Top Ten Health Law Myths

I have been practicing health law for more than 25 years and have had the benefit of working with a lot of healthcare providers. My clients will often repeat myths about the practice of healthcare they have heard from their colleagues. There are also occasions when my fellow attorneys will make assumptions about healthcare law that are not accurate.

There is a lot of confusion and misinformation floating around about the legalities of healthcare. Let’s debunk the top 10 myths right now.

Myth No. 1: Everyone is doing it, so it must be okay.

Truth: There is no strength in numbers. The more people doing things the wrong way, the more they attract the attention of enforcement agencies and licensing boards.

This is perhaps the most pervasive myth there is. I can’t tell you how many times I explain to clients how their business should be structured or some restriction or requirement they must observe. They will often ask how their competitors are getting away with doing things differently.

The truth is, they probably misunderstand what their competitors are doing. Some healthcare providers have only a vague understanding of how their business is structured. Just because some other provider told you their business functions a certain way doesn’t mean it is true.

But even if other people are doing things a certain way, that doesn’t make it correct or legal. Remember the question your mother would ask you: “If everyone was jumping off a cliff, would you do it too?” The truth is, many people are jumping off the proverbial cliff. Don’t follow them.

This is particularly important when it comes to governmental billing. CMS has established the Center for Program Integrity that uses big data to identify fraudulent billing. If everyone else is doing something wrong, Medicare is more likely to take notice.

There is no strength in numbers, only exposure. If you need any convincing, read my recent article on the government’s attempts to recoup funds paid out for neurostimulators.

Myth No. 2: If you don’t see Medicare patients, you can’t violate the Anti-Kickback Statute or the Stark Law.

Truth: You can violate the fraud and abuse rules even if you don’t see Medicare patients.

People are rightfully concerned about submitting false claims to the federal government given the significant civil and criminal penalties involved. However, too many providers think they are safe from these penalties if they don’t see Medicare patients.

The truth is there are other federal laws, and even state laws, which carry civil and criminal penalties that apply to all patients, even if they are not Medicare beneficiaries.

Consider the Federal Travel Act. The use of the Travel Act in healthcare prosecutions is a hot topic nationally, and especially in North Texas following the Forest Park Medical Center case.

The Travel Act was passed in 1961 at the behest of Attorney General Robert F. Kennedy to combat the prevalence of organized crime and racketeering syndicates. Despite the name, you don’t have to travel to violate the Travel Act. The Travel Act makes it a federal crime to use facilities of interstate commerce to promote, manage, establish, or carry on specific, statutorily defined “unlawful activity.”

These unlawful activities are can be any state law crime. As it relates to healthcare fraud and abuse, state crimes such as commercial bribery can form the basis for Travel Act liability. By co-opting these state law offenses, the Travel Act effectively federalizes state law violations.

State also have their own laws which apply. The Texas Patient Solicitation Act (TSPA) is sometimes called the Texas Anti-Kickback Statute or the Texas Stark Law because it has elements of both. You violate the TPSA by offering to pay or agreeing to accept anything of value to secure or solicit a patient or patronage for or from a licensed professional. Called an “All-Payor” statute, a TPSA violation is not limited to referrals for services paid by government health programs.

By default, a TPSA violation is a Class A misdemeanor, but it can become a third-degree felony if the person has violated the TPSA previously or was employed by a federal, state, or local government at the time of the offense.1

Just because you don’t see Medicare patients, or your arrangement doesn’t involve Medicare patients, don’t think you are beyond the reach of anti-referral laws.

Myth No. 3: Sales representatives are a good source of legal advice

Truth: Sales representatives are not attorneys and may not be familiar with the latest developments in health law. Plus, they are incentivized to sell products and don’t necessarily have your best interests at heart.

I’m not disparaging sales representatives. I am admonishing the providers to beware of their motivations. Their job is to sell you supplies and equipment, and like any good sales representative, they will put their product in the most favorable light. They do not necessarily have the legal expertise to analyze the legalities of reimbursement, business structures, patient disclosures, or your licensing board requirements.

Invariably, the sales representative will start the conversation by saying, “I’m not an attorney but…”, then they proceed to give the provider legal advice regarding a complex application of an Anti-Kickback Safe Harbor. I have been on phone calls where the sales representative provided the client with incorrect advice and which I had to gently correct.

Even in the best of situations, legal advice in the healthcare context can be complex and nuanced. Coupled with the fact that most of the sales representatives are not attorneys and you’ve got a recipe for confusion and misinformation. Providers should consider the source of any legal advice they receive and discerning about the advice they choose to accept.

Myth No. 4: All lawyers are well-versed in healthcare law, or the corollary, that health law is just like business or corporate law.

Truth: Healthcare is the most regulated industry. As a result, health law is expansive and nuanced. Many attorneys are not equipped to offer comprehensive advice on health law topics.

This myth manifests itself in several ways. Some providers have business or family attorneys (or CPAs) they rely on for advice on various health law issues. Perhaps, that is better than no advice at all, but oftentimes healthcare issues turn on a complicated framework of federal and state statutes and regulations. Most attorneys do not take health law classes in law school and are therefore not familiar with all of the issues at play.

I’ve also seen this issue arise with unscrupulous businesses who, to entice physicians to enter into a deal, will hire lawyers to draft “opinion letters” that the deal is legal. Some of these opinion letters are nothing more than marketing propaganda. As with sales representatives, you should consider the source of the information. Recognize that the attorney is being paid to write the letter and does not represent you. If you get into trouble, that attorney will be nowhere to be found.

At the very least, providers should have their own health law attorney review the arrangement rather than taking someone else’s word for it.

Myth No. 5: Non-compete provisions are not enforceable against physicians.

Truth: Non-compete provisions are enforceable against physicians and other healthcare providers. Do not sign any restrictive covenant without the advice of competent counsel.

Noncompete provisions are common in healthcare and are routinely enforced. Unfortunately, some physicians think the opposite is true and incorrectly reason they can agree to anything without fear of repercussion.

Perhaps this myth stems from a unique statute in Texas. Based on the theory that a private contract should not unreasonably restrict a patient’s right of access to the physician of their choice, Texas has some unique requirements for noncompetes to be enforceable. One such requirement is that the noncompete must include a buyout provision, meaning, the physician must be allowed to pay a fee to “buyout of” the restriction.2

Texas also limits the scope and geographic area of noncompetes to the most narrow restriction necessary to accomplish the business purpose of the restriction. If the restrictions are reasonable, courts will enforce the provision. If the restrictions are not reasonable, courts have broad discretion to revise them as appropriate.

Myth No. 6: Medical school prepares physicians to handle the business and legal aspects of practicing medicine by themselves.

Truth: Legal concepts in healthcare are complex and dynamic. Great physicians are not necessarily great lawyers.

Schools do a great job educating healthcare providers to provide healthcare. And while many of them also offer courses on business and Texas jurisprudence, it is simply impractical to instill in the provider all the information he or she will need to navigate the legalities of modern healthcare. Even lawyers who specialize in health law must constantly stay up-to-date on recent developments.

I’ve met some wonderful physicians over the years, but a common trait among them is that they will sign or enter into an agreement without reading the agreement or truly understanding what they are getting themselves into.

I once came across a physician who tried to sell my client her medical practice, not realizing she had sold it to someone else. Two years prior, she sold the practice to a “management company” and didn’t realize she was just an employee and not the owner. This example may be extreme, it is a consistent theme.

The practice of law is as technical as the practice of medicine. Lawyers shouldn’t practice medicine and physicians shouldn’t practice law. You will save yourself a lot of money and heartache if you retain competent legal counsel rather than trying to go it alone.

Show me a physician who tries to handle legal problems themselves and I’ll show you a physician who is going to be a great client. It’s much better to avoid the problem in the first place than to fix the problem after the fact.

Myth No. 7: There is a way around any legal prohibition or restriction.

Truth: The government has broad discretion to prosecute fraud and abuse. The Department of Justice will closely scrutinize arrangements designed to circumvent the law.

It is not uncommon for initial conversations with clients to begin, “I want to practice ethically and do everything above board, but is there a way around… [fill in the blank.]” This attitude is dangerous.

Federal and state healthcare and reimbursement statutes are broad and sweeping. The anti-kickback statute, for example, applies to any remuneration, that is, anything of value. And it applies to both sides of the transaction whether soliciting kickbacks or paying kickbacks. The government has broad discretion to review business arrangements and identify possible kickbacks. You may find yourself on the wrong side of a civil or criminal prosecution because the result of your arrangement is to pay you or someone else for the volume or value of referrals.

The Stark Law has a special penalty for “circumvention schemes” designed to avoid technical violations of the law. The Texas Patient Solicitation Act applies even more broadly than its federal counterparts.

The point is that you should avoid getting too clever with the types of arrangements you enter into. There are ways to structure deals legally, but there are also deals that can’t be structured in any way to make them appropriate.

Providers are right to want to stay above board, but that means saying no to certain questionable arrangements.

Myth No. 8: The government has better things to do than to focus on a single provider.

Truth: The government will investigate individual providers, but even if they don’t investigate you, your own employees may start legal action against you.

This is a corollary to the myth about strength in numbers. Once the government identifies the providers who have been involved with a particular scheme, they can and will go after single healthcare providers. Small clinics or large practices. It doesn’t matter. The government will target anyone who has been involved in the scheme.

But even if the government doesn’t seek you out, your employees are incentivized to turn you in.

The government provides incentives to turn people in who have submitted false claims to the government. Qui tam actions, also called “Whistleblower” actions, allow a citizen to file a lawsuit on behalf of the government and share in the money recovered. In the healthcare context, the False Claims Act allows private persons and entities with evidence of fraud against federal programs to sue the alleged wrongdoer on behalf of the government.

For 2018, the Department of Justice recovered over $2.5 billion in fraud judgments and settlements in the healthcare industry. $1.9 billion came from these whistleblower actions.

Don’t think your employees won’t turn you in. Disgruntled employees or competitors are rich sources of qui tam actions or unsolicited complaints to the government.

The government makes it easy to report fraud via various fraud hotlines. I have had clients whose disgruntled employees sent emails to the authorities outlining all the alleged fraudulent conduct. Just do a Google search on whistleblower attorneys in your area. You will be surprised at how many attorneys advertise this type of representation.

Don’t think for a minute that the government won’t focus on your small clinic. It will. But perhaps the government is not your biggest concern. Your employees or competitors can turn you in as well.

Myth No. 9: A new treatment, drug, or protocol, will make you a lot of money quickly.

Truth: There are no shortcuts to a profitable healthcare business. Watch out for those pushing such schemes.

One of the greatest joys of my practice is to be able to help healthcare providers be successful in their practices. Whether it is a new business venture or an ongoing practice, it’s great to see healthcare providers be successful. But there are times when clients think they are on the cusp of the next big thing. All we have to do is set up a business and do this or that, and they will catch the wave to financial prosperity.

There are very few get-rich-quick opportunities. That is even more true in healthcare. Because it’s so highly regulated, new and innovative products, treatments, or drugs often become the subject of fraud and concern. Even if it is effective, it takes years for the standard of care and the law to catch up. Coupled with the fact that the FDA monitors devices and drugs, and that the Texas Medical Board is concerned about unapproved treatments, being on the cutting-edge is usually not desirable.

A great example is stem cell therapies. Stem cells offer great promise. However, the science is still developing and many of these products are not yet approved by the FDA. The Texas Medical Board has taken a unique interest in stem cell therapies and the types of representations been made to the public about their efficacy.

Be very skeptical about embracing the “next big thing.” Focus on marginal improvements in your practice and business that compound over time to yield outstanding results. Address the legal liabilities and pitfalls immediately in front of you rather than taking on an entirely new set of risks.

Myth No. 10: If someone files a complaint against you with your licensing board, all you need to do is send a letter to the Board and explain your side of the story. The complaint will go away.

Truth: Providers often make the situation worse by failing to appreciate all the rules and regulations governing the practice of medicine in Texas.

The unfortunate reality of being a professional is that you may one day be faced with a complaint filed against you by a patient. Complaints are filed for many reasons. Sometimes, providers fall short of the expected standard of care. Other times, clients file complaints because they are angry about some aspect of their treatment or want their money back. Whatever the reason, complaints must be taken seriously and responded to timely and appropriately.

I’ve been called more than once by providers who tried to handle it themselves. They fired off an answer to the Board only to make the situation worse. Now, instead of facing a minor complaint, they are dealing with a more serious violation.

Besides the legal aspects of the case, there are practical considerations. As the provider, you may not be able to look at the situation objectively. You may not recognize some important element of the complaint, or appreciate how a casual explanation can raise questions about other statutes and regulations. I’ve had several clients who thought they were helping themselves by explaining their side of the story, but all they did was create additional questions about other potential violations.

Most providers don’t realize that once the Board starts an investigation, they are not limited to the specific complaint. Like the Camel’s nose, once they are in a little, they are all in. Nothing is off-limits. The Board will review all aspects of your practice and your care. While defending yourself against one violation, you might inadvertently admit to another.

Even if you feel like the complaint has no merit, you should hire experienced counsel to represent you throughout the complaint process. Your attorney can make sure you meet all the applicable deadlines and put you in the best position possible for a favorable outcome.

Also, an experienced attorney has been through the complaint and hearing process before and understands the expectations of the Board and what resolution is possible.


These are just a few health law myths. It is unfortunate that there is such misinformation. Healthcare practice in today’s environment is challenging enough, but doing so with the wrong understanding makes it more difficult.

Finding a good health law attorney to help you avoid costly mistakes can make your practice more profitable and less stressful.

Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements

Improper billing for electro-acupuncture using a “P-Stim” device (or peri-auricular stimulation device) has been the subject of two False Claims Act (FCA) settlements already in 2021, following a trend of such enforcement actions within the past year. And there are more to come.

These prosecutions involve providers billing federal healthcare programs for acupuncture using P-Stim devices under HCPCS Code L8649. Unlike P-Stim devices, though, which are attached to the ears of a patient using needles and adhesives without surgery or anesthesia, HCPSCS Code L8649 applies to a product that is surgically implanted into a patient using anesthesia. Medicare, TRICARE and the Federal Employees Health Benefit Program (FEHBP) do not reimburse for acupuncture devices like P-Stim, nor do they reimburse for P-Stim as a neurostimulator or an implantation of neurostimulator electrodes. In addition to P-Stim, the brand names for these devices include ANSiStim, E-pulse, Stivax and NeuroStim.

Source: Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements

Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators

Spinal Decompression Clinic of Texas (“SDCT”) has agreed to pay $330,898.00 to resolve liability under the False Claims Act for the alleged improper billing of electro-acupuncture device neurostimulators.

SDCT received reimbursement from Medicare in the amount of $177,051.15 for these procedures. SDCT, however, did not perform these surgeries, and instead applied P-Stim devices in an office setting, without surgery or anesthesia. P-Stim is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device then provides intermittent stimulation by electrical pulses. It is a single use, battery-powered device designed to be worn for approximately four days until its battery runs out, at which time the device is thrown away.

Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.

Source: Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators

The United States and Tennessee Resolve False Claims Act Claims Relating to “P-Stim” Devices

A physician and two chiropractors agreed to pay the United States and Tennessee a total of $1.72 million to resolve liability under the False Claims Act for the alleged improper billing for electro-acupuncture using a peri-auricular stimulation device known as “P-Stim” that does not qualify for reimbursement under Medicare.

From May 2016 through November 2018, Dr. Anderson, Total Family, and Chiro2Med billed for, and were reimbursed by the United States for acupuncture using P-Stim devices under HCPCS Code L8679, which instead requires implantation of a neurostimulator with anesthesia in a surgical setting by a physician, typically a surgeon. Dr. Anderson, Total Family, and Chiro2Med separately billed for, and were reimbursed by, Medicare and/or TennCare for these devices over a two year period.

Dr. Anderson agreed to pay $1 million over five years, Dr. Spencer and Total Family agreed to pay $700,000 over five years and Dr. Shea and Chiro2Med agreed to pay $20,000 over five years.

Source: The United States And Tennessee Resolve Claims With Three Providers For False Claims Act Liability Relating To “P-Stim” Devices For A Total Of $1.72 Million

OIG Issues New Guidance Regarding Big-Box Store Gift Cards as Patient Incentives

In a new advisory, the OIG addressed the use of gift cards to incentivize patients to utilize health care services.

Even though gift cards have been discussed previously in various OIG guidance over the years, this Advisory Opinion together with the OIG’s guidance around the new Safe Harbor is the first time the OIG has taken the position that gift cards to “big-box” retailers are identified as impermissible “cash or cash equivalent” incentives under the CMP Law.

Source: OIG Issues New Guidance Regarding Big-Box Store Gift Cards as Patient Incentives

Patient Recruiter Convicted in $2.8 Million Telemedicine Scheme Against Medicare

The owner of an Orlando-area telemarketing call center was convicted for his role in a kickback scheme involving expensive genetic tests and fraudulent telemedicine services that resulted in the payment of approximately $2.8 million in false and fraudulent claims to Medicare.

Ivan Andre Scott, 34, of Kissimmee, Florida was convicted after a four-day trial of one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiracy to defraud the United States and pay and receive health care kickbacks, and three counts of receiving kickbacks.

The evidence showed that Scott targeted Medicare beneficiaries with telemarketing phone calls falsely stating that Medicare covered expensive cancer screening genetic testing, or “CGx.” The tests could cost as much as $6,000 per test. After beneficiaries agreed to take the test, the evidence showed Scott paid bribes and kickbacks to telemedicine companies to obtain doctor’s orders authorizing the tests.

Between November 2018 and May 2019, labs submitted more than $2.8 million in claims to Medicare for genetic tests Scott referred to them, of which Medicare paid over $880,000. In that timeframe, Scott personally received approximately $180,000 for his role in the scheme.

Source: Patient Recruiter Convicted in $2.8 Million Telemedicine Scheme Against Medicare

Texas Hospice Owner Sentenced for Fraud Scheme

A jury found Rodney Mesquias guilty last week on charges of: conspiracy to commit healthcare fraud, conspiracy to commit money laundering, conspiracy to obstruct justice, conspiracy to pay and receive kickbacks, and six counts of healthcare fraud.

Mesquias owned and operated Merida Group, a healthcare company with dozens of locations in Texas. The Department of Justice says Mesquias conspired with the company’s CEO and medical director to mislead thousands of people with long-term, but not fatal, illnesses into believing they had only six months to live. This led to their enrollment in Merida’s “expensive and unnecessary” group homes, nursing homes, and housing projects.

This story has been widely reported and is one of the more egregious examples of intentional fraud I’ve seen. It has everything – false medical records, kickbacks, medically unnecessary services. To make matters worse, there were allegations that those involved were lying to patients telling them they had fatal illnesses, going so far as to send “chaplains” to lie to patients and give them last rites.


Given the complexities of the fraud and abuse laws, there are occasions when providers unintentionally run afoul of the rules. This is not one of those instances. The jury clearly thought this was intentional deceit.

Source: Texas Hospice Owner Sentenced for Fraud Scheme

Texas Heart Hospital and Subsidiary Management Company to Pay $48 Million to Settle False Claims Act Allegations Related to Alleged Kickbacks

Huge qui tam settlement where the qui tam plaintiffs will recover $13.9 million. The underlying action involves allegations that the Heart Hospital violated the Stark Law and the Anti-Kickback Statute by requiring physician owners to satisfy the Heart Hospital’s yearly 48 patient-contact requirement in order to maintain ownership in the hospital.

This settlement arises from a lawsuit filed by former Heart Hospital physician owners Mitchell Magee, M.D. and Todd Dewey, M.D. pursuant to the whistleblower or qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds.

Dr. Dewey and Dr. Magee will collectively receive $13,920,000 as their share of the recovery.

Source: Texas Heart Hospital and Wholly-Owned Subsidiary THHBP Management Company LLC to Pay $48 Million to Settle False Claims Act Allegations Related to Alleged Kickbacks

Federal Regulatory Compliance Issues Can Arise in State Court Matters

An interesting read regarding the use of federal regulatory compliance issues (e.g impermissible healthcare kickbacks) to support a state court tort claim.

The plaintiffs sued the manufacturer of a immunoglobulin infusion product alleging that the manufacturer improperly induced a physician to misdiagnose their condition by paying the physician impermissible kickbacks through bonuses and commissions. The plaintiffs did not assert Anti-kickback or Stark claims directly. Such claims must be brought as qui tam actions.

Instead, they alleged that the fact that the federal statutes prohibit such conduct illustrates that patient harm is a foreseeable consequence of the payment of kickbacks.

The gist is that these regulatory issues could find their way into your state court litigation case.

Source: Memorandum Order Denying Defendants’ Motion to Strike, Post v. AmerisourceBergen Corp., Northern District of West Virginia

Two area home health agency owners charged in health care fraud and illegal kickback scheme

A federal grand jury indicted two home health agency on allegations that they fraudulently billed Medicare more than $10 million.

The indictment alleges that Tataw and Anglea Bisong, co-owners of SierCam Healthcare Services LLC, billed Medicare for home health services that were not medically necessary or not actually provided as billed.

Under the alleged scheme, the Bisongs paid SierCam patients to sign up for medically unnecessary home health services and provided free transportation and covered the copayments and other fees at doctor’s office visits to facilitate their health care fraud scheme.

It is also alleged that they created created false medical records to make it appear the services met Medicare’s criteria for reimbursement.

They were charged with six counts of health care fraud and conspiracy to commit health care fraud.

Source: Two area home health agency owners charged in health care fraud and illegal kickback scheme