Tag: Anti-Kickback Statute

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Pharmacy Owner Sentenced for Paying Illegal Kickbacks and Engaging in a Money Laundering Conspiracy

Summary of press release from United States Department of Justice:

A Texas pharmacy owner was sentenced today to four years and four months in prison and ordered to pay over $59 million in restitution for paying illegal kickbacks and engaging in a money laundering conspiracy. According to court documents and evidence presented at trial, Richard Hall, 53, of Fort Worth, worked with others to create and market expensive compounded medications, which are intended to be custom-tailored to individual patient needs. Hall paid marketers to recruit area doctors to write prescriptions for these expensive compounded medications, including by creating so-called “investment opportunities” so that doctors who wrote prescriptions to the pharmacy could profit from the pharmacy operations. Hall paid illegal kickbacks to these marketers and engaged in a conspiracy to launder the unlawful proceeds. A federal jury in the Northern District of Texas convicted Hall in July 2023 of four counts of paying and receiving unlawful kickbacks and one count of conspiring to launder money.

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Oklahoma Chiropractic Clinic, Owner, and Referring Physicians Pay $465,000 to Settle Federal False Claims Act and Kickback Allegations

From United States Department of Justice:

Chiropractic Associates and Dr. Scott Kirkpatrick paid $365,000 to settle allegations of wrongfully paying physicians to induce referrals of durable medical equipment (DME), leading to the submission of false claims to the Medicare program. Dr. Cash Biddle and Dr. Chad Keeney each paid $50,000 to settle allegations that they received remuneration from Chiropractic Associates and/or Dr. Kirkpatrick to induce referrals of Medicare DME orders.

From October 2017 to July 2021, Chiropractic Associates and Dr. Kirkpatrick allegedly violated the Anti-Kickback Statute (AKS) and/or the Physician Self-Referral Law (Stark Law) by paying referring providers to induce referrals of Medicare DME orders. It is also alleged that Dr. Biddle and Dr. Keeney received such remuneration during certain periods.

The AKS and Stark Law aim to ensure that physicians’ medical judgments are not influenced by improper financial incentives and are based on patients’ best interests. Violations of these laws result in claims under the False Claims Act. To settle these allegations, Chiropractic Associates and Dr. Kirkpatrick paid $365,000, and Dr. Biddle and Dr. Keeney each paid $50,000 to the U.S.

In reaching this settlement, Chiropractic Associates, Dr. Kirkpatrick, Dr. Biddle, and Dr. Keeney did not admit liability, and the government did not make any concessions about the legitimacy of the claims. The agreements allow the parties to avoid the delay, expense, and uncertainty associated with litigation.

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Houston Dental Clinic Operator Convicted in $6M Pediatric Fraud Scheme

From Press Release, United States Attorney’s Office, Southern District of Texas:

  • Rene Gaviola, operator of Floss Family Dental Care clinic in Houston, admitted to submitting fraudulent claims to Medicaid for pediatric dental services that were not provided.
  • Gaviola confessed to employing unlicensed individuals to practice dentistry on Medicaid-insured children and operating the clinic without any licensed dentists, billing Medicaid as if licensed professionals provided the services.
  • He further admitted to paying kickbacks to marketers and caregivers of Medicaid-insured children for bringing them to Floss, and to laundering Medicaid funds from the clinic’s business account to his personal account in transactions exceeding $100,000.
  • From 2019 to 2021, Floss billed Medicaid nearly $6.9 million for pediatric dental services, of which Medicaid paid approximately $4.9 million.
  • Gaviola pleaded guilty and awaits sentencing on April 16, facing potential penalties including up to 10 years for conspiracy to commit health care fraud, payment of kickbacks, and money laundering, as well as potential fines in the hundreds of thousands.
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Health Law Highlights

HHS-OIG Determines Consultant’s Gift Cards Given to Physicians Recommending Services Do Not Implicate Anti-Kickback Statute

From Barnes & Thornburg, by Jason D. Schultz and Mary Elizabth “Lizzy” Ford:

  • The U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) issued Advisory Opinion No. 23-15, permitting a consulting services company to offer gift cards as incentives for physician practices to recommend its services to other physicians. 
  • The company provides various consulting services, including workflow optimization, data analytics, electronic health record consulting, compliance monitoring, and assistance with Medicare Merit-Based Incentive Payment System (MIPS) matters.
  • The proposed arrangement involves three streams of remuneration: gift cards for recommendations and successful referrals, payment for consulting services, and potential higher MIPS reimbursements for customers. 
  • HHS-OIG determined that the Anti-Kickback Statute (AKS) would not be implicated, as the arrangement does not involve referrals or purchases for which payment may be made under a federal healthcare program. 
  • The opinion underscores that the AKS is not violated and no sanctions are imposed when the arrangement does not involve referrals or purchases related to a Federal health care program.
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Health Law Highlights

OIG Approves Hospital’s Redemption Offer to Retiring Physician-Owners

From Bass, Berry & Sims, PLC, by Justin Brown, Krista Cooper, Ashley Gholston Fowler, Travis Lloyd:

  • The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion No. 23-12 on January 3, approving a plan by a physician-owned hospital to redeem the ownership interests of physicians who retire at 67 over a two-year period. This opinion provides guidance on redemption of physicians’ ownership interests in syndicated facilities like physician-owned hospitals and ambulatory surgery centers.
  • The requesting party, a limited liability partnership operating two hospitals, proposed a one-time offer to physician-owners turning 67 to redeem their units over two years to avoid a potential liquidity crunch. To accept, a physician-owner must agree to retire within six months of the first payment and certify they will not refer patients to the hospitals or other partners.
  • The partnership would redeem the units in three equal increments over the two-year period at a fair market value price. Redeemed units are offered to existing and prospective physician-owners equally, without regard to the volume or value of referrals or other business generated.
  • The OIG concluded that the arrangement posed a low risk under the federal Anti-Kickback Statute, based on the fact that eligibility for the redemption offer is unrelated to the volume or value of referrals or other business generated, and the remuneration is unlikely to result in unfair competition by altering referral patterns.
  • The advisory opinion highlights the importance of objectivity and consistency in structuring redemptions and offerings. Basing redemptions and offerings on objective criteria unrelated to the volume or value of referrals or other business generated and applying these criteria consistently to all physicians reduces the risk of non-compliance with the Anti-Kickback Statute and federal physician self-referral law (Stark Law).
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Health Law Highlights

The Growing Causal Divide: But-For Causation in AKS/FCA Actions

From McGuireWoods, by Renee Kumon, Timothy Fry and Brett Barnett:

  • The District of Massachusetts Court recently joined the Sixth and Eighth Circuits in requiring the government to show a direct tie between kickbacks and referrals that proximately caused claims to federal healthcare programs to prevail in Anti-Kickback Statute (AKS) and False Claims Act (FCA) actions.
  • The District Court’s ruling contributes to the growing split between the Third Circuit, which requires a mere causal connection between kickbacks and referrals, and the Sixth and Eighth Circuits, which require but-for causation between the kickback and the federal claim.
  • This split relates to the per se fraud clause added to the AKS in 2010, which provides “a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim” for purposes of the FCA.
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Health Law Highlights

Advisory Opinion 23-7 OIG Issues Favorable Opinion Regarding Proposal to Pay Bonuses to Its Employed Physicians Based on Net Profits

From Health Law Diagnosis, by Nathaniel Arden & Michael Lisitano:

  • On October 13, 2023, the Office of Inspector General (OIG) published Advisory Opinion 23-07, in which the OIG issued a favorable opinion regarding a physician group employer’s proposal to pay bonuses to its employed physicians based on net profits derived from certain procedures performed by the physicians at ambulatory surgery centers.
  • Under the proposed arrangement, the Group would pay its physician employees a bonus in addition to the physicians’ base compensation. The bonus would be equal to 30% of the Group’s net profits derived from two ambulatory surgical centers’ facility fee collections attributable to that physician’s procedures.
  • The two ambulatory surgical centers in question would be operated as “divisions” of the Group and not as separate legal entities.
  • The OIG determined that the proposed bonus arrangement is protected by the bona fide employee statutory exception and regulatory safe harbor of the Anti-Kickback Statute and would therefore, not generate prohibited remuneration.
  • The OIG differentiated similar arrangements where the ACS is owned by a separate entity. In those cases, the bona fide employee exception and safe harbor would likely not apply.
  • OIG’s analysis in the Advisory Opinion demonstrates that when properly structured to comply with statutory exceptions and regulatory safe harbors, certain bonus compensation arrangements of this sort may be permissible.
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Health Law Highlights

Labs Take Note New OIG Opinion Highlights That Fair Market Value Per Test Payments Can Still Violate the Anti-Kickback Statute Publications

From Bass, Berry & Sims, by Jennifer E. Michael & Danielle M. Sloane:

  • The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 23-06, wherein the OIG reiterated its longstanding position that carving out federal health care program (FHCP) business from an arrangement does not insulate the arrangement from Anti-Kickback Statute liability.
  • The arrangement would involve laboratories that conduct both the Technical Component (TC), preparing the slides, and the Professional Component (PC), interpreting the slides.
  • The Requestor would pay fair market value (FMV) for the TC services from other labs, provide the PC, and then bill commercial insurance for both the TC and PC services. The commercial insurance policies allowed this practice.
  • The arrangement would not involve any service reimbursable by FHCP, but the Requestor did expect the labs to refer FHCP services outside of this arrangement.
  • The Requestor admitted the arrangement was not commercially reasonable because it could provide TC services itself for less than FMV.
  • Despite the FMV payment and FHCP business carve-out, OIG determined that the arrangement could increase the likelihood that the labs or their referring physicians would order federally reimbursable services from Requestor.
  • Citing its Special Fraud Alert on Laboratory Payments to Referring Physicians, OIG reiterated that the Anti-Kickback Statute is violated if even one purpose of the payment is to induce referrals of FHCP business, regardless of whether that payment is FMV.
  • Finally, the proposed arrangement in Advisory Opinion 23-06 failed to meet a safe harbor only because Requestor effectively certified that the arrangement was not commercially reasonable.
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Health Law Highlights

Federal Judge Rules Government Must Demonstrate “But-For” Causation for Anti-Kickback Statute Claims

From ArentFox Schiff LLP, by D. Jacques Smith , Randall A. Brater , Michael F. Dearington , Nadia Patel , Heather M. Zimmer:

  • Chief Judge Dennis Saylor of the US District Court for the District of Massachusetts ruled that the federal government must demonstrate but-for causation in order to prove that Regeneron Pharmaceuticals, Inc., the manufacturer of the drug Eylea, submitted false claims resulting from violations of the Anti-Kickback Statute (AKS).
  • The 2010 amendments provide that any Medicare claim that includes items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA.
  • The government urged that the court to adopt the “exposure” theory of causation set forth in United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 96-98 (3d Cir. 2018) — that once the government has proven an AKS violation occurred, to demonstrate causation, it need only prove a causal link that (1) a patient has been “exposed to an illegal recommendation or referral” and (2) that the provider has submitted a reimbursement claim for that patient.
  • In contrast, Regeneron argued for the stricter “but-for causation standard — that the government must demonstrate that an AKS violation occurred and that the remuneration actually caused the provider to provide different medical treatment and thus caused the false claims.
  • The court held that the adoption by Congress of the ‘resulting from’ language in the AKS statute required a finding that the appropriate standard is but-for causation.
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Health Law Highlights

U.S. Supreme Court Declines to Clarify Key Provisions of the False Claims and Anti-kickback Statutes

From Stevens & Lee, by Charles Honart:

  • The Supreme Court declined to resolve a circuit court split on the issue of causation, to wit, when a provider’s claim for reimbursement results from a violation of the Anti-kickback Statute (“AKS”) for purposes of liability under the False Claims Act (“FCA”).
  • Remuneration: A hospital’s decision not to hire an ophthalmologist in return for a general commitment of continued surgery referrals from another ophthalmologist was not “remuneration” covered by the AKS.
  • Causation: The term “resulting from” means that there must be “but-for” causation, *i.e.*, the claim for reimbursement would not have been submitted but-for the violation of the AKS.
  • This ruling is consistent with the Eighth Circuit in United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828 (8th Cir. 2022), but contrasts with the Third Circuit’s opinion in United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89 (3d Cir. 2018), where the court held there must only be a “link” between the AKS violation and the filing of the claim.