret laws in favor of the State. Order ¶ 2 (R 754-57) (A.1).

A. The 1994 Amendments Nullify Rules Regard-ing Joinder

In order to facilitate the State's recovery against potential tortfeasors, the Amendments create a special category of joinder rules applicable only to AHCA that give the State a substantial advantage in litigation. Under the Amendments, AHCA has the absolute right to join thousands of claims against a manufacturer in one suit if a single criterion is met: the existence of "common issues of fact or law." § 409.910(9). The Amendments further provide that AHCA "can proceed to seek recovery based upon payments made on behalf of an entire class of recipients" without identifying any individual recipient. § 409.910(9)(a). AHCA is thus free to ignore the Florida Rules of Civil Procedure governing joinder of claims or class actions.

This Court struck down an analogous statute in Avila S. Condominium Ass'n v. Kappa Corp., 347 So. 2d 599, 607-08 (Fla. 1977). There, this Court declared unconstitutional a statute that gave condominium associations the right to maintain class actions on behalf of owners. The Court acknowledged that the legislature had the power to grant associations the right to sue and be sued. The Court, however, held that "the legislature had no constitutional power to also create a procedural vehicle for condominium associations to maintain or defend such suits as a class action, this being a matter of practice and procedure." In re Rule 1.220(b). Fla. Rules of Civil Procedure, 353 So. 2d 95, 97 (Fla. 1977) (discussing the holding in Avila) (emphasis added). Likewise, here, the legislature has "no constitutional power" to create for the State "a procedural vehicle"—unlimited joinder of claims—to bring claims against third parties for Medicaid reimbursement. [ The legislature also has "no constitutional power" to nullify the power of a court to require the State to disclose who was allegedly injured by a potential defendant. Furthermore, the nonidentification provisions of section 409.910(9)(a) also violate due process. See infra pp. 61-64.]

The Amendments also nullify other rules regarding joinder. Although the Amendments allow unlimited joinder of claims, they absolutely forbid the joinder of certain parties. The Amendments prohibit the joinder of a Medicaid recipient in an action brought by AHCA—even though the recipient's claims arise out of the same occurrence (and against the same defendants) as AHCA's claim. § 409.910(12)(a). This statutory provision directly conflicts with Florida Rule of Civil Procedure 1.250(c), which allows the trial court substantial discretion to order joinder of parties. See Markert v. Johnston, 367 So. 2d 1003, 1006 (Fla. 1978) (striking down a statute barring the joinder of an insurer as a defendant in a lawsuit against insured on separation of powers grounds).

Although there is a presumption in favor of a statute's constitutionality, the Court should "not go so far in [its] narrowing constructions so as to effectively rewrite legislative enactments." Wychie v. State, 619 So. 2d 231, 236 (Fla. 1993). Here, the purpose and effect of the 1994 Amendments are to create a purely procedural vehicle to facilitate the State's new cause of action—in violation of separation of powers. The State makes two arguments to the contrary, but both essentially ask the Court to rewrite the Amendments and should be rejected.

1. Section 409.910(9) and Subsection (9)(a) Do Not Create Rules Defining the Scope of Damages

The State argues that section 409.910(9) and subsection (9)(a) concern the scope of damages, not joinder of claims or class actions, and therefore do not infringe upon the exclusive power of the judiciary to establish practice and procedure for the state courts. State Br. at 13-16.

The plain language of the Amendments refutes the State's suggestion. Section 409.910(12)(h) expressly states that "[e]ach item of expense provided by the agency shall be considered to constitute a separate cause of action" (emphasis added). Then section 409.910(9) allows the agency to assert each of those causes of action in one proceeding. On its face, the Amendments' provisions deal with joinder of claims.

Practical application of the provisions proves the State wrong as well. The State can choose to file a case under the Amendments based on a single claim, without joining multiple claims together. Or, the State can choose to join thousands of claims together, subject to very minimal preconditions. Joining claims, however, would not increase the total amount of damages that the State could recover with respect to "each item of expense." Joinder is merely a vehicle to facilitate adjudication of the State's claims—just as the class action device was a vehicle to facilitate adjudication in Avila. It is procedural and within the judiciary's exclusive jurisdiction. [ The State is correct that the amount of a damage award will increase as more ultimately successful claims are joined together in a single proceeding. However, the damages to which the State is entitled for each claim will remain the same. All of the cases cited by the State deal with substantive changes in the law, not the creation of procedural vehicles. See VanBibber v. Hartford Accident & Indemnity Ins. Co. , 439 So. 2d 880 (Fla. 1983) (bar on joining an insurance company was the necessary result of a new statute providing that a third party has no interest in an insurance policy -- and therefore cannot sue the insurer -- until a judgment is obtained); Florida Wildlife Fed'n v. State Dept. of Envtl. Resources , 390 So.2d 64 (Fla. 1980) (legislature imposed conditions precedent for asserting a new substantive cause of action); Williams v. Campagnulo , 588 So. 2d 982 (Fla. 1991) (new notice requirement is substantive because it tolls the statute of limitations to promote settlement). Of course, under the State's flawed arguments, the new provisions would have to be viewed as substantive and thus could be applied only prospectively. See infra pp. 24-27.]

2. The New Joinder and Class Action Rules Are Inconsistent with the Florida Rules of Civil Procedure

The State submits that, even if the new joinder and class action rules are procedural, they are consistent with the Florida Rules of Civil Procedure. State Br. at 15-16. However, under Florida Rules of Civil Procedure 1.250 and 1.270, the courts have substantial discretion to sever claims against a party, [ Fla. R. Civ. P. 1.250(a); Bernstein v. Dwork , 320 So.2d 472, 474 (Fla. 3d DCA 1975) ("A trial judge has broad discretion in the interest of effective judicial administration to sever the claims or to order separate trials under RCP 1.250 and 1.270(b)."), cert. denied , 336 So. 2d 559 (Fla. 1976) See also School Bd. of Broward Co. v. Surette , 281 So. 2d 481, 483 (Fla. 1973) (striking down statute as in conflict with rules promulgated by Supreme Court relating to procedure).] drop parties, [ Fla. R. Civ. P. 1.250(b).] consolidate actions, [ Fla. R. Civ. P. 1.270(a); Pages v. Dominguez , 652 So. 2d 864, 868 (Fla. 4th DCA 1995) (Trial court has broad discretion to consolidate actions involving common questions of law or fact and to order joint hearings or a joint trial.).] and order separate trials on any claims. [ Fla. R. Civ. P. 1.270(b); Haven Fed. Sav. & Loan Ass'n. v. Kirian , 579 So. 2d 730, 732 (Fla. 1991) (statute removing trial court's discretion to sever claims is unconstitutional).] The Amendments' new joinder provisions remove this discretion from the court and hand it over to AHCA. §§ 409.910(9), (9)(a), (12)(h). For a court in its discretion to sever individual claims, drop a claim, or order separate trials on any claim would clearly violate the Amendments. [ The State points to Rule 1.110(g), which allows a pleader to assert multiple claims in the same complaint, as being consistent with the new joinder provisions of the 1994 Amendments. State Br. at 15. But Rule 1.110(g) deals only with pleading matters and leaves severance to the court's discretion. The 1994 Amendments remove that discretion in violation of separation of powers.]

B. The Amendments Violate Separation of Powers By Requiring Courts To Construe the Extrinsic Laws in Favor of the State

The Amendments also violate the separation of powers doctrine by directing courts to construe common law theories of recovery and the rules of evidence in favor of AHCA -- and thus not in a neutral and impartial manner. The Amendments in effect instruct the judiciary how to exercise its judgment in interpreting law of general application wholly separate from the Amendments. This Court has long recognized that any such instruction conflicts with the separation of powers:

Each case should be determined on its own facts and the applicable law. Statutes cannot direct or control the judicial judgment of the trial or the appellate court in the exercise of the judicial power vested in the court by the constitution when such judicial power is duly exerted within the limitations prescribed by the constitution ....

In re Alkire's Estate, 144 Fla. 606, 623, 625, 198 So. 475, 482, 483 (1940) (emphasis added). Accord Simmons v. State, 160 Fla. 626, 628-29, 36 So. 2d 207, 208 (1948) (en banc) (the legislature "cannot abridge the power of the judge to charge the law, and [to] direct a verdict where the facts are undisputed; nor can it require the court to instruct the jury with regard to the evidence offered") (citations omitted) (emphasis deleted).

The State argues in response that the legislature has included "liberal construction" provisions in other enactments, such as the evidence code, the Declaratory Judgment Act, and the Florida Antitrust Act. State Br. at 17-19. [ The State also argues that the Florida Supreme Court has held that statutes in the public interest may be construed liberally in favor of the public. State Br. at 19. Obviously, if the Court tells itself to construe a particular type of statute liberally there is no separation of powers problem.] But, in each example, the liberal construction provision applied only to the Act or code which contained the provision. Sections 409.910(1) and (9) are unique because they reach beyond the four comers of the Amendments and direct Florida courts to give extrinsic bodies of law (common law theories of recovery and the evidence code) a special interpretation—one that favors the State in each instance. If a court were to comply faithfully with this provision, the result would be the creation of two bodies of decisional law interpreting the same common law and evidence code—one in favor of the State applicable solely in Medicaid cases and the other developed impartially applicable in every other case. [ The State also argues, for the first time on appeal and only after the circuit court struck the provision, that the trial court did not have jurisdiction to reach this issue with respect to any appellee because there is "no pending controversy." State Br. at 20. Yet, the State itself has conceded below that such a controversy exists, see Transcript at 103 (A.6), at least with respect to Philip Morris, who is already a named defendant in a pending case brought under the Amendments. See Florida v. The American Tobacco Company , Case No. 95 - 1466AO (15th Cir.) (filed July 3, 1995). Unlike Martinez v. Scanlon , 582 So. 2d 1167 (Fla. 1991), there is a pending controversy here . Furthermore, the trial court correctly found in rejecting the State's motion for summary judgment that declaratory relief was proper for the other appellees because their present business activities are affected by the Amendments and they face a real risk of future litigation. Order Denying Defendants' Motion for Summary Judgment as to Associated Industries of Florida, Inc., Publix Supermarkets, Inc., and National Association of Convenience Stores, Inc. (May 24, 1995) (R. 476-77) (A.5). That Order has not been challenged on appeal by any party. In any event, the trial court's invalidation of sections 409.910(1) and (9) should also be upheld on the alternative basis of due process. See supra pp. 59 - 64.]

II. THE 1994 AMENDMENTS CAN ONLY BE APPLIED TO CONDUCT THAT OCCURRED AFTER THEIR EFFECTIVE DATE

A. As a Matter Of Statutory Construction and Due Process, the 1994 Amendments Apply Prospectively Only

"The bias against retroactive legislation is deeply rooted in Anglo-American law." Trustees of Tufts College v. Triple R. Ranch, Inc., 275 So. 2d 521, 524 (Fla. 1973); See also Landgraf v. USI Film Prods., 114 S. Ct 1483, 1497 (1994) (same). Elementary considerations of fairness dictate that legal consequences of conduct be assessed under the law existing when the conduct took place. Landgraf, 114 S. Ct. at 1497; See also L. Ross, Inc. v. R.W. Roberts Constr. Co., 466 So.2d 1096, 1098 (Fla. 5th DCA 1985) ("it is fundamentally unfair and unjust for the legislature to impose… a new or increased obligation, burden, or penalty as to a set of facts after those facts have occurred"), aff'd, 481 So. 2d 484 (Fla. 1986).

The 1994 Amendments drastically change the rules governing when a manufacturer may be held liable for Medicaid payments and the amount of such liability. As the circuit court found, "[t]he Amendments create new substantive rights and impose new legal burdens." Order ¶ 3 (R. 756) (A.1). Accordingly, both as a matter of statutory construction and due process, the circuit court was correct in ruling that the 1994 Amendments "may only be applied prospectively -- specifically, to conduct of potential defendants that occurred after the Amendments' effective date of July 1, 1994." Id.

First, prospective-only application is required as a matter of statutory construction. "A substantive statute is presumed to operate prospectively rather than retrospectively unless the Legislature clearly expresses its intent that the statute is to operate retrospectively." Alamo Rent-A-Car, Inc. v. Mancusi, 632 So. 2d 1352, 1358 (Fla. 1994); See also Young v. Altenhaus, 472 So. 2d 1152, 1154 (Fla. 1985) ("it is clear that m the absence of an explicit legislative expression to the contrary, a substantive law is to be construed as having prospective effect only"). The purpose of this rule of construction is twofold. The presumption ensures that the legislature "has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits." Arrow Air, Inc. v. Walsh, 645 So. 2d 422, 425 (Fla. 1994) (quoting Landgraf, 114 S. Ct. at 1501). The presumption also helps ensure that persons receive "fair warning" of what conduct may give rise to liability and prevents the legislature from taking "retribution against unpopular groups or individuals." Landgraf, 114 S. Ct. at 1497.

The 1994 Amendments contain no clear expression of retrospective intent. Nor does the State claim otherwise. Instead, what the State does claim is that the absence of any express legislative intent on this issue allows the Amendments to apply retroactively. But the presumption -- and the holdings of this Court -- go exactly the other way. Where there is no expression of legislative intent, the presumption bars retrospective operation. Alamo, 632 So. 2d at 1358. Nor can a retroactive intent be inferred simply because retroactive application would be consistent with the purposes of a statute. See State Br. at 33. This Court has recently held that "the mere fact that 'retroactive application of a new statute would vindicate its purposes more fully . . . is not sufficient to rebut the presumption against retroactivity.'" Arrow Air, 645 So. 2d at 425.

Indeed, if anything, the 1994 Amendments reflect an intent against retroactive application. The 1994 Amendments contain a provision setting forth their effective date:

This act shall take effect July 1, 1994, or upon certification approval by the U.S. Department of Health and Human Services that the Florida Department of Legal Affairs is the recipient agency for Federal Medicaid Fraud Control funds,. whichever is later.

Ch. 94-251, § 7, at 1893. Such "inclusion of an effective date… effectively rebuts any argument that retroactive application of the law was intended." State Dep't of Revenue v. Zuckerman-Vernon Corp., 354 So. 2d 353, 358 (Fla. 1977); See also Bennett v. New Jersey, 470 U.S. 632, 641 (1985) (specific reference to effective date in statute indicated new law was prospective).

Second, prospective-only application of the Amendments is also required by due process. In Florida Patient's Compensation Fund v. Scherer, 558 So. 2d 411 (Fla. 1990), this Court held that the retrospective application of a law allowing the award of attorney's fees would violate due process. This Court explained that "due process considerations preclude retroactive application of a law that creates a substantive right." Id. at 414. Similarly, in State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55, 61 (Fla. 1995), the Court recently reaffirmed that "[e]ven when the legislature does expressly state that a statute is to have retroactive application, this Court has refused to apply a statute retroactively if the statute impairs vested rights, creates new obligations, or imposes new penalties." See also Wiley v. Roof, 641 So.2d 66, 68 (Fla. 1994) (suggesting that Florida law provides greater due process protection against retroactive legislation).

The 1994 Amendments abrogate affirmative defenses "normally available to liable third parties;" effectively preclude defendants from challenging elements of proximate cause; impose joint and several "market share" liability; and change the preconditions for market share liability -- to list just a few of the substantive changes of the 1994 Amendments. Unquestionably, the statute grants the State new substantive rights and imposes new obligations, burdens, and penalties for manufacturers in Florida. As a matter of due process, therefore, the 1994 Amendments may be applied only prospectively. [ Federal case law on the federal due process right is different, but the same result obtains under the circumstances presented here. The U.S. Supreme Court has recognized that "retrospective civil legislation may offend due process if it is particularly harsh and oppressive." Pension Benefit Guar. Corp. v R.A. Gray & Co. , 467 U.S. 717, 733 (1984) (citations omitted). The Amendments satisfy this standard. Virtually all of the cases decided by the federal courts involved retrospective statutes "confined to short and limited periods." Gray , 467 U.S. at 731. The retrospective period here would span decades. Further, none involved the virtual abandonment of the proximate cause requirement as is involved here. See Usery v. Turner Elkhorn Mining Co. , 428 U.S. 1 (1976).]

B. The 1994 Amendments Do Not Simply Codify Already Existing Law

The State's chief argument for retroactive application of the 1994 Amendments is that they "merely codify existing rights of the State." State Br. at 20. According to the State, "[t]he 1994 Amendments do not make new substantive law." Id.

The State's own actions belie its argument. If the 1994 Amendments made no new substantive law, why did the proponents of the legislation pass it through the legislature during the last two days of the 1994 legislative session? And why earlier this year did the legislature find it necessary to repeal the Amendments? Clearly, the legislature must have believed that the 1994 Amendments changed the law when it enacted the bill repealing them. And so too must have the Governor, when he vetoed the legislature's repeal of the 1994 Amendments. Finally, if the 1994 Amendments merely codified the law, what was the point of the Governor's Executive Order No. 95-105, purporting to limit enforcement of the 1994 Amendments to tobacco-related defendants?

The State's position should be seen for exactly what it is: post-hoc rationalization. It is contrary to common sense. It is also contrary to the rule of construction that an amendment should be "presumed to have intended some objective or alteration of the law, unless the contrary is clear from all the enactments on the subject." Carlile v. Garne & Fresh Water Fish Comm'n, 354 So. 2d 362, 364 (Fla. 1977) (emphasis added) (quoting 30 Fla. Jur. Statutes § 97).

1. The Medicaid Third-Party Liability Act Has Never Embodied the Provisions of the 1994 Amendments

The State first argues that the Medicaid Third-Party Liability Act "always" embodied the substance of the 1994 Amendments. State Br. at 25-26. But, prior to 1994, that Act provided the State with only two statutory remedies against potential third-party tortfeasors: assignment and subrogation. See § 409.910(6)(b), (c), Fla. Stat. (1993). There is no suggestion in any Florida case that the State possessed any other remedy in the Medicaid context. Certainly, no Florida court had ever applied the substance of the 1994 Amendments in a Medicaid reimbursement case (or any other case, for that matter). The State is engaging in historic revisionism.

Prior to the 1994 Amendments, under traditional principles of equitable subrogation and assignment, the State stood in the shoes of the Medicaid recipient. The State was entitled to assert all of the rights of the recipient, but had only those rights that the recipient had. Accordingly, if the recipient could not recover—because, for example, he could not prove proximate cause or he was comparatively at fault -- neither could the State. This result was neither unusual nor harsh -- it was the straightforward application of the law of equitable subrogation and assignment. See, e.g., Scott & Jobalia Constr. v. Halifax Paving Inc., 538 So. 2d 76, 79 (Flat 5th DCA 1989) ("subrogee acquires all of the rights of the subrogor (the potential plaintiff), but is subject to all the available defenses the defendant could assert against the subrogor"), aff'd, 565 So. 2d 1346 (Fla. 1990); Diamond Blue Charter, Inc. v. Wolfin, 518 So. 2d 467, 468 (Fla. 4th DCA 1988) (same); State v. Family Bank of Hallandale, 20 Fla. L. Weekly D1992, 1993 (Fla. 1st DCA Aug. 31, 1995) ("assignee steps into the shoes of the assignor and is subject to all equities and defenses that could have been asserted against the assignor had the assignment not been made"). [ See also Blue Cross & Blue Shield of Florida v. Ryder Truck Rental , 472 So. 2d 1373, 1375 (Fla. 3d DCA 1985) (subrogation), rev'd on other grounds , 498 So. 2d 423 (Fla. 1986); Escandar v. Southern Management and Inv. Corp ., 534 So. 2d 1203 - 05 (Fla. 3d DCA 1988) (assignment); Campbell Printing-Press & Mfg. Co. v. Walker , 1 So. 59, 65 (Fla. 1886) (assignment); Commercial Nat'l Bank v. Jordan , 71 So. 760, 762 (Fla. 1916) (assignment); Prestress Erectors, Inc. v. James Talcott, Inc ., 213 So. 2d 296, 298 (Fla. 3d DCA 1968) (assignment), cert. denied , 219 So. 2d 702 (Fla. 1968). The State distinguishes between contractual and equitable subrogation (State Br. at 24 - 25), but even in equitable subrogation the subrogee is subject to all the available defenses the defendant could assert against the subrogor. See Scott & Jobalia Constr ., 538 So. 2d at 79. The case relied upon by the State -- Allstate Ins. Co. v. Metropolitan Dade County , 436 So. 2d 976 (Fla. 3d DCA 1983), distinguishes between contractual and equitable subrogation, but not in terms of available defenses.]

In the Medicaid context, courts around the country have recognized that the statutory remedies of "subrogation" and "assignment" in state Medicaid statutes should be given their ordinary meaning, unless expressly modified by statute. See, e.g., Kittle v. Icard, 405 S.E.2d 456, 463 (W. Va 1991); Smith v. Alabama Medicaid Agency, 461 So. 2d 817, 819 (Ala Civ. App. 1984); State v. Cowdell, 421 N.E.2d 667, 671 (Inc. Ct. App. 1981); White v. Sutherland, 585 P.2d 331, 334 (N.M. Ct. App. 1978), cert. denied, 582 P.2d 1292 (N.M. 1978). These courts have held that a State's statutory right to subrogation and assignment is limited by traditional common law and equitable principles. This was exactly the result reached by the Florida court in Underwood v. Department of HRS, 551 So. 2d 522 (Fla. 2d DCA 1989), review denied, 562 So. 2d 345 (Fla. 1990), with respect to the Florida Medicaid Third-Party Liability Act. Citing Smith and White, the court held that the "[State] is to be reimbursed for medical assistance payments in accord with general principles of subrogation." Id. at 525. There is no question from the court's opinion that the State could recover only as a traditional subrogee or assignee. If the State had an "independent cause of action" as of 1989 that expanded its right of recovery, the court would never have held that the "principles of subrogation" governed the State's claim.

The State suggests, but does not expressly state, that the federal government's mandate to seek reimbursement requires as broad a reading of the state's remedies as necessary to ensure recovery. See State Br. at 1, 2-7. There is, however, no federal policy that the State "should always win" Medicaid reimbursement Suits. [ Cf. O'Melveny & Meyers v. Federal Deposit Ins. Corp. , 114 S. Ct. 2048, 2055 (1994) (stating that the Court has rejected similar arguments based on the government's need for "more money").] No court in the country has rewritten its state Medicaid subrogation remedy to embody the expansive provisions of the 1994 Amendments. Even in Hedgebeth v. Medford, 378 A.2d 226, 231 (N.J. 1977), relied upon heavily by the State (State Br. at 26), the court rejected such an argument and held that traditional subrogation principles governed the state's subrogation remedy. Although the court there recognized that the state had an "independent right of recovery," this only meant that the State could proceed directly against the potential tortfeasor and did not have to wait until the injured recipient sued and obtained a recovery. [ The State's reliance on Hedgebeth is puzzling. In Hedgebeth , the sole issue before the court was whether "the State's right of subrogation" under the Medicaid laws "is governed by equitable principles." 378 A.2d at 117. As in Kittle, Smith, Cowdell , and White , the court found that the traditional principles of equitable subrogation were applicable and so reduced the State's recovery.]

In short, Florida law simply does not support the conclusion that subrogation or assignment rights were "always separate from the claims of Medicaid recipients" and not subject to "any affirmative defenses." State Br. at 25 (emphasis added). The 1994 Amendments enacted what the State now wishes the law to be, not what the law actually was, as applied by Florida courts. [ The State also relies on cases construing the federal Medical Care Recovery Act ("MCRA"), 42 U.S.C. § 2651. State Br. at 25 - 26. Those cases, however, turn on the unique language of the federal statute not applicable here. Thus, in Waldron v. Miami Valley Hosp ., 1994 WL 680152, at *20 (Ohio Ct. App. 1994), appeal denied , 72 Ohio St. 3d 1415 (1995) (A.12), the court stated: "[The state Medicaid law] refers only to subrogation and makes no reference to an independent right of recovery. Thus, the federal cases cited by the appellant are not persuasive and, in fact, indicate that without language similar to that contained in the federal statute, only subrogation rights are created." Furthermore, even in the MCRA context courts disagree about whether an injured party's negligence is a defense. See United States v. Housing Auth. of Brewerton , 415 F.2d 239, 24243 (9th Cir. 1969) (contributory negligence defense applies). Beyond that, there is serious doubt as to whether the cases cited by the State remain good law. In O'Melveny v. Myers , 114 S. Ct. at 2055, (holding that attorneys could assert state tort defenses in receiver's wit under FIRREA), the Supreme Court held that statutes creating a federal right of recovery based on state law should be construed to incorporate applicable state law defenses and that the federal interest in "more money" was not sufficient to abrogate such defenses. The construction of MCRA adopted in the State's cases is inconsistent with this principle.]

2. The 1990 Amendments Did Not Enact the Substance of the 1994 Amendments

The State alternatively argues that the 1994 Amendments did not change the law because the 1990 Amendments had already enacted the substance of the 1994 provisions. [ Section 409.910, as it appeared after the 1990 Amendments but before the 1994 Amendments, is located at (A.13).] State Br. at 3-5, 10, 23-24. This argument also cannot survive scrutiny. "[W]hen a statute is amended, it is presumed that the Legislature intended it to have a meaning different from that accorded to it before the amendment." Carlile, 354 So. 2d at 364.

The history of the 1990 Amendments begins with the Underwood case, discussed above. In Underwood, the precise issue was equitable distribution of a settlement -- funds already obtained from an alleged third-party tortfeasor -- between the State and the injured party. The court held that in such cases traditional subrogation principles governed; as a result, the State as subrogee could take only its pro rata share of the recovery. 551 So. 2d at 525-26.

The Florida legislature enacted the 1990 Amendments in reaction to the Underwood case, but not to change or supplement the State's traditional subrogation cause of action against potential third-party tortfeasors. The Act, as amended in 1990, retained the identical language setting out the State's subrogation remedy against third parties: the State was "automatically subrogated to any rights that a . . . recipient . . . has to any third party benefit." § 409.910(6)(a), Fla. Stat. (1993). The only pertinent change brought about by the 1990 Amendments was that aspect of the Underwood decision addressing the rights of the State vis-à-vis the Medicaid recipients once money became available for distribution. The 1990 Amendments sought to ensure that the State had priority over recipients to funds once a recovery was obtained from a third party. Thus the 1990 Amendments provided:

If benefits of a liable third party are discovered or become available after medical assistance has been provided by Medicaid. it is the intent of the Legislature that Medicaid be repaid in full and prior to any other person, program, or entity. Medicaid is to be repaid in full from. and to the extent of any third-party benefits, regardless of whether a recipient is made whole or other creditors paid. Principles of common law and equity as to assignment, lien, and subrogation are to be abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources. It is intended that if the resources of a liable (third party become available at any time, the public treasury should not bear the burden of medical assistance to the extent of such resources.

* * *

The department is a bona fide assignee for value in the assigned right, title, or interest, and takes vested legal and equitable title free and clear of latent equities in a third person. Equities of a recipient, his legal representative, his creditors, or health care providers shall not defeat or reduce recovery by the department as to the assignment granted under this paragraph.

§§ 409.910(1) & (6)(b)(2), Fla. Stat (1993) (emphasis added). These provisions make clear that the legislature intended only that the State be repaid in full before any payment was made to the injured recipient or any "third person" (meaning the recipient's "legal representative, his creditors, or health care providers"). The House analysis of the 1990 Amendments confirms that the legislature was concerned solely with ensuring that the State be repaid first "when third party resources are discovered or become available" (emphasis added). [ See House Committee on Health Care, Final Staff Analysis & Economic Impact Statement, CS/CS/CS/HB 1209 at 6 (July 3, 1990) (A.14).] The phrase "third-party resources" clearly connotes the existence of funds which have already become available for distribution. There is not a word in the 1990 Amendments or the House analysis about expanding a potential tortfeasor's liability or the creation of new rights for the State against a tortfeasor

Again, the State cites no law to the contrary. No Florida court has ever held that the 1990 Amendments expand the State's rights against potential third-party tortfeasors. The State's entire argument rests on snippets of the 1990 Amendments taken entirely out of context:

The State relies on the fifth sentence of 409.910(1), which states the "[p]rin-ciples of common law and equity as to assignment, lien, and subrogation are to be abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources." But the State ignores the context of the paragraph, which is intended to ensure that the State has priority over the Medicaid recipient to funds already recovered. Thus the sentence preceding provides that "Medicaid is to be repaid in full… regardless of whether a recipient is made whole." And the following sentence states that "if the resources of a liable third party become available at any time, the public treasury should not bear the burden." This statutory provision assumes a pot of money already on the table; it does not expand a State's rights against a third-party tortfeasor.

The State relies on the first sentence of 409.910(6)(b)(2), which provides that the "department is a bona fide assignee . . . and takes vested legal and equitable title free and clear of latent equities in a third person." The State suggests that the phrase "latent equities in a third person" somehow means legal defenses such as comparative fault. State Br. at 24. Once again, however; the provision was intended simply to ensure the State will have priority over a pot of money once obtained. In this context, the phrase "third person" refers to persons identified in the very next sentence: "legal representative[s]," "creditors," or "health care providers," who could also have claims against the same pot of money.

The State relies on 409.910(6), which lists the State's subrogation and assignment rights and states that "independent principles of law" shall be "construed together to provide the greatest recovery from third-party benefits." But this provision simply means that the State can assert either assignment or subrogation in any specific case, depending on which remedy would yield the greater recovery. Nothing in this provision expands the State's subrogation or assignment rights.

The State relies on 409.910(7), which provides that the State shall recover the full amount of all medical assistance provided by Medicaid on behalf of the recipient to the full extent of third-party benefits." Again, this section assumes a pot of money on the table -- "the third-party benefits." The statute does not expand a defendant's liability.

Indeed, the 1994 Amendments show how clear language can easily be used to expand the State's rights against manufacturers. Consider again the 1994 version of section 409.910(1):

Principles of common law and equity as to assignment, lien, subrogation, comparative negligence, assumption of risk, and all other affirmative defenses normally available to a liable third party, are to be abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources; such principles shall apply to a recipient's right to recovery against any third party. but shall not act to reduce the recovery of the agency pursuant to this section. The concept of joint and several liability applies to any recovery on the part of the agency.

(new provisions highlighted). This provision for the first time expands the rights of the State against potential third-party tortfeasors. Furthermore, the provision itself expressly states that the abrogated affirmative defenses were "normally available to a liable third party" before 1994 and in fact are still available today under the 1994 Amendments except "to the extent necessary to ensure full recovery by Medicaid from third-party resources." The State's claim that no affirmative defenses existed before 1994 conflicts with this clear statutory language.

The 1990 Amendments did not abrogate a manufacturer's legal defenses. Moreover, not even the State argues that the 1990 Amendments changed the law regarding market share liability theory, joint and several liability, or proving causation solely by statistics. The provisions of the 1994 Amendments are new and substantive.

3. The 1994 Amendments Did Not Codify the State's So called "Equitable Rights."

In a final effort to show that the 1994 Amendments did not change a manufacturer's potential liability, the State engages in an extended discussion of unjust enrichment and indemnity. State Br. at 26-32. The State argues that the 1994 Amendments merely codified the State's alleged equitable rights.

Of course, the State itself does not contend that all provisions of the 1994 Amendments were already part of Florida equity law. For example, the State does not argue that equity in Florida has already adopted the 1994 Amendments' version of market share liability. Nor has the State pointed to any Florida equity case that allows causation to be proven solely by statistics or without identifying the injured recipient. Therefore, even under the State's theories of equity, it is clear that the 1994 Amendments impose substantive changes in the law.

Beyond that, the State's theories of equity do not reflect existing Florida law. Once again, the State asserts merely what it wishes equity to be. The State asks this Court to "recognize" new equitable rights never before applied in any Florida case. Then, it asks this Court to rule that the 1994 Amendments somehow "codified" these new rules of equity -- before they were adopted by any Florida Court. This bootstrap strategy cannot be allowed to succeed. [ The State in fact has never asserted any equitable rights against a third-party tortfeasor in the Medicaid context for a good reason: no such rights exist. The State's remedy is limited to the remedies created by statute. It is well established that, where a plaintiff has an adequate remedy at law, he is not entitled to equitable relief. 30A C.J.S. Equity § 17 (1992). Here, the Florida Medicaid Third-Party Liability Act has provided the State with adequate remedies in assignment and subrogation. And, even if those remedies were somehow "inadequate," courts have refused to create a new equitable cause of action for the sovereign who created the very remedies asserted to be inadequate. See , e.g., United States v. Standard Oil Co. , 332 U.S. 301, 316-17 (1947). Furthermore, creation of the State's amorphous equitable remedies would render the Medicaid Act superfluous, as the State would never choose to invoke the narrower statutory remedy.]

a. Unjust Enrichment. The State asserts that the general theory of unjust enrichment allows it to hold a manufacturer liable for injuries caused by its products without showing that the manufacturer (1) was legally liable to the person injured or (2) ever committed "a wrong." State Br. at 27-29. The State fails to cite a single Florida case for this remarkable proposition.

Indeed, the State's theory of unjust enrichment would swallow up Florida product liability law. For decades, this Court has struggled to balance the competing interests of the public and manufacturers -- to determine when a manufacturer should and should not be liable. The State's theory would upset that balance. It would render manufacturers liable without proof of the elements of any tort. Manufacturers would become insurers of their products -- contrary to the holding of this Court in West v. Caterpillar Tractor Co., 336 So. 2d 80, 89 (Flat 1976).

The theory of unjust enrichment, as applied by Florida courts, does not permit such a result. "It is axiomatic that there must be a benefit conferred before unjust enrichment exists." Challenge Air Transp., Inc. v. Transportes Aereos Nacionales, 520 So. 2d 323, 324 (Fla. 3d DCA 1988) (emphasis added); See also Henry M. Butler, Inc. v. Trizec Properties, 524 So. 2d 710, 712 (Fla. 2d DCA 1988); Coffee Pot Plaza Partnership v. Arrow Air Conditioning and Refg., Inc., 412 So. 2d 883 (Fla. 2d DCA 1982). What is the benefit here? How does the State's payment of an injured person's medical bills benefit a manufacturer? The only way such a payment could benefit a manufacturer would be if the manufacturer was legally liable to pay for the injured person's medical care, and the State's payment discharged that liability. Yet, that is exactly the showing that, according to the State, unjust enrichment does not require.

The State suggests two answers to this fundamental question. First, the State suggests that the availability of Medicaid benefits may have resulted in fewer individual lawsuits being filed—and thus have relieved a manufacturer "of the possibility of immense liability and litigation expenses from thousands of individual suits." State Br. at 28 (emphasis added). But no Florida court has allowed such a speculative and amorphous benefit to serve as the basis for an unjust enrichment claim. If the mere reduction of the possibility that a lawsuit would be filed gave rise to an unjust enrichment claim, there would be no end to such claims or liability. Nor would it be possible to determine damages, which are measured in an unjust enrichment case by the value of the benefit received. See Sun Coast International v. Department of Business Regulation, 596 So. 2d 1118, 1120-21 (Fla. 1st DCA 1992) (citing 11 Fla. Jur. 2d Contracts § 246, at 548-4 (1979))

The second "benefit" identified by the State is the discharge, not of a legal duty, but of an undefined "manifest" duty "to the victims of [the] enterprise." State Br. at 29. But, in Florida, it is product liability law that defines a manufacturer's duty to the public.

What is a "manifest duty?" From what source does it arise? What are its elements? The State does not and cannot answer these questions. The State's "manifest duty" analysis is simply not part of existing Florida law. [ Whether this Court should create such a duty is an issue not before the Court. The sole issue before the Court is whether the 1994 Amendments "codify" existing Florida law.]

Unjust enrichment provides a remedy fundamentally different from the 1994 Amendments for other reasons as well. For example, the plaintiff in an unjust enrichment claim must show that the defendant "accepted and retained" the benefit conferred. Challenge Air, 520 So. 2d at 325. No such showing is necessary under the Florida Medicaid Third-Party Liability Act, as amended. In short, the 1994 Amendments cannot r be characterized as simply "codifying" the pre-existing law of unjust enrichment.

b. Indemnity. The State similarly argues that the remedy of indemnity is coextensive with the 1994 Amendments. State Br. at 29-32. But, again, Florida law is clear that one seeking indemnity must prove that the alleged indemnitor is legally liable to the individual injured. See e.g. Scott & Jobalia Constr. Co., 538 So. 2d at 79 ("In order to seek indemnity, the indemnitee must have a legal liability to a plaintiff; the liability must be paid; [and] the indemnitor must have a coextensive liability to the plaintiff."), aff'd, 565 So. 2d 1346 (Fla. 1990) (parentheticals omitted and emphasis added). The State is unable to cite a single Florida case in which damages were awarded without such proof. [ The State cites Stuart v. Hertz Corp. , 351 So. 2d 703 (Fla. 1977), for the proposition that indemnity is appropriate when one is compelled to pay money which in justice another ought to pay. State Br. at 30. Although that may be one of the prerequisites of an indemnity claim, it is not the only one. Indeed, in Stuart -- where this Court rejected an indemnity claim -- the indemnitor was legally liable to the injured person because of medical malpractice. 351 So. 2d at 704.]

Indemnity is dissimilar to the 1994 Amendments in other respects as well. Under Florida law, a person is entitled to indemnity only if there is a special relationship between the indemnitee and indemnitor, such as an employment relationship, that resulted in a finding that the indemnitee (employer) is "vicariously, constructively, derivatively or technically liable" for the wrongful acts of the indemnitor (employee). Houdaille Indus. v. Edwards, 374 So. 2d 490, 492 (Fla. 1990); See also Diamond Blue Charter, 518 So. 2d at 468. Here, however, the indemnitee (the State) is not connected to potential indemnitors (manufacturers) through any of the kinds of pre-existing legal relationships required under Florida indemnity law. The 1994 Amendments thus go substantially beyond the Florida law of indemnity. [ In addition, indemnity differs because the theory applies only if the payment by the person seeking indemnity was not voluntary. Candyworld, Inc. v. Granite State Ins. Co ., 652 So. 2d 1165, 1168 (Fla. 4th DCA 1995). Here, the federal Medicaid program is a voluntary one. West v. Cole , 390 F. Supp. 91, 97 (N.D. Miss. 1975); See also Mississippi Hosp. Ass'n v. Heckler , 701 F.2d 511 (5th Cir. 1983) (A state is not obligated to participate in the program and only becomes subject to federal regulation if it elects to participate.). The State's decision to participate in the Medicaid program may be a wise and benevolent policy choice, but it is not required and therefore cannot give rise to an indemnity claim.]

Finally, the State alleges that a person seeking indemnity may recover even though the indemnitor would have valid affirmative defenses if sued by the injured party. State Br. at 32. But each case cited by the State involves unique defenses applicable only to certain relationships between the underwriter and the injured party -- defenses such as parent-child immunity or the immunity resulting from workers' compensation laws -- the policies of which do not apply to an indemnitee. [ Furthermore, each case cite by the State involved an indemnitor who was in fact liable in tort to the injured plaintiff -- which is exactly what the State asserts is not required. See e.g. , Trail Builders Supply Co. v. Reagan , 235 So. 2d 481, 485 (Fla. 1970) (the indemnitor committed an "active, culpably wrong act" by removing a safety bar).] In contrast, courts "with substantial unanimity" allow the defenses of comparative fault or assumption of the risk against an indemnity claim. See 2B Arthur Larson, The Law of Workmen's Compensation, Third Party Defenses § 75.21 (1995) (collecting cases). [ See e.g ., Finney v. Manpower, Inc ., 177 Cal. Rptr. 74 (Cal. Ct App. 1981) (where injured plaintiffs comparative fault reduced his recovery against a tortfeasor, the plaintiffs employer could not recover medical costs in indemnity exceeding the amount of plaintiff's recovery); Regal Steel, Inc. v. Farmington Ready Mix, Inc ., 414 A.2d 816 (Cone. Super. Ct. 1980) (an injured worker's negligence was a defense to an action by the injured worker's employer to recover the costs of medical care paid by the employer); accord McDrummond v. Montgomery Elevator Co ., 551 P.2d 966 (Idaho 1976); City of Pittsburgh v. Rue , 393 A.2d 1066 (Pa Commw. Ct. 1978); American Casualty Co. v. South Carolina Gas Co ., 124 F. Supp. 30 (W.D.S.C. 1954); Courtright v. Sahlberg Equip ., Inc ., 563 P.2d 1257 (Wash. 1977).] The State cites no contrary precedent: neither its workers' compensation cases nor its intrafamily immunity cases address comparative negligence or assumption of risk.

C. The State's Other Arguments Are Meritless

The State's other objections to the circuit court's ruling regarding retroactivity are | also meritless.

First, the State argues that the rule against retrospective application applies only to new rules that change a party's primary conduct. State Br. at 34-35. According to the State, even under the 1994 Amendments, the standards governing a manufac-turer's conduct remain the same as those set out in West, 336 So. 2d 80, and Green v. American Tobacco Co., 154 So. 2d 169 (Fla. 1963). State Br. at 27. Florida courts, however, do not require that the law change a party's primary behavior before the bar against retrospective application applies. Rather, this Court has repeatedly held that any statute that imposes new legal burdens (such as abolishing affirmative defenses or adopting an expansive version of market share liability) must be applied prospectively only. Thus, in Young v. Altenhaus, 472 So. 2d 1152, 1154 (Fla. 1985), this Court held that a statute authorizing a court to impose attorney’s fees imposes a "new obligation or duty" and therefore applies prospectively only. Similarly, in Alamo Rent-A-Car, Inc., 632 So. 2d at 1358, this Court held that a cap on punitive damages "eliminates a right or entitlement" and therefore cannot apply retrospectively. And in Timmeny v. Tropical Botanicals Corp., 615 So. 2d 811, 818 (Fla. 1st DCA 1993), the court refused to apply retrospectively a change in the availability of a statute of limitation defense because the ability to assert the defense was a "substantive right." None of the statutes involved in these cases changed the "rules of primary conduct," yet each was held to apply only prospectively. See also Landgraf, 114 S. Ct. at 1506 n.35 (even when conduct is already illegal or immoral, "a degree of unfairness is inherent whenever the law imposes additional burdens based on conduct that occurred in the past.").

The provisions of the 1994 Amendments are exactly the sort that cannot be applied retroactively under Florida law. West recognized affirmative defenses based on a plaintiff's conduct which the 1994 Amendments purport to abrogate. Neither West nor Green adopts the Amendments' unique version of market share liability or allows proximate cause to be proven solely by statistical analysis. The undeniable fact is that the 1994 Amendments change the circumstances under which a manufacturer will be held liable. That is enough to trigger the rule against retrospective application.

Second, the State relies on the "remedial" purpose of the 1994 Amendments to argue that they should apply retroactively. State Br. at 20-23. However, this Court in Arrow, Inc. recently held that, if a statute "accomplishes a remedial purpose by I creating substantive new rights or imposing new legal burdens," it is not "the type of remedial legislation that should be presumptively applied in pending cases. 645 So. 2d at 424. (emphasis added). See also L. Ross, Inc., 466 So. 2d 1096 (extensive discussion of remedial/substantive distinction). Here, as noted above, the 1994 Amendments create new rights and impose new legal burdens.

Third, the State asserts that barring the retrospective application of this statute would lead to "absurd results," but that is simply not true. Courts routinely apply different sets of laws depending upon when the actionable conduct occurred. On the other hand, applying the 1994 Amendments' draconian new cause of action to conduct that already occurred would be fundamentally unfair.

Fourth, the State asserts that "[a]pplying a new statute to cases filed after its effective date --without regard to when the underlying conduct occurred -- is the standard way that a legislature makes a law 'prospective.'" State Br. at 35. This assertion, however, is refuted by the caselaw. The U.S. Supreme Court has recently held that "the legal effect of conduct should ordinarily be assessed under the law that existed when the conduct took place," not when the suit challenging the conduct was filed. Landgraf, 114 S. Ct. at 1497 (cited and quoted in Arrow Air, Inc., 645 So. 2d at 425) (emphasis added). Recently, in Gupton v. Village Key & Saw Shop, Inc., 656 So. 2d 475 (Fla. 1995), this Court refused to apply a statute governing noncompete clauses retroactively to a noncompete agreement executed before the statute's effective date, even though the lawsuit was filed well after that date. Id. at 477-78. Similarly, in Arrow Air, this Court refused to apply the Whistle-Blower's Act retroactively because such application "would subject the employer to new liability for its past conduct." 645 So. 2d at 425 (emphasis added). And, in Florida Patient's Compensation Fund, 558 So. 2d at 414, this Court refused to apply a new medical malpractice attorney fee statute retroactively to "an act of malpractice" that occurred before the statute's effective date, regardless of when the cause of action arose. Indeed, any other rule would be inconsistent with the purpose of the presumption against retroactivity: to prevent unfairness to the defendant. [ The State also asserts that "the proper focus for retroactivity purposes is on the tobacco companies' duty to repay Medicaid expenses." State Br. at 34. But the 1994 Amendments create no "duty to repay Medicaid expenses" per se. Rather, the Amendments abolish defenses, create a new version of market share liability, and make other substantive changes in the law that change both the circumstances under which manufacturers will be held liable and the amount of the liability. It is the unfairness of imposing new legal consequences on manufacturers' past business activities that requires the 1994 Amendments to apply prospectively. Similarly, the State's argument that the 1994 Amendments should apply retrospectively because court decisions adopting new theories of common law often apply to pending cases (State Br. at 35) ignores the fundamental distinction between common law and new substantive statutes. Florida courts have held that statutes adopting new causes of action or abolishing defenses car not apply retroactively. & cases cited above.]

III.

THE TRIAL COURT'S RULING

REGARDING THE STATUTE OF REPOSE

SHOULD BE UPHELD

The 1994 Amendments provide that "[t]he defense of statute of repose shall not apply to any action brought under this section by the agency." § 409.910(12)(h). It is well-established Florida law that statutory immunity from suit afforded by a statute of repose cannot be retroactively withdrawn by subsequent legislation. Wiley v. Roof, 641 So. 2d 66 (Fla. 1994); Firestone Tire & Rubber Co. v. Acosta 612 So. 2d 1361, 1363-64 (Fla. 1992). Accordingly, the circuit court correctly held that "[t]he Amendments' elimination of the statute of repose defense cannot apply to revive any claim already timebarred by the statute of repose." Order ¶ 4 (R 754-57) (A.1).

For the first time in this case, the State challenges the circuit court's ruling on this issue on the ground that the claim is not ripe. State Br. at 36. This Court, however, has found jurisdiction to grant declaratory relief "when the cause involved the public interest in the settlement of controversies in the operation of essential government functions and in the disbursement of public funds." Chiles v. Children A, B, C, D, E. and F, 589 So. 2d 260, 263 (Flat 1991). This statute of repose issue clearly meets the Chiles test. Moreover -- irrespective of the application of the statute of repose to Philip Morris -- AIF, Publix, and NACS established below that they have a bona fide, actual, and present need for a declaration. They or their members are suppliers of a wide variety of products that may well be covered by the statute of repose. Based on uncontested affidavits, [ See Affidavits of Jodi Chase and Clayton Hollis With Attached Exhibits (May 9, 1995) (R. 233-321) (A.15).] the circuit court found that they satisfy the test set out in May v. Holly, 59 So. 2d 636, 639 (Fla. 1952). [ See Order Denying Plaintiffs' Motion for Summary Judgment as to Associated Industries of Florida, Inc., Publix Supermarkets, Inc., and National Association of Convenience Stores, Inc. (May 23, 1995) (R. 476) (A.5).] The State ignores the factual record in asserting that plaintiffs have failed to demonstrate an actual controversy.

IV.

THE AHCA IS UNCONSTITUTIONAL UNDER ARTICLE IV, SECTION 6 OF THE

FLORIDA CONSTITUTION

Article IV, Section 6 of the Florida Constitution requires that all functions of the executive branch shall be allotted among not more than twenty-five departments. AHCA is not a department. AHCA's function is not allotted to a department. Therefore, as the trial court held, AHCA's structure violates the Florida Constitution.

A. The AHCA

The State's Brief and the various Amicus Briefs fully concede the structure of AHCA. The agency was not established as a new executive department. Nor was it established as an agency subject to the control and supervision of an executive department. Rather, it was designed to be a new form of executive branch agency -- an "independent agency."

To accomplish this purpose, AHCA's authorizing legislation lodged AHCA "within" the Department of Business and Professional Regulation ("DBPR"), but at the same time established the Agency's complete independence from DBPR:

There is created the Agency for Health Care Administration within the Department of Business and Profe-ssional Regulation. The agency shall be a separate budget entity, and the director of the agency shall be the agency head for all purposes. The agency shall not be subject to control, supervision, or direction by the Department of Business and Professional Regulation in any manner, including, but not limited to, personnel, purchasing, transactions involving real or personal property, and budgetary matters.

§ 20.42, Fla. Stat. (1993) (emphasis added). AHCA's dual status -- being within DBPR while at the same time being independent of any executive department -- violates the Florida Constitution.

B. The Florida Constitution Prohibits the Creation of a Wholly Independent Agency Within the Executive Department

The Florida Constitution provides in pertinent part:

All functions of the executive branch of state government shall be allotted among not more than twenty-five departments, exclusive of those specifically provided for or authorized in this constitution. The administration of each department, unless otherwise provided in this constitution, shall be placed by law under the direct supervision of the governor, the lieutenant governor, the governor and cabinet, a cabinet member, or an officer or board appointed by and serving at the pleasure of the governor ....

Art IV, § 6, Fla. Const (emphasis added). The Constitution thus requires that all executive functions be allotted to a department and that the administration of each department be placed under the direct supervision of one of the listed entities or individuals (the "department head"). AHCA's function is not allotted to DBPR because, though placed "within" the DBPR, AHCA is not subject "in any manner" to the "control, supervision, or direction" of DBPR. [ The State argues that AHCA's technical placement "within" DBPR is enough to satisfy the Constitution, even if the department has no supervision over the agency's function. State Br. at 44 45. But, such a reading would render the requirements of Section 6 meaningless. If Section 6 means anything at all, an executive "function" can only be "allotted" to a department if the department has some "control, supervision, or direction" over that function. Such is not the case here.] Instead, the director of AHCA has direct supervision of AHCA "for all purposes -- an authority reserved by the Florida Constitution for the department head.

The dilemma is clear. In establishing a new executive branch agency the legislature must make a choice: either it can place the agency within an existing department and subject the agency to the control of the department head, or it can establish the agency as a new department with its own head. However, the legislature cannot constitutionally establish a fully autonomous agency "within" an existing executive branch department. By restricting the number of departments to twenty-five, the citizens of Florida have limited the legislative power to create a free-form, massive, unaccountable executive branch. The State's position directly contradicts this purpose by allowing the legislature to create any number of "independent agencies," technically "within" departments but completely unaccountable to those departments. There is simply no provision for wholly independent agencies, such as AHCA. [ It is no answer to say that AHCA is under the direct supervision of the Governor. First, the Constitution requires that "each department" be under the direct supervision of the Governor or a department head. AHCA is not a department. Second, aside from appointment and removal, the Governor does not have the power to supervise or direct the day-to-day activities of AHCA through binding directions. See Op. Att'y Gen. Fla. 081-59 (1989) (governor may not give binding directions to any state executive agencies or departments) (A.16).]

C. Section 20.42 Cannot Be Afforded A Saving Construction

The constitutional defect in AHCA's enabling legislation cannot be judicially cured. Under the separation of powers doctrine, courts cannot legislate. Art II, § 3, Fla. Const.; see State v. Globe Communications Corp., 622 So. 2d 1066, 1080 (Fla. 4th DCA 1993), aff'd, 648 So. 2d 110 (Fla. 1994); Brown v. State, 358 So. 2d 16, 20 (Fla. 1978) ("The Florida Constitution requires a certain precision defined by the legislature not legislation articulated by the judiciary."). As this Court has explained:

Whenever reasonably possible and consistent with the protection of constitutional rights, courts will construe statutes in such a manner as to avoid conflict with the constitution. But the court, in construing a statute, may not invade the province of the legislature and add words which change the plain meaning of the statute. Furthermore, courts may not vary the intent of the legislature with respect to the meaning of the statute in order to render the statute constitutional.

Metropolitan Dade County v. Bridges, 402 So. 2d 411, 414 (Fla. 1981) (citations omitted) (emphasis added), receded from on other grounds, Makemson v. Martin County, 491 So.2d 1109 (Fla. 1986).

There is no way to "save" section 20.42 without impermissibly invading the exclusive domain of the legislature. To allow a division of a department to act independent of the department would render meaningless Article IV, Section 6, which limits the number of independent agencies or departments to twenty-five. To subject AHCA to the control of its parent DBPR -- as required by the Constitution -- would necessitate rewriting the statute which specifically states that AHCA "shall not be subject to control, supervision, or direction by [DBPR] in any manner." § 20.42, Fla. Stat. (1993). Nor should this court, as the State suggests (State Br. at 41-42), simply declare AHCA to be a separate department, for that would render meaningless the legislative directive that AHCA be "within" DBPR § 20.42, Fla. Stat (1993). Indeed, the extensive history cited by the State itself illustrates the legislature's unmistakable intent when it created AHCA. The legislature consciously and expressly decided not to make the Agency a department. State Br. at 3940; House Comm. on Insurance Health Care, Final Bill Analysis & Economic Impact Statement CS/SB 2390 (1992), at 66 (A.17). The Court should not "vary the intent of the legislature" by rewriting the statute. [ The State encourages the Court to relabel AHCA a department since there are not 25 executive departments at the moment. According to the State, however, there are at least three other independent agencies like AHCA. State Br. at 44-45. The 25 department limitation will certainly be exceeded if all these unconstitutional agencies are all relabeled departments. In addition, simply redefining agencies to be departments would limit the legislature's ability to exercise its discretion to create new departments in violation of separation of powers principles. Finally, to interpret AHCA's enabling legislation to mean one thing when it expressly says another would frustrate the constitutionally based policy that "[t]he responsibility within the executive branch of government for the implementation of programs and policies should be clearly fixed and ascertainable ." § 20.02(4), Fla. Stat. (Supp. 1994) (emphasis added); See also Op. Att'y Gen. Fla. 081-49 (1989) (A.16).]

To rewrite the statute as the State suggests would also require inserting a provision providing that the head of AHCA be confirmed by the Florida Senate. Under Article IV, Section 6, confirmation by the Florida Senate or the approval of three members of the cabinet is required for the appointment to any designated statutory office "when provided by law." Section 20.05(2) specifically requires that all secretaries appointed by the governor to serve as department heads "must" be confirmed by the Florida Senate. § 20.05(2), Fla. Stat (Supp. 1994). By contrast, the legislature provided that the director of the AHCA is appointed solely by the governor. Determining whether or not the AHCA head must be confirmed by the Florida Senate is not a judicial prerogative; it is a choice which must be made by the Florida legislature.

In sum, any "saving" construction would violate Article II, Section 3's provisions relaxing to the separation of powers. Under Florida's constitutional scheme, only the legislature is authorized to create executive departments of government. Art. IV, § 6, Fla. Const When the legislature has expressly refrained from designating AHCA a department by redesignating it an "agency" and placing it within DBPR, the courts cannot constitutionally, by judicial decree, transform AHCA into an executive department. [ The amicus briefs raise several other arguments that are not raised by the State or that have been waived by the State. For example, the Amicus Brief of the Hillsborough County Hospital Authority argues that fact issues precluded the entry of summary judgment below. The State never argued that fact issues existed and both parties agreed that the case was "ripe for disposition on summary judgment." See Order at 1 (R. 754-57) (A.1); Transcript at 103 (A.6). The Amicus Brief of Good Samaritan and St. Mary's Hospitals argues that the portions of section 20.42 that place AHCA and DBPR should be severed and the Court should construe AHCA as a department. The State has never made a severance argument. In addition, severance is no remedy here, where the clear legislative purpose of the statute was to create an agency within a department. The Court cannot rewrite the statute to frustrate the legislative purpose under the guise of severance. See Cramp v. Board of Pub. Instruction of Orange County , 137 So. 2d 828 (Fla. 1962) (severance allowed only where legislative purpose expressed in valid provisions can be accomplished independently of those which are void).]

D. Declaring AHCA Unconstitutional Will Not Produce Harsh and Absurd Results

The State and the multiple amici hypothesize wildly and incorrectly about the possible effects if AHCA is declared unconstitutional. [ The amicus briefs raise several other arguments that are not raised by the State or that have been waived by the State. For example, the Amicus Brief of the Hillsborough County Hospital Authority argues that fact issues precluded the entry of summary judgment below. The State never argued that fact issues existed and both parties agreed that the case was "ripe for disposition on summary judgment." See Order at 1 (R. 754-57) (A.1); Transcript at 103 (A.6). The Amicus Brief of Good Samaritan and St. Mary's Hospitals argues that the portions of section 20.42 that place AHCA within DBPR should be severed and the Court should construe AHCA as a department. The State has never made a severance argument. In addition, severance is no remedy here, where the clear legislative purpose of the statute was to create an agency within a department. The Court cannot rewrite the statute to frustrate the legislative purpose under the guise of severance. See Cramp v. Board of Pub. Instruction of Orange County , 137 So.2d 828 (Fla. 1962) (severance allowed only where legislative purpose expressed in valid provisions can be accomplished independently of those which are void.)] Under the de facto officer doctrine, AHCA's past actions vis-à-vis the general public will be valid; it is only AHCA's actions with regard to the plaintiffs/appellees that will be void.

The de facto officer doctrine "confers validity upon acts performed by a person acting under the color of official title even though it is later discovered that the legality of that person's appointment or election to office is deficient." Ryder v. United States, 115 S. Ct. 2031, 2034 (1995) (citing Norton v. Shelby County, 118 U.S. 425, 440 (1886)); see State ex ref. Hawthorne v. Wiseheart, 28 So. 2d 589, 593 (Fla. 1946). [ In Florida, courts have relied upon the doctrine not only where an office is unlawfully filled, but also where, as here, the legislature's creation of the office itself is unconstitutional. Kane v. Robbins , 556 So. 2d 1381 (Fla. 1989) (although special act providing for nonpartisan school board elections unconstitutional, actions of school board valid).] The rule was created to validate those official actions that have induced reliance by innocent parties, such as the public here. Treasure Inc. v. State Beverage Dep't, 238 So. 2d 580 (Fla. 1970).

Under the de facto officer doctrine, however, the officer's actions with regard to the challenging party will be declared null and void:

when a party to be affected by an official's act or decision holds actual knowledge that such official might not in fact legally occupy the office, and when the party makes a timely and direct attack on the authority and jurisdiction of the person attempting to exercise the powers of the office, there is no reliance by an innocent party and no reason to apply the rule. Any other rule would unreasonably restrict bonafide challenges to public officials' authority and jurisdiction.

Id. at 585 (emphasis added). In Ryder, the Supreme Court held that the plaintiff challenging the constitutional validity of the appointment of an officer who adjudicated his case was "entitled to a decision on the merits of the question and "whatever relief may be appropriate if a violation indeed occurred " 115 S. Ct. at 2035 (emphasis added). [ See also Buckley v. Valeo , 424 U.S. 1 (1976) (granting affirmative relief to parties challenging constitutionality of FEC appointments procedures, but validating FEC's past actions); Northern Pipeline Constr. Co. v. Marathon Pipeline Co. , 458 U.S. 50 (1982) (granting relief to challenging party when bankruptcy court's jurisdiction unconstitutional, but staying decision for three months to afford Congress an opportunity to remedy problem). In both cases, the Supreme Court stayed its judgment for some months to afford Congress the opportunity to reconstitute the unconstitutional entity. This Court can do the same thing here with respect to AHCA.]

Plaintiffs/appellees, as in Treasure and Ryder, have timely filed a direct constitutional challenge to AHCA's authority and are therefore entitled to the appropriate relief. Plaintiffs/appellees do not seek a ruling invalidating all of AHCA's past acts, but ask only that the Court rule that AHCA -- an unconstitutional, unaccountable agency -- is without power to sue plaintiffs/appellees under the Act.

ARGUMENT ON CROSS APPEAL

On cross appeal, appellees/cross-appellants further challenge the constitutionality of the 1994 Amendments on the grounds that they violate (1) the access-to-courts provision of the Florida Constitution, (2) the separation of powers doctrine providing that the judiciary has the exclusive power to determine the relevancy and admissibility of evidence [ Although the circuit court ruled that certain provisions of the Amendments violate separation of powers, it specifically ruled that the provision allowing the State to prove causation and damages through statistical analysis did not violate separation of powers. It is this separation of powers issue that appellees raise on cross appeal.] , and (3) due process.

I.

THE 1994 AMENDMENTS DENY

ACCESS TO COURTS IN VIOLATION OF

THE FLORIDA CONSTITUTION

Article I, Section 21 of the Florida Constitution declares that the courts of Florida "shall be open to every person for redress of any injury -- a "fundamental right" that ensures the ability of parties to present claims and defenses. Psychiatric Assocs. v. Siegel, 610 So. 2d 419, 424 (Fla. 1992) (citing G.B.B. Investments, Inc. v. Hinterkopf, 343 So. 2d 899, 901 (Flat 3d DCA 1977)). The 1994 Amendments violate this fundamental right.

A. The 1994 Amendments Abrogate Access to the Courts

The 1994 Amendments violate the access-to-courts provision by (1) abolishing common law defenses and (2) erecting barriers to asserting otherwise available defenses.

1. The 1994 Amendments Abolish Common Law Defenses

In Kluger v. White, 281 So. 2d 1, 4 (Fla. 1973), the Florida Supreme Court held that the right of access to courts protects any "right [that] has become a part of the common law of the State pursuant to Fla. Stat. § 2.01." Specifically, the right of access protects rights defined in "the common law as it existed as of November 5, 1968," the date the 1968 Florida Constitution was adopted. Eller v. Shova, 630 So. 2d 537, 542 n.4 (Fla. 1993). The rights protected include not only claims, but defenses. Thus, in Psychiatric Assocs., 610 So. 2d at 424, this Court held that the right of access applies to the right to assert "claims or defenses in court.'' (Emphasis added.) Similarly, in State ex rel. Pittman v. Stanjeski, 562 So. 2d 673 (Fla. 1990), this Court held that, if a statute were construed to permit automatic entry of a judgment for delinquent support monies without giving the defendant an opportunity to present defenses, it would violate the right of access to the courts. Id. at 676. And in State Farm Mut. Auto. Ins. Co. v. Hassen, 650 So. 2d 128, 140-41 (Fla. 2d DCA 1995), the court recognized that access to courts applied to "claims or defenses" -- and specifically struck a statute that impaired an insurance company's ability to defend itself by disputing liability.

Here, in one sweeping provision, the Amendments absolutely abolish all affirmative defenses of a manufacturer that, in the Act's own words, are "normally available to a liable third party:"

Principles of common law and equity as to assignment, lien, subrogation, comparative negligence, assumption of risk. and all other affirmative defenses normally available to a liable third party, are to be abrogated to the extent necessary to ensure full recovery ....

§ 409.910(1) (emphasis added).

Many, if not all, of these defenses were part of common law in 1968 and consequently are part of the constitutional right of access to courts. For example, "[c]ontributory negligence and assumption of the risk were still the law in 1968"—and still exist today in the modified form of comparative fault. Eller, 630 So. 2d at 543 (citations omitted). [ This Court has explained that contributory and comparative negligence theories "both recognize that negligence of a plaintiff may play a part in causing his injuries and that the damages he is allowed to recover should, therefore, be diminished to some extent." Hoffman v. Jones , 280 So. 2d 431, 436 (Fla. 1973); See Blackburn v. Dorta , 348 So. 2d 287, 293 (Fla. 1977) (merging implied assumption of risk into defense of comparative negligence). The Act does far more than merely "modify" these common law defenses. Compare Eller , 630 So. 2d at 542 (amendment at issue "merely raises the degree of negligence required" and does not abolish a negligence cause of action).] The 1994 Amendments thus violate the right of access to courts by abolishing longstanding defenses recognized for decades by Florida common law. [ The State asserted below that these defenses were never available to plaintiffs/appellees in the first place. Such an argument ignores longstanding principles of Florida common law and misconstrues the pre-1994 Medicaid Third-Party Liability Act. See supra pp. 28-31.]

2. The 1994 Amendments Erect Barriers to Defenses

This Court has also held that a statute may deprive a person of access to courts by imposing barriers to asserting otherwise available claims or defenses. Thus, in Psychiatric Assocs., 610 So. 2d at 424-25, this Court struck down a statute that required a plaintiff to post a bond before bringing an action. The Court held that the statute created "an impermissible restriction on access to the courts." 151. at 424. See also State Farm Mut. Auto. Ins. Co. v. Hassen, 650 So. 2d at 141 ("The constitutional right of access to the courts sharply restricts the imposition of financial barriers to asserting claims or defenses in court.") (citations omitted) (emphasis in original).

Here, section 409.910(9)(a) of the 1994 Amendments construct a formidable barrier preventing a manufacturer from disputing that its products caused a particular Medicaid recipient's injury. The Amendments attempt to deny a manufacturer discovery of critical information needed to dispute causation: the identity of the Medicaid recipients whose health care costs the State seeks to recoup. § 409.910(9)(a). By withholding this information, the Amendments attempt to preclude a manufacturer from proving that (a) another cause was responsible for a particular recipient's injury, (b) another manufacturer s product caused the injuries, or (c) the alleged medical costs were unreasonable or the result of fraud. By keeping manufacturers ignorant of the identity of the people they allegedly injured, the Amendments seek to ensure that the State wins every case.

The combination of section 409.910(1) (joint and several liability) and subsection 409.910(9)(a) (market share liability) also result in a barrier to a manufacturer's right to exculpate itself from excessive liability imposed under a market share liability theory. Although this Court upheld the constitutionality of market share liability in Conley v. Boyle Drug Co., 570 So. 2d 275, 287 (Fla. 1990), it did so in part because the Conley theory imposed liability limited to a manufacturer's market share:

We find no merit to the respondents' equal protection, due process, and access to courts challenges to the adoption of a market share theory of liability. Under the theory of liability we adopt today, a defendant is not precluded from presenting a defense, nor is liability imposed in an arbitrary manner.... [T]he extent to which each defendant will be held liable will be equivalent to the percentage of harm it actually could have caused within the relevant market.

Id. (emphasis added).

The Amendments deny manufacturers this right. The Amendments impose on each manufacturer joint and several liability -- that is, liability for the damages caused by the entire industry -- without giving any manufacturer the opportunity to limit its liability proportionately to its market share, as Conley requires. § 409.910(1). The Amendments thus guarantee arbitrary and excessive liability.

B. The Amendments Fail the Test of Kluger v. White

Under Kluger, the abrogation of a longstanding claim or defense is unconstitutional unless (1) the legislature provides a reasonable alternative to protect the rights of the party whose claim or defense is being abrogated, or (2) the legislature can chow that there is an "overpowering public necessity" for abolition of the claim or defense and that there is no alternative method of meeting that necessity. 281 So. 2d at 4. Neither of these tests is met here.

First, the Amendments provide third-party defendants with no reasonable alternative to abolished affirmative defenses. For example, there is no substitute mechanism for considering the injured Medicaid recipient's own conduct in causing his injuries. The Amendments abolish longstanding defenses, yet provide manufacturers with no "commensurate benefit." [ See Smith v. Department of Ins ., 507 So. 2d 1080, 1088 - 89 (Fla. 1987) (per curiam) (striking down statute creating a cap on noneconomic damages because statute provides plaintiffs with no commensurate benefit); Psychiatric Assocs ., 610 So. 2d at 424 (striking down statute imposing bond requirement because it provides no "commensurate benefit" and statute "lack[s] reciprocity"); State Farm , 650 So. 2d at 141 (striking down statute because "commensurate benefit" was illusory). Compare University of Miami v. Echarte , 618 So. 2d 189, 194 (Fla.) (upholding statute capping noneconomic damages which provided a "commensurate benefit" through establishment of an arbitration process with advantages for claimants), cert. denied , 114 S. Ct 304 (1993).]

Second, there is no recognition in the Amendments of an "overwhelming public necessity." In the few cases where legislation has been upheld based on such "necessity," the Florida courts have relied on reasons for the legislation articulated by the legislature itself. [ See e.g. , Rotwein v. Gersten , 160 Fla. 736, 738, 36 So. 2d 419, 420 (Fla. 1948) (en banc) (court relies on legislative "declaration of policy" detailing grave abuses of cause of action for alienation of affections); Echarte , 618 So. 2d at 191-92 (court relies on "factual findings" of the legislature set out in preamble to