Kickbacks are any type of financial incentive intended to influence the providing of healthcare. The federal Anti-Kickback Statute (AKS) makes it a crime to knowingly and willfully give or receive or offer to exchange anything of value in an effort to induce the referral of business that impacts a federal healthcare program.
The AKS not only applies to doctors and pharmacists but also to those who provide any healthcare service, equipment, or testing. A non-healthcare professional can also violate anti-kickback laws by receiving or giving incentives for referring patients, healthcare products, or services. States also have similar laws concerning kickbacks that relate to healthcare.
The purpose of AKS is to ensure that federal healthcare programs, such as Medicare, are not expending funds for non-legitimate purposes. In addition, the anti-kickback laws are designed to ensure that medical decisions are based upon the best interest of the patient.
An example of an illegal kickback involving healthcare professionals and non-professionals can be seen in this scenario:
A pharmacist pays a person (not a healthcare professional) to refer friends and members of his social club to see a particular doctor. The doctor accepts the patient and after examination issues a prescription medication. The doctor suggests that the prescription be filled by the pharmacist. The pharmacist pays the doctor for every patient that the doctor sends to the pharmacy.
The government will charge the doctor and the layman with receiving kickbacks and the pharmacist with paying the kickbacks.
LAWS AGAINST HEALTHCARE KICKBACKS
There are several federal laws that apply to kickbacks. In addition to the Anti-Kickback Statute, the government can charge conspiracy whenever two or more people are involved in the kickback scheme. Money laundering statutes also apply. The government will contend that payments to a healthcare provider as a result of the illegal kickback is criminally derived property. Receipt of such funds is money laundering.
The Stark Law is a civil statute that prohibits physicians from referring patients to businesses that provide certain healthcare services paid for by Medicare. Referrals violate the Stark Law if a financial arrangement exists between the parties. The referrals must relate to healthcare services designated in the statute. A violation of the Stark Law creates civil liability against both parties to the arrangement and can also form the basis for a suit under the Federal False Claims Act. This act allows the government to seek return of payments in violation of the law, as well as monetary penalties in addition to the repayment.
The Beneficiary Inducement Statute is another law dealing with healthcare services and payments. This law covers inducements to prospective or actual patients of healthcare. The scope of the Beneficiary Inducement Statute is far-reaching. For example, providing free in-home medical assessments by a provider of medical equipment could be considered a violation of this statute and lead to imposition of monetary penalties. This law sets forth parameters for offering gifts or other inducements that are permissible, however, the complexities of the law can lead to significant legal problems for the healthcare provider if the government believes the free services are an unlawful inducement to patients.
Punishment
The Anti-Kickback statute is a felony punishable by up to 5 years in prison plus a monetary fine and restitution. The government is not limited to charging one count of a violation of the AKS. Several charges of illegal kickbacks can be included in an indictment. Each separate charge carries a maximum of 5 years in prison.
The government can also charge violations of the money laundering statutes including 18 U.S.C. § 1957, which is punishable by a maximum sentence of 10 years in prison. The court has the power to impose a sentence on each count of conviction consecutively. This means that if a defendant is convicted of 2 counts of violating the AKS and one count of money laundering, the potential maximum sentence is 20 years. In addition to long terms in prison, a conviction will usually result in a loss of professional licenses. The Stark Law, the Beneficiary Inducement Statute, together with the False Claims Act are civil statutes that result in repayment of monies received in violation of the statute as well as additional penalties over and above the repayments.
ANTI-KICKBACK STATUTE, STARK LAW AND SAFE HARBORS
The broad nature of both the Stark Law and the Anti-Kickback Statutes can impact routine and good-faith relationships between healthcare professionals and businesses, including doctor's practices and hospitals. In an effort to prevent the unfair application of these laws, various safe harbors have been recognized. Safe harbors are designed to be applied to normal and good-faith referrals and other business relationships within the healthcare industry. Examples of safe harbors include arrangements for doctors to have an ownership interest in the business made up of several doctors employed by a hospital.
An example of the broad scope of the AKS and Stark Law is apparent from a review of the designated healthcare services covered under the law. Referrals to designated healthcare services can result in violation of the AKS or Stark Law unless covered in a safe harbor provision. The designated healthcare services include:
- Physical therapy services
- Radiology services including magnetic resonance imaging, ultrasound services, and computerized axial tomography scans
- Durable medical equipment and supplies
- Prosthetics, orthotics, and prosthetic devices and supplies
- Outpatient prescription drugs
- Outpatient speech-language pathology services
- Clinical laboratory services
- Occupational therapy services
- Inpatient and outpatient hospital services
- Radiation therapy services and supplies
- Parenteral and enteral nutrients, equipment, and supplies
- Home health services
Other examples of safe harbor provisions touch upon routine matters in the healthcare industry. Examples include the sale of a medical practice, prepaid medical plans, interest paid on investments from doctors or other healthcare professionals, referral arrangements for specialty services, and joint ventures to serve areas in need of medical professionals and academic centers.
It is not uncommon for there to be differences of opinion concerning whether relationships fall under the safe harbor provisions. State and federal regulators may reject good-faith efforts of healthcare professionals to comply with the law.
Should a healthcare professional be under investigation or accused of violating the AKS or Stark Law, legal representations should be sought immediately. Backed by over 45 combined years of federal criminal defense experience, the Law Offices of Horwitz & Citro, P.A. can provide the expertise, experience, and aggressive strategies to stand between the healthcare professional and overreaching by state and federal investigators and prosecutors.
Contact our firm at (407) 901-5852 to discuss your case today.
