Anti-Kickback Statute Defense

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) is a criminal law that prohibits the knowing and willful payment of "remuneration" to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies.

In some industries, it is acceptable to reward those who refer business to a person. However, in the Federal health care programs, paying for referrals is a crime. The statute covers the payers of kickbacks-those who offer or pay remuneration- as well as the recipients of kickbacks-those who solicit or receive remuneration. Each party's intent is a key element of their liability under the AKS.

Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms, and exclusion from participation in the Federal health care programs. Under the CMPL, physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration.

Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor and satisfy all of its requirements. Some safe harbors address personal services and rental agreements, investments in ambulatory surgical centers, and payments to bona fide employees.                                              

Physicians are an attractive targets for kickback schemes because they  can be a source of referrals for fellow physicians or other health care providers and suppliers. Physicians decide what drugs their patients use, which specialists they see, and what health care services and supplies they receive.

Many people and companies want a physician’s  patients' business and would pay doctors  to send that business their way. Just as it is illegal for physicians to take money from providers and suppliers in return for the referral of their  Medicare and Medicaid patients, it is illegal for a doctor to pay others to refer their Medicare and Medicaid patients.

The kickback prohibition applies to all sources of referrals, even patients. For example, where the Medicare and Medicaid programs require patients to pay copays for services, a doctor is  generally required to collect that money from his patients. Routinely waiving these copays could implicate the AKS and a doctor  may not advertise that he will forgive copayments. However, a doctor is free to waive a copayment if he makes an individual determination that the patient cannot afford to pay or if his reasonable collection efforts fail. It is also legal to provide free or discounted services to uninsured people.

Besides the AKS, the beneficiary inducement statute 42 U.S.C. § 1320a-7a(a)(5) also imposes civil monetary penalties on physicians who offer remuneration to Medicare and Medicaid beneficiaries to influence them to use their services.

The Government does not need to prove patient harm or financial loss to the programs to show that a physician violated the AKS. A physician can be guilty of violating the AKS even if the physician actually rendered the service and the service was medically necessary. Taking money or gifts from a drug or device company or a durable medical equipment (DME) supplier is not justified by the argument that a doctor would have prescribed that drug or ordered that wheelchair even without a kickback.

Anti-Kickback enforcement will come in one of three forms, (1)  an administrative action by the department of Health and Human Services, (CMS and OIG), (2) a qui tam whistleblower case, or (3) a criminal action by the Department of Justice.   There is no bright-line test for determining when a scheme will be prosecuted as a crime.  Increasingly, the government has shown a willingness to indict employees and officers of corporations who conspire to pay kickbacks.

There are a number of defenses to Anti-Kickback Statute cases.   A defendant must exercise great caution in selecting counsel who is knowledgeable in these defenses. Martin Merritt is recognized as one of the nation’s leading lawyers in the field of  False Claims Act Defense tactics, and is a nationally recognized Stark Lawyer located in Dallas, Texas.  If you would like to schedule a free consultation, please contact us.


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