Federal Anti-Kickback Law – Federal Crime

Federal Anti-Kickback Law – Table of Contents

• 42 U.S.C. § 1320a-7b Overview
• 42 U.S.C. § 1320a-7b Prosecuting
• 42 U.S.C. § 1320a-7b Sentencing
• 42 U.S.C. § 1320a-7b Defending
• Hire Us

Federal Anti-Kickback Law – Overview

42 U.S.C. § 1320a-7b(b)) makes it a crime if any healthcare providers, such as medical doctors, chiropractors, pain management specialists, dentists, or other physicians:

“…. knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind-

   (B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.”

To be found guilty, the prosecution must demonstrate two essential aspects of the business transaction:

1. Remuneration was offered or received (such as through compensation of some kind); and
2. a “bad intent” existed for the business transaction (meaning the transaction was made with the intent to receive or offer a bribe, kickback or compensation).

The Federal Anti-Kickback statute prevents individuals in the healthcare field from knowingly and willfully soliciting or receiving illegal compensation (called “remuneration”), whether directly or indirectly, in exchange for referring individuals for services or goods that will ultimately be reimbursed by “federal health care programs.” 

A violation of the statute is a crime that can result in a felony conviction, severe fines, and time in federal prison. 

You can also be held liable in civil court. This is remedial in nature, and the government does not prosecute you; instead, they seek monetary damages. 

As outlined more fully below, there are certain exceptions in which business transactions are immune to this statute because the statute identifies them as legitimate in nature. Therefore, if there is a legitimate business relationship between the individual and the provider, the business transaction is exempt from the statute. In that case, compensation received or offered will not be considered a bribe or a kickback. Also, “safe harbor” provisions exempt specific business transactions from being covered by the statute.  

What is the Federal Anti-Kickback Statute?

The Federal Anti-Kickback statute prevents individuals in the healthcare field from knowingly and willfully soliciting or receiving illegal compensation (called “remuneration”), whether directly or indirectly, in exchange for referring individuals for services or goods that will ultimately be reimbursed by “federal health care programs.”

There are two elements essential in proving the government’s case: (1) Remuneration was offered or received amongst the parties, and (2) the remuneration resulted from illegal intent. As outlined more fully below, some business transactions are exempt because the statute identifies them as having legitimate purposes. In addition, the statute specifies many “safe harbor” provisions regarding transactions and business arrangements that would not result in a violation of the law. 

Prosecuting Under the Federal Anti-Kickback Statute

The prosecution is no longer required to show that you intended to violate the law; instead, they must demonstrate that (1) remuneration amongst the parties took place, and (2) the exchange of the services or goods was accomplished with a “bad intent.” This is why this federal statute is an “intent-based” statute.  

First Element: Remuneration

Remuneration or payment can come in various forms, such as money, rebates, meals, or trips. Essentially, it can be almost anything considered to have value; some type of benefit must be offered or received. This has been interpreted very broadly by the courts. However, because of the broad definition of “remuneration” in this context, it becomes increasingly important to show the parties acted amongst themselves with bad intent in the offer or receipt of the remuneration.

Second Element: Intent

The remuneration offered or received (paid for or reimbursed by a government healthcare program) must accompany an illegal intent.

To be found guilty, the healthcare professional would have to intentionally offer, solicit, or receive payment in return for acting in one of the following two scenarios:

1. referring a patient to an individual or entity for the furnishing of services or items that are reimbursed by a federal healthcare program; or
2. ordering services for patients by arranging or recommending those services if a federal healthcare program reimburses them.

Subsection (f) of this statute defines federal healthcare programs as follows: “For purposes of this section, the term “Federal health care program” means-

1. any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government….; or
2. any State health care program…”

Basically, you cannot solicit or accept compensation or payment for these types of referrals or generate some kind of business for Medicare or Medicaid to receive compensation. In addition, offering or making the actual payments to the individual who made the referral is also illegal.   

Types of Individuals and Industries Under Investigation

The statute applies to individuals such as healthcare providers (for example, medical doctors, nurses, nurse practitioners, chiropractors, dentists) and those who are non-licensed. Non-licensed individuals would include healthcare business owners.

The types of industries that are under scrutiny for violations of the statute include the following:

(1) Pharmacies;
(2) Labs;
(3) Medical Device Companies;
(4) Imaging Centers, such as those that perform M.R.I.s or X-Rays;
(5) Physicians; and
(6) Surgical Centers.

Examples:

1. Assume a chiropractor uses any kind of compensation to persuade a patient to use his office for chiropractic treatment (such as telling the patient no co-pay is necessary) or coaxes another medical provider to refer patients to their chiropractic facility; this is an example of a kickback. 
2. If a physician does not actually perform services, but is paid or compensated for those services, that is a kickback. In this scenario, the cash, or compensation, can be in the form of anything valuable such as travel, money, food/meals, or vacations. 
3. If a physician or healthcare provider engaged in a business deal where remuneration was received for services that were not actually necessary for the patient or above the fair-market value for the services, that is considered a kickback. For example, recommending an unnecessary surgery and being compensated for it is regarded as a kickback and is illegal. 
4. If a hospital or medical facility allows a doctor or healthcare practitioner free or reduced rent on the condition that the doctor agrees to refer patients to the hospital or medical facility, that is a kickback. 
5. If a pharmacy decides not to charge patients with deductible or co-pays or states to the patient they do not have to “worry” about “out-of-pocket” costs, this could violate the statute, as well as the False Claims Act and also the Civil Monetary Penalties Law.

Sentencing Under the Federal Anti-Kickback Statute

There are both federal and civil penalties for violations of the statute.

Criminally, a person who violates the statute could face a fine of up to $25,000-$100,000 or five to ten years in prison or both. This is true even for first-time offenders.

Federal sentencing for these crimes is complex, and there is discretion on the judge’s part regarding the sentencing. In addition, certain considerations pursuant to 18 U.S.C. 3553(a) can affect sentencing.

Civil penalties can be pursued by the Officer of the Inspector General (“OIG”) for the Department of Health and Human Services (“H.H.S.”). Fines can be as high as $50,000 for each kickback, and the government can seek additional penalties for up to three times the amount of each kickback. 

Additional penalties can mean debarment or exclusion from participating in federal health care programs and plans, such as Medicare, Medicaid, or TriCare. Moreover, a violation of the statute could lead to additional investigations for serious crimes like violating the False Claims Act.  

Sentences vary in state courts and are determined by the state’s sentencing provisions.  

An experienced federal defense attorney will be crucial to obtaining the best favorable outcome for your particular case. Experienced attorneys bring knowledge and insight to each particular case to help determine whether federal criminal charges or civil charges are being sought and your best defense.  

Moreover, an attorney can be helpful even when no investigation has begun. For example, suppose you want to decide whether to enter into a business arrangement or not. In that case, an experienced attorney can guide you in the process to ensure there is no violation of the statute if you conduct certain business activities, including seeking referrals.  

Defending Under the Federal Anti-Kickback Statute

It is obviously best to avoid an investigation altogether. Thus, if you are considering entering into a business arrangement or deal and are unsure if you will violate the statute by doing so, a lawyer can help.

For example, an experienced attorney can help construct business deals and compliance programs between the parties and healthcare providers so that the arrangement may fall within some of the safe harbor provisions (discussed below). In addition, attorneys can help determine the actual fair market value for services and how to avoid personal liability. Moreover, they can assist in setting up a business arrangement that shows “good” intent vs. “bad” intent as they relate to the Federal Anti-Kickback statute.  

Safe Harbors

H.H.S. has listed various “safe harbor” regulations that are exempt from the statute. These are business arrangements that are lawful between physicians and non-physicians. These are optional, and it is not necessarily an illegal arrangement if you fail to fit within a safe harbor provision.  

Some safe harbors include:

1. Space rental agreements;
2. Compensation to employees for legitimate work;
3. Health plans with price reductions that are offered;
4. Equipment rental contracts;
5. Referral services; and
6. Ambulatory surgical centers.

There are many others.

An experienced federal criminal defense attorney can help you navigate these muddy and complex waters so that you achieve the best possible outcome. Whether you seek legal counsel to make a lawful business arrangement, or an investigation has already begun, a lawyer will be able to ensure the best possible outcome for you based on your particular case.

The right attorney can bring knowledge of the healthcare industry to the table. Healthcare violations, although serious, are sometimes not obvious or apparent to the average person.

Having a lawyer who understands this industry is critical. An attorney’s experience in working with government officials is also beneficial. Attorneys can negotiate with the government officials and may be able to reduce your charges or have them dismissed entirely; for example, this could be done by an attorney demonstrating a lack of bad intent.

Finally, an attorney will want the investigation to remain in civil court instead of the criminal court. An experienced attorney can often persuade the government that you did not make any errors intentionally or willfully in your business arrangement. This is essential because, as stated above, the law allows you to be punished either civilly (such as with monetary recoupment) or criminally, where you are fined, prosecuted, and maybe sentenced to prison if found guilty.

Hire Us

We can help prevent fraudulent business arrangements amongst healthcare and medical professionals statewide and nationally. Our healthcare compliance attorneys can assist you to make sure that any business arrangements you make in the healthcare profession, including those involving referrals, are lawful and valid.  

If you’ve been charged with Federal Anti-Kickback violations in the Los Angeles area, contact us today for a free consultation. Your freedom depends on finding an experienced defense attorney immediately. The sooner you reach out, the sooner we can work on getting your case drastically reduced or dismissed entirely. Call us now at 310‑274‑6529 for a free consultation.

If you or a loved one has been charged with Federal Anti-Kickback violations, we invite you to contact us immediately for a free case review.

Our experienced criminal defense attorney will be sure to fight until the end to reduce or drop your charges entirely.

Call Us for a FREE Case Review: 310-274-6529