Anti-Kickback Law in Healthcare
The federal Anti-Kickback Statute stands as a crucial pillar in preserving the integrity of healthcare. It flags a company for engaging in fraudulent behavior when it entices doctors and other healthcare providers with financial incentives to use the company's products or services, for which payment is made under Medicare, Medicaid, or other federally funded healthcare programs.
The Anti-Kickback Statute was first enacted in 1972 and has been amended multiple times since then, showing the evolving approach to healthcare fraud.
Examples of illegal kickbacks in healthcare include cash payments and other items of monetary value, such as gifts, free or discounted supplies or services, and travel. Hospitals and other companies often try to disguise their medical kickbacks as legitimate payments.
For example, suppose someone pays doctors inflated rates for speaking engagements or pays above fair market value to lease office space. State-level anti-kickback laws exist and apply to medical providers participating in Medicaid programs.
Even when a payment has a lawful basis, any attempt to influence a doctor or other healthcare provider to use a company's products or services can be considered fraudulent. The implications of such violations are severe, with claims being deemed false under the federal and state False Claims Acts, leading to significant penalties.
Anti-Kickback Law Involving Healthcare
The False Claims Act empowers whistleblowers to play a pivotal role in exposing pharmaceutical and medical kickbacks in the healthcare system.
This complex system, involving financial arrangements between doctors, hospitals, and other healthcare providers or companies, can be brought to light with the crucial help of whistleblowers, demonstrating the power of collective vigilance.
Kickbacks to doctors or other healthcare providers are prohibited under federal laws, such as the Anti-Kickback Statute [42 U.S. Code 1320a-7 b(b)] and the Stark Law (42 U.S.C. 1395nn). Whistleblowers often work with the government to stop healthcare kickbacks and improper referrals and receive a reward by filing a “qui tam” lawsuit under the False Claims Act.
Medical and pharmaceutical kickbacks occur in many forms. But in every kickback case, healthcare providers provide some material benefit in return for other providers prescribing or using their products or services.
According to anti-kickback laws, kickbacks are usually illegal. Doctors are supposed to decide on the most appropriate treatment for their patients without considering their financial interests.
Federal laws, as specified by the Stark Law, prohibit kickbacks and improper compensation to doctors and other healthcare providers. Those financial incentives often result in medically unnecessary treatment and the use of more expensive products, which in turn result in higher costs to patients, Medicare, Medicaid, and other healthcare insurance programs.
What Does the Law Say?
The Federal Anti-Kickback Statute in healthcare programs is defined under 42 U.S. Code 1320a-7b(b), Criminal penalties for acts involving Federal health care programs say "(b) Illegal remunerations -
"(a) Making or causing to be made false statements or representations, whoever,
(1) knowingly and willfully makes or causes to be made any false statement or representation of a material fact in any application for any benefit or payment under a Federal health care program (as defined in subsection (f)),
(2) at any time knowingly and willfully makes or causes to be made any false statement or representation of a material fact for use in determining rights to such benefit or payment,
(3) knowing the occurrence of any event affecting (A) his initial or continued right to any such benefit or payment, or (B) the initial or continued right to any such benefit or payment of any other individual in whose behalf he has applied for or is receiving such benefit or payment, conceals or fails to disclose such event with an intent fraudulently to secure such benefit or payment either in a greater amount or quantity than is due or when no such benefit or payment is authorized,
(4) having made application to receive any such benefit or payment for the use and benefit of another and having received it, knowingly and willfully converts such benefit or payment or any part thereof to a use other than for the use and benefit of such other person,
(5) presents or causes to be presented a claim for a physician's service for which payment may be made under a Federal health care program and knows that the individual who furnished the service was not licensed as a physician, or
(6)f or a fee knowingly and willfully counsels or assists an individual to dispose of assets (including by any transfer in trust) in order for the individual to become eligible for medical assistance under a State plan under subchapter XIX, if disposing of the assets results in the imposition of a period of ineligibility for such assistance under section 1396p(c) of this title,"
This strict prohibition exists due to the potentially adverse effects kickbacks could have on medical decision-making, program costs, and patient trust.
If you're a healthcare professional connected with the federal healthcare system in any way, and you're accused of either offering or receiving a kickback for referrals, you could face up to 10 years in prison if convicted.
Anti-Kickback Statute - Explained
The Anti-Kickback Statute (AKS)is a federal criminal law designed to protect patients and federal healthcare programs from fraud and abuse.
The AKS prohibits the willful exchange of "remuneration," essentially anything of value, to induce or reward referrals for services covered by a federal healthcare program. This includes monetary payments, such as bribes or rebates, and non-monetary compensation, like free perks, expensive trips, or inflated salaries. This law targets the following:
- Receiving Kickbacks. Soliciting or accepting remuneration in exchange for referrals for federally reimbursed healthcare services.
- Offering Kickbacks. Paying or offering remuneration to influence someone to make such referrals.
This prohibition applies to all people and entities involved in federal healthcare programs, including physicians, hospitals, medical suppliers, and healthcare executives. Violations can occur even if the services provided were medically necessary or the patient suffered no actual harm. Examples of Anti-Kickback Statute violations could include:
- Medical Device Kickbacks,
- Hospital-Physician Arrangements,
- Pharmaceutical Company Violations,
- Clinical Laboratory Kickbacks,
- Home Health Agency Kickbacks
- Durable Medical Equipment Kickbacks,
- Ambulance Service Kickbacks.
Anti-Kickback Statute Prosecution
Anti-kickback prosecutions are filed against people who make money by recruiting and signing up patients for a federally reimbursed healthcare program.
For example, suppose a doctor pays a third-party per-patient fee if they refer business to their office. The doctor makes a profit because they are treating more patients who can be reimbursed, most often at a high rate, directly paid by the federal taxpayer.
The individual making the referral to the doctor's office will also benefit directly from a bribe or kickback from the doctor. This statute applies to sales of healthcare-related goods and services.
Not all compensation received from federally reimbursable healthcare will result in anti-kickback prosecution. This federal statute exempts a discount or reduction in price from a provider or even services provided at the discount that is disclosed and stated in the claims for reimbursement submitted to the government.
Employee compensation issues, if they have a valid relationship with the provider, will not qualify as a kickback or bribe. The provisions of the Anti-Kickback Statute are focused on the patient referral and kickback activity, not on valid healthcare providers who provide services compensated by federal tax dollars.
Penalties for Violating the AKS
The penalties for violating the AKS are not to be taken lightly. A conviction carries significant consequences, including:
- People found guilty of violating the AKS can face up to 10 years in prison and fines of up to $100,000 per violation.
- Violators may also face civil monetary penalties under the Civil Monetary Penalties Law (CMPL), which imposes fines of up to $50,000 per false claim or kickback, in addition to treble damages, which is three times the amount of the remuneration involved.
- Those convicted may be excluded from participating in Medicare, Medicaid, and other federal programs, which can have dramatic professional implications for healthcare providers and organizations.
Safe Harbor Provisions
The AKS has provisions known as "safe harbors " to encourage innovation. These exceptions protect specific practices that might otherwise be considered illegal under the statute. Safe harbors offer a way for healthcare professionals to structure their business relationships that comply with the AKS.
An arrangement must fully comply with all the specific requirements of the applicable safe harbor provision for it to qualify for safe harbor protection. Some examples of common safe harbors include the following:
- Safe harbor exempts payments made as part of a legitimate employer-employee relationship if the compensation is for providing covered services.
- Discounts offered to healthcare providers are permissible if they are disclosed and accurately reflected in claims made to federal healthcare programs.
- Compensation arrangements for personal services or management contributions are allowed if they align with fair market value and meet specific contractual guidelines..
Defenses to AKS Charges
Suppose you are a physician or healthcare professional accused of violating the AKS. In that case, you need to consult with a federal criminal defense attorney. Some possible strategies are discussed below.
Perhaps we can argue there was a lack of intent. Federal prosecutors must prove beyond a reasonable doubt that the accused knowingly and willfully engaged in illegal kickback activities. If your conduct was unintentional, this lack of intent can serve as a defense.
Perhaps we can argue a safe harbor compliance. If the specific arrangement in question meets one of the statute's safe harbor provisions, this should protect you from criminal or civil liability.
Perhaps we can argue statutory exemptions. Certain statutory exceptions within the AKS allow specific practices, such as properly disclosed price reductions or permissible arrangements with federally qualified health centers..
Perhaps we can argue that there were good-faith compliance efforts. If you can demonstrate good faith efforts to comply with federal regulations, such as obtaining legal advice or implementing compliance programs, this can serve as a mitigating factor or defense.
For additional information, contact the Hedding Law Firm, a federal criminal defense law firm, located in Los Angeles, California.
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