Could a Louisiana nursing home owner also own the pharmacy serving its residents?

Plain-English summary

The AG reconsidered an earlier opinion after enactment of Louisiana's Medical Assistance Programs Integrity Law. It again concluded that a nursing home's owners or managers could have an interest in a pharmacy serving residents. The nursing home residents' right to choose their pharmacy remained part of the analysis.

The AG did not decide whether actual business transactions between commonly owned facilities constituted illegal remuneration. It said that question belonged to the Department of Health and Hospitals and depended on facts.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Was common ownership of the home and pharmacy itself barred?
The AG said no under the state law it analyzed.

Could residents choose a different pharmacy?
The quoted residents' rights provision protected their pharmacy choice.

Did the opinion clear every transaction between the two businesses?
No. The AG left any illegal remuneration question about particular transactions to the health department.

Background and statutory framework

The opinion read R.S. 40:2010.8(12)'s resident choice provision alongside the Medical Assistance Programs Integrity Law and its illegal remuneration rule in R.S. 46:438.2. It distinguished ownership from specific payments or referrals.

Citations and references

• R.S. 40:2010.8(12): residents' pharmacy choice.
• R.S. 46:437.1: medical assistance program law cited.
• R.S. 46:438.2: illegal remuneration rule.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/00-0172

Original opinion text

May 4, 2000
OPINION 00-172

Honorable Robert Marionneaux, Jr. 87 PHARMACY
State Senator 22-2 DRUGS
R.S. 40:2010.8(12); R.S. 46:437.1, et seq.
Post Office Box 577
Louisiana law does not prohibit the ownership or management of a
Livonia, LA 70755
nursing home from owning an interest in a pharmacy serving the patients
of that nursing home.
Dear Senator Marionneaux:

In 1988, this office issued Attorney General Opinion 88-626, answering in the affirmative the question of whether the principals involved in the ownership of a nursing home may also own a pharmacy that provides prescription drugs to the residents of the nursing home. This opinion was predicated upon state law pertinently providing:

§ 2010.8. Residents’ bill of rights

A. All nursing homes shall adopt and make public a statement of the rights and responsibilities of the residents residing therein and shall treat such residents in accordance with the provisions of the statement. The statement shall assure each resident the following:

(12) The right to select a personal physician; to obtain pharmaceutical supplies and services from a pharmacy of the resident’s choice, at the resident’s own expense or through Title XIX of the Social Security Act; and to obtain information about, and to participate in, community-based activities and programs, unless medically contraindicated, as documented by a physician in the resident’s medical record, and such participation would violate infection control laws or regulations. See R.S. 40:2010.8 (Emphasis added).

Further, the author of Opinion 88-626 cited federal rules which call for “free choice providers” at 42 C.F.R. 431.51, in acknowledgement of a nursing home resident’s right to obtain pharmaceuticals at a place of the resident’s choice.

Subsequent to the issuance of Opinion 88-626, in the 1997 Regular Legislative Session, the legislature enacted the “Medical Assistance Programs Integrity Law”, R.S. 46:437.1, et seq. The legislative intent and purpose of the Act is to “protect the fiscal and programmatic integrity of the medical assistance programs from health care providers and other persons who engage in fraud, misrepresentation, abuse, or other ill practices…..to obtain payments to which these health care providers or persons are not entitled.” See R.S. 46:437.2.

It has been suggested that R.S. 46:438.2 defining “illegal remuneration” might have some impact on our conclusion in Opinion 88-626. Of concern is the following language of R.S. 46:438.2(A):

Page 2

Honorable Robert Marionneaux, Jr.
OPINION 00-172
Page 2

§ 438.2 Illegal remuneration

A. No person shall solicit, receive, offer or pay any remuneration, including but not limited to kickbacks, bribes, rebates, or bed hold payments, directly or indirectly, overtly or covertly, in cash or in kind, for the following:

(1) In return for referring an individual to a health care provider, or for referring an individual to another person for the purpose of referring an individual to a health care provider, for the furnishing or arranging to furnish any good, supply, or service for which payment may be made, in whole or in part, under the medical assistance programs.

(2) In return for purchasing, leasing, or ordering, or for arranging for or recommending purchasing, leasing, or ordering any good, supply, or service, or facility for which payment may be made, in whole or in part, under the medical assistance programs.

(3) To a recipient of goods, services, or supplies, or his representative for which payment may be made, in whole or in part, under the medical assistance programs.

The foregoing cited statute does not change our conclusion in Opinion 88-626, namely, that Louisiana law does not prohibit the ownership of a nursing home from owning an interest in a pharmacy serving the patients of that nursing home. In fact, R.S. 46:437.13B(3)(c)(iv) recognizes that health care providers may have ownership interests in other health care providers or related entities. However, the question of whether the business transactions between the nursing home and the pharmacy, who share common ownership, constitute a violation of R.S. 46:438.2 is within the jurisdiction of the Department of Health and Hospitals and is a factual determination, not an issue of law.

Should you have further questions in which we may provide assistance, please contact this office.

RICHARD P. IEYOUB
ATTORNEY GENERAL

BY: _______
KERRY L. KILPATRICK
ASSISTANT ATTORNEY GENERAL

KLK:ams

Page 3

Honorable Robert Marionneaux, Jr.
OPINION 00-172
Page 3

OPINION 00-172

88 PHARMACY
22-3 DRUGS

R.S. 40:2010.8(12); R.S. 46:437.1, et seq.

Louisiana law does not prohibit the ownership or management of a nursing home from owning an interest in a pharmacy serving the patients of that nursing home.

Honorable Robert Marionneaux, Jr.
State Senator
Post Office Box 577
Livonia, LA 70755

Date Received:
Date Released: May 4, 2000

KERRY L. KILPATRICK
ASSISTANT ATTORNEY GENERAL