Anti-Kickback Prosecutions For Paying Patients
Anti-kickback Investigation Defense Attorneys for Healthcare Professionals
Providing payment or other benefits to patients may implicate numerous federal healthcare laws and other federal criminal statutes, including the general healthcare fraud statute, the federal Anti-Kickback Statute, and federal mail and wire fraud statutes. Providers, marketers, manufacturers and other participants in the medical industry may face criminal, civil, and administrative penalties if they improperly compensate patients to use particular providers, services, or items over others.
Former U.S. Prosecutors & Healthcare Fraud Defense Attorneys
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While compensating patients may seem harmless or even beneficial to the patients, the federal government takes improper patient compensation extremely seriously as a threat to medical decision-making and quality of patient care. All participants in the medical industry must remain actively mindful of federal healthcare regulations in order to protect themselves and their businesses from federal investigation and prosecution.
Once an individual has violated federal healthcare laws by providing improper remuneration to patients, other federal criminal laws often come into play. For example, if a provider improperly compensates a patient to use his services and then uses the United States Postal Service or the Internet to submit that patient’s claims to Medicare, the provider may be guilty of mail fraud or wire fraud, respectively. Federal prosecutors often tack wire and mail fraud charges to healthcare fraud charges.
Likewise, federal prosecutors often join charges of healthcare fraud with conspiracy charges. Violations of the Anti-Kickback Statute are particularly susceptible to being coupled with conspiracy charges, as the Anti-Kickback Statute criminalizes both the payment and the receipt of an improper remuneration. Each co-conspirator involved in a scheme to commit healthcare fraud, including provision of improper remuneration, may be held personally liable for the acts of all other individuals involved in that scheme.
The Anti-Kickback statute (42 U.S.C. § 1320a-7b) prohibits anyone from knowingly or willfully paying or receiving remuneration in exchange for referrals or the purchase of any item or service that might be paid for by a federal healthcare program. The types of remuneration prohibited by the Anti-Kickback Statute include, but are not limited to, kickbacks, bribes, and rebates. The statute expressly prohibits both “direct” and “indirect” remuneration. In addition, the Anti-Kickback Statute is reciprocal, meaning that both the payer of kickbacks and the receiver of kickbacks are liable under the statute.
The statute is extremely broad and covers everything from volume-based discounts to physician referrals. The government espouses the “One Purpose Rule” to determine whether remuneration is improper. Under the One Purpose Rule, if just one of any number of purposes for remuneration is to incentive patient referrals, the entire remuneration is deemed improper for purposes of the Anti-Kickback Statute. Healthcare providers can be prosecuted for seemingly benign conduct unless one of the statutory or regulatory “safe harbor” provisions applies. Again, the federal government defines “remuneration” very broadly for the purposes of federal healthcare regulations. Anything of value may be deemed remuneration, including payments, gifts, waivers of fees or co-pays, discounts, and complimentary services or items.
Notably, liability under the Anti-Kickback Statute is not contingent on harm to either the federal government or a patient. For example, provider who administers effective and medically necessary care to a patient may still be in violation of the Anti-Kickback Statute if that provider improperly incentivized the patient to utilize his services. The Anti-Kickback Statute focuses on the provider’s business practices as opposed to his treatment policies. The federal government’s purpose in enacting the Anti-Kickback Statute is trifold:
First, such pro First, such programs can corrupt the decision-making process, resulting, for example, in over-utilization, increased costs, or inappropriate medical choices. Second, there is potential harm to competing providers and suppliers who do not, or cannot afford to, offer incentives to generate business. Third, these practices could negatively affect the quality of care given to beneficiaries. As providers and suppliers race to the bottom by offering increasingly valuable goods or services, the incentive to offset the cost of these inducements by cheating on the quality of the Medicare or Medicaid item or service increases proportionately.
Department of Health and Human Services, Office of the Inspector General, Advisory Opinion No. 12-21 (January 3, 2013).
Punishment: A violation of the Anti-Kickback statute is a felony criminal offense that carries with it potential penalties of imprisonment of up to five years, fines of up to $250,000 for individuals or $500,000 for companies, and mandatory exclusion from federal healthcare programs. At their discretion, prosecutors may seek any combination of these penalties or pursue all three against a defendant. The Anti-Kickback statute also provides administrative remedies, authorizing the Office of the Inspector General of Health and Human Services to impose a civil monetary penalty and seek to exclude any provider which it determines has violated the statute.
Importantly, any violation of the Anti-Kickback Statute is automatically deemed a violation of the federal False Claims Act (31 U.S.C. § 3729 et seq.). The False Claims Act authorizes civil remedies against individuals or companies that present false or fraudulent claims for payment to the federal government. Penalties for violating the False Claims Act include fines ranging from up to $10,781.40 to up to $21,562.80 per false claim, recoupment of up to three times the amount of damages sustained by the government as a result of the false claims, and permanent or temporary exclusion from participation in federal healthcare programs. False Claims Act charges may be filed against a defendant in addition to charges under the Anti-Kickback Statute.
General Healthcare Fraud Statute
Payment of improper remuneration to patients may also be charged under the general healthcare fraud statute instead of, or in addition to, charges under the Anti-Kickback Statute.
Pursuant to 18 U.S.C. § 1347, a person is guilty of healthcare fraud if the Government proves beyond a reasonable doubt that the person:
- Knowingly and willfully executes, or attempts to execute, a scheme or artifice
- To defraud any healthcare benefit program or obtain, by means, of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program
- In connection with the delivery of or payment for healthcare benefits, items, or services.
For purposes of this crime, a “healthcare benefit program” means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract. This, of course, includes Medicare, Medicaid, and the TRICARE program.
Of note, each execution or attempted execution of the scheme to defraud, and not simply acts in furtherance of the scheme, can constitute a separate count. For example, each fraudulent invoice submitted may constitute a separate execution of the defendant’s scheme, and thus, the defendant may be charged and sentenced accordingly. See United States v. Lemons, 941 F.2d 309 (5th Cir. 1991).
Punishment: A person found guilty of healthcare fraud shall be imprisoned not more than 10 years, fined, or both. If the violation results in serious bodily injury, the defendant shall be imprisoned not more than 20 years, and if the violation results in death, the defendant shall be imprisoned for any term of years or for life.
If you have reason to believe you are under investigation, you should contact our attorneys today for a free and confidential consultation. Our attorneys are standing by seven days a week – including weekends – to answer your questions or discuss how we may be able to help you in our case.
 Proper application of the safe harbors is a highly technical endeavor subject to legal interpretation and calls for a specific analysis of particular facts on a case-by-case basis.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.